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ExxonMobile (NYSE:XOM) will not move forward with one of the world’s largest low-carbon hydrogen projects if the Biden administration withdraws tax incentives for natural gas-fired plants, CEO Darren Woods told Bloomberg at the CERAWeek by S&P Global conference on Monday.
Under current guidelines, the incentives are intended for projects that produce “green” hydrogen using water and renewable energy, but Exxon (XOM) believes it can produce “blue” hydrogen from the gas by trapping carbon emissions; as a result, Woods said the company’s proposed Houston-area plant should qualify for tax credits under the Inflation Reduction Act.
Giving preference to green hydrogen over blue would amount to the government trying to favor certain technologies rather than simply focusing on reducing overall emissions, Woods said in the interview.
Exxon (XOM) said the project planned in Baytown, Texas, could produce 1 billion cubic meters/day of hydrogen and capture 98% of the associated carbon, helping to reduce emissions at the adjacent oil refinery by up to a third .
“We are investing billions of dollars to reduce the carbon intensity of our natural gas,” Woods told Bloomberg, adding that the Inflation Reduction Act’s failure to provide credit to companies would “essentially immediately halt investments to reduce the intensity of carbon by industry as a Total tool.”
To put the world on track to reaching net zero by 2050, broad recognition of the costs and time needed to move from a fossil fuel-based energy system to a low-carbon system is needed, the CEO said.
“The narrative and many activists in this space have made it a one-dimensional issue that is simply getting rid of oil and gas, fossil fuels and coal,” Woods said. “You can’t give up benefits so quickly. Society can’t tolerate that, the hardships that come with the lack of those benefits.”
Woods also told CERAWeek that Exxon (XOM) is not interested in buying Hess, but the company wants the right to determine the value of the company’s stake in Guyana, and then consider buying the stake if it is successful in ‘arbitration.