ExxonMobil’s new low-carbon companies may at some point be extra profitable than its fossil gas manufacturing, a prime government stated, because the US oil main laid out bold plans to generate tens of billions of {dollars} from biofuels, hydrogen and carbon seize inside a decade.
The Texas-based oil producer on Tuesday gave traders essentially the most complete view but of its energy transition plans, saying it expects to revenue from carbon-cutting applied sciences even because it expands oil and fuel output.
Exxon’s share value hit a file in February after excessive oil and fuel costs drove bumper 2022 earnings. However Dan Ammann instructed traders that the low- carbon enterprise he runs may ultimately be value “lots of of billions of {dollars}” and develop to be “bigger than ExxonMobil’s base enterprise is right this moment because the world approaches web zero”.
That progress is determined by discovering methods to convey down the prices of hydrogen gas and carbon seize and on authorities incentives, he added. This might take the type of carbon taxes or financial subsidies comparable to these within the Biden administration’s 2022 Inflation Discount Act, which included intensive funding for local weather initiatives.
“To ensure that the vitality transition to achieve success, it needs to be made economically viable, and that’s an enormous a part of our job and constructing this enterprise,” Ammann instructed the Monetary Occasions.
Exxon’s critics argue the corporate’s continued funding in fossil fuels runs counter to worldwide efforts to slash greenhouse fuel emissions. Additionally they contend it has not confirmed that it may construct large-scale carbon seize and hydrogen initiatives.
However Ammann, who moved to Exxon final yr after operating Normal Motors’ self-driving automotive unit, stated the low-carbon enterprise was beginning to construct “momentum”.
In current months, the corporate has introduced a variety of hydrogen and carbon seize initiatives, largely alongside the US Gulf Coast, and it says they may begin producing money by 2025.
“Initiatives are shifting off PowerPoint and into the actual world, and that’s actually encouraging,” he stated.
Exxon stated it deliberate to spend about $17bn on the low-carbon enterprise by to the top of 2027, about 10 per cent of what it goals to spend on fossil gas initiatives over the identical interval. Amman stated most of that may be within the US “pushed by the Inflation Discount Act”. He contrasted the American incentives with Europe’s extra “prescriptive” strategy that mandates shifts away from fossil gas. He stated the latter makes Europe much less enticing for funding.
Kathy Mikells, Exxon’s chief monetary officer, stated on Tuesday that final yr’s file earnings meant there was “loads of capital to be able to guarantee the expansion of this enterprise”.
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