ExxonMobil (NYSE:XOM) unveiled plans yesterday to create a new business to commercialize its low-carbon technology portfolio. ExxonMobil Low Carbon Solutions will initially concentrate on carbon capture and storage, which extracts carbon dioxide from the atmosphere and injects it into the ground. This business will also focus on other lower-carbon technologies in the future, including hydrogen.
ExxonMobil plans to advance more than 20 new carbon-capture and storage (CCS) projects worldwide in the next few years. It anticipates investing $3 billion on lower-emissions energy projects through 2025.
The company has several projects under development. For example, it's evaluating several CCS projects that have the potential to collect millions of tonnes of carbon dioxide from industrial sources along the U.S. Gulf Coast, which it would store in onshore and offshore geologic formations. Future new projects will complement the company's existing carbon-capture capacity in the U.S., Australia, and Qatar that currently capture 9 million tonnes per year, the equivalent of planting 150 million trees.
ExxonMobil is the latest oil giant to ramp up its investment in lower-carbon energy solutions. But at $3 billion through 2025, it's a small portion of its overall capital spending program (as much as $25 billion per year) during that time frame. For comparison's sake, BP (NYSE:BP) plans to shrink its oil and gas business by 40% over the next decade while spending as much as $5 billion annually to build a leading renewable energy power business.
Given the economy's transition to lower-carbon fuel sources, Exxon will need to continue shifting spending away from fossil fuels or risk falling behind and underperforming its rivals.