Exxon should be eligible for IRA incentives for a low-carbon hydrogen project expected to be the largest in the world. If it isn't, the company will probably scrap it, chief executive Darren Woods told Bloomberg.
The current IRA distribution eligibility criteria single out only green hydrogen as eligible for federal financial support. Exxon's project will produce so-called blue hydrogen, which is made from natural gas but involves carbon capture.
"If we find the regulation gets heavily influenced by the lobbying and what I would say is people trying to pick winners and losers then we won't move forward with it," Woods told Bloomberg at the CERAWeek conference.
"That would violate one of the fundamental principles which is just to focus on reducing emissions and let the market and the companies figure out how best to do that."
The Inflation Reduction Act envisages subsidies of $3 per kilogram of green hydrogen, which is the most expensive form of producing the element. The IRA also envisages subsidies for other methods of producing hydrogen but substantially lower.
The company's CEO echoed a warning made by Exxon earlier this year. In February, the company said it may not go ahead with the Baytown, Texas facility unless the federal government revises its incentive plan.
The plan is to build a facility that would produce 1 billion cubic feet of hydrogen per day, capturing 98% of the carbon emissions generated during the process. The facility could be up and running in three to four years-with incentives. It would also help reduce the emissions from Exxon's Baytown refinery by as much as a third.
"We're investing billions of dollars to reduce the carbon intensity of our natural gas," Woods told Bloomberg. "Why would the regulation not give companies doing that any credit? That will basically instantly stop investments to reduce carbon intensity by the industry as a whole."
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com More