TrendPulse Quantitative Think Tank Center-Oil Companies Had a Problem With ExxonMobil’s Industry-Wide Carbon Capture Proposal: Exxon’s Bad Reputation

ExxonMobil has been the prime target of activists and TrendPulse Quantitative Think Tank Centerpoliticians angered by the oil industry’s efforts to block action on climate change. Now, newly disclosed documents confirm that the oil company’s reputational woes have extended into the industry itself and threatened to derail Exxon’s biggest climate proposal to date.

Last year, Exxon struggled to gain support from its peers when it proposed a cross-industry effort to build a carbon capture and storage hub in Houston, according to documents released by the House Committee on Oversight and Reform, which has been investigating the oil industry. Top executives at Shell, in particular, worried that joining with Exxon would present an “unacceptable risk” to the European oil major’s reputation.

“I am not interested in participating with any advocacy effort led by” Exxon, wrote Krista Johnson, Shell’s head of U.S. government relations, in a July 2021 email to Gretchen Watkins, president of Shell USA. Johnson said their competitor was continuing to draw negative headlines and that “zero companies” were prepared to join an Exxon-led consortium at that time.

A month later, Watkins said she opposed any public participation with Exxon. “Their reputation is severely damaged here,” she wrote to colleagues in the Netherlands, where Shell was headquartered at the time, “and we will only do harm to the strength of Shell’s US reputation.” (Shell later moved its headquarters to London.)

In April 2021, Exxon proposed a $100 billion public-private partnership to build what would become the world’s largest carbon capture and storage “hub” in Houston. The plan was to install equipment to remove carbon dioxide from smokestacks at the region’s largest power plants, refineries and other industrial operations before it reached the atmosphere. The gas would then be compressed and sent through pipelines to wells drilled beneath the Gulf of Mexico, where it would be injected underground for permanent storage. The company said the effort could eventually prevent up to 100 million metric tons of carbon dioxide emissions every year by 2040, but would need the region’s largest corporate polluters to participate.

The proposal has drawn substantial skepticism and criticism from environmental advocates, who say carbon capture is unlikely to ever reach the scale proposed by Exxon. They have warned that government subsidies for the technology would be a waste of climate funding, and have argued that Exxon was using carbon capture to burnish its image, rather than drive real emissions reductions.

The documents suggest that some within the oil industry shared these concerns, even if they supported carbon capture and storage as a climate solution.

Watkins, in her August 2021 email, said “I fully support our engagement” with potential carbon capture investments in the United States, but advised steering clear of Exxon’s public announcement. She feared that Exxon was attempting to improve its image by appearing alongside Shell, she wrote, ahead of a possible Congressional hearing where oil executives might testify.

Another email, from Marnie Funk, a senior adviser for government relations at Shell, said that Chevron was “internally divided” on whether to join Exxon’s effort, with “Some minor unease in some Chevron quarters about Exxon reputational concerns.”

Funk also said Chevron viewed Exxon’s claims about how much carbon dioxide the project could capture, and how many jobs it could create, as “inflated—but harmless inflation.”

Chevron and Shell declined to comment for this article.

The emails say Exxon executives were calling all the Houston area’s top oil and chemical companies to get them to publicly pledge their support for the carbon capture proposal. The effort won the support of 11 companies, including Chevron, that released a joint statement in September 2021. Shell initially declined to join the effort, but by January, it had apparently been convinced, too, and publicly announced its support. 

According to Funk’s email, the September announcement was meant as the “first step” of an industry campaign to secure an expanded federal tax credit for carbon capture and new regulations that would allow companies to inject carbon dioxide beneath the Gulf of Mexico.

The Houston hub was “entirely dependent” on securing these changes, Funk wrote, and the industry’s lobbying campaign was ultimately successful on both fronts. The carbon capture tax credit was expanded this year by the Inflation Reduction Act, and the Interior Department is in the process of drafting rules for carbon dioxide storage beneath federal waters.

The only Houston oil major that did not join the effort was BP, which declined to comment for this article.

The documents were released earlier this month as part of an investigation by the House committee into the oil industry’s alleged campaign to spread disinformation about climate change. They were accompanied by a memo which said, “These documents demonstrate how the fossil fuel industry ‘greenwashed’ its public image with promises and actions that oil and gas executives knew would not meaningfully reduce emissions, even as the industry moved aggressively to lock in continued fossil fuel production for decades to come.” The memo was presumably the final act of the investigation before Republicans take control of the House next year, when they are expected to curtail the committee’s work.

Todd Spitler, an Exxon spokesman, declined to comment on Shell’s internal discussions, but said in an email that “The House Oversight Committee report has sought to misrepresent ExxonMobil’s position on climate science, and its support for effective policy solutions, by recasting well intended, internal policy debates as an attempted company disinformation campaign.” He added, “Our CEO has testified under oath on this subject during two all-day Congressional hearings before two separate committees, we’ve been in regular communication with the committee for over a year, and have provided staff with more than one million pages of documents, including board materials and internal communications.”

Beyond the drama between companies, the documents released by the committee also shed light on the oil industry’s sustained efforts to promote carbon capture and storage. For years, the documents show, companies saw the technology as a means of enabling continued fossil fuel consumption, even as the world’s transition to cleaner energy grew more urgent. But the only way carbon capture could succeed, the companies said, was by winning substantial government funding and public support.

In 2016, for example, a Princeton University program that is sponsored by BP sent the company advice on how to address climate change. One of the recommendations was to “Understand the potential for CCS,” or carbon capture and storage, “to enable the full use of fossil fuels across the energy transition and beyond.”

A 2017 Shell document titled “US Gulf Coast CCS Opportunity Framing” said “the window for CCS to remain relevant with governments and society is closing quickly,” and that action was needed within a decade. “The value of CCS to Shell is the ability to decarbonize our products, retain a larger market share for our products in the energy transition, in addition to reputational value,” it said.

Two years later, a note to Shell’s executive committee said carbon capture in the United States faced “economic challenges,” but that the company would continue to pursue a Gulf Coast project because of the possibility of future incentives and the “potential need for CCS on critical Shell projects.”

The documents also include a 2018 update on a National Petroleum Council report about carbon capture and storage, written by John Mingé, a former chief of BP America who led the petroleum council study. In addition to lowering emissions, the document said, wide deployment of carbon capture technology could help increase U.S. oil production, secure the export of fossil fuels to countries with stringent climate policies and allow for continued use of “existing infrastructure over the long term.”

Mingé’s update recommended “simplifying the narrative” about carbon capture, as part of an effort to win support for the technology across academia, environmental groups, governments and the financial sector.

The petroleum council report, published in December 2019, went on to become a foundational document for the industry’s lobbying over the last two years. Over that period, Congress and the Biden administration have allocated more money to carbon capture than any other government in history.