US-based oil major ExxonMobil has outlined new emissions reduction targets through to 2025, but green groups have called them “woefully inadequate” and investors are pushing for a restructure to its board of directors.US-based oil major ExxonMobil has outlined new emissions reduction targets through to 2025, but green groups have called them “woefully inadequate” and investors are pushing for a restructure to its board of directors.
The company claims its new climate targets are compatible with the Paris Agreement and has argued that short-term goals, assessed regularly, can drive more progress than long-term net-zero visions.
It is ultimately striving to ensure that every barrel of oil produced in 2025 generates one-fifth fewer emissions over its life cycle than in 2016. Supporting targets to decrease methane intensity by 40-50% and flaring intensity by 35%-45% have been set.
Speaking to a news conference late on Monday (14 December), Exxon representatives said new goals will be developed in the run-up to 2025.
But fact that there are no overall targets across all scopes is concerning to green groups and investors. Exxon could produce fuels with a lower emissions intensity but increase production, ultimately growing its absolute emissions footprint.
Critics also doubt whether the new goals are aligned with the Paris Agreement’s 1.5C trajectory, as Exxon representatives have claimed they are. The IPCC has warned that global emissions will need to reach net-zero by 2050 for humanity to have the best chance of capping temperature increase in this way.
“We certainly recognize the direction of travel that Paris sets out and the ambitions for society to get to net-zero as early as possible before the end of the century,” Exxon’s director of greenhouse gas and climate change Peter Trelenberg said.
“What we have tried to do is to develop specific actionable plans that we can hold our organization accountable to drive continuous improvement in emissions.”
But the Union of Concerned Scientists called the plan “woefully inadequate”, arguing that it is not compatible with the Paris Agreement and that other oil majors – notably those in Europe – have developed far more ambitious strategies.
“Any company that fails to keep pace with what science demands threatens its future while endangering the rest of us with escalating climate impacts and systemic risks to the global economy,” the Union of Concerned Scientists’ accountability director Kathy Mulvey said.
Long-term, net-zero goals have notably been set by the likes of Shell, Eni, BP and Equinor in recent months. While there are doubts around whether these companies will change their business models and finance flows significantly enough to deliver, it would be hard to argue that they are less ambitious than Exxon’s new targets.
Fuel to the fire
Two weeks ago, Exxon announced plans to write off up to $20bn of assets as a result of the pandemic’s financial impact on the oil and gas sector. It also outlined plans to cut Capex in the short-term and mid-term. Exxon’s market valuation is now $266bn lower than it was in early 2014.
While some oil and gas majors facing this issue have made commitments to diversify, increasing spending on renewables, hydrogen and other low-carbon solutions, Exxon said it would scale back on natural gas in the US while accelerating oil production in Brazil and Guyana.
This angered activist investors Engine No. 1 and D.E. Shaw, who are pressing Exxon to either make formal commitments to diversifying its portfolio, or to restructuring its board of directors if current members refuse to make this move.
“We believe that for ExxonMobil to avoid the fate of other once-iconic American companies, it must better position itself for long-term, sustainable value creation,” Engine No. 1 said in a statement.
Engine No. 1 is being supported by the Church of England and the California State Teachers’ Retirement System – one of the largest public-sector pension schemes in the US.