Exxon Mobil is looking to prove its commitment to addressing climate change in the aftermath of a scandal involving one of its senior lobbyists claiming in a secretly recorded sting video that the company’s support for a carbon tax is only for show.
In an exclusive interview with the Washington Examiner, Erik Oswald, who leads Exxon’s new Low Carbon Solutions business, acknowledged the comments by lobbyist Keith McCoy “frustrated” his company’s attempts at lobbying for a carbon tax.
McCoy said Exxon is only publicly supporting a carbon tax to appear environmentally friendly with little consequence because it sees the policy as politically impossible to pass.
“On a personal level, it was just gutting to have to listen to that because it was such a mischaracterization of what we are all working for,” Oswald said. “You kinda felt like you had your legs chopped off from underneath you.”
In recent weeks, Exxon CEO Darren Woods has also condemned the lobbyist’s comments and apologized for them while reassuring the company is committed to lobbying for carbon pricing.
Woods declined an interview request for this story.
But Exxon’s attempts at damage control are being met with skepticism by some quarters, including traditional allies.
This month, the Climate Leadership Council and its advocacy arm, Americans for Carbon Dividends, pulled Exxon’s membership in both groups.
The Climate Leadership Council, a group founded by former GOP secretaries of state James Baker and the late George Shultz, advocates for a federal carbon tax that would return the revenue from the fee to households to offset higher energy costs.
Exxon was one of the first oil companies to endorse the Climate Leadership Council’s carbon tax and dividend proposal in 2017, later committing $1 million over two years to help promote the plan.
An official at the organization told the Washington Examiner that the group acted against Exxon after “careful and deliberate consideration and internal discussions.”
Exxon called the decision “disappointing and counterproductive,” and Oswald deemed the retaliation premature, saying it’s “a little early to do something like that.”
Still, Oswald claimed the lobbyist’s comments had done more to “hurt” Exxon’s advocacy efforts with “people we didn’t have a relationship with or had a very negative view of the company or the industry” rather than allies.
In the video, McCoy revealed the identities of 11 senators “crucial” to Exxon’s lobbying on Capitol Hill, including a host of centrist Democrats known for convening business leaders, including the oil industry, in hopes of advancing bipartisan climate legislation.
These include West Virginia Sen. Joe Manchin, the chairman of the Energy Committee, Arizona Sen. Kyrsten Sinema, Montana Sen. Jon Tester, and Delaware Sen. Chris Coons.
Oswald said the “first thing” Exxon executives did after the video came out in June was reach out to “counterparts all along that circle and restate what our views actually are and how we’ve had this very long-held opinion” about carbon pricing.
Exxon is one of many large oil and gas companies that has come around to endorse a carbon tax as preferable to mandates and regulations, touting it as a “market-based approach” to incentivize emissions reductions by making polluting goods more expensive.
But critics question Exxon’s sincerity, given its previous position spreading doubt about the risks of climate change and fighting policies to address it.
“It certainly has played into that storyline,” Oswald said. “That is more where the damage is, not from the people we know or are talking to.”
Democratic Sen. Sheldon Whitehouse of Rhode Island, a carbon tax supporter not named in the video, said Exxon has more to prove.
“If Exxon is serious, the company should start by using its considerable lobbying power to advocate for a price on carbon pollution,” Whitehouse told the Washington Examiner. “It could also commit to full transparency moving forward.”
Others have come to Exxon’s defense.
Mike Sommers, CEO of the American Petroleum Institute, the oil industry’s lobby group, said Exxon was influential in persuading its members to support carbon pricing.
“Those [lobbyist’s] comments don’t reflect the experience I have had with Exxon Mobil,” Sommers told the Washington Examiner.
Former GOP Rep. Carlos Curbelo of Florida said McCoy and other Exxon officials offered “encouraging words” about a carbon tax bill he introduced in 2018, making him the first Republican to introduce national carbon pricing legislation in nearly a decade.
“What the company needs to do is over-communicate their beliefs, strategy, and investments and be perfectly transparent to prove they are serious about this and are committed to it,” Curbelo told the Washington Examiner. “They need to repair and build new alliances with stakeholders in the climate space.”
The timing of the video came soon after Exxon’s stunning board shake-up in which shareholders voted to install three new members nominated by a tiny activist hedge fund.
The hedge fund, Engine No. 1, persuaded shareholders with an argument based on financial grounds, contending that Exxon’s strategy of sticking with its core oil and gas business has not produced strong profits.
Exxon has acted in recent months to respond to shareholder and public pressure, setting short-term targets for reducing emissions and, for the first time, started publishing data on how the use of its products contributes to pollution.
Exxon also proposed building out a massive venture to install equipment to capture its carbon emissions in Houston, the first venture of the Low Carbon Solutions unit that Oswald leads.
Oswald said Exxon is focusing much of its lobbying on selling the Biden administration and lawmakers in Congress on the so-called carbon capture hub, which the oil major will need significant policy support to get off the ground.
Under the plan, Houston’s plentiful industrial facilities, such as gas-fired power plants, refineries, and chemical manufacturing operations, would install equipment to capture its carbon emissions.
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 world captured in 2020, Oswald said.
Carbon capture technology, however, remains too costly to be deployed widely.
Exxon is calling on Congress to beef up federal tax incentives for carbon capture and storage.
“Carbon capture is a really well-established part of the climate solution, but that [extra funding source] would get these projects going, and we would start moving to really material amounts of carbon sequestration going on,” Oswald said.
Exxon, however, has been reluctant to shift more directly into clean energy beyond its current focus on carbon capture, hydrogen, and biofuels.
Over the last few years, Exxon’s Big Oil competitors in Europe have pivoted more aggressively away from oil and gas and set decarbonization goals.
The Wall Street Journal reported that Exxon is considering pledging to reduce its net carbon emissions to zero by 2050, following BP and Shell.
But Exxon isn’t ready to make that commitment.
“We routinely evaluate our work and commitments and will update our shareholders and the public as those plans evolve,” said Todd Spitler, an Exxon spokesman.
Joseph Majkut, director of climate policy at the Niskanen Center, said Exxon would signal real change by setting a net-zero emissions goal, a target that he said could be more achievable if the United States imposed a carbon tax.
“Moving toward net-zero is an expression of taking the climate challenge seriously,” Majkut said. “Finding a way to do it that’s profitable and meets consumer needs is challenging, which is why we need policies like carbon pricing.”
