(Bloomberg) — Exxon Mobil Corp. announced an “ambition” to eliminate some greenhouse gas emissions by 2050 in the oil giant’s first such long-term pledge to curb carbon output.
Exxon said Tuesday in a statement that over the next 2 years it would develop roadmaps to its crude refineries and chemical plants. This will help eliminate Scope 1 and 2 emissions. Exxon does not plan to eliminate carbon that is emitted by customers who use Exxon products, such as jet fuel and gasoline, which are the main sources of pollution in the oil-industry.
Although Exxon’s pledge falls short of those made by European peers like Royal Dutch Shell Plc and BP Plc, it’s a major step for the largest Western oil explorer. It comes less than a year after shareholders replaced one-fourth of Exxon’s board following an activist campaign that criticized the company’s approach to climate change.
“This is more than just a pledge,” Chief Executive Officer Darren Woods said during an interview with CNBC on Tuesday. “We’ve been doing work for several years now to make sure we were confident that we had a line of sight on how to achieve this.”
Exxon shares rose 1.5%, to $72.91 at 9.36 in New York. This brings the 12-month advance up to 49%.
Woods stated that the roadmaps would include both low- and higher-cost solutions to pollution reduction. He said government incentives or technological improvements could help to increase the cost of high-cost solutions.
Exxon’s plants and other assets released the equivalent of 111 million tons of carbon dioxide equivalent in 2020, down 6% from the previous year and the lowest in a decade, the company said in a report. Exxon’s achievement has an asterisk because Exxon, along with the rest of industry had to cut back on fuel production after the pandemic in the world decimated global energy demand.
Exxon’s Scope 3 emissions totaled 540 million tons that same year, almost five times the size of Scopes 1 and 2.
Europe’s oil giants were the first to make net zero commitments and U.S. drillers have been playing catch-up. In October, Chevron Corp. adopted an operational net zero “aspiration” while ConocoPhillips, Occidental Petroleum Corp. and Pioneer Natural Resources Co. also announced plans to curb carbon released by mid-century.
Exxon’s board has emphasized the importance on better communicating what it’s doing to lower emissions, Woods said.
“Historically we’ve pulled back a little bit and wait until we’re actually doing it” to make an announcement, he said. “Helping folks understand what we’re trying to do and the work we’re doing today to achieve is an important emphasis the board has given us.”
Today’s plans builds on several low-carbon announcements over the past few months. Exxon presented new plans for reducing emissions by 2030 in December. This builds on Exxon’s Low Carbon Solutions business that it created earlier in the year. It plans to invest $15billion in low-emissions projects through 2027. This represents a major step forward from the past.