Trump’s Attacks on Climate Policy Are Even Hitting Exxon

Republicans’ tax bill would, however, severely limit a provision making it much easier for smaller firms to take advantage of the tax credit. That could end up being a boon for huge companies that have already invested heavily in carbon capture. Among the grants being terminated by the Department of Energy is $332 million for a project at ExxonMobil’s Houston-area Baytown chemical plant, where the company still claims it will eventually capture 98 percent of carbon dioxide generated by producing hydrogen from methane gas. Exxon hasn’t commented on the grant cancelation, but it’s a drop in the bucket compared to the company’s recent investments in carbon management. Exxon’s $5 billion acquisition of the pipeline firm Denbury in 2023 made it into the largest owner and operator of carbon dioxide storage in the U.S. Late last year, Exxon also secured a lease from Texas for the country’s largest offshore CO2 storage site.

Why does Exxon want to be in the carbon management business? There are modest but growing markets abroad for carbon-derived products like ammonia. Although Exxon’s Baytown hydrogen plant has yet to reach a final investment decision, the company has signed off-take agreements with Mitsubishi, the South Korean firm SK Inc., and Japan’s Marubeni Corp., which intends to use Exxon’s ammonia to fuel a gas-fired power plant there. ADNOC—the United Arab Emirates’ state-owned oil-producer—acquired a 35 percent equity stake in the project last September. Stateside, Exxon has also inked major deals with deep-pocketed tech companies to provide gas power to data centers for AI, premised in part on the idea that it’ll at some point be “net zero emissions” thanks to carbon capture. Even if the U.S. isn’t poised to demand that oil and gas companies reduce their greenhouse gas emissions, other countries might. Starting in 2026, the European Union, for instance, will tariff importers of carbon-intensive goods like hydrogen and ammonia. Equipping petrochemical manufacturing operations with carbon scrubbing devices could ease compliance. Given Exxon’s size, moreover, an injection of federal dollars could set the company up to control whatever market for carbon storage does develop in the U.S., even if actual climate regulations are a long ways off. 

For now, the Trump administration is preserving Exxon and its competitors’ right to spew as many greenhouse gasses as they want. Corporations continuing to invest in carbon capture may represent a longer-term bet that some kind of regulation on carbon dioxide will happen eventually, either through more widespread carbon pricing or direct regulations of greenhouse gas emissions. Two things can be true: Companies like Exxon intend to continue drilling for oil and gas for as possible, and they also see a modest yet growing market for certain low-carbon technologies that they have the cash and expertise to gain a foothold in. This isn’t exactly great news for the planet. Mostly, it’s a reminder that a proliferation of “green technologies” doesn’t spell the end of dirtier ones.