Just as NLPC warned, ExxonMobil’s latest signals to investors suggest the company’s foray into “low-carbon” ventures is not going as planned. After years of touting large-scale hydrogen production and carbon capture as central to its climate ambitions, management is now openly acknowledging that these projects make no economic sense without subsidies. According to Bloomberg:
Exxon Mobil Corp. warned its project to build the world’s biggest low-carbon hydrogen plant in Texas could face delays after Congress curtailed incentives as part of President Donald Trump’s tax and spending package.
“If we can’t see an eventual path to a market-driven business, we won’t move forward with the project,” Chief Executive Officer Darren Woods said in a call with analysts Friday. He also warned of possible delays in low-carbon gas for AI data centers and lithium.
Exxon announced plans for a multitude of low-carbon projects over the last few years as the company sought to be an early-mover in mitigating industrial emissions and counter criticism over climate change. But the Trump administration’s withdrawal of Biden-era subsidies threatens to reduce the profitability of such projects and halt progress.
Mr. Woods added that Exxon is “concerned about the development of a broader market.” That’s exactly what NLPC warned in 2024 when our shareholder proposal urged Exxon’s board to avoid tethering executive compensation to emission-reduction targets and subsidized climate projects. We doubled down on our warnings by calling for Mr. Woods’s removal after he voiced support for the Paris Agreement. We argued that Exxon shouldn’t invest in projects that suddenly become unprofitable with the stroke of a pen.
Fortunately, now that the subsidies are disappearing, so are Exxon’s climate-friendly plans. That should reassure shareholders that Exxon is not immune to reason. A focus on projects that clear real-world return thresholds—not those propped up by temporary incentives—aligns with the value-creation discipline that built Exxon into the world’s preeminent energy company. NLPC welcomes the recalibration and will continue to hold the board to the principle we set out in 2024: invest in what works for owners, not in what flatters policymakers.
