ExxonMobil commits to net zero for its operations, but not for entire supply chain

ExxonMobil plans to reach net-zero carbon levels from its global operating assets by 2050, but not for the downstream use of the fuels it produces, it said in a progress report released 18 January.

For the supply chain emissions, the global oil and natural gas giant said it would focus on "developing and deploying emission-reducing technologies and products."

ExxonMobil is the laggard among major US oil companies in announcing net-zero CO2 goals, according to IHS Markit's Markit's Corporate GHG Emissions Tracker, which shows APA, Occidental Petroleum, ConocoPhillips, Chevron, Devon, Diamondback, EOG, Hess, and Pioneer with plans already in place.

In Advancing Climate Solutions - 2022 Progress Report, ExxonMobil said it would build on its 2030 plans to reduce Scope 1 and 2 GHG emissions across its assets. Scope 1 refers to direct releases from production activity, while Scope 2 refers to the emissions released through purchases of heat and power for its operations.

These plans include an additional $15 billion over the next six years in lower-emissions solutions, including carbon capture and storage, hydrogen, and biofuels.

ExxonMobil released 104 million metric tons (mt) of Scope 1 GHGs and 7 million mt of Scope 2 emissions across its crude and gas operations in 2020, according to the progress report.

More net-zero roadmaps forthcoming

The company said it already has developed a net-zero roadmap for its Permian Basin operations in Texas and New Mexico that involve targeting Scope 1 and 2 emissions, with the aim of reaching net-zero CO2 levels by 2030.

"Unconventional" hydraulic fracturing techniques are responsible for producing an average of 500,000 barrels of oil equivalent per day in the Permian, which Exxon Mobil said represents 40% of the company's net US upstream production, or 13% of its global production.

The company said it plans to develop net-zero road maps for at least 90% of its assets in 2022 and the remainder in 2023.

"We are developing comprehensive roadmaps 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," CEO Darren Woods said in an 18 January statement accompanying the report.

Focus on developing low-emissions solutions

As for Scope 3 emissions, which encompass GHG releases across the value chain, including end use in the transportation sector, ExxonMobil said it is concentrating its efforts on increasing the supply of products with lower lifecycle GHGs, which will enable the transition from higher-emissions alternatives.

During the pandemic-induced lockdown year of 2020, ExxonMobil estimated Scope 3 emissions from gas and crude production totaled 540 million mt from upstream operations, 600 million mt from refining operations, and 650 million mt from petroleum product sales.

As expected though, ExxonMobil's Scope 3 emissions across the board were significantly higher in 2019 when people were moving about more freely, without fear of catching the virus. For instance, upstream production was responsible for 570 million mt in 2019, refining processes contributed 630 million mt, and petroleum product sales were responsible for an estimated 730 million mt.

Scope 3 emissions are "five times larger"

Will Scargill, managing energy analyst with GlobalData, a leading data and analytics company, said ExxonMobil's announcement brings it in line with other oil "supermajors" such as BP, Chevron, Eni,Royal Dutch Shell, TotalEnergies, and ConocoPhillips.

However, Scargill criticized the company for not making a commitment on Scope 3 emissions, saying "these emissions are at least five times larger than those covered by the target, and, based on its upstream oil and gas production."

GlobalData estimates Scope 3 emissions will increase by around 15% over the next five years and could effectively cancel out the emissions reduction targeted for this decade, which is already less ambitious than those of some peers, he added.

For the energy sector, Scope 3 emissions are a "big deal" because they include emissions released by the use of sold products such as combustion of aviation fuel by aircraft or gasoline in car engines, Nick Lowes, vice president of IHS Markit's Energy Transition & Cleantech Consulting arm, said during the company's 17 June "Climate Readiness and the Journey to Net Zero by 2050" webinar.

Trying to track the GHGs emitted can become incredibly complex, especially as there is no standard method for defining these emissions from a standard barrel of oil, Lowes explained.

Despite criticism and stakeholder pressure, ExxonMobil said it is taking a "holistic" approach to tackling Scope 3 GHGs by considering society's essential needs, available alternatives, and the emissions created or avoided throughout a product's life cycle in meeting those needs.

Using this approach, ExxonMobil said it calculated GHGs across its business plan and concluded that its full life-cycle absolute GHG releases from its oil, gas, fuels (including biofuels), chemicals, and lubricants portfolio could decrease by about 12% in 2030 relative to 2016 levels, and its carbon intensity would decrease by 4% during this time period. The reductions in both absolute emissions and carbon intensity would be achieved through improvements at existing operations, optimization of asset portfolios, plus a growth in LNG, chemical products, lubricants, and lower-emissions fuels that it said would help customers reduce their emissions.

To illustrate its approach, the company said its projected 2030 renewable fuel production could avoid more than 25 million mt each year of GHGs by displacing a corresponding amount of conventional fuel refined from crude. ExxonMobil said it plans to provide more than 40,000 barrels per day of lower-emissions fuels by 2025, and has a further goal of 200,000 barrels per day by 2030.

Already, ExxonMobil is partnering with Global Clean Energy to convert an existing refinery to begin making renewable diesel in 2022, starting with soybean oil as feedstock and then gradually switching over to camelina oil, which would improve the feedstock's carbon intensity by 50%. It also is in partnership with its affiliate in Canada, Imperial Oil, to produce renewable diesel from canola oil starting in 2024. This project will avoid 3 million mt of GHGs, the company said.

Using Permian target as a yardstick

Given ExxonMobil's long history of dismissing the idea of a net-zero commitment, "today's announcement is the best evidence yet that the company's new directors are having an impact," Andrew Logan, senior oil and gas director for Ceres, a nonprofit sustainable network of institutional investors, told Net-Zero Business Daily.

Logan was referring to the success Activist investor Engine No. 1 had in the summer of 2021 in installing three of its four nominees to ExxonMobil's board in a bid to reduce the company's carbon footprint.

"This new commitment covers a broader set of assets, albeit on a longer timeline. The company's performance in the Permian over the next few years will tell us a lot about how achievable its 2050 net zero target is," Logan added.

Posted 18 January 2022 by Amena Saiyid, Senior Climate and Energy Research Analyst