Jan. 8, 2024
Advocating for essential policy support
Jan. 8, 2024
We recognize the important role that supportive government policies play in the development and deployment of lower-emission technologies, including those that are part of our Low Carbon Solutions business.
Clear and consistent policies, along with advancements in technology, can act as an accelerator for lower-emission alternatives, which is why we actively participate in climate-related policy engagements around the world, including our work with the IPCC.
We focus on practical policy solutions that consider both sides of the “and” equation: rising global demand for affordable, reliable energy, and scalable development of technologies with lower greenhouse gas emissions.
Understanding life-cycle emissions to better inform policy decisions
We have been working with the MIT Energy Initiative to develop a new life-cycle approach tool that covers pathways of multiple technologies representing most sources of greenhouse gas emissions. This tool, called the Sustainable Energy System Analysis Modeling Environment (SESAME),1 is based on well-referenced, peer-reviewed public sources. It will evolve to perform full life-cycle analyses for more than 1,000 technology pathways, from primary energy sources to final products or services including those from the power, transportation, industrial, and residential sectors. To date, a series of SESAME-related publications in peer-reviewed journals have been released exploring areas such as the U.S. electric power systems.2,3,4
For example, a coordinated and transparent economy-wide price on carbon such as a carbon tax would enable all technologies to compete and cost-effectively lower carbon emissions intensity by focusing on reducing emissions per unit of energy while delivering meaningful emission reductions. Broad adoption of an economy-wide price on carbon could also help spur the development of global carbon markets as envisioned in Article 6 of the Paris Agreement.
In the absence of economy-wide carbon pricing, well-designed sector-based policy options, along with technology advancements, could also be an effective way to reduce emissions. We support the approaches outlined below, which help address greenhouse gas emissions in hard-to-decarbonize sectors of the economy, including manufacturing, transportation, and power generation.
To reduce industrial emissions in the manufacturing sector, our focus is on both carbon capture and storage and hydrogen. To drive investment and deploy these technologies at the pace and scale needed for a net-zero future, governments must establish durable regulatory and legal frameworks as well as incentives similar to those available for more established lower-emission technologies such as solar and wind. The U.S. Inflation Reduction Act (IRA), enacted in 2022, provides some of the government support described in this document. The IRA leverages a life-cycle assessment approach as the method for assessing the greenhouse gas emissions of low-carbon hydrogen and transportation fuels, and it defines the value of corresponding credits by the emissions intensity achieved on a life-cycle basis.
We support a policy and regulatory framework for carbon capture and storage that would:
- Sustain long-term government support for research and development.
- Provide standards to ensure safe and secure CO₂ storage.
- Allow for fit-for-purpose CO₂ injection well design standards.
- Provide legal certainty for geologic storage ownership.
- Ensure a streamlined permitting process for carbon capture and storage facilities.
- Provide access to CO₂ storage capacity owned or controlled by governments.
- Allow for high-quality offsets generated from carbon capture and storage, low-carbon, and carbon-removal projects.
We are participating in several studies, including the National Petroleum Council’s report on low-carbon hydrogen, to assess emissions during hydrogen production and transportation as well as the benefits of hydrogen on a full life-cycle intensity basis versus alternatives.
A holistic low-carbon transport policy that combines a market-based, technology-neutral fuel standard with a life-cycle vehicle CO₂ emission standard could drive emission reductions across the entire vehicle fleet.
We advocate for a carbon intensity-based fuel standard approach that can be extended to the aviation and marine sectors. We are a lead participant in developing the American Petroleum Institute’s policy framework that includes actions to reduce life-cycle emissions in the U.S. transportation sector.
A technology-neutral clean-energy standard or carbon-intensity standard could reduce CO₂ emissions in the electricity sector by setting targets based on carbon intensity and incentivizing necessary infrastructure and lower-emission options. These include natural gas, renewables, and bioenergy, as well as negative-emission technologies like carbon capture and storage and direct air capture.
We participated in the U.S. Chamber of Commerce’s development of policy principles to underpin a U.S. clean energy standard for the electricity sector. We continue to support engagement with the U.S. government on this issue.
As part of our participation in policy discussions, we engage through trade associations and industry collaborations, including the Oil and Gas Climate Initiative. We are also actively engaged in the development of studies and reports designed to better inform policy decisions. For example, we have leadership roles on two National Petroleum Council reports, one focusing on hydrogen and the other on natural gas.
We use various communication channels including this report, press releases, ExxonMobil.com, and the Exxchange advocacy portal to clearly and transparently articulate our climate-related policy positions. These positions inform and provide the basis for our lobbying and advocacy efforts.
U.S. Inflation Reduction Act 45V credit by GHG intensity5
Well-to-Gate GHG Intensity, kg CO2eq/kg H2
Our international affiliates are also engaged in climate-related policy developments and initiatives. For example, our Imperial Oil affiliate in Canada will work alongside our partners, the Government of Canada, and the Government of Alberta toward the goal of achieving net-zero GHG emissions from oil sands operations by 2050,6 collectively reducing an estimated 68 Mt/CO₂e per year.7
Our Global Outlook seeks to identify potential impacts of climate-related policies by using various assumptions and tools, including applications of a proxy cost of carbon, to estimate potential impacts on global energy demand.
Separately, we use proprietary greenhouse gas pricing where we operate and invest. Where policy provides greenhouse gas pricing, we align with and apply such greenhouse gas pricing to evaluate investment opportunities and estimate operating costs, where appropriate, for specific greenhouse gas emissions sources. International accords and underlying regional and national regulations covering greenhouse gas emissions continue to evolve with uncertain timing, outcome, and potential business impact. Where greenhouse gas pricing policy currently does not exist, we assume a price informed by the Global Outlook proxy cost of carbon.
Greenhouse gas emissions pricing where ExxonMobil operates or invests8,9
The greenhouse gas pricing we use for planning is similar to ranges provided by the third parties referenced below.
| World Bank
GHG Emissions Prices
| IEA WEO STEPS
|($ metric ton CO2 -
Ranges provided for jurisdictions where ExxonMobil operates or invests.
ExxonMobil’s GHG emissions pricing for 2023-2030 is based on currently stated existing or anticipated policies; pricing for 2030-2050 reflects presumed regional policies for both advanced and emerging economies.
ExxonMobil’s GHG emissions pricing is in 2023 USD and has not been adjusted for future inflation.
For 2023 and 2024, we have not applied GHG emission prices to our operations or investments in countries where there is no existing GHG emission price. We do apply anticipated prices within the range identified in the table in those countries beginning in 2025.
ExxonMobil’s GHG emissions prices include CO2 and other GHGs (e.g., methane), where appropriate.
- E. Gencer, S. Torkamani, I. Miller, T. Wu, F. O’Sullivan, Sustainable energy system analysis modeling environment: analyzing life-cycle emissions of the energy transition, Applied Energy 277 (2020) 115550. https://sesame.mit.edu/.
- E. Kasseris, N. Goteti, S. Kumari, B. Clinton, S. Engelkemier, S. Torkamani, T. Akau, E. Gencer, Highlighting and overcoming data barriers: creating open data for retrospective analysis of US electric power systems by consolidating publicly available sources, Environmental Research Communications 2 (2020) 115001.
- I. Miller, E. Gencer, H. Vogelbaum, P. Brown, S. Torkamani, F. O'Sullivan, Parametric modeling of life-cycle greenhouse gas emissions from photovoltaic power, Applied Energy 238 (2019) 760-774.
- I. Miller, M. Arbabzadeh, E. Gencer, Hourly power grid variations, electric vehicle charging patterns, and operating emissions, Environmental Science & technology 2020, 54, 16071-16085.
- H.R.5376 – Inflation Reduction Act of 2022, SEC. 45V. Credit for production of clean hydrogen.
- Scope 1 and 2.
- 2023 Imperial Oil Advancing Climate Solutions Report: https://www.imperialoil.ca/-/media/imperial/files/publications-and-reports/advancing-climate-solutions-report.pdf.
- World Bank: State and Trends of Carbon Pricing 2023, https://openknowledge.worldbank.org/entities/publication/58f2a409-9bb7-4ee6-899d-be47835c838f. Reference World Bank ranges are consistent with existing carbon pricing for those jurisdictions as of March 31, 2023.
- IEA World Energy Outlook 2023. IEA ranges have been adjusted for 2023$ Real.
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Images or statements of future ambitions, plans, goals, events, projects, projections, opportunities, or conditions in the publications, including plans to reduce, abate, avoid or enable avoidance of emissions or reduce emissions intensity, sensitivity analyses, expectations, estimates, the development of future technologies, business plans, and sustainability efforts are dependent on future market factors, such as customer demand, continued technological progress, policy support and timely rule-making or continuation of government incentives and funding, and represent forward-looking statements. Similarly, emission-reduction roadmaps to drive toward net zero and similar roadmaps for emerging technologies and markets, and water management roadmaps to reduce freshwater intake and/or manage disposal, are forward-looking statements. These statements are not guarantees of future corporate, market or industry performance or outcomes for society and are subject to numerous risks and uncertainties, many of which are beyond our control or are even unknown.
Actual future results, including the achievement of ambitions to reach Scope 1 and 2 net zero from operated assets by 2050, to reach Scope 1 and 2 net zero in Upstream Permian Basin unconventional operated assets by 2030, to eliminate routine flaring in-line with World Bank Zero Routine Flaring, to reach near zero methane emissions from operated assets and other methane initiatives, to meet greenhouse gas emission reduction plans or goals, divestment and start-up plans, and associated project plans; technology advances including in the timing and outcome of projects to capture and store CO2 supply lower-emission fuels, produce hydrogen, produce lithium, obtain data on detection, measurement and quantification of emissions including reporting of that data or updates to previous estimates, and use plastic waste as feedstock for advanced recycling; progress in sustainability focus areas; and reserve or resource changes could vary depending on changes in supply and demand and other market factors affecting future prices of oil, gas, petrochemical or new market products and services; future cash flows; our ability to execute operational objectives on a timely and successful basis; policy and consumer support for emission-reduction and other advanced products and technology; changes in international treaties, laws, regulations and incentives, including those greenhouse gas emissions, plastics, carbon storage and carbon costs; evolving reporting standards for these topics and evolving measurement standards for reported data; trade patterns and the development and enforcement of local, national and regional mandates; unforeseen technical or operational difficulties; the outcome of research efforts and future technology developments, including the ability to scale projects and technologies such as electrification of operations, advanced recycling, CCS, hydrogen production, or direct lithium extraction on a commercially competitive basis; availability of feedstocks for lower-emission fuels, hydrogen, or advanced recycling; changes in the relative energy mix across activities and geographies; the actions of competitors; changes in regional and global economic growth rates and consumer preferences; actions taken by governments and consumers resulting from a pandemic; changes in population growth, economic development or migration patterns; military build-ups, armed conflicts, or terrorism; and other factors discussed in this release and in Item 1A. “Risk Factors” in ExxonMobil’s Annual Report on Form 10-K for 2022 and subsequent Quarterly Reports on Forms 10-Q, as well as under the heading “Factors Affecting Future Results” on the Investors page of ExxonMobil’s website at www.exxonmobil.com. The Advancing Climate Solutions Report includes 2022 greenhouse gas emissions performance data and Scope 3 Category 11 estimates for full-year 2022 as of March 1, 2023. The greenhouse gas intensity and greenhouse gas emission estimates include Scope 2 market-based emissions. The Sustainability Report, the Advancing Climate Solutions Report, and corresponding Executive Summaries were issued on Jan. 8, 2024. The content and data referenced in these publications focus primarily on our operations from Jan. 1, 2022 – Dec. 31, 2022, unless otherwise indicated. Information regarding some known events or activities in 2023 are also included. No party should place undue reliance on these forward-looking statements, which speak only as of the dates of these publications. All forward-looking statements are based on management’s knowledge and reasonable expectations at the time of publication. We do not undertake to provide any further updates or changes to any data or forward-looking statements in these publications. Neither future distribution of this material nor the continued availability of this material in archive form on our website should be deemed to constitute an update or re-affirmation of these figures or statements as of any future date. Any future update will be provided only through a public disclosure indicating that fact.
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Actions needed to advance ExxonMobil’s 2030 greenhouse gas emission-reductions plans are incorporated into its medium-term business plans, which are updated annually. The reference case for planning beyond 2030 is based on the Company’s Global Outlook research and publication. The Global Outlook is reflective of the existing global policy environment and an assumption of increasing policy stringency and technology improvement to 2050. However, the Global Outlook does not attempt to project the degree of required future policy and technology advancement and deployment for the world, or ExxonMobil, to meet net zero by 2050. As future policies and technology advancements emerge, they will be incorporated into the GIobal Outlook, and the Company’s business plans will be updated as appropriate. References to projects or opportunities may not reflect investment decisions made by the corporation or its affiliates. Individual projects or opportunities may advance based on a number of factors, including availability of supportive policy, permitting, technological advancement for cost-effective abatement, insights from the company planning process, and alignment with our partners and other stakeholders. Capital investment guidance in lower-emission investments is based on our corporate plan; however, actual investment levels will be subject to the availability of the opportunity set, public policy support, other factors, and focused on returns.
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SUPPLEMENTAL INFORMATION FOR NON-GAAP AND OTHER MEASURES
The Resiliency section of the Advancing Climate Solutions Report mentions modeled operating cash flow in comparing different businesses over time in a future scenario. Historic operating cash flow is defined as net income, plus depreciation, depletion and amortization for consolidated and equity companies, plus noncash adjustments related to asset retirement obligations plus proceeds from asset sales. The Company’s long-term portfolio modeling estimates operating cash flow as revenue or margins less cash expenses, taxes and abandonment expenditures plus proceeds from asset sales before portfolio capital expenditures. The Company believes this measure can be helpful in assessing the resiliency of the business to generate cash from different potential future markets. The performance data presented in the Advancing Climate Solutions Report and Sustainability Report, including on emissions, is not financial data and is not GAAP data.