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Exxon Mobil (NYSE:XOM) will not move forward with one of the world’s largest low-carbon hydrogen projects if the Biden administration withholds tax incentives for natural gas-fed facilities, CEO Darren Woods told Bloomberg at the CERAWeek by S&P Global conference on Monday.
Under current guidelines, incentives are earmarked for projects that produce “green” hydrogen by using water and renewable energy, but Exxon (XOM) believes it can produce “blue” hydrogen from gas by trapping carbon emissions; as a result, Woods said the company’s proposed Houston-area facility should qualify for tax credits under the Inflation Reduction Act.
Giving preference to green hydrogen over blue hydrogen would amount to a government attempt to favor certain technologies rather than simply focusing on cutting overall emissions, Woods said in the interview.
Exxon (XOM) has said its planned Baytown, Texas, project could produce 1B cf/day of hydrogen and capture 98% of associated carbon, helping reduce emissions at its adjacent oil refinery by as much as one third.
“We’re investing billions of dollars to reduce the carbon intensity of our natural gas,” Woods told Bloomberg, adding that failure of the Inflation Reduction Act to give companies credit would “basically instantly stop investments to reduce carbon intensity by the industry as a whole.”
To set the world in motion to achieve net zero by 2050, a broad recognition is needed of the cost and timeline of moving from a fossil-fuel based energy system to a low-carbon system, the CEO said.
“The narrative and a lot of the activists in this space have made it a one-dimensional issue which is just get rid of oil and gas, fossil fuels and coal,” Woods said. “You can’t give up the benefits that quickly. Society can’t tolerate that, the hardships that come with the lack of those benefits.”
Woods also said at CERAWeek that Exxon (XOM) is not interested in buying Hess, but the company wants the right to establish the value of the company’s Guyana stake, then consider the possibility of buying the stake if it is successful in arbitration.