ExxonMobil dismisses carbon targets as a ‘beauty’ match
ExxonMobil will eschew a “beauty match” on carbon emissions as rivals set out firm targets, marking a divide with international oil groups under pressure to address their impact on the global climate.
The largest US oil company on Thursday reaffirmed plans for $30bn-$35bn in capital spending in each of the next five years, most of it on big oil and gas projects from the US Permian Basin to Papua New Guinea.
Its shares fell another 4.4 per cent to $50.11 on Thursday, near the lowest price in 15 years, leaving it with a market value of $212bn against as much as $527bn in 2007.
Once the largest company by market value, Exxon has lost allure to investors spooked by declining returns and questions over future demand. Some have pledged to divest from oil and other fossil fuel stocks as worries build over climate change.
Darren Woods, Exxon chief executive, made a robust case for the future of oil and gas at the company’s annual investor day, arguing its investment in wells, refineries, gas terminals and chemicals plants would yield bumper profits when commodity markets tighten.
“We want to ensure that we’re well-positioned for the inevitable upswing as growth in demand outstrips current supply,” Mr Woods told the audience at the New York Stock Exchange.
European counterparts have set out various commitments to reduce the amount of carbon dioxide they emit. BP in February pledged net-zero carbon emissions from the oil and gas that it produces by 2050. Eni, the Italian energy group, last week pledged to cut its greenhouse gas emissions by 80 per cent by 2050 and said its oil and gas production would peak in 2025.
Exxon has taken less dramatic measures, committing to a 15 per cent reduction in emissions of methane — another potent greenhouse gas — between 2016 and 2020, and a 25 per cent cut in flaring waste natural gas.
While on track to achieve those goals, Exxon’s total annual greenhouse gas emissions held steady at about 124m tonnes on a CO2-equivalent basis between 2009 and 2018, according to company data.
Asked by an analyst about carbon targets, Mr Woods said he sought to avoid “a beauty match, a beauty competition” with other companies. He highlighted Exxon technology initiatives such as biofuels and carbon capture and storage.
“We think about this on a global scale,” he added. “Individual companies hitting targets and then selling assets to another company so that their portfolio has a different carbon intensity has not solved the problem for the world. It hasn’t made a dent in it. And in some cases, if you’re moving to a less effective operator, you’ve actually made the problem worse.”
His comments echoed Chevron, the second-largest US oil group, which held an analyst day on Tuesday. Michael Wirth, chief executive, said the company — like Exxon, a descendant of John D Rockefeller’s Standard Oil — would not “play a shell game with our portfolio” to meet climate goals.
“You could change the carbon footprint of your profile by changing your asset mix, and you could move higher emission assets to less responsible operators that won’t have commitments to reduce the intensity of those operations. And guess what, the world hasn’t reduced greenhouse gas emissions,” Mr Wirth said.
Larry Fink, the chief executive of BlackRock, the world’s largest fund manager, in January sent a letter to corporate bosses warning of a “significant reallocation of capital” as investors respond to the risks of climate change.
Mr Woods told reporters he met Mr Fink and discussed the letter.
“What was missing from the letter I think explicitly is the time dimension,” Mr Woods said. He said that with projections showing continued use of oil and gas even in scenarios that limited higher global temperatures, “the transition will take time”.