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CERAWeek: ExxonMobil CEO seeks market price for carbon to reduce GHG emissions

02 March 2021 Amena Saiyid

The head of ExxonMobil called on governments to set a market price for carbon, while cautioning them against picking winners and losers among energy sources.

"Getting a market price on carbon is going to be really important to make sure we are really using market forces to cost-effectively reduce [carbon dioxide (CO2)] emissions," Darren Woods, ExxonMobil chief executive officer, said during a 2 March panel discussion at CERAWeek by IHS Markit.

Woods was responding to IHS Markit Vice Chairman and Pulitzer Prize-winning author Daniel Yergin, who had asked him about the role governments should play in helping economies transition to a low-carbon future.

The oil executive also cautioned governments that "they should not pick winners and losers and they should not pick sectors," sending a message to President Joe Biden, who has made no bones about weaning the US off greenhouse gas-emitting fossil fuels.

Woods' remarks about winners and losers were made on the same day that a US District Court judge slapped a $14.25 million fine on ExxonMobil's Baytown refinery complex in Texas for violating Clean Air Act violations over an eight-year period.

Carbon credits and incentives

Instead, Woods said the government should open up the marketplace to a mix of carbon credits and incentives, where credits for reducing emissions in one sector could be used to help reduce emissions in another hard-to-decarbonize sector.

Woods' recommendations found backing from Saad Sherida Al-Kaabi, president and chief executive officer of Qatar Petroleum, who also participated in the panel discussion.

Al Kaabi said governments should partner with the energy industry, which has "put billions and billions of dollars" into enabling people to drive cars, fly in planes, and have running water and electricity.

"We need to be fair. The industry is responsive to the requirements of the environment going forward," he added.

Yergin pointed to an International Energy Agency report that said oil and natural gas will together make up 46% of the energy mix in 2040. He asked both Al-Kaabi and Woods how their companies would address the ensuing emissions from their operations going forward.

Natural gas has a role

Both Al-Kaabi and Woods were adamant that gas has a role in a transition toward a low-carbon future because they see wind and solar generation as intermittent and unreliable sources of energy.

The largest exporter of LNG, Qatar in February announced a $28.7 billion expansion of its QatarGas fields that would be equipped with carbon capture and storage technology. By 2027, Al-Kaabi said the expanded facility will have the capacity to store 7-9 million metric tons (mt) of CO2 emissions equivalent each year.

Al-Kaabi also said Qatar Petroleum is investing in drones and other technology to identify and measure leaks of methane, a key component of natural gas and a potent greenhouse gas, from its operations. "You can't fix what you can't identify," Al-Kaabi said.

Al-Kaabi said the oil industry was needlessly "hammered," but the "issue we need to focus on is how we can replace coal." He said 125 million mt of CO2 equivalent emissions would be erased, the equivalent of removing the emissions of 25 million cars, if gas-fired generation was to replace coal generation in its entirety.

Woods said he sees hydrogen as a low-carbon solution going forward. When asked whether he saw hydrogen production moving to commercial scale, he said "it all depends on the advancement of technology."

He said the technology to produce hydrogen is expensive and its applicability is limited.

"Frankly to do the job as required to help get society to net zero, we are going to need more advances and costs associated with that," Woods said.

Posted 02 March 2021 by Amena Saiyid, Senior Climate & Energy Research Analyst, IHS Markit

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