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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Exxon Presents Its Very Own Solution To Climate Change

Shareholders have been stepping up pressure on the world’s top oil companies to start addressing climate change risks and set emission reduction targets if the world is ever to achieve the Paris Agreement targets.

Some European oil majors have slowly started to succumb to investor demands and have recently pledged to set short-term emission targets and bind them with executive pay. All big European oil firms have also increased investments in clean energy and technology—from electric vehicle (EV) charging networks to wind power generation and utilities.

Across the Atlantic, U.S. supermajor Exxon believes that the answer to climate change risks is to invest in research and development (R&D) in finding yet-to-be-discovered comprehensive and scalable solutions that would mitigate global warming, rather than putting money into wind and solar farms.

So Exxon announced this week that it would invest US$100 million over ten years to research and develop advanced lower-emissions technologies with the U.S. Department of Energy’s National Renewable Energy Laboratory and National Energy Technology Laboratory. The investment will support research and collaboration into ways to bring biofuels and carbon capture and storage to commercial scale across the transportation, power generation, and industrial sectors, Exxon said.

Exxon’s financial commitment to develop lower-emission technologies—US$100 million in 10 years—is just a tiny fraction of the US$2.4 billion in earnings that the supermajor reported for the first quarter of 2019 alone. The announcement for the investment in lower-emission R&D comes three weeks before the company’s annual meeting of shareholders on May 29, at which some institutional investors will continue to press Exxon to start to adequately account for climate risk in its operations. 

Unlike the major European oil and gas companies, Exxon doesn’t see the existing low-emission solutions as “comprehensive enough,” according to Exxon’s chief executive Darren Woods.

“We’re working on a solution that doesn’t exist but is needed,” Woods said in an interview with Bloomberg.

“Somebody needs to be doing that. There’s more value in that than investing in technologies that already exist but are not comprehensive enough,” the CEO said, adding that the society is not asking for firms like Exxon to go into renewable energy.

“Instead what they’re looking for is solutions to the risk of climate change,” Woods said. Related: Oil Production Booms… But Funding Is Drying Up

Exxon’s approach to addressing climate risks differs from what the European rivals are doing.

To be sure, none of the majors will stop pumping oil and gas in the foreseeable future. Shell, BP, Total, and Equinor, however, have been investing in existing clean technology and operations in recent years.

Shell is investing in new energies, including in buying UK household energy provider First Utility and NewMotion, one of Europe’s largest electric vehicle (EV) charging providers.

Earlier this year Shell announced its first-ever short-term goals to cut the carbon footprint of its operations and product sales. In December last year, in an industry first, Shell said that it plans to set short-term targets for reducing the net carbon footprint of the energy products it sells, and to link those targets with executive remuneration. 

However, Shell’s core business is and will continue to be oil and gas for the foreseeable future, the supermajor’s chief executive Ben van Beurden said last fall. 

In June last year, BP bought the UK’s largest EV charging company, Chargemaster.

Equinor, which dropped the name ‘Statoil’ last year to rebrand itself as an energy, rather than oil and gas, company, plans to boost its renewables portfolio. The Norwegian major has also recently bowed to investor pressure, saying it would review its existing climate targets through 2030, come up with new ones for 2030 and beyond, and tie executive and employee remuneration to achieving those goals.

Exxon, on the other hand, is putting money into developing novel and scalable energy technologies.

“The commitment from ExxonMobil stands out as the largest single external investment in research at NREL in the laboratory’s history,” the National Renewable Energy Laboratory (NREL) said in a statement.

“What excites me,” said Martin Keller, director of NREL, “is that there are different mindsets coming together and, in my view, the breeding ground of tremendous breakthrough ideas.” Related: Iran’s Master Plan To Beat U.S. Sanctions


Exxon’s mindset appears to be that it will pursue yet-to-be-discovered technology instead of investing into diversification into renewable energy.

Meanwhile, Exxon investors the New York State Common Retirement Fund and the Church for England want the supermajor to separate the role of chair and CEO, and encourage other investors to vote for that proposal at the annual meeting later this month.

“Exxon’s board’s refusal to adequately address significant shareholder concerns and properly account for climate risk in its operations, even as its competitors do so, presents a governance crisis. Exxon’s failure to demonstrate it is prepared to take steps toward the transition to a lower carbon future puts its business at risk,” New York State Comptroller Thomas P. DiNapoli said on behalf of the fund.

The Fund and the Church of England said they would also vote in favor of two other shareholder proposals asking Exxon’s board to create a “climate committee” to evaluate the company’s “strategic vision and responses to climate change” and that the company disclose its spending on lobbying.

By Tsvetana Paraskova for Oilprice.com

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Leave a comment
  • Lee James on May 10 2019 said:
    Face it, $100 million over a ten-year period for climate change mitigation is but a drop in an oil barrel. ExxonMobil is slowly moving in a helpful direction, but no wonder company shareholders are challenging XOM's Board.

    The author of the article is right to compare our U.S. Big Oil companies to large European companies. Equinor is leading the way by changing its company name (from Statoil) to a name that marks becoming an Energy company -- not just doing oil and gas.

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