Exxon chases after a $2 trillion opportunity to capture and bury carbon emissions

Exxon Baton Rouge refinery
An Exxon refinery in Baton Rouge, Louisiana

Happy Friday and welcome to Insider Energy, a weekly energy newsletter brought to you by Insider.  

Here’s what you need to know:

I’m hosting a live energy roundtable on Monday with execs from Shell, Facebook, and other big firms, you know, in case CERAWeek wasn’t enough. 

It should be great! We’ll discuss whether oil giants still deserve their bad reputations, how companies can generate returns as they pivot to renewables, and what tech breakthroughs we need to clean up the grid. And it’s just 30 minutes. You can sign up here

Anyway, this week was another week. 

We got a few more details on Exxon’s strategy during the company’s investor day Wednesday (though not much of what it announced is new). And the fallout from the Texas storm – now expected to be the most expensive weather event in the state’s history – continues to spread. 


Exxon Mobil's Fife Ethylene Plant in Cowdenbeath, Scotland
Exxon Mobil’s Fife Ethylene Plant in Cowdenbeath, Scotland

Exxon is chasing what it calls a $2 trillion carbon-capture opportunity

Once skeptical of betting big on carbon-capture technology, Exxon says it’s ready to go all-in.

During an investor presentation Wednesday, Darren Woods said advances in the technology and a “growing market need” have created a unique opportunity for Exxon.

Call and response: The reality is that Exxon had to do something. For months now, investors and activists have been calling on the company to address its enormous carbon footprint at a faster clip. 

  • The investors Engine No. 1 and D.E. Shaw, in addition to a coalition of shareholders with $2.5 trillion under management, are among the groups pushing for change.

The easy choice: Capturing carbon dioxide and storing it underground is far easier for a company like Exxon than building out renewable energy capabilities, as its European competitors are doing. 

  • The company has been doing CCS for decades. And the main use of captured CO2 is to extract more oil out of the ground, anyway. 
  • The real change is that Exxon is now organizing all of its carbon capture projects – there are 20 in the pipeline, many of which were already under construction before the recent announcements – in a new business called Low Carbon Solutions

Wall Street is happy: After freefalling in 2020, Exxon’s stock is up almost 50% from the start of the year, and many of the top Wall Street banks favor the company. 

  • “XOM’s newly formed Low Carbon Solutions business helps mitigate energy transition uncertainty while also offering new attractive growth options for the company,” Morgan Stanley analysts wrote in a note this week. 
  • Wall Street firms cite not just Exxon’s strategy to cut emissions but pared back capital spending and a low breakeven price for oil. 

Yet challenges remain: Some investors say Exxon’s plan to cut emissions and change up its board doesn’t go far enough. Experts have also raised questions about the economics of carbon capture technology. 

  • “The business as it stands today is underpinned by government support, and this can be shaky over the long term,” Peter McNally, an energy expert at Third Bridge Group, said in a comment this week. 

Meanwhile, morale has collapsed: Exxon had to slash its operations budget last year to stay afloat, which resulted in job cuts that several employees described as haphazard. Morale inside the company has suffered as a result. 

  • Executives were not forthright with employees about the toll the downturn would take on its workforce and, at times, came across as insensitive when they did communicate about job cuts, current and former employees said.
  • You can read more about that here

Power lines are seen on February 19, 2021 in Texas City, Texas
Power lines in Texas City, Texas

The people and companies paying for Texas’s grid disaster 

Texas’s energy industry faces a reckoning after its grid nearly collapsed last month.

The latest: Power has been restored, and enviable 70-degree weather is forecast for the weekend, but Texans still face flooded homes and other damage. And they’re not the only ones paying the price … 

  • The oldest and largest power cooperative in the state, Brazos Electric Power Cooperative, is filing for bankruptcy protection. It was hit with $2.1 billion in bills after the storm.
  • Bill Magness, CEO of Texas’s grid operator ERCOT, was fired by his board this week. Several board members have also resigned. 
  • DeAnn Walker, chairwoman of the Public Utility Commission of Texas, which oversees ERCOT, resigned this week.
  • Griddy, the company behind most of the big bills many Texans got stuck with, was effectively shut down and now faces a state lawsuit alleging it misled customers. On that note … 

Griddy’s rise and fall: The Texas startup had big plans to disrupt the state’s $21 billion electricity market. Then they backfired. 

  • In our story this week, we lay out the company’s business model, why it failed, and what happens next. 

Sunrun solar installation
Sunrun installers put panels on a home in Sunnyvale, California

Meanwhile, the Texas disaster is set to propel Sunrun to new heights

Following the widespread blackouts in California, back in 2019, the solar giant Sunrun – which sells rooftop panels and home batteries – began shifting its pitch to customers: Go solar not just to access clean energy but to power through blackouts. 

  • The company even adopted the slogan “Power through.” 

Sunrun sees a massive opportunity in the disruption of centralized power. Blackouts lead to a surge in customer interest, especially for backup batteries. 

A Texas boost: So it’s no surprise that, as we reported this week, the state’s recent power crisis is set to drive sales at Sunrun

  • Traffic on its website shot up 350% in Texas during the storm. 
  • “Accelerating extreme weather events will continue to drive consumers to choose solar and batteries,” Lynn Jurich, the company’s CEO, said in a call with investors.

A big year: 2021 was already on track to be a massive year for the rooftop solar industry, analysts said. Now it’s all but guaranteed. 

Read more: The Texas blackouts are fueling a massive market for solar energy – and Sunrun is set to cash in


Rivian Amazon delivery van

Amazon has $2 billion to experiment with all kinds of different climate tech

A world plagued by a pandemic is one that demands lots and lots of packages. And unfortunately, most of them are shipped by planes, trucks, and boats that cough up tons of greenhouse gases. 

That’s a big problem for Amazon, which stares down a pledge to reach net-zero emissions by 2040 across the company. So it’s calling on climate-tech startups for help. 

This week: We talked to the head of Amazon’s Climate Pledge Fund – a $2 billion pot of venture capital that it can dish out to startups.

  • The company is funding startups developing technologies that will help Amazon cut its emissions. 
  • Matt Peterson laid out which technologies it’s after and why Amazon, like so many companies, is so bullish on green hydrogen. 

That’s it! Have a great weekend. 

– Benji 

Read the original article on Business Insider

Hydrogen-powered flight inches closer to reality as Amazon and Gates’ cleantech fund back fuel-cell startup ZeroAvia

Shell Hydrogen charging point 2019
Shell is among the largest backers of hydrogen technology

Happy Friday, and welcome to Insider Energy, a weekly energy newsletter brought to you by Business Insider.  

Here’s what you need to know:

  • Want to get Insider Energy in your inbox every Friday? Sign up here
  • You can reach me at bjones@businessinsider.com. I welcome feedback and story tips. 
  • Save the date! We’re hosting a virtual roundtable about building a clean energy economy on the morning of March 8. More on that below. 

It snowed a lot this week. My dog lost his mind. Now, like all good things, the snow has turned to brown slush. 

Also this week, several top oil companies reported earnings, giving us a more complete picture of the financial fallout from the pandemic. There were no major surprises, but the negative numbers are big. 

We’ll get to that, but first: A look at an early winner of the hydrogen boom. 


ZeroAvia hydrogen-powered plane
ZeroAvia is developing a powertrain for planes powered on hydrogen fuel cells

Hydrogen planes inch closer to reality with funding from Amazon, Shell, and Bill Gates’ cleantech fund

When hydrogen gas inside the Hindenburg exploded in 1937, the era of airship travel came to an end. Now the very same gas is reentering the aviation industry. And this time it’s kicking off a new era – one of zero-carbon travel.

This week: I profiled ZeroAvia, an ambitious startup working on hydrogen-powered aircraft. It recently raised money from huge names including Amazon, Shell Ventures, and Bill Gates’ climate tech venture fund, Breakthrough Energy Ventures. 

Hydrogen’s moment: Is right now. The gas is quickly building a reputation as a linchpin in the transition to cleaner energy, and investors are now looking for where to place their bets. Some aren’t having much luck. 

  • “We look aggressively,” Vinod Khosla, founder of Khosla Ventures, told me last fall. “We haven’t found somebody with breakthrough technology. There’s a lot of incremental technologies there, but nobody has a real breakthrough. If you find one, have them call me.”
  • Investors we spoke to say hydrogen used for aviation, heavy-duty vehicles, and industrial processes, such as steelmaking, is most promising. 

Chevron gas station
Chevron’s deal to buy Noble Energy for $5 billion would come with redundancies, the company said.

Big losses for Big Oil

The results are in: Major oil companies, surprising no one, suffered steep financial losses in 2020. 

One big number: $56 billion

  • That’s the combined full-year loss of five of the top companies including Exxon, Chevron, BP, Shell, and ConocoPhillips. Exxon and Shell topped the list. 
  • Last year, these firms earned about that same amount, combined. 

Only up to go? Probably, at least until demand for oil and gas begins a more permanent decline. 

  • The price of oil is rising fast as demand notches up. Brent is trading at close to $60 a barrel, erasing year-over-year losses. 
  • Companies spent 2020 lowering the cost of production, so they’re positioned to succeed even if oil prices don’t go much higher. 
  • That’s made some investors extremely bullish on the traditional energy sector. Bank of America’s chief oil researcher told us why he thinks oil and gas will have a good year and shared 15 of his top picks

But: We have a new president who’s pushing clean energy and major companies are setting targets to reduce their reliance on fossil fuels. 

  • The “decarbonization newsflow,” as Goldman Sachs put it in a recent note, is souring investor sentiment in oil and gas companies.
  • Among the news that investors see as downside risk is litigation surrounding pipelines and GM’s announcement that it will phase out gas-powered cars. 
  • That’s “widened the gap in sentiment between clean energy and traditional energy,” Goldman Sachs analysts wrote. Residential solar is most in favor, they said.

Read more: Meet the 11 top execs helping CEO Mary Barra make General Motors all-electric by 2035


Exxon Baton Rouge refinery
An Exxon refinery in Baton Rouge, Louisiana

Exxon doubles down on carbon capture but activist investors remain unsatisfied

Exxon this week announced it was launching a new business unit focused on low-carbon technologies. (We’ve now updated our org chart to include the new division.)

What to know: The unit, which Exxon launched after investors pressed the company to move faster to address climate change, will initially focus on carbon capture and storage.

  • No surprises here: Exxon has been developing carbon capture projects for a while now.
  • The technology is attractive to oil companies in part because it doesn’t require that they rewrite their business models and pump less crude from the ground.

How investors responded: They were nonplussed. 

  • A coalition of investors with over $2.2 trillion in assets said Exxon’s plan to build out carbon capture capabilities isn’t credible, pointing to a carbon-capture project that the company delayed
  • Activist investor Engine No. 1 had a similar reaction: It’s “poor long-term planning to rely almost exclusively on the idea that carbon capture will become scalable and affordable soon enough to allow for continued oil and gas production growth for decades to come under a Paris-compliant trajectory,” the group said. 
  • But investors aren’t jumping ship: The company’s stock is up 10% this week and 20% since the start of the year.

What’s more: Exxon also announced a new board member this week – Tan Sri Wan Zulkiflee Wan Ariffin, former CEO of the Malaysian state energy company Petronas. 

  • A board shake-up is another demand from activist investors.
  • Hedge fund DE Shaw had been in talks with Exxon about making changes to its board, Bloomberg reported ahead of the announcement. Engine No. 1 has also launched a campaign to elect four new directors. 
  • On Thursday Bloomberg reported that the company is considering also appointing Jeff Ubben, who runs Inclusive Capital Partners, to the board.

WASHINGTON, DC, UNITED STATES - 2018/03/04: Jennifer Granholm, Former Governor of Michigan, speaking at the AIPAC (American Israel Public Affairs Committee) Policy Conference at the Walter E. Washington Convention Center. (Photo by Michael Brochstein/SOPA Images/LightRocket via Getty Images)
Former Michigan Governor Jennifer Granholm is Joe Biden’s pick for energy secretary.

5 things in energy politics 

  1. Jennifer Granholm’s nomination as Energy Secretary cleared a key Senate committee and now advances to the full Senate, where she is expected to be confirmed.
  2. A new report by left-leaning groups Evergreen Action and Data for Progress reveals how Senate Democrats can clean up the electric grid by 2035, even with a razor-thin majority.
  3. Senate Democrats reintroduced legislation for a $100 billion national “green bank.” It would make loans and investments in technologies aligned with Biden’s climate agenda, Greentech Media reported
  4. Agriculture Secretary nominee Tom Vilsack said that he plans to prioritize efforts to address climate change and food insecurity, during his confirmation hearing on Tuesday, Insider’s Ayelet Sheffey reports
  5. Senator Gary Peters, a Michigan Democrat who advocates for strong climate change policy, recently invested up to $15,000 in a power company that primarily burns fossil fuels, according to a stock purchase disclosure, Insider’s Dave Levinthal reports

Save the date: Building a clean-energy economy

We’re hosting a virtual roundtable, as part of our Transformers series, on how to build a clean energy economy. Save the date! 

When: March 8, at 10:00 am (NYC time)

Where: Online, of course. We’ll send out more information next week. 

Who: The roundtable will feature Shell’s head of new energies, the founder of Form Energy, Facebook’s renewable energy lead, and Oliver Wyman’s head of energy. 

That’s it! Have a great weekend. 

– Benji 

Ps. This was a serious storm. Here’s what it looked like in Park Slope. 

Benji snow
Snow in Park Slope

Read the original article on Business Insider

Exxon launched a $3 billion effort focused on lowering its emissions after investors pressured the oil giant to address climate change

Exxon Baton Rouge refinery
An Exxon refinery in Baton Rouge, Louisiana

  • Exxon Mobil on Monday announced a new business focused on low-emissions technologies. 
  • The business will initially focus on carbon capture, a technology Exxon has been developing for years, and spend $3 billion through 2025. 
  • The announcement follows mounting pressure from investors who have been pushing the company to do more to address climate change.
  • Visit Business Insider’s homepage for more stories.

Exxon Mobil, the largest US oil company, announced on Monday that it was forming a new business focused on low-emissions technologies including carbon capture. The announcement follows reports that investors with more than $2 trillion in assets are pressing the company to move more quickly to address climate change. 

The Irving, Texas-based company said it plans to spend $3 billion through 2025 on what it calls “lower-emission technologies.” That’s $600 million a year, or 3% to 4% of the firm’s project budget for 2021.

Part of that will go toward 20 new carbon-capture projects that Exxon also announced Monday. 

“With our demonstrated leadership in carbon capture and emissions reduction technologies, ExxonMobil is committed to meeting the demand for affordable energy while reducing emissions and managing the risks of climate change,” Exxon CEO Darren Woods said in a statement. 

Carbon capture involves sucking greenhouse gas emissions out of ambient air or from point sources, such as steelmaking factories. It’s among a suite of technologies researchers say we’ll need to achieve the goals of the Paris Agreement, an international accord aimed at keeping global warming in check. 

Read more: Exxon is slashing workers and cutting costs after a historic year of loss. Here’s everything we know.

The technology is attractive to oil companies in part because it doesn’t require that they rewrite their business models and pump less crude from the ground. As Exxon advances its carbon capture projects it will be able to lower the carbon emissions associated with each barrel of oil – something known as “carbon intensity.”

In December, the company committed to reducing the carbon intensity of emissions stemming from oil exploration and production by as much as 20% by 2025.

Other major oil companies including BP and Shell have taken more aggressive approaches to lower their emissions over the last year, such as by investing in clean energy sources like wind and solar. BP, for one, said it will spend $4 billion to $5 billion a year by 2025 on low-carbon energy. 

Exxon is scheduled to report financial results on Tuesday morning.

Exxon Mobil gas station

Investors call on Exxon to address its climate impact

The pressure on Exxon to do more to address climate change has been building over the past few months. 

Last year, the activist firm Engine No. 1, with the support of CalSTRS, began a campaign to elect four new board members, push the company to invest in cleaner sources of energy, and preserve its dividend. Other investors including BNP Paribas, through its asset management division, are pressing Exxon to be more transparent about its lobbying efforts as they pertain to climate change. 

Read more: Exxon is fighting a plan hatched by major investors to push the oil giant to reveal how it influences climate policy

These efforts are snowballing: Reuters reported last month that more than 135 investors who manage more than $2 trillion altogether are forming a coalition to force the company to make similar changes.

It’s not clear whether those investors will be satisfied by Monday’s announcement.

Carbon Engineering pilot plant
Occidental Petroleum is partnering with the carbon-capture startup Carbon Engineering. The startup’s pilot plant is pictured here.

Exxon’s new business will focus on carbon capture

Exxon has been developing and using carbon-capture technologies for years.

The new business, dubbed Low Carbon Solutions, marks a major expansion of that effort and it includes new carbon capture projects located in the US, Europe, the Middle East, and Asia. Exxon also suggested it may expand its work with hydrogen. 

“ExxonMobil Low Carbon Solutions will also leverage ExxonMobil’s significant experience in the production of hydrogen which, when coupled with CCS, is likely to play a critical role in a lower-carbon energy system,” Exxon said in the press release. 

The Low Carbon Solutions business will be spearheaded by Joe Blommaert, who was formerly the SVP for global operations in Exxon’s chemical business. The company also elected him as VP, a coveted title shared by just 12 other executives. 

Read more: We mapped out the power structure at Exxon and identified 138 of the oil giant’s top employees. Here’s our exclusive org chart.  

Read the original article on Business Insider

Exxon and Chevron discussed merging to form second-largest oil company: report

Exxon Baton Rouge refinery
An Exxon refinery in Baton Rouge, Louisiana

Exxon and Chevron discussed merging the oil companies last year, a move that would have likely created the second-largest oil company in the world, The Wall Street Journal reported Sunday.

The talks between Chevron CEO Mike Wirth and Exxon Mobil CEO Darren Woods took place in the early days of the coronavirus pandemic, which battered the oil sector, the Journal reported, citing a source familiar with the matter. The talks were preliminary and are not ongoing, though the two CEOs might resume discussions, the Journal said.

If the merger were to occur, it would likely make the ensuing firm the second-largest oil company in the world by market capitalization and production, the Journal said. Saudi Aramco is the world’s largest oil company.

A Chevron spokesperson did not comment on the Journal’s report, telling Insider “we do not comment on market rumors or speculation.” Exxon did not immediately respond to Insider’s request for comment. 

The oil industry has been hit hard by the pandemic, with reduced travel drastically cutting demand for jet fuel, diesel, and gasoline. Oil prices have rebounded this year after a brutal spring 2020 in which US crude fell into negative territory for the first time. 

Read more: How Exxon Mobil went from being the world’s most valuable company to getting booted from the Dow and laying off thousands in less than a decade

Exxon, the largest US oil producer, has faced pressure from a number of events, including its ousting from the Dow Jones Industrial Average in August and a reported SEC investigation into allegations the company overvalued a key oil and gas property in Texas’ Permian Basin. It also posted losses in the first three quarters of 2020; fourth quarter results will be revealed on Tuesday. 

Chevron has also been hammered by the decline in demand for crude oil. Late last year, the second-largest US oil producer took steps to reduce costs and streamline operations. It also asked employees worldwide to reapply for positions, Reuters reported. Last week the company reported a fourth quarter loss. 

Exxon and Chevron have market capitalizations of $190 billion and $164 billion, respectively. 

Last week, S&P Global Ratings put several big oil companies, including Chevron and Exxon, on notice that it could soon downgrade their credit ratings due to heightened concerns about climate change and a global push towards greener energy.

The agency – one of the three most influential ratings firms in the world – said it could ultimately downgrade the ratings of Chevron, Exxon, Shell and Total among others.

The Journal noted that the proposed merger between Chevron and ExxonMobil would bring back together two of the companies borne after John D. Rockefeller’s Standard Oil monopoly was broken up in 1911.

Read the original article on Business Insider

See the key employees who run Exxon Mobil in our exclusive org chart

exxon org chart 2x1
Exxon’s top four execs. From left to right: Andrew Swiger, SVP and Principal Financial Officer; Darren Woods, CEO; Jack Williams, SVP; and Neil Chapman, SVP.

  • Exxon faced a difficult 2020. The oil titan saw profit evaporate as oil prices crashed, and it was forced to slash spending and cut jobs. 
  • Behind those tough decisions is what some employees have referred to as the God Pod, Exxon’s executive suite. 
  • At the top are CEO Darren Woods and three other members of the company’s management committee. All four men, who are white, have been with the company for decades. 
  • We mapped out the executives they oversee in an org chart available exclusively to Insider subscribers
  • Visit Business Insider’s homepage for more stories.

Exxon Mobil, like most large oil companies, faced a number of tough decisions in 2020. After the price of crude collapsed, the firm slashed capital spending by $10 billion, cut thousands of workers, and said it would write down billions more in assets. 

Behind those decisions is what some employees have referred to as the “God Pod” – Exxon’s executive wing at the company’s headquarters. The name is a reference to the top floors of the office that the group occupies, and it’s been used to describe the company’s leadership style. 

“The executive wing of Exxon Mobil’s headquarters outside Dallas is nicknamed the God Pod because orders given by executives there can sometimes be as sharp as thunderbolts,” longtime New York Times energy reporter Clifford Krauss wrote in 2017

At the top is CEO Darren Woods, who’s led the company since 2017, along with three other members of Exxon’s management committee: Neil Chapman, Andrew Swiger, and Jack Williams. Together, they have an average tenure of nearly 35 years. They oversee Exxon’s second tier of executives including vice presidents and division leads.

All four members of the management committee are white men. 18% of Exxon’s US executives are minorities, as of 2019, the company says on its website. 

It’s a new year, but many of 2020’s challenges linger: The layoffs sunk morale, oil markets are still stunted, and some investors are pressuring the company to address the risks associated with climate change, as many of its peers have done. 

We lay out the executives who will navigate those challenges in an org chart, available exclusively to Insider subscribers. It includes 138 of the firm’s top employees. 

View our exclusive Exxon org chart here

Read the original article on Business Insider