Carbon dioxide emissions are a significant contributor to climate change. That's leading the world to find ways to reduce emissions in hopes of preventing the worst impacts of climate change. While much of the focus has been on the shift toward cleaner energy sources like renewables, emission reduction initiatives will likely play a crucial role in addressing the problem.

Carbon capture and storage (CCS) could become an important piece of the puzzle. Many energy companies believe the technology represents a $3 trillion to $5 trillion future market opportunity. Because of that, several industry players are racing to become early leaders in the space.

ExxonMobil (XOM -0.67%), EnLink Midstream (ENLC 0.55%), and Occidental Petroleum (OXY 0.87%) are emerging as early leaders in the carbon capture sector. Here's a look at their strategies for capturing this potentially multitrillion-dollar market opportunity.

Quickly capturing the opportunity

Energy companies are pursuing two different methods of capturing carbon dioxide: point source capture and direct air capture (DAC). ExxonMobil is emerging as an early leader in point source capture, capturing carbon dioxide directly from an emissions source, like a large-scale industrial facility.

Last year, the energy giant unveiled a landmark agreement with CF Industries, a leading hydrogen and nitrogen products producer. Exxon will capture and permanently store up to 2 million metric tons of carbon dioxide emissions annually from one of CF Industries' manufacturing complexes in Louisiana. That's equivalent to replacing about 700,000 gasoline-powered cars with electric vehicles (EVs).

CF Industries is investing $200 million to build a carbon dioxide dehydration and compression unit at its facility to capture the carbon dioxide. Exxon will transport the greenhouse gas (through EnLink Midstream's pipeline network) to a permanent underground storage hub it's developing.

Exxon has since signed similar commercial agreements with Linde and Nucor. Those three agreements are equivalent to replacing 2 million gas-fueled cars with EVs, roughly the same number of EVs currently on the road.

In addition, it has acquired Denbury Resources in a $4.9 billion deal to bolster its carbon dioxide infrastructure. Denbury has the largest owned and operated carbon dioxide pipeline network at 1,300 miles and 10 strategically located onshore sequestration sites.

With Denbury now in the fold, Exxon has the capacity to reduce the country's emissions by 100 million tons per year, 20 times its current agreements with CF Industries, Linde, and Nucor. That gives the company a huge competitive advantage as it seeks to capture the potentially lucrative carbon capture and storage market. Exxon believes carbon solutions could become a multibillion-dollar annual revenue source in the coming years.

Strategically positioned to capture the opportunity

EnLink Midstream aims to be the carbon dioxide transporter of choice. The midstream company owns strategically positioned pipelines in the Gulf Coast region that it can repurpose for carbon dioxide. It can also build additional pipes to connect emissions sources and sequestration hubs to its existing infrastructure.

The company has already secured Exxon as an anchor shipper for its carbon dioxide transportation system. Meanwhile, it's working with several other companies on firm transportation contracts. EnLink estimates that the addressable market for transporting carbon dioxide in the Mississippi River corridor alone is 80 million tons annually.

EnLink would only need to invest a modest amount of capital to convert existing pipelines and build new infrastructure linking carbon capture sites with regional hubs. This new line of business represents $300 million in potential incremental annual adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the company. That's 25% above this year's level.

Building out a leading platform

Occidental Petroleum is emerging as a leader in DAC technology. The energy company agreed to acquire Carbon Engineering, a leader in developing DAC technology, for $1.1 billion earlier this year. Occidental has been working with Carbon Engineering since 2019 to develop large-scale DAC projects.

The oil giant is currently building its first large-scale DAC project in Texas. The Stratos facility will directly capture 500,000 tons of carbon dioxide from the air when it starts commercial operations in mid-2025.

Occidental has been working to commercialize the project by signing carbon removal credit agreements with several customers, including Amazon, the Houston Astros, and the Houston Texans. It also recently formed a joint venture with leading asset manager BlackRock to fund $550 million of the project's cost.

Stratos will likely be the first of many DAC facilities Occidental builds. The company recently received a grant from the Department of Energy to support the development of its South Texas DAC hub, where it plans to build the world's first DAC to remove up to 1 million tons of carbon dioxide per year.

In addition to its U.S. projects, the company is working with partners in the Middle East to develop carbon capture and sequestration solutions. Occidental sees the potential of building hundreds, if not thousands, of DAC facilities in the future.

Early leaders in this potentially massive market

CCS could become an important solution to help reduce carbon emissions. It has the potential to grow into a multitrillion-dollar market in the coming years. Exxon, EnLink, and Occidental are emerging as early leaders in the space, which could be major growth drivers for them in the future. That makes them potentially intriguing long-term investment opportunities in the energy sector.