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ExxonMobil aims for net zero greenhouse gas emissions from operations by 2050

ExxonMobil has a refinery in Baton Rouge. (Kathleen Flynn/Reuters)
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ExxonMobil, which has been under pressure to slash its carbon footprint, has committed to net zero greenhouse gas emissions from its operations by 2050.

In a report released Tuesday, the oil giant said it has identified more than 150 “potential steps and modifications” to reach that goal, and that it already is working to limit methane that can leak from damaged pipes and other equipment, among other measures.

Investors, regulators and activists for years have been pressing the energy industry, which generates hundreds of millions of tonnes’ worth of greenhouse gases, to transition toward cleaner fuels. Such emissions are a major contributor to climate change, with rising temperatures tied to more frequent and severe weather events around the globe.

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Climate experts called Exxon’s goal a positive but limited step forward for the oil giant, which trails many of its industry rivals on this front. BP and Shell, for example, have more ambitious reduction targets than Exxon, and analysts say some of its European competitors spend more on renewables.

And its “net zero” goal does not apply to the carbon dioxide released by everyday drivers and other end-use customers, a category that accounts for most of its emissions.

“Its great that they’re cleaning up their operations … they should have done that a long time ago,” said Paasha Mahdavi, a political scientist at the University of California at Santa Barbara who studies extractive industries. “But without a plan to pivot towards something more sustainable, they’re not solving the actual problem,” he said.

Exxon made about $200 billion in the first nine months of 2021, making it one of the world’s largest oil companies by revenue. Its production volumes in the Permian Basin of the Southwestern United States averaged 500,000 barrels per day in the most recent quarter, according to a recent financial report.

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In recent years, activist investors have pressured the company to address its contribution to climate change. Last year they secured three of the 12 seats on its board, over chief executive Darren Woods’s objections.

On Tuesday, it pledged to spend $15 billion by 2027 on lower-emission business initiatives. It wants to invest in better processes for detecting methane leaks across its infrastructure, and explore alternative hydrogen-based fuels. The company said it will roll out detailed road maps throughout 2022 and 2023 that should further crystallize its plans.

“We are developing comprehensive road maps to reduce greenhouse gas emissions from our operated assets around the world, and where we are not the operator, we are working with our partners to achieve similar emission-reduction results,” Woods said in a statement.

But Tuesday’s announcement applies to a relatively small portion of the company’s overall emissions. The zero-emissions goal applies only to scope 1 and scope 2 emissions, which include gases given off directly by the company’s business operations, such as through the burning of excess fuel. The net zero goal does not involve “scope 3 emissions,” which include everyday drivers who fill up at the gas station.

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Exxon reported at least 650 million tonnes of emissions from petroleum sales in 2020, compared with “operational” emissions of 112 million tonnes, according to the Securities and Exchange Commission. That means about 85 percent of Exxon’s 2020 emissions would not be covered by the net zero plan announced Tuesday.

Excluding scope 3 amounts to “pushing the blame off of themselves and onto consumers,” says Josh Eisenfeld, corporate accountability communications manager with the climate advocacy group Earthworks.

“This is a commitment to continue using fossil fuels, which is driving us further towards a climate catastrophe,” Eisenfeld said.

Some of Exxon’s global competitors are years ahead of it. A database compiled by the investment bank Raymond James counts 19 oil companies that have already committed to bringing their operations to net zero by 2050. Several smaller firms, including the U.K.'s Tullow Oil and Norway’s Equinor ASA, want to reach that goal by 2030.

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And several of Exxon’s peers ― including BP, Occidental and Shell ― have released net zero carbon dioxide targets that include scope 3 emissions, according to Raymond James.

Raymond James analyst Pavel Molchanov said Exxon is trailing its peers not only in how it sets goals, but the degree to which it is investing in renewable energy solutions.

Some of Exxon’s European counterparts are investing more than 20 percent of their capital budgets in renewable and low-carbon energy, Molchanov said. For Exxon, that number is in the single digits.

“[Exxon] is moving slowly, but it’s better than nothing,” Molchanov said.

Exxon shares closed Tuesday at $73.08, up 1.7 percent.