Please ensure Javascript is enabled for purposes of website accessibility

Exxon Moves to Limit Methane Emissions

By Rich Smith - Mar 3, 2020 at 12:40PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Oil companies against global warming?

In 2016, the Obama Administration Environmental Protection Agency (EPA) set new limits on methane emissions by the oil and gas industry, calling for emissions to halve by 2025. The Trump Administration has proposed rolling back those rules, and you might think the oil and gas industry would be happy about that (regulation -- bad, right?)  

Surprisingly, though, not everyone is onboard with rolling back the regulations.

ExxonMobil refinery

Image source: ExxonMobil

In 2018, for example, Royal Dutch Shell proposed limiting its own methane emissions to no more than 0.2% of natural gas extracted by 2025. (Globally, the International Energy Agency estimates that the average methane leakage rate currently is 1.7%). And today, ExxonMobil (XOM -1.80%) proposed a "model framework" for government regulation of emissions "in all phases of production."

Hinging on voluntary reductions in methane emissions, Exxon's plan urges companies to replace energy infrastructure components at production sites showing a "high-leak potential," improving production technology in general, and conducting additional research and gathering more data.

Practicing what it preaches, Exxon says it has successfully lowered its own methane emissions by 20% since 2016 at "unconventional operations" (i.e. fracking locations) and is on course to reduce its emissions by 15% across the board.

Why are Shell and Exxon taking these steps? To reduce global warming of course -- because methane in the atmosphere can become 80 times more potent as a greenhouse gas, than carbon dioxide, over long periods of time. Energy companies would also probably prefer to proactively help write the rules that govern their operations than have the EPA do it for them.  

From a competitive perspective, too, increased cost of regulation has the potential to grow costs for the companies' competitors, giving a business advantage to companies with larger scale of operation, companies like ... Shell and ExxonMobil.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Exxon Mobil Corporation Stock Quote
Exxon Mobil Corporation
$83.28 (-1.80%) $-1.53
Royal Dutch Shell plc Stock Quote
Royal Dutch Shell plc

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/07/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.