In December 2024, ExxonMobil secured the largest offshore carbon storage site in U.S. history—271,000 acres in Texas state waters. The oil giant trumpeted this acquisition as part of its commitment to "growing its Low Carbon Solutions business" while announcing plans to invest up to $30 billion in "lower-emission technologies" by 2030. For philanthropists seeking legitimate climate investments, these moves appear promising.
But a different story emerges when you follow the money.
Internal ExxonMobil strategic planning documents obtained through SEC filings reveal the company projects just 250-500 carbon capture facilities globally by 2050—a fraction of competitor Shell's estimate of 2,500-10,000 facilities. This stark disconnect raises an urgent question: Is ExxonMobil's carbon capture push genuine climate action or sophisticated financial engineering driven by enhanced tax credits?
The Public Relations Offensive vs. Internal Reality
ExxonMobil's public messaging portrays the company as a carbon capture pioneer. Beyond securing massive storage rights in Texas waters, the company claims commitments for capturing over 14 million tons of CO2 annually and aims to ultimately remove up to 100 million tons through its Gulf Coast network. The company emphasizes its role in creating a commercial carbon capture and storage (CCS) industry in the U.S., with plans to decarbonize operations and support low-carbon electricity generation.
Yet internal assessments tell a dramatically different story.
Internal documents from 2018 revealed ExxonMobil's assessment that "global scale is limited" for carbon capture technology, contradicting the company's public messaging promoting it as essential for achieving net-zero emissions. This aligns with the Intergovernmental Panel on Climate Change (IPCC) estimate that carbon capture could account for only about 2.4% of global carbon mitigation by 2030.
The numbers don't add up. If ExxonMobil truly believed carbon capture would play a significant role in addressing climate change, why would its internal projections show minimal global deployment—especially compared to Shell's far more ambitious outlook?
Following the Money: The 45Q Tax Credit Driver
The disconnect between ExxonMobil's public enthusiasm and private skepticism becomes clear when following the money trail—specifically, the lucrative tax incentives that make carbon capture financially attractive regardless of climate impact.
The enhanced 45Q tax credit offers $85 per ton for CO2 permanently stored and $60 per ton for CO2 used in enhanced oil recovery (EOR). This credit can be claimed for 12 years after equipment is operational and is uncapped, with inflation adjustment starting in 2027.
For ExxonMobil, with its extensive CO2 pipeline infrastructure already in place, these credits represent a virtually risk-free revenue stream that requires minimal additional investment while potentially generating billions in tax benefits over the next decade. The company operates over 1,500 miles of CO2 pipeline—the largest network in the U.S.—positioning it perfectly to capitalize on these subsidies.
Recent modifications have made the credit even more attractive, including lowered capture thresholds and extended construction windows for projects. The Infrastructure Investment and Jobs Act allocated nearly $12 billion to develop the carbon capture supply chain.
What's particularly revealing is that the break-even cost for carbon capture projects is estimated at $109-$153 per ton, exceeding current tax credit values. This suggests that without tax subsidies, many projects wouldn't be economically viable. The credit's transferability allows entities with limited tax liability to unlock full credit value, driving investment decisions based on tax optimization rather than climate impact.
The Enhanced Oil Recovery Reality
Here's what ExxonMobil's marketing materials don't emphasize: approximately 73% of CO2 captured worldwide is used for enhanced oil recovery rather than permanent storage. ExxonMobil's own Shute Creek project directed approximately 95% of 120 million tonnes of captured CO2 to EOR over 35 years.
This isn't an ExxonMobil anomaly—it's an industry pattern. Studies indicate that 22 out of 32 commercial carbon capture projects globally are primarily used for EOR. Research on CO2-EOR operations shows they can initially start with a negative carbon footprint but may transition to a positive footprint over time as oil production continues, potentially creating a net increase in atmospheric carbon despite being marketed as a climate solution.
This raises fundamental questions about whether ExxonMobil's carbon capture initiatives are primarily climate solutions or oil production enhancements subsidized by taxpayers.
Geological Risks and Scientific Credibility Gaps
Even if ExxonMobil were focused on permanent storage rather than EOR, significant geological risks threaten the viability of carbon storage—risks conspicuously absent from the company's public messaging.
While ExxonMobil's public materials emphasize "proven technology" and "permanent storage," the significant geological complications that have plagued even the most sophisticated projects in Norway raise questions about how these challenges will be addressed in the Texas Gulf Coast—a region with different geological characteristics.
Norway's Sleipner and Snøhvit projects, often cited as successful CCS models, have faced serious geological complications. At Sleipner, CO2 unexpectedly rose into a shallow layer, revealing a previously unknown geological stratum. At Snøhvit, signs of CO2 rejection appeared just 18 months into operations, indicating a much shorter storage capacity than anticipated and necessitating emergency interventions.
These findings from Norway—where geological conditions are relatively well-understood—raise serious questions about ExxonMobil's Texas Gulf Coast storage plans. The region has potential for gigatonne-scale geological carbon storage but currently lacks operational Class-VI wells specifically designed for CO2 injection. Seismic hazards are a particular concern, with potential for induced earthquakes that could compromise storage integrity.
Over 150 academic papers have been published on Sleipner and Snøhvit, indicating extensive study but also ongoing uncertainty about their geological stability.
Investment Balance: Climate Action or Business as Usual?
ExxonMobil's carbon capture investments must be viewed alongside its continued fossil fuel expansion plans. While announcing up to $30 billion for "lower-emission technologies," the company simultaneously aims to increase upstream production to 5.4 million oil-equivalent barrels per day. This dual strategy raises questions about whether carbon capture serves as genuine climate action or provides cover for continued fossil fuel expansion.
The company's 2024 earnings of $33.7 billion and plans to extend its annual $20 billion share-repurchase program through 2026 demonstrate robust financial performance that could support more aggressive climate investments if the company were genuinely committed to emissions reduction.
Due Diligence Guide for Philanthropist Investors
For philanthropists seeking legitimate climate investments, ExxonMobil's approach reveals how financial incentives can corrupt the scientific promise of carbon sequestration. Before committing funds to any carbon capture project—whether ExxonMobil's or others—investors should demand answers to these critical questions:
What percentage of captured carbon will go to EOR versus permanent storage? Request specific projections and contractual commitments, not vague assurances.
Has the geological storage site been independently assessed for leakage risks? Look for comprehensive studies from geologists without financial ties to the project.
What monitoring systems are in place, and are they independently verified? Effective Monitoring, Verification, and Accounting (MVA) tools should differentiate between natural and anthropogenic CO2 and monitor CO2 plume migration.
How does the project's economics change if tax credits are reduced or eliminated? Projects overly dependent on tax subsidies may prioritize financial engineering over climate impact.
What is the net climate impact when accounting for additional oil production? Demand lifecycle carbon accounting that includes emissions from extracted oil.
Alternative investment considerations include direct air capture technologies with verified permanent storage, natural carbon sequestration projects with rigorous measurement protocols, and carbon capture projects with transparent geological assessments and no EOR component.
The Path Forward
A study published in Nature Climate Change found that CCS capacity must increase eight-fold by 2030 to meet climate targets, yet only 10% of climate mitigation pathways meet the necessary growth constraints. Historical analogues suggest CCS could reach 0.37 GtCO2 per year by 2030, lower than required for 1.5°C pathways.
For carbon capture to fulfill its climate potential rather than simply subsidizing business as usual, we need transparent geological assessments, verified carbon accounting, and clear separation from enhanced oil recovery. Independent verification frameworks like the Verified Carbon Standard and MSCI's carbon credit project assessments offer promising approaches for evaluating project integrity.
ExxonMobil's carbon capture initiatives reveal a troubling pattern: public climate promises that mask internal skepticism, tax-driven investments that prioritize EOR over permanent storage, and geological risks downplayed in corporate messaging. For philanthropist investors, distinguishing between genuine climate solutions and tax-advantaged greenwashing requires looking beyond the corporate marketing to follow the money trail.
The question isn't whether carbon capture has a role in addressing climate change—it's whether ExxonMobil's approach serves the climate or simply its bottom line.
Things to follow up on...
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Senate tax credit: A U.S. Senate panel has proposed raising the 45Q tax credit for enhanced oil recovery projects to $85 per metric ton, equal to the credit for permanent carbon storage, which could further incentivize oil production over climate benefits.
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Industrial carbon removal: Research published in Biophysical Economics and Sustainability suggests that industrial carbon removal methods may be net CO2 additive, potentially emitting more CO2 than they sequester when accounting for full lifecycle impacts.
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Texas storage capacity: The Texas Gulf Coast has potential for gigatonne-scale geological carbon storage, but estimated annual costs range from $715 million for 10 MtCO2 to $2.65 billion for 30 MtCO2, raising questions about economic viability.
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Global storage verification: A 2022 study estimates that only 29 Mt of CO2 was actually geologically stored in 2019, with capture capacity often overstated by 19-30%, highlighting the need for uniform reporting standards on capture and storage rates.