During an earnings call last Friday, Exxon CEO Darren Woods shared several carbon-focused directions the oil company is exploring. Both direct air capture (DAC) and the production of carbon materials were mentioned, as well as the current thinking behind their prospects.
In the presentation the two were grouped as potential “high-value, high growth” markets. Carbon dioxide has multiple applications in carbon fiber products, as well as batteries according to Woods and with the share of renewables growing at a promising pace this could turn into an opportunity. CO2 has also been touted as the optimal solution for long duration storage by companies like Energy Dome.
Keen to set the right levels of expectation, Woods said that: “There’s a number of things today we had our applications for, but there’s either a performance dimension that needs to be improved, or a cost dimension that needs to be improved. We think we have a line of sight for how we can do that, how we can improve the performance aspects using our technology capabilities and at the same time find ways to reduce the cost of production. It is early days, I would say.”
The prospects of Direct Air Capture according to Exxon
The earnings call confirmed that Exxon has completed its feasibility study of the technology and is happy with the results at this stage. The next hurdle however might be a harder one – cost.
Answering a question about the company’s approach to DAC (also containing a reference to Occidental’s progress with the technology) Woods elaborated: “..our view is the available technologies today don’t meet the cost requirements. That’s somewhere [around] $600 per ton of CO2 removed, and our view is if you try to apply that across the emissions challenge the planet has, the world won’t be able to pay for that, so we’ve got to find a reduction. “We’ve set an initial goal of cutting the cost in half, just because that is a significant step change, recognizing it won’t be enough.”
As it stands there are approximately 80 companies developing DACs with most a dozen different approaches. Some of them are working with prepurchase agreements with organizations like advance market commitment Frontier and Swedish climate impact platform Milkywire. According to the latter, suppliers they are working with “…claim their capture costs are significantly lower than 500 USD today (even below 200 USD) but ask for more to cover uncertainties and overhead.”
Relevant: Exxon To Advance Direct Air Capture With Its Own Pilot Project
Woods doesn’t seem concerned about the competition and pointed out that the company will have a role to play when it comes to global deployment, regardless of who reaches the price point that will enable its mass adoption.
Critics have pointed out the potential dual application of DAC as a technology that can reduce the cost of enhanced oil recovery and ultimately produces more oil and emissions but this was not included as a revenue stream or source of cost reductions in the presentation.
Carbon Materials Attention
This was probably the first time carbon materials have been under the Exxon investor spotlight. With the potential to be utilized in a variety of battery and long-term storage technologies, carbon dioxide could become a feedstock for a market that is currently growing over 10% every year.
“..the challenge we’ve given our organization is, what can we do with carbon molecules? How can we meet growing needs and large markets? And they have to be large markets, because […] “If we are going to do something that moves the needle for the corporation, we have to do it at scale.” said CEO Woods.
Ominously, he also explained the bigger picture behind the inclusion of carbon materials: “We put it out there in this call to make sure people are beginning to think more broadly about what this company is capable of, and how our future could evolve in a very different direction than where we have come from.”
Read more: ExxonMobil And EnLink Working Together On New CO2 Transportation Areas
