"By this, some 98% less CO₂ is being emitted" - ExxonMobil Low Carbon Solutions President Dan Ammann in an interview with WirtschaftsWoche

Mr Ammann, you were President at General Motors and Chairman of the Supervisory Board of Opel, you have a test driver's license for the Nürburgring. What kind of cars do you have in your garage today? Cars with combustion engines or e-drives?

Since I moved to Texas, I actually walk to work.

You're serious? In Houston, where practically everyone goes everywhere by car?

Here, I'm probably the only person who does that. In my garage today I have a mix of electric and petrol-powered cars, new and old.

Green politicians and climate activists see the oil industry as the enemy. One gets the feeling that the industry does not feature at all in their climate strategy. Why did you choose to join the oil company ExxonMobil?

If you make a list of those companies that actually have the potential to accelerate the transition to a climate-neutral energy supply, I think ExxonMobil is at the top. The oil and gas industry - and ExxonMobil in particular - have a key role to play if we want to achieve the energy transition.

So far, Big Oil has been a major contributor to global warming. Can the industry be part of the solution at all?

We have to be part of the solution. The world needs safe, reliable, and affordable energy. At the same time, it needs to reduce CO2 emissions. I started my career on Wall Street, was in the car industry for a long time, worked on self-driving cars in Silicon Valley. About a year ago, I moved to the oil and gas industry. In my career, I have dealt with big, challenging issues. But climate change and the energy transition are probably the biggest challenges facing humanity right now. And we can contribute a lot to that.

What was your first impression of the energy sector?

I noticed: You read about all the projects, all the initiatives. Lots of press releases are issued. But there are surprisingly few real activities, surprisingly few real projects to lower emissions that have got off the ground. Let's look at the emissions worldwide since the Paris Climate Agreement: They've gone up, not down. So there hasn't been much progress. We now need to finally build real projects that will help lower emissions, not just talk about them.

What is the problem?

An incredible amount of energy is spent arguing about what is the best way to become climate neutral. Should it be all electric? Should it be green hydrogen? Should it be blue hydrogen? Should it be pink hydrogen? The fact is that we will need all of it.

What will ExxonMobil's role be in all this?

Global energy emissions are about 35 billion tons of CO2 equivalent. About 80 per cent come from heavy industry, power generation and commercial transport. Only about ten or eleven per cent from light vehicle transport. The car industry is now being electrified. But that is just a tiny part of the total bill. That's why we focus on the 80 percent. How can we decarbonize heavy industry, electricity generation or commercial transport? To do that, we want to use those capabilities that already exist at ExxonMobil today. After all, we have a lot of experience in dealing with hydrocarbons, with carbon capture and storage. We have experience with hydrogen. We have experience with e-fuels, with biofuels. And we have experience with converting methanol to gasoline and methanol to jet. We can use these internal skills and knowledge in a very cost-effective way and help to reduce emissions. These are all issues where we have high credibility, where we can make a difference. 

You pointed out a lack of projects actually being implemented to bring emissions down. Has ExxonMobil already initiated anything?

Over the past 12 months we've signed the world's first three significant third-party carbon off-take agreements with an ammonia producer, an industrial gas producer, and a steel company. These are CO2 emissions on an industrial scale. With these first three contracts alone, we are saving five million tons of CO2 per year. That is the equivalent of converting two million internal combustion cars to e-drives. To put that in perspective: That’s the amount of all e-cars sold in the US to date. So I am incredibly optimistic about what we can achieve if we take on these industries.

What do you do with the captured CO2?

We store it deep underground. The first storage sites will be on the Gulf Coast. There are good geological conditions for storing CO2 permanently. We know how to capture CO2, how to transport the gas safely via pipelines, and a lot about subsurface geology and where to store the gas permanently and safely. We are experts in this field.

This is CO2 from others. What about your own products?

We are in the process of building the world's largest plant for the production of low-CO2 hydrogen here in Texas. It will produce about one million tons per year. About half of that will go to reduce emissions in our own operations by replacing natural gas.

By producing hydrogen from green electricity and water using electrolysis plants?

We produce hydrogen using natural gas and storing the resulting CO2 deep in the underground. This emits about 98 percent less CO2 into the air than before. We can also then convert the hydrogen into ammonia, which is an efficient way to transport the energy of hydrogen around the world.

Many activists would rather leave oil and natural gas in the ground right now. They see injecting CO2 as inconsistent.

Our main focus is on the question: what is the most cost-effective way to reduce emissions as much as possible? Can we make the energy transition affordable? We should be completely indifferent to the “how”. There is a big difference here between the Inflation Reduction Act in the U.S. and how the EU’s approach. In Europe, people often try to prescribe the way. You can only do it X way or Y way or Z way. But then you make it more expensive by definition.

When you walk through ExxonMobil's headquarters in Houston, talk to people who have worked in the oil and gas business for decades, how do they react to your plans? Do they say, we don't need this new nonsense? Or are they on board?

When I came into the company, I actually wasn't sure. It could have been that people would say, yeah, go to that corner over there and do your stuff. But it's been the exact opposite. The level of enthusiasm is incredible. The enthusiasm for what we're doing is very, very high and really encouraging. One of the advantages at ExxonMobil is that we can leverage all these incredible capabilities in engineering, research, and execution of major projects, and put them together in the right teams.

Let's look at the automotive industry. It's now invested more than a trillion dollars in electrifying its fleets. How much is ExxonMobil putting into the new climate-friendly business?

The initial investment over the next four or five years will be $17 billion. But that's just the start. The difficulty is not capital anyway. It's getting the projects done. After all, we are doing things that no one has done before. The total investment for the first three projects is about a billion dollars. And we're having the same impact as probably hundreds of billions that have been spent on a few million electric vehicles so far.

Occidental Petroleum together with Canadian company Carbon Engineering build right now a plant in Texas that uses direct air capture to fish CO2 out of the air. That will then be injected into the ground as well. By that, Occidental intends to sell climate-neutral oil. Is that something that you at ExxonMobil also have in mind?

We also have a major technology program on Direct Air Capture that we are working on. We believe the technology will play a critical role in the energy transition. The challenge here is to make it cost-effective. It's one thing to demonstrate something on a small scale. But it's even more important to scale it up and bring costs down that way.

Making fossil oil carbon-neutral in this way sounds charming. Will it be superior to e-fuels made entirely with the help of green power?

The world will probably use a combination of both. Here we need to be practical and pragmatic, rather than ideological. If e-fuels work in one place and direct air capture along with fossil oil in another, or if both work side by side, that would be great. Because we need all of those things.

In Chile, you are a partner in what is currently the only factory producing e-fuels. What do you expect from this?

This is a very interesting demonstration-scale project. We are trying to learn as much as possible from it. For example, how we can reduce production costs if we transfer e-fuel production to a large scale. It's really important that the fuel is affordable. After all, Europe has seen in the last year or two what happens when energy becomes unaffordable.

What do governments need to contribute to make all these things you're talking about happen on a large scale?

We absolutely need a price, some version of a price for CO2. This can take many forms. An emissions trading system, as it exists in Europe, is conceivable. A policy approach like the Inflation Reduction Act in the USA. But it could also be penalties that become due if CO2 emissions are not reduced. As soon as the price of CO2 is higher than the cost of reducing carbon, then projects will start to scale. The latter happens by investing in new technologies and scaling up projects and economies of scale. That's where I see our role.

As a former investment banker, you know that it will be hard to sustain without growth. Do you think ExxonMobil will find a way to continue growing despite the energy transition? Or will it become a shrinking company?

We will definitely remain a growth company. And the most significant part of the growth opportunity is exactly what we're talking about here. We see the low-carbon business that we're building as a very, very big opportunity. We want to play a very important role in the energy transition and build a really interesting and compelling new business.

Other oil companies have dabbled, more or less successfully, in wind power, among other things. Would that be something for ExxonMobil?

Renewable power is going to play a really big role in the energy transition. About half of the energy will probably come from renewables at some time in the future. The other half will come from molecule-based solutions, which we're working on right now, that, however, need wind and solar power, too. But wind and solar is not an area we're experts in. And if you're not an expert in a field, it's going to be harder to make a return on it. But there are many big project developers who can do it better, and we’ll will work with them.