US Largest Oil Company ExxonMobil Reluctantly Commits to Carbon Neutrality by 2050

Among Major Oil Companies, the Latest to Officially Commit to Carbon Neutrality... Scope 3 Carbon Neutrality Excluded

[Photo by Reuters Yonhap News]

[Asia Economy Reporter Park Byung-hee] ExxonMobil, the largest oil company in the United States, has officially committed to achieving carbon neutrality company-wide by 2050, according to a report by The Wall Street Journal (WSJ) on the 18th (local time). However, the announcement of its carbon neutrality plan came later than other major oil companies, and its detailed implementation plans are less developed compared to competitors, leading to ongoing criticism from environmental groups.

Last month, ExxonMobil announced that it would reduce its total greenhouse gas emissions by 20% by 2030 and achieve carbon neutrality by 2030 specifically for production facilities in the Permian Basin, which spans Texas and New Mexico, its most important production sites. On this day, ExxonMobil took a step further by stating its intention to achieve company-wide carbon neutrality by 2050.

However, ExxonMobil’s official announcement of its carbon neutrality goal is the latest among major U.S. and European oil companies. BP and Royal Dutch Shell had already proactively announced their carbon neutrality plans in 2020, and Chevron, the second-largest U.S. oil company, disclosed its carbon neutrality plan last October.

Another point of controversy is that ExxonMobil’s carbon neutrality target only covers greenhouse gas emissions from production facilities it directly operates. ExxonMobil did not announce carbon neutrality plans for production facilities in which it only invests but does not directly operate, nor did it disclose plans for greenhouse gas emissions from refined products such as gasoline. Darren Woods, CEO of ExxonMobil, stated only that the company would collaborate with partners to achieve similar levels of greenhouse gas reductions at production facilities it does not directly operate.

ExxonMobil has excluded Scope 3 carbon neutrality. Corporate carbon emissions are categorized into Scopes 1 to 3. Scope 1 refers to direct emissions from the company’s production processes, Scope 2 refers to indirect emissions from electricity and power used at business sites such as factories, and Scope 3 broadly includes emissions from supply chains, logistics, product use, and disposal stages.

Will Scargill, an analyst at market research firm GlobalData, pointed out that BP, Royal Dutch Shell, and others have set carbon neutrality goals including Scope 3, and that ExxonMobil’s carbon neutrality plan is passive compared to its competitors.

Analyst Scargill noted, "The greenhouse gases emitted from products produced by ExxonMobil are at least five times greater than the greenhouse gases emitted from production facilities directly operated by ExxonMobil." He added, "Greenhouse gas emissions from products are expected to increase by about 15% over the next five years."

CEO Woods has previously expressed a negative stance on carbon neutrality. He likened the successive announcements of carbon neutrality plans by competitors to a "beauty contest," downplaying their significance. Woods said, "If oil companies reduce greenhouse gases by selling facilities to other competitors, it is merely a sleight of hand where the greenhouse gas emissions are recorded on another company’s books."

However, as pressure from environmental groups and activist funds demanding stronger eco-friendly policies has increased, ExxonMobil has gradually strengthened its environmental policies. In May last year, ExxonMobil conceded three of the 12 board seats to an activist fund advocating for environmentalism through a proxy fight at the shareholders’ meeting. ExxonMobil announced last year that it would invest $15 billion by 2027 to reduce carbon emissions, expanding its previous plan to invest $3 billion by 2025.