On 15 November at the Asia Pacific Economic Cooperation (APEC) in California, Exxon CEO Darren Woods made a speech outlining his longer term plans for the company. The title was ‘reframing the climate challenge’ and that is what he attempted to do. Woods believes Exxon is central to tackling the climate crisis, and this is where he made his case.
From an Exxon PR perspective, the speech was a relative success. Oil hacks lapped it up. Don’t make Big Oil ‘villains’ reported Bloomberg — one of many platforms to not see the Woods from the trees. I’m not going to go through the speech line by line, but I am going to highlight some chunks that were not widely reported as I think they offer a useful take on how Big Oil will play COP28. If you want the full speech you can read / watch it here.
PART 1 — I’m human, just like you
Here Woods seeks to address claims Big Oil doesn’t care. It’s a similar play to ex-Shell boss Bill Van Beurden a few years back. He has grandkids and they’re at the heart of his work. Just like any average person. Albeit one who took home $35.91m in 2022. Note his ref to solving problems: that’s central to his pitch.
“By training, I’m an engineer, which in many ways is how I still see myself — as someone who solves problems. And in my personal life, I’m a father and grandfather — who cares about his family, their quality of life, and their futures. Which means, I care very much about our environment and the health of our planet.”
PART 2 — What Exxon ‘knew’ doesn’t matter
This bit is fascinating. It’s been well covered that since the late 1970s Exxon scientists knew global warming was a bad thing. Pretty accurately, it turns out. But instead of warning the world, evidence suggests Exxon spent millions undermining climate science and backing climate denial. Woods doesn’t deny this — but he says we should move on.
“I’m fully aware that there are many who question ExxonMobil’s commitment because of what was said over 30 years ago or what they think Exxon knew back then. Frankly, I’m more interested in what ExxonMobil knows today.”
PART 3 — Climate is a problem, but not the only one
Woods is now grinding the gears. Climate is an issue but there are bigger ones. And the biggest is energy access. What’s more, only big oil & gas have the answers — because they’ve already done more than anyone to raise global standards of living. It’s a play to position himself and Exxon at the centre of the transition, not on the edges where he currently is. Note there is minimal ref to the cost of climate impacts in this speech.
“The global North-South divide will only be bridged when we commit to solving the world’s energy and emissions challenges simultaneously. Oil and gas are at the centre of both. Combusting them is a leading source of man-made greenhouse gas emissions. That’s the societal cost, and it’s real. At the same time, the societal benefits of oil and gas are unmatched in human history. They’ve done more to grow economies, eradicate poverty and improve quality of life than anything else.”
PART 4 — Exxon has changed: you just didn’t notice
A running theme in this speech is the suggestion that Exxon has long been a force for good, a serious advocate for development and a science believer. A quick look at its low-carbon vs oil & gas capex suggests otherwise, but let’s roll with Woods for now.
“If some of you are surprised by the clarity of ExxonMobil’s position on the climate challenge, even more noteworthy is the scale of our effort to address it… if you list the companies with a realistic chance to help improve access to energy and “bend the curve” on emissions, ExxonMobil would also be at the top.”
PART 5 — Wind, solar are nice but dim
The other key theme in this speech is that Woods has the answers others do not. He is the serious voice in the room and only he really understands the energy transition. Yet since Exxon has no serious wind or solar investments, one might assume Exxon is not backing the transition. But Woods knows what he’s doing: he now needs to knock the idea supported by the IEA among others that clean energy can deliver across all sectors.
“Wind and solar have great utility as a source of low-carbon electricity, but they just can’t get the job done in these hard-to-decarbonize sectors. We need to open the aperture to a much broader set of solutions.While renewable energy is essential to help the world achieve net zero, it is not sufficient — wind and solar alone can’t solve emissions in the industrial sectors that are at the heart of a modern society. The technologies ExxonMobil is pursuing can.”
PART 6 — We have the answers
So. Exxon has changed. Woods is a serious guy. Renewables aren’t the answer. What is? It should be obvious: carbon capture and storage (CCS). Worry not that Exxon’s CCS investments were a rounding error prior to this year. Exxon is spending $25bn a year on oil & gas, so this is $150bn v $17bn ‘low carbon’ through 2027. $5 billion went toward the acquisition of CO2 pipeline play Denbury Inc (note: shifting assets around doesn’t increase capacity).
“All of this — and more — is supported by our investment of approximately 17 billion dollars over six years …and our almost $5 billion dollar acquisition of a company with the largest pipeline system in the U.S. for transporting and storing CO2. When it comes to developing additional solutions, beyond World-scale problems like climate change, need world-scale companies to help solve them — like ExxonMobil.”
PART 7 — You’ve got the transition all wrong
With the speech wrapping, Woods gets to his key point. It’s time to be serious. His clear thesis is that oil & gas is the future. It is the sun around which others revolve. There cannot be a global energy system without hydrocarbons. Note nobody is saying the energy sector needs to shift overnight — but it’s a line oil & gas execs love to use to paint opponents as irrational.
“To get serious about net zero, the world needs to get real. We cannot replace overnight an energy system that took 150 years to build. The size and complexity are simply too vast. Those who would tear down the existing energy system have the wrong problem statement. The problem is not oil and gas. It’s emissions.”
PART 8 — Rewriting history
There’s still time here for Woods to bend the arc of history to suit Exxon’s story. Ignoring seismic global shifts off asbestos, CFCs, DDT, the closure of coal power plants globally and shift off polluting cars to cleaner transport — Woods claims (incorrectly) the push to keep oil in the ground is historically wrong.
“Never before have we stopped using an energy source because of the byproduct it produces. We successfully dealt with smog and acid rain by addressing harmful emissions, not by banning cars or shutting down power plants. The solutions to climate change have been too focused on reducing supply. That’s a recipe for human hardship and a poorer world.”
PART 9 — Exxon, defender of the poor
The central plank in big oil’s fight back is that major European & US firms have always had the concerns of the world’s poor at heart. Brush over the oil spills in Africa, Lation Africa & Asia. Gloss over the extractive practices of commodity traders that leave little to local communities. Ignore the climate impacts that hit the world’s poorest. Exxon once knew. Now it definitely cares.
“Leaving oil in the ground does nothing to stop the demand for it. It simply raises the price and makes it harder to alleviate poverty around the world. The global North grew vastly wealthier because of economic growth powered by oil and gas. The story is very different in the global South. In non-OECD countries, income per person is still only 11,000 dollars a year. No country has ever joined the developed world without access to oil and gas.”
PART 10 — We’re serious; our opponents are not
So to the finale. If you’re a vast corporation that made multi-billion profits off the 2022 energy crisis you should have a plan. Exxon has a plan. But it’s a plan that cannot rely on its vast profits. A company Woods has billed as a global changemaker cannot do this alone. It is a mere cog.
“To get serious, three things are needed: supportive public policy, significant technology advancements, and a smooth transition from government subsidies to market-based mechanisms. The governments of Asia-Pacific, and elsewhere, need to embrace constructive policy to encourage the shift to a lower-emissions future. And, most importantly, leverage the power of competitive markets… We should allow technologies and companies to compete — and let the best solutions win.”
A cynic might wonder why Exxon has long opposed EVs despite their rapid rise. It might question why a company that calls for a level playing field lobbies so hard for state subsidies. The cynic might also question why there’s no space in this speech for a serious reference to climate impacts, despite the multi-billion damages on the horizon. No matter. Woods has a plan, a lot of cash, and apparently grandkids.
All said, the speech is important as it lays out the big oil argument for COP28. Iterations of his thesis will proliferate in Dubai, as will oil deals. But the core argument will remain the same. Only Big Oil can save the day. Facts on the ground suggest this is a sham argument, but it’s one their vast PR teams will pump hard in the coming weeks. That’s why it’s worth reading in full — next to Exxon’s profits / low carbon CAPEX balance sheet.
