Playing right into the central argument of our ESG and Climate report is today’s ExxonMobil investor day, and we include a couple of key slides around the company's proposed path to net-zero below. The first slide shows just how much blue hydrogen (with CCS) the company plans to add to offset its emission-generating fuels – the volumes implied in the chart are high.
Source: ExxonMobil Investor Day Presentation, March 2022
The second ExxonMobil chart shows how the company predicts how its cash flow model will evolve over the next 30 years. This projection assumes a cost of hydrogen production and CCS costs, but also likely has an implied either carbon cost or carbon credit. Despite the recent collapse in European carbon credits (as a consequence of speculation around the Russia/Ukraine war, there is a much clearer path for hydrogen and CCS development in Europe and we would expect ExxonMobil to move faster in many places outside the US today than within the US. But ExxonMobil is likely assuming that carbon and emission pricing will move to justify much of the investment implied above. The IPCC report published this week (and covered in more detail in today’s ESG and climate report) talks about several climate red flags and has an appropriate degree of “fear factor” for an agency body that is supposed to highlight the climate risks. One of its key conclusions is that we are not moving fast enough to implement change. This of course butts up against the supply constraints we have written about above, but it is another fair criticism that can be leveled:
- Why does it take 2 years to get approval from the EPA for a Class 6 permit for a CO2 injection well?
- Why have we still not heard from the US and European regulators around better standards for ESG disclosures and corporate ESG reporting?
- Why does it take 10 years to site permit and build a nuclear power plant in the US?
Source: ExxonMobil Investor Day Presentation, March 2022
