On January 18, the oil giant Exxon released their net zero strategy that boasts impressive and highly ambitious commitments to reach a net zero carbon emissions target by 2050. The strategy identifies 150 modifications of its exploration and production practices to help the company reach its goal including electrification of operations with energy from renewable sources. Essentially, Exxon promises to make good on its climate plan almost entirely through these sorts of improvements in operational efficiency and new low-carbon technologies.
This announcement is unsurprising, given shareholder activism last May when Exxon lost three seats on its board of directors to hedge fund Engine No. 1, which showed that the energy company needed to act fast and invest in clean energy. Since then, the Exxon board has been getting more serious about net-zero commitments. Exxon may be the first American oil and gas company to come out with tangible net-zero commitments, but it is relatively laggard in respect to some of its European peers, Shell and BP.
Though it is a step in the right direction, it may be one step too few. It is not moving at a fast enough pace needed to drastically reduce emissions and keep warming below 2 degrees Celsius (ideally 1.5). For all the new policies Exxon has in place to reduce, and eventually eliminate Scope 1 and Scope 2 emissions, which are the emissions produced directly by the company and from the generation of power that Exxon buys, they stop short of including Scope 3 emissions. Scope 3 emissions are those produced by customers, as well as other companies that Exxon supplies oil to. As you can imagine, the vast majority of emissions from energy companies are linked to the combustion of fuels customers use, and they are the hardest to control and eliminate. Shell, the largest European oil company, included Scope 3 emissions when setting their net zero target, which it says accounts for over 90 per cent of its emissions. Addressing Scope 1 and 2 emissions is necessary but by no means sufficient, given that for Exxon, Scope 3 likely make up upwards of 80 per cent of their carbon emissions. Furthermore, the lack of consideration for Scope 3 emissions continues the narrative propagated by oil and gas eschewing blame by shifting it and responsibility to decarbonize solely onto consumers.
Exxon’s plan relies on biofuels, carbon offsets, and carbon capture, which are risky technologies, and the jury is out on whether they really are a useful tool to counterbalance emissions. Some of these methods of geoengineering that Exxon hopes to use to reduce emissions are like jumping out of a frying pan into a fire. Exxon is not willing to drastically change its business model to achieve a net zero goal, unlike Shell and BP, who have structured theirs around investments in renewable power generation. The International Energy Agency deems this to be the most effective way to rapidly reduce emissions, on the timeline required, and to ensure supply to consumers. To be a more meaningful net zero strategy and put its money where its mouth (or corporate greenwashing) is, Exxon needs to shift its emphasis away from carbon capture and low carbon alternatives, and address the carbon footprint of the product it is providing.