announced on Monday that it would create a new business to focus on commercializing technology to reduce carbon emissions. The company has been under pressure from activist investors to shift its business toward more climate-friendly initiatives.
The new business will focus at first on carbon capture and storage, an area where Exxon (ticker: XOM) has been active for decades. Carbon capture involves capturing carbon dioxide instead of allowing it to be released into the atmosphere, and then injecting it deep into rocks, where it is expected to stay permanently. The technology has been cited by a United Nations panel as one way to slow the impact of climate change.
Exxon has been working on the technology for more than 30 years and says it “was the first company to capture more than 120 million metric tons of CO2, which is equivalent to the emissions of more than 25 million cars for one year.”
The company also said in the release that it would spend $3 billion through 2025 on “lower emission energy solutions.” Exxon says it has put more than $10 billion into carbon-reduction research and development and deployment since 2000.
But Exxon has been criticized for being slower than other oil giants to shift its business model toward renewables.
(BP), for instance, said last year it planned to spend $3 billion to $4 billion a year on renewable energy by 2025.
Asked in a recent interview with Barron’s why Exxon wasn’t investing as quickly as BP, Exxon executive Neil Chapman noted that the company had made low-carbon investments, while saying “we see the demand for crude oil or gas, for refined products and petrochemicals, being there for a long time into the future.”
Exxon is facing an activist campaign from investment firm Engine No. 1, which is challenging the company on its low-carbon commitment. Engine No. 1 has nominated four members to Exxon’s board. Other investors, including the Church of England, have been pushing Exxon on this issue, too.
Exxon has long been an energy innovator but hasn’t always capitalized on its inventions. In fact, Exxon was a key developer of lithium ion battery technology, which powers electric vehicles that have been eating into Exxon’s core business. The company, however, isn’t making much money on lithium batteries, even as that business has become one of the fastest-growing areas of energy production.
Asked if it wished it had commercialized that technology sooner, a spokesperson wrote that lithium batteries are “one part of the energy transition. Exxon Mobil Low Carbon Solutions will be focused on adding new technologies as they mature to commercialization.”
Write to Avi Salzman at firstname.lastname@example.org