ExxonMobil on Monday announced more ambitious goals to reduce greenhouse gas (GHG) emissions over the next five years only a week after a group of shareholders called for an overhaul of strategic goals.
The Irving, TX-based supermajor also expects to meet a 2020 forecast set two years ago to cut global methane emissions by 15% and natural gas flaring by 25% from 2016 levels. ExxonMobil said the stepped up goals align with the United Nations climate accord, better known as the Paris Agreement.
“These meaningful near-term emission reductions result from our ongoing business planning process as we work toward industry leading greenhouse gas performance across all our business lines,” CEO Darren Woods said. “We respect and support society’s ambition to achieve net zero emissions by 2050, and continue to advocate for policies that promote cost-effective, market-based solutions to address the risks of climate change.”
Earlier this month activist investment firm Engine No. 1 called on ExxonMobil to enhance its long-term value by, among other things, “more significant investment in clean energy” to ensure a commitment to emission reduction opportunities. The California State Teachers’ Retirement System, which owns more than $300 million in stock, aligned with Engine No. 1’s goals.
By 2025, ExxonMobil now plans to reduce the intensity of operated upstream GHG emissions by 15-20% from 2016 levels. ExxonMobil also is aiming to reduce methane intensity by 40-50% and cut flaring intensity by 35-45%.
The new goals follow “several months of detailed analysis and includes input from shareholders.” The global emission reduction plans cover Scope 1 and Scope 2 emissions from operated assets as laid out in the Paris Agreement. Many companies are aiming to reduce their Scope 1-3 emissions to comply with the voluntary accord.
Scope 1 covers direct emissions from owned/controlled sources, while Scope 2 covers indirect emissions from purchased power from electricity, steam, heating and cooling. Scope 3 includes all other indirect emissions in a company's value chain.
ExxonMobil expects to detail its Scope 3 emissions every year, but reporting indirect emissions “does not ultimately incentivize reductions by the actual emitters.”
The goals also align with the World Bank’s initiative to eliminate routine flaring by 2030, management noted.
To achieve its forecasts, plans are to leverage operational efficiencies, as well as develop and deploy additional lower emission technologies.
Investments would continue in technologies that include carbon capture, manufacturing efficiencies and advanced biofuels. Also planned is increased cogeneration capacity at manufacturing facilities.
In addition, management would continue to support “sound policies that put a price on carbon,” and tie environmental performance to executive compensation. However, management noted that reducing global GHGs substantially “will require changes in society’s energy choices coupled with the development and deployment of affordable lower-emission technologies.”
Since 2000, ExxonMobil has invested more than $10 billion to research, develop and deploy low-emission technologies, including nearly $3 billion at cogeneration facilities
The company noted that it has supported the Paris Agreement “from its inception and continues to support U.S. government participation in the framework.” While the Trump administration formally withdrew from the accord last month, President-elect Biden has said he would rejoin on his first day in office.
ExxonMobil noted that it has long supported the Oil and Gas Climate Initiative’s aim to reduce methane and carbon intensity for upstream operations.
In response to the GHG reduction plan, Engine No. 1 said the “announcement reinforces the urgent need for ExxonMobil to develop a strategy for long-term value creation and for new directors with successful track records in energy industry transformations to help it do so.
“While reducing emissions intensity is important, nothing in ExxonMobil’s stated plans better positions it for long-term success in a world seeking to reduce total greenhouse gas emissions. Likewise, as the company itself acknowledges, nothing in its enhanced Scope 3 disclosure will lead to the reduction of such emissions.” It is “time for the company’s shareholders to weigh in.”
Meanwhile, ExxonMobil and Malaysia’s state-owned Petroliam Nasional Berhad, aka Petronas, have discovered hydrocarbons offshore Suriname. The find extends ExxonMobil’s slew of discoveries in the Guyana-Suriname Basin. The latest discovery was at the Sloanea-1 exploration well on Block 52.
Petronas drilled the well to a total depth of 15,682 feet. The block covers an area of 1.2 million acres and is about 75 miles offshore north of Suriname’s capital city, Paramaribo. ExxonMobil Exploration and Production Suriname BV holds a 50% stake in the block, with Petronas Suriname E&P BV holding the other half.
