ExxonMobil promises emissions cuts after investor pressure

ExxonMobil promises emissions cuts after investor pressure

ExxonMobil has promised to cut emissions for every barrel of oil it produces by up to a fifth over the next five years, in response to investor pressure for action on climate change.

The company said on Monday it would aim for a cut of 15-20 per cent per barrel by 2025, compared to 2016 levels. 

The announcement comes as Exxon faces a vocal shareholder campaign to do more to reduce its environmental impact.

A number of US oil producers have promised to cut emissions in the face of investor worries about climate change, and ahead of the inauguration of the new US president Joe Biden, who has said he will “transition away from the oil industry”.

Exxon, which was once the world’s largest company by market capitalisation, is a symbol of big oil in the US. It has stuck to a strategy of expanding crude output despite a shift by rivals towards greener forms of energy production and some forecasts pointing to a peak of global crude consumption this decade.

Unlike many European producers, Exxon’s new targets apply purely to its scope 1 and 2 emissions — those produced by its own operations and its power providers. They do not apply to its scope 3 emissions — those produced by burning its oil.

However, Exxon did say it would start to publish scope 3 emissions figures annually. “It’s been of keen interest to stakeholders we meet,” said Pete Trelenberg, ExxonMobil director of greenhouse gas and climate change.

The new targets would focus on reducing emissions from Exxon’s oil and gas operations, the company said, and did not indicate a switch toward more investment in low carbon power such as wind and solar.

Exxon’s targets include a 40-50 per cent reduction in methane emissions per barrel produced and a 35-45 per cent reduction in per barrel flaring — burning off less valuable gas found alongside oil — by 2025. The company said it would eliminate routine flaring by 2030. 

The incoming Biden administration has promised to crack down on the oil and gas sector’s methane emissions and gas flaring and to put the US on a path to net zero emissions by 2050.

Like much of the global oil industry, Exxon was hit hard by this year’s price crash, booking three consecutive quarters of losses, fuelling fears it may be forced to cut its dividend.

Last week, the Church of England joined a growing investor campaign demanding sweeping changes at Exxon, backing calls for the appointment of new directors and for the oil supermajor to develop a strategy for the transition to cleaner fuels.

Exxon’s new targets result from “our ongoing business planning process as we work towards industry-leading greenhouse gas performance across all our business lines,” said Darren Woods, Exxon chief executive. 

But environmentalists said the targets did not go far enough. Ben Ratner, senior director at the Environmental Defense Fund, described them as “inadequate to the challenges and opportunities facing the energy industry”.

“Meeting the goals of the Paris Agreement requires an energy transformation that slashes absolute emissions, not piecemeal intensity targets backed by spotty methane data and reporting,” he said. 

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