Exxon set to surpass Shell, BP in low carbon expenditure

TL/DR –

ExxonMobil plans to spend $30bn on low emissions opportunities through 2030, surpassing Shell and BP in low carbon spending. The US oil major’s low carbon spending will focus on reducing greenhouse gas emissions through technologies such as carbon capture, biofuels, hydrogen, and lithium extraction. European oil majors such as Shell, BP, and Equinor have slashed low carbon spending guidance to concentrate on more lucrative fossil fuel production.

ExxonMobil Surpasses European Rivals in Low Carbon Investments

ExxonMobil, previously critical of European competitors’ clean energy investments, is set to outpace Shell and BP in low carbon expenditures. The oil giant plans to spend $30bn on low emissions opportunities until 2030, a significant increase compared to its $3bn commitment in 2021.

Investments in technologies such as carbon capture, biofuels, hydrogen, and lithium extraction form Exxon’s approach to reducing greenhouse gas emissions. Unlike its European counterparts, Exxon has not developed a large renewable energy business.

Exxon’s increased investment comes as European rivals like Shell, BP, and Equinor trim their clean energy investments under investor pressure, according to data from energy research group, Wood Mackenzie.

BP, which once championed green energy, reduced its annual guidance on low carbon spending to $1.75bn. Shell and Norway’s Equinor also cut their proposed low carbon investments. Meanwhile, TotalEnergies, despite a slight cut in its forecast, stays at the forefront of low carbon investment.

Tom Ellacott from Wood Mackenzie lauds Exxon’s low carbon strategy but mentions uncertainties over delivery. The strategy relies on US government subsidies and customer demand. Exxon’s investment in certain low carbon projects, such as a hydrogen plant at its Texas refinery, hinge on tax breaks from the US government.

There are complexities in comparing oil producers’ low carbon spending as definitions can differ. Exxon includes spend on reducing emissions for its customers, unlike European majors. This could account for about half of Exxon’s spending.

Shareholder activist group Follow This argues that Exxon cannot be considered a leader as it excludes pollution from its customers burning its oil and gas.

Despite criticism, there is a notable change in Exxon’s strategy since 2020 when CEO Darren Woods aimed to avoid a competition with rivals on carbon emissions. Analysts say Exxon is leaning into these areas because of genuine business opportunities.

Shell argues that Wood Mackenzie’s data fails to consider the scale of its historical investments in the low carbon space. Environmental Defense Fund agrees that Exxon has ramped up its low carbon spending, but contends it’s insufficient to achieve major decarbonisation in the next 30 years.

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