ExxonMobil (XOM -2.78%) believes carbon capture, utilization, and sequestration (CCUS) will play a vital role in helping reduce global emissions. The energy company sees this technology eventually becoming a massive global industry that will one day rival the size of the oil and gas market. It estimates the CCUS market could reach $4 trillion by 2050.

That's driving its investment in developing a CCUS platform. It's currently working on a potential breakthrough technology with FuelCell Energy (FCEL 3.38%) that could capture carbon emissions directly from industrial sites while also producing energy, which could lower costs and emissions. It's one of many steps ExxonMobil is taking to build out what could eventually be a very valuable lower-carbon energy business.

A potential breakthrough technology

An ExxonMobil affiliate plans to build a pilot plant at its Rotterdam Manufacturing complex to test carbonate fuel cell (CFC) technology. This test project would gather data on the performance and operability of the technology jointly developed with FuelCell Energy. It would also provide the companies with information on potential technical issues and the costs of installing and operating the CFC plant. If successful, Exxon could deploy this technology at its other manufacturing sites.

CFC can capture carbon dioxide emissions directly from an industrial emissions source. On top of that, they can make valuable co-products like low carbon power, heat, and hydrogen. The technology's ability to simultaneously capture carbon and produce electricity makes it a "game-changer for the industry," stated FuelCell CEO Jason Few in the press release unveiling the pilot project. That combination increases the efficiency of the carbon capture process while providing valuable revenue streams to help reduce the cost of capturing and sequestering carbon dioxide.

The modular technology makes it easy to adapt to a wide range of sites. It could become an economical solution to reduce emissions across a range of industries.

Building out a CCUS platform

ExxonMobil has been steadily investing more money into lower carbon energy. The oil giant recently updated its long-term strategic investment plan, boosting its planned spending to $20 billion through 2027. That's its third increase since it launched its lower carbon energy platform three years ago and $3 billion above its prior target.

The company is spending half that capital on projects that reduce the emissions at its existing facilities, like its Rotterdam pilot project. It's investing the rest of the money to build several lower-carbon energy platforms, including CCUS, hydrogen, biofuels, and lithium.

Exxon is working on developing end-to-end CCUS solutions. It has already partnered with several large industrial companies on carbon capture projects. Exxon will transport carbon captured on-site to underground sequestration facilities it's developing for permanent storage. It has secured large-scale commercial contracts that support these projects.

The oil giant significantly enhanced its ability to transport and store carbon dioxide by acquiring Denbury Resources earlier this year. It paid nearly $5 billion for the oil company, which owned and operated the country's largest carbon dioxide pipeline network and 10 strategically located sequestration sites. That acquisition will help accelerate Exxon's ability to provide decarbonization services to customers in the coming years.

Exxon believes CCUS could eventually become a multi-billion-dollar annual revenue stream. Further, unlike its legacy oil and gas business, the earnings from CCUS would come from long-term contracts that supply stable and predictable revenue. That would help mute some of the volatility of its earnings.

Working on a potentially game-changing solution

Exxon believes that CCUS technology will play a crucial role in supporting a lower carbon world. That drives its view that it could become a very lucrative global industry. If Exxon is right, CCUS could become a major growth driver for the energy giant in the coming years. That upside makes it a potentially compelling long-term investment opportunity.