Policy uncertainty may be clouding new energies pathways in the U.S., but some energy powerhouses appear to still have a line of sight to lower-carbon solutions while acknowledging headwinds.
Speaking during quarterly earning calls, Exxon Mobil Corp. and Chevron Corp. executives addressed continued pursuits of carbon capture and storage (CCS) and hydrogen. Both are considered key components of ambitions to shrink global greenhouse gas emissions, though the pace of development for projects’ customers vary. Some projects are more heavily reliant on government support than others to strengthen economics.
The Trump administration has taken bold steps to undo parts of clean energy legislation that ushered in billions of dollars in loans, tax incentives and other financial benefits to spur development of domestic lower carbon energy resources. The move comes as traditional oil and gas companies add to their energy offerings, aiming to meet demand for lower carbon, affordable and reliable energy.
Exxon Mobil CEO Darren Woods addressed what he called the right policy framework for a successful energy future.
“Through 2030, roughly 90% of our planned capex is allocated to established, fully-functioning markets for energy and products that require no policy support,” Woods said. “Only about 10% is earmarked for nascent, lower-emissions markets where market forces have yet to fully take hold. The case in point is our Baytown low-carbon hydrogen project.”
Exxon plans to produce up to 1 Bcf/d of hydrogen—using natural gas as feedstock from its Permian Basin operations—for the Baytown project. Eyeing startup in 2029, the company has said it anticipates taking a final investment decision on the project in 2025. The project, however, depends on Exxon securing tax incentives under Section 45V of the Inflation Reduction Act (IRA) to be economically viable.
Used today mainly for industrial processes such as petroleum refining and fertilizer, hydrogen is produced primarily via steam methane reforming. But efforts are underway to add CCS components to production methods or use renewable energy. With the cleanest production method, companies could qualify for a tax credit of up to $3 per kilogram of hydrogen produced.
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“We believe these incentives are critical to establishing a fully market-based future where hydrogen competes head-to-head with traditional fuels. But the end goal is clear: a system where no energy source remains dependent on government subsidies,” Woods said.
He added that government policy should set carbon intensity standards on products.
“We believe this is the best way to engage the collective efforts of industry and leverage competitive market forces,” he said. “To drive further innovation and reduce the most emissions at the lowest cost, policies must remain technology agnostic. Governments should not pick winners and losers. Intensity standards establish a level playing field and have a strong precedent.”
Aside from policy support, customers signing offtake agreements are needed, he added.
Chevron and partner Mitsubishi Power are moving closer to starting up the Advanced Clean Energy Storage project in Delta, Utah, later this year, according to Chevron CEO Mike Wirth.
Mitsubishi sealed an offtake agreement with Intermountain Power Agency (IPA) for the hydrogen storage project, known as ACES Delta, before Chevron Corp. became a majority owner in the project. ACES Delta predates the IRA.
“The project is one of the world’s largest hydrogen storage projects and will have over 200 megawatts of electrolyzer capacity,” he said.
ACES Delta, the beneficiary of a $504.4 million loan guarantee from the U.S. Department of Energy’s Loan Programs Office, will convert the renewable energy into 100 metric tonnes per day of hydrogen to be stored in two gigantic 4.5 MMbbl salt caverns. The project will provide long-duration energy storage to be dispatched as needed to the grid as part of IPA’s Intermountain Power Project.
Moves are also being made on the CCS front.
Chevron’s “Bayou Bend is working towards a FEED decision for the offshore project, and we’re also developing plans to capture and store CO2 from our Pascagoula refinery,” Wirth said.
Located in Southeast Texas, the Bayou Bend CCS project is comprised of the offshore Bayou Bend East and the onshore Bayou Bend West. Chevron’s Pascagoula refinery is in Mississippi.
Like hydrogen, lining up offtake contracts is essential to advancing projects. Also, as with hydrogen, costs have been flagged as a customer concern, particularly from those who need more expensive post-combustion capture. The low CO2 concentration in flue gas requires more energy for separation, making the process more difficult and expensive, compared to pre-combustion capture.
Despite challenges associated with scaling up CCS, Exxon Mobil continues to make strides with its carbon capture business following its acquisition of Denbury Inc. in 2023.
“We’re the only company in the world today with an end-to-end system capable of capturing, transporting and storing carbon emissions. At 6.7 million tons per year, we’ve contracted more CO2 for transport and storage than any other company by far,” Woods said. “We’re also well-positioned to meet surging demand from data centers for low-carbon power, and on a timetable that alternatives such as nuclear simply can’t match.”
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Exxon Mobil Targets $2B More Earnings from Low Carbon Solutions
Exxon Mobil has said its Low Carbon Solutions business, which includes hydrogen, CCS and lithium, could bring in about $2 billion in earnings growth through 2030.
“Obviously, that’ll come as we pick up momentum and start to implement the projects that we’ve been talking about,” said Kathy Mikells, senior vice president and CFO for Exxon.
