ExxonMobil (XOM 0.39%) unveiled an update of its long-term corporate plan. That strategy will see the company invest an average of $20 billion to $25 billion per year on capital projects through 2027. While that overall spending level hasn't changed from last year's outlook, the company plans to boost its lower-carbon investments to $17 billion over that period. That's a 15% increase from its prior view. 

The oil company believes it has a win-win-win plan. It will allow ExxonMobil to meet the world's energy needs, reduce emissions, and reward shareholders.

Drilling down into Exxon's plan

ExxonMobil's plan aims to strike a balance. It intends to steadily grow its production, earnings, cash flow, and shareholder returns, all while reducing global emissions.

For 2023, the company plans to make between $23 billion and $25 billion of capital investments, an increase from 2022's $22 billion spending level. That will enable Exxon to maintain its current production level of 3.7 million barrels of oil equivalent per day (BOE/d).

Meanwhile, its longer-term spending range of $20 billion to $25 billion should support production growth of about 500,000 BOE/d by 2027. It plans to allocate 70% of that capital to its four highest-return growth pillars: the U.S. Permian Basin, Guyana, Brazil, and liquefied natural gas (LNG) projects. That should enable Exxon to double its earnings and cash flow from 2019's levels by 2027, assuming similar oil pricing.

Management plans to allocate $17 billion of that capital to lower-emissions investments. About 60% of that money will go toward reducing its emissions. Those investments will help Exxon cut the greenhouse gas emissions of its upstream oil and gas business by 40% to 50% from 2016's level by 2030. Meanwhile, the other 40% will go toward helping other companies reduce their emissions by building its lower-emissions businesses of carbon capture and storage (CCS), biofuels, and hydrogen.

Lastly, Exxon has expanded its share repurchase authorization to $50 billion, including plans to buy back $15 billion in shares this year. That's an increase from its current $30 billion authorization. The company also plans to continue growing its dividend. It recently boosted its shareholder payout, marking its 40th straight year of dividend increases. 

Why investors should like Exxon's plan

One thing that stands out about Exxon's strategy is the increase in lower-carbon investments. The company's plan of building out lower-carbon energy businesses is starting to bear fruit.

One of the most notable wins from that strategy was its landmark CCS agreement with CF Industries (CF -0.33%). The company inked the largest-of-its-kind commercial agreement to capture and permanently store 2 million metric tons of carbon dioxide per year from a manufacturing complex that CF Industries is building in Louisiana. That's equivalent to replacing about 700,000 gas-powered cars with electric vehicles. Exxon will transport the carbon dioxide captured at that plant through pipelines owned by EnLink Midstream to a 125,000-acre carbon dioxide storage site it's developing in Louisiana.

That deal is only the tip of the iceberg for the potential ExxonMobil sees in CCS. It believes this market could reach $4 trillion by 2050. The company wants to capture this massive market opportunity by ramping up its lower-carbon investment. 

In addition to the commercial opportunities from CCS, that technology could extend the life of the company's legacy oil and gas business. If Exxon and its peers can reduce emissions through CCS, it would enable oil and gas to continue playing a vital role in fueling the global economy since they won't have as much impact on global emissions.  

But that's not stopping Exxon from investing in cleaner alternatives. It also plans to grow its biofuels and hydrogen production. Those fuels also represent enormous long-term growth opportunities for Exxon. For example, Statista sees the global biofuels market growing from $116.5 billion this year to over $200 billion by 2030. Meanwhile, Goldman Sachs believes hydrogen could become a $1 trillion global market by 2050, up from $125 billion today. 

Exxon's lower-carbon strategy could pay big dividends

Management continues to increase its allocation to lower-emissions investments. These could reap huge rewards in the future if the markets for CCS, biofuels, and hydrogen develop as Exxon and others anticipate. They could enable the company to continue growing its earnings and cash flow, allowing it to return more cash to shareholders through higher dividends and share repurchases. That potential upside to the growth in lower-carbon energy makes ExxonMobil look like an attractive oil stock to buy for the long term.