Exxon to ‘pace’ low-carbon spending blaming weak demand and bad policies

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ExxonMobil says it will “pace” spending on low-carbon projects because of disappointing customer demand and government policies that are failing to provide the right incentives to create viable markets. 

Chief executive Darren Woods told the Financial Times that assumptions the company made when setting a $30bn capital expenditure budget for “low emissions opportunities” to 2030 last year had not been met.

Woods said there are not enough customers willing to buy products such as hydrogen and biofuels and that climate policies designed to support decarbonisation “frankly aren’t working”.

“That’s challenging with the investments we would have to make to generate a return. Policy around the world hasn’t moved in the direction that we had anticipated,” he said in an interview on the sidelines of an event in São Paulo, ahead of Brazil hosting the COP30 climate summit next week.

“So we’re going to pace that spending based on how quickly the market and policy transitions evolve.”

Exxon lagged behind its European rivals for years on low-carbon investments, but more recently has boosted expenditure on areas such as hydrogen, carbon capture and lithium. 

The $30bn it set aside for clean energy projects to the end of the decade was 10 times the amount pledged in 2021, and catapulted the Houston-based group beyond Shell and BP in terms of forecast spending, according to Wood Mackenzie, a research group.

Exxon is expected to update its low carbon spending plans next month.

Woods said government regulation on carbon emissions were “very reminiscent of centrally planned economies — think North Korea, East Germany, the Soviet Union, Cuba”.

“That is the feature of how this whole problem is being tackled today — government dictating what the solution needs to look like.”

Giving the example of biofuels, Woods said that many government policies around the world did not focus on utilisation of existing refinery infrastructure but instead prioritised “whole-cloth, new solutions”.

“We could be bringing bio feeds into those refineries and making lower carbon biofuels using the existing kit we have. That is the right answer for society because it’s available today. It’s lower cost and it leads to quicker decarbonisation,” he said.

“But policymakers around the world have excluded the ability to do that. So we can’t make those investments to convert those units because policy is not supportive. It doesn’t count that as an emissions reduction step.”

Woods said what was needed was a new accounting system that enabled companies to accurately measure the carbon intensity of their products.

“That then gets the government out of the business of dictating solutions or gets them out of the business of collecting revenues and taxes and then redistributing it,” he said.

“It gets them out of the business of dictating which technologies to use. But instead focuses on what needs to be achieved . . . that I think is the long-term solution.”

Following Donald Trump’s election last year, Woods unsuccessfully urged the Republican to keep the US in the Paris agreement, the cornerstone of international efforts to limit global warming. 

“I felt like then and continue to feel like having the US at the table debating where the appropriate solutions to reduce emissions without compromising economic growth, without impacting the standards of living of people around the world is a useful voice to have in the room,” he said.

On stage at the Sustainable Innovation Forum in São Paulo on Friday, Woods admitted he was “not optimistic” about the challenges, but said he was “hopeful that actions” result from COP30.