‘The energy giant Exxon, once a resister, now pushes for draconian regulations on carbon emissions’ – Wants to ‘take advantage of some of the government support’ for carbon capture & sequestration

By Allysia Finley

Excerpt:

The world hit peak climate four years ago. Companies and countries pledged to become “net zero.” Automakers put the pedal to the metal on electric vehicles. Asset managers vowed to punish corporate boards that didn’t get with the program.

Exxon Mobil at first resisted. But after a bruising shareholder proxy battle in 2021, the energy giant surrendered to the progressive climate army that is now in retreat. As governments, asset managers and companies withdraw from the climate crusade, Exxon is racing to the front lines by urging global CO2 emissions regulations.

During an earnings call on Friday, CEO Darren Woods touted his company’s plans to “take advantage of some of the government support and policy that’s out there”—i.e., subsidies for hydrogen and for carbon capture and sequestration—and also work “very hard” to “establish a true framework for carbon accounting.”

“We need a better system to manage emissions across the globe,” he said. Yes, just what the world needs is for a multilateral government body à la the United Nations to regulate emissions of businesses across the globe. This is essentially what Exxon advocated in a report last week that starts by lamenting the “world’s climate policies are falling short.”

Exxon’s solution: “Product-level carbon-intensity standards,” which it analogizes to energy-efficiency standards for appliances. “These standards work by setting limits on certain product characteristics” and “can be tightened over time, which incentivizes producers to meet increasingly stringent requirements,” the report explains.

In short, regulators would set CO2 emissions rules for manufacturing products, which would compel companies to use more renewable energy, biofuels, hydrogen and carbon capture. Exxon has invested heavily in the last three.

A model for this regulatory regime is California’s low-carbon fuel standard, which has driven refineries in the state to produce biofuels instead of gasoline and jacked up prices at the pump. Regulatory costs and market distortions would be much worse if such carbon-intensity standards were applied to more businesses, as Exxon has in mind.

“Policy makers can start with the products that could drive large amounts of global CO2 emission reductions, such as steel, cement, and aviation fuel, where even small changes in carbon intensity would have big impacts,” the report says. “This approach embeds the cost of reducing emissions in the product’s price rather than as an explicit tax.”