ExxonMobil hopes to sell the Biden administration and lawmakers in Congress on a massive proposed carbon capture venture — one the oil major will need significant policy support to get off the ground.
The proposal, which ExxonMobil announced last month as the first major endeavor of its Low Carbon Solutions business, would make Houston a hub for carbon capture and storage. Houston’s plentiful industrial facilities — such as gas-fired power plants, refineries, and chemical manufacturing operations — would install equipment to capture its carbon emissions. The oil giant is partnering with around 50 industrial facilities on the plan.
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The hub would also include pipeline infrastructure to transport that carbon underground. ExxonMobil envisions the storage to occur tens of miles off the Gulf Coast, deep under the seafloor in federal waters, where the storage capacity is enormous.
When fully up and running, the hub could capture a total of 100 million tons of carbon dioxide each year by 2040, more than double what the entire world captured in 2020.
That amount of captured emissions is equivalent to taking 20 million cars off the road every year or planting all of California’s landmass in trees every year, according to Erik Oswald, vice president of strategy development and advocacy for ExxonMobil’s Low Carbon Solutions.
“It’s a really big bite at the emissions challenge,” Oswald told the Washington Examiner in a recent interview.
However, whether and how quickly ExxonMobil’s carbon capture vision can become a reality depends on what type of policy support the oil giant can get from the federal government. Oswald was in Washington, D.C., the week of May 17 to meet with members of the Biden administration and congressional offices about the proposal.
“If you could make a lot of progress on the policy front over the next six months to a year, you’re really only a couple years away from being able to start physically building things,” Oswald said, noting ExxonMobil is “actively” in the project design and analysis stage.
Nonetheless, it would be a massive investment. ExxonMobil estimates the entire project could require at least $100 billion in public and private funding. Carbon capture technology, too, currently remains too costly to be deployed widely.
Oswald said the ideal policy for the Houston hub — and to support carbon capture technology in general — would be a national market mechanism pricing carbon, such as a carbon tax or a standard, that would offer credit to low-carbon fuels.
In the absence of consensus on that type of policy, ExxonMobil is calling on Congress to substantially beef up federal tax incentives for carbon capture and storage. Those incentives, known as the 45Q tax credit, enjoy broad bipartisan support, and Biden has suggested he’d support bipartisan efforts in Congress to expand and extend those credits.
Currently, those incentives offer a $50 tax credit per ton of carbon dioxide stored underground in geologic reservoirs. To support carbon capture on the scale of the Houston hub proposal, Congress would need to double that incentive and increase the amount of time developers can claim it from 12 to 30 years, Oswald said.
ExxonMobil is also calling on the Biden administration to help fund the project. The oil company is exploring “what vehicles are available for the government to make initial investments in infrastructure,” Oswald said in talks with government officials. For example, if the federal government were to spend $10 billion on carbon dioxide pipeline and storage infrastructure, it could help “kickstart” the Houston project, Oswald added.
In addition, the Houston project raises new regulatory questions because ExxonMobil is proposing to inject carbon dioxide into the seafloor of federal waters, and the federal government would need to grant access to large swaths of offshore areas.
Overall, Oswald said ExxonMobil has had “very good, very high-level conversations” with the Biden administration. “They’ve been very supportive of the project and advancing the conversations,” he added.
Nonetheless, ExxonMobil’s pitch comes as some left-wing environmental activists sharply criticize carbon capture and storage, calling on the Biden administration to exclude the technology from its climate agenda. A group of White House environmental justice advisers echoed those concerns in a recent draft report, saying carbon capture projects “will not benefit a community.”
Oswald said the oil company wants to be cognizant of the concerns from people in the local Houston area, especially those who live in heavy-polluted regions, as it develops the carbon capture hub.
“There’s even the opportunity here where we’re actually improving the environment, not just the CO2 but other air pollutants,” he said.
However, Oswald rejected criticism from environmentalists that oil companies don’t have a role in transitioning to lower-carbon energy. Projects such as the Houston carbon capture hub are critical to helping de-carbonize hard-to-abate sectors such as industrial manufacturing that create essential products, he added.
ExxonMobil envisions more than just a carbon capture ecosystem growing out of its hub proposal, too.
Oswald said the carbon capture hub could ultimately help create a supply of low-cost, low-carbon hydrogen, versatile fuel the Biden administration and industries say will be important to de-carbonize sectors such as heavy-duty trucking, marine transportation, and manufacturing.
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ExxonMobil’s initial calculations also show the carbon capture hub could create tens of thousands of jobs and retain tens of thousands of industrial jobs in the region.
“It’s a rare thing that’s very huge, but it’s going to require a tremendous amount of coordination and cooperation,” Oswald said of the Houston hub proposal. “That’s the thing that we’re kind of looking at right now, talking to all of these people, making sure that we can all work together to accomplish something like this.”
