In our last post about ExxonMobil, we described how Chairman and CEO Darren Woods overcorrected in response to the 2021 Engine No. 1 board insurgency, steering the company into a multi-billion-dollar low-carbon investment program built on the assumption that the Biden administration‘s climate policy architecture would be permanent. The Paris lobbying embarrassment, the “pacing” of hydrogen and biofuels spending, the $331 million in federal grants — all of it flows from that original miscalculation.
Darren Woods/IMAGE: Milken Institute via YouTube
But there is a second story inside the larger one, and it is more consequential for shareholders — and for American taxpayers. While Woods performed his Paris advocacy for external audiences, he simultaneously made a very large and very specific infrastructure bet: that ExxonMobil could dominate the emerging market for industrial carbon capture and storage, own the toll roads of the coming carbon compliance economy, and then — critically — use its policy influence to ensure that government mandates fill those pipelines with paying customers.
That is not a climate strategy. It is a regulatory capture strategy. And it has been financed in significant part by the American taxpayer.
The pivot to CCS dominance began in earnest in July 2023, when ExxonMobil announced the acquisition of Denbury Inc. in an all-stock transaction valued at $4.9 billion. Denbury was a specialist in CO2 pipeline infrastructure and enhanced oil recovery, and what ExxonMobil was buying, above all, was its pipe. The deal gave ExxonMobil the largest owned and operated CO2 pipeline network in the United States — more than 1,300 miles, stretching across Louisiana, Texas, and Mississippi — along with more than 15 strategically positioned onshore CO2 storage sites. When the acquisition closed in November 2023, ExxonMobil had secured a pipeline footprint no competitor could match.
“This transaction is a major step forward in the profitable growth of our Low Carbon Solutions business,” Woods said at the time.
The key word is profitable. This was not philanthropy. ExxonMobil was buying the physical infrastructure of what it expected to be a regulated, government-sustained carbon compliance market — and positioning itself as the only company with the scale to serve it.
By late 2024, the buildout accelerated. ExxonMobil described the year as a “breakout year” for its CCS business, touting signed commercial agreements with industrial customers. Among the earliest was a 2022 deal with CF Industries, the world’s largest ammonia producer, to capture and permanently store up to 2 million metric tons of CO2 annually from its Donaldsonville, Louisiana complex — a project that began commercial operations in July 2025. In June 2023, ExxonMobil announced a deal with Nucor Corporation, one of North America’s largest steel producers, to capture up to 800,000 metric tons of CO2 per year from Nucor’s direct reduced iron plant in Convent, Louisiana. In April 2025, it announced a deal with Calpine Corporation, the nation’s largest natural gas power producer, to transport and permanently store up to 2 million metric tons of CO2 per year from a facility near Houston.
ExxonMobil’s own corporate materials state the Gulf Coast network has the potential to ultimately handle more than 100 million metric tons of CO2 annually — more than six times its current contracted volumes. That gap between what is contracted today and the theoretical capacity of the network is a very large, very expensive hole that requires customers. And the way ExxonMobil intends to find those customers is through government policy.
Built on the Taxpayer’s Back
This infrastructure dominance has not been achieved on market terms alone. ExxonMobil pursued a $331 million federal Department of Energy grant for a hydrogen project at its Baytown, Texas facility — only to have the Trump administration cancel the award in June 2025, along with $3.7 billion in other Biden-era clean energy grants, citing lack of economic viability. Beyond direct grants, the company’s CCS investments depend heavily on the Inflation Reduction Act’s (aka the Green New Deal) Section 45Q tax credit, which under the IRA provided up to $85 per metric ton of CO2 captured and stored in saline geological formations — a subsidy that Woods himself warned at COP29 would materially change ExxonMobil’s CCS investment calculus if repealed.
“There needs to be an incentive to reward those investments and generate a return,” Woods told CNBC. “If we find that those incentives dissipate or go away entirely, then that would definitely change our investment plans.”
ExxonMobil’s own investor-facing disclosures acknowledge the dependency plainly. The company projects “exponential revenue growth potential” from its CCS business, but qualifies that projection with a list of required conditions that includes, prominently, “supportive government policies.” Even ExxonMobil’s announcement of its largest offshore CO2 storage site in the U.S. — a 271,000-acre lease off the Texas Gulf Coast — included the caveat that future capacity is “subject to additional investment by ExxonMobil, customer commitments, supportive policy, and permitting.” Without those policies, the business model does not work. The infrastructure exists; the customers do not yet exist at the scale the network requires; and the subsidy and mandate structures that would compel or incentivize those customers are exactly what ExxonMobil has been lobbying to create.
As NLPC has documented, this is a pattern, not an anomaly. ExxonMobil’s non-hydrocarbon investments are commercially viable in direct proportion to the government’s willingness to underwrite them.
The Lobbying That Completes the Circle
ExxonMobil’s own published advocacy and lobbying disclosures make the strategy explicit. The company states that it “strongly supports policies that advance the research, development, and deployment of carbon capture and storage technologies and advocates for policies that encourage the use of CCS.” It specifically identifies support for “carbon intensity-based fuel standards” — a policy framework that would require industrial manufacturers and fuel producers to meet government-mandated carbon intensity thresholds, with CCS as the primary compliance mechanism available to carbon-heavy industries.
Read that plainly: ExxonMobil is lobbying for government rules that would effectively require its industrial customers — steel mills, ammonia plants, natural gas processors, power generators — to capture and store their CO2 emissions. ExxonMobil owns the only large-scale end-to-end infrastructure to handle those emissions. The mandates would create the customers. The customers would fill the pipes. The pipes belong to ExxonMobil.
An independent academic analysis published in 2025 found that fossil fuel companies were responsible for 89 percent of all federal CCUS lobbying expenditures between 2005 and 2024 — totaling approximately $954 million — and that the industries nominally cited as needing CCS (steel, cement, paper) spent a tiny fraction of what the energy sector spent advocating for it. ExxonMobil was among the top three individual company spenders. This is not an industry pulling for a technology that will help its customers. This is an industry pulling for a policy architecture that will require its customers to buy a service it has already built.
The Competitive Moat
The commercial logic is straightforward once you see it. Chevron has CCS ambitions — a joint venture off the Texas Gulf Coast, a struggling flagship facility in Australia — but minimal operational U.S. pipeline infrastructure. ConocoPhillips has made no significant CCS infrastructure investment. No other American oil company has anything approaching ExxonMobil’s 1,300-mile CO2 pipeline network, its portfolio of offshore and onshore storage sites, or its roster of operational commercial agreements with customers across steel, ammonia, natural gas processing, power generation, and methanol. If the federal government were to mandate carbon intensity standards that require major industrial emitters to capture and store their CO2, ExxonMobil would be the only company positioned to fulfill that demand at scale, in the largest industrial corridor in the United States, in the near term.
That is a monopoly built on public subsidy and policy advocacy. And it is being constructed by a Chairman-CEO who also chairs the board responsible for evaluating whether this strategy serves shareholders’ long-term interests.
What This Means for Shareholders
NLPC’s position is not that carbon capture is inherently without merit. The technology is real, and there are legitimate industrial applications for it. The problem is the governance structure under which this particular CCS empire is being built — and the risks it creates for ExxonMobil shareholders.
The CCS business model is explicitly contingent on government policy durability. The current administration has shown no interest in mandating carbon intensity standards, and the IRA tax credits that underpin the 45Q subsidy structure are already under pressure — the One Big Beautiful Bill Act that passed in 2025 standardized the base credit at $17 per metric ton for new equipment placed in service after July 4, 2025, a steep reduction from the $85-per-ton rate that originally animated ExxonMobil’s investment thesis. If policy support continues to erode, ExxonMobil will be left holding $4.9 billion in Denbury infrastructure, a Gulf Coast pipeline network sized for a regulatory mandate that never arrived, and commercial agreements signed with customers who no longer have a compelling business reason to pay for ExxonMobil’s service.
We have seen this movie before, and recently. Ford, General Motors, and Stellantis each committed billions to electric vehicle infrastructure sized for a government-mandated market that did not arrive at the pace Washington had promised. The result: combined write-downs of more than $52 billion across the three companies, with Stellantis alone posting a $26.3 billion net loss for 2025 — its first annual loss in company history — driven overwhelmingly by EV write-downs. Stellantis’s own CEO described it as “the cost of over-estimating the pace of the energy transition.” ExxonMobil’s CCS empire rests on an identical bet: that government will mandate the traffic before the market produces it. Detroit’s balance sheet is the cautionary exhibit.
Meanwhile, Woods’s recently “paced” hydrogen and biofuels investments — pulled back because customer demand didn’t materialize — are a preview of what happens when the government policy assumptions behind a non-core investment thesis fail to hold. History is now repeating, at larger scale, in CCS.
NLPC has filed a shareholder proposal at ExxonMobil’s 2026 annual meeting calling for separation of the Chairman and CEO roles. The CCS regulatory capture story is precisely why that reform is necessary. A CEO who also chairs the board evaluating his own strategic bets is not a CEO who faces meaningful accountability. Shareholders deserve an independent board chair who can ask — before billions more are committed to a pipeline network sized for mandates that may never come — whether ExxonMobil’s CCS ambitions are a genuine business strategy or an elaborate bet that government will be compelled to bail out.
Meanwhile Woods seems lost as to what has historically made his company and its shareholders massive profits.
“I’m not sure how ‘drill, baby, drill’ translates into policy,” he told CNBC in Nov. 2024.
Editor’s note: This post originally stated that ExxonMobil “received at least $331 million in federal Department of Energy grants for carbon capture projects in Texas.” That description was incorrect in two respects. The $331 million grant was awarded for a hydrogen project at ExxonMobil’s Baytown, Texas facility, not for carbon capture. Additionally, the grant was not received — the Trump administration cancelled it in June 2025, along with $3.7 billion in other Biden-era clean energy awards, citing lack of economic viability. The relevant paragraph above has been corrected accordingly.
(Image above created with Nano Banana AI).
