Burning fossil fuels emits a significant amount of carbon dioxide into the atmosphere, which impacts the environment. This means the global economy has been working on switching to lower-carbon energy sources. While carbon dioxide is a big problem for the oil and gas industry, many energy companies are starting to see an opportunity.

Oil giant ExxonMobil (XOM -0.08%) estimates that capturing carbon dioxide and storing it underground (i.e., carbon capture and storage, or CCS) could become a $4 trillion market by 2050. Meanwhile, Occidental Petroleum (OXY -0.02%) sees CCS growing to a $3 trillion to $5 trillion global industry in the coming years. That's leading these and other oil companies to invest heavily to capture some of this potentially massive market opportunity. 

The global leader

ExxonMobil is a global leader in CCS. The oil giant has already captured more carbon dioxide than any other company, at 120 million metric tons. That's 40% of the total, and equivalent to eliminating the emissions of more than 25 million cars for one year. 

ExxonMobil has a twofold strategy for CCS: First, it wants to deliver lower carbon oil and gas by capturing the equivalent carbon dioxide emissions from producing and using those fossil fuels, aiming to achieve net-zero oil and gas. That would reduce the impact of fossil fuels on the environment, enabling oil companies like Exxon to continue producing oil and gas well into the future to fuel the global economy.

The oil giant also wants to help other companies decarbonize. The company recently signed a landmark deal with CF Industries to capture and permanently store up to 2 million tons of carbon dioxide emissions annually. Exxon will transport carbon dioxide captured at a new plant CF Industries is building in Louisiana to a secure geologic formation, where it will store the greenhouse gas. Commercial CCS agreements like this could provide Exxon with a meaningful income stream in the future.

Becoming a leader

Occidental Petroleum is betting big on CCS. It believes this business could eventually produce similar earnings and cash flow as it currently gets from oil and gas production. 

The company is investing $1.1 billion to build the world's first large-scale direct air capture (DAC) project in the U.S. This DAC plant would remove 1 million tons of carbon dioxide from the atmosphere each year. That's 100 times more than the current combined capacity of the world's 18 operating DAC plants. The energy giant plans to build 100 DAC plants worldwide by 2035. 

Occidental has signed two different types of commercial agreements supporting this plant. SK Trading has agreed to buy up to 200,000 barrels of net-zero oil annually, backed by carbon captured from this plant. Meanwhile, Airbus has purchased the capture and permanent sequestration of 100,000 tons of carbon dioxide from the atmosphere by this facility. CCS agreements like these could supply the company with significant income as it builds more DAC projects in the coming years. 

Looking for ways to capitalize on the opportunity

Meanwhile, Chevron (CVX 0.52%) is also pursuing several CCS opportunities. It launched a project earlier this year to reduce the carbon intensity of its operations in California. It's installing carbon dioxide post-combustion capture equipment at one of its co-generation plants in the state to capture and then safely sequester carbon dioxide. 

The company is also working on commercial opportunities to help customers decarbonize. For example, Chevron recently received permits to assess the carbon storage potential in three blocks offshore Australia. It's also studying the prospect of transporting liquified carbon dioxide from Singapore to permanent storage locations offshore Australia. Commercial projects like that would give Chevron a carbon-powered income stream that could become a meaningful future growth driver. 

Good for the environment and their business

Big oil giants believe CCS could be the key to their long-term success. It would enable them to lower the emissions profile of their oil and gas output, reducing their environmental impact and lessening the need to switch to alternative fuels. Meanwhile, they can leverage that expertise to help other companies decarbonize.

Overall, CCS represents a multi-trillion-dollar opportunity for the sector. That upside potential makes companies working to capitalize on this market look like attractive long-term investment opportunities.