The CEOs of several oil majors are seeking greater continuity in a sea of change. The Covid-19 pandemic and the acceleration of a green transition in the United States, under the Biden Administration, have led to structural changes in the energy industry.
Oil and gas companies have had to respond to challenges, including political and geopolitical issues, that have led many firms to change their long-term strategies. Most major fossil fuel companies now include renewable energy or clean tech projects in their portfolios and plan to diversify beyond oil and gas in the coming decades. This has resulted in Big Oil becoming increasingly wary of the shift that a change in leadership, from Biden to Donald Trump, could bring.
Chevron and the Future of U.S. Energy
Mike Wirth, the CEO of Chevron, has spoken in favor of the development of a strong renewable energy sector, alongside continued fossil fuel output, to ensure U.S. energy security.
Wirth recently stated that the energy transition is “going to take longer than people would have hoped a few years ago.” In December, Wirth said that developing “a separate [zero-carbon] energy system in parallel” will require new infrastructure and new investments and is “going to take time.”
However, the CEO also acknowledged the value of a green transition and the need for a tailored approach to achieving it. “The reality is some of these solutions work better in some places than they do in others, and none of them serve all the different needs of a diverse economy,” Wirth said. He emphasized his support for the flexibility of the Paris Agreement, which permits countries to make nationally determined contributions based on their contexts.
When it comes to Trump, Wirth has called for continuity in U.S. energy policy. He has stressed the importance of mitigating environmental impact, ensuring access to affordable energy, and maintaining national security.
Wirth said that he thinks Trump understands “the importance of a strong energy economy for a strong US economy.” He also expects Trump to “reduce the regulatory burden” that the energy industry faces to spur growth and innovation in both renewables and conventional energy.
ExxonMobil’s View
Meanwhile, in November last year, ExxonMobil’s CEO Darren Woods said Trump should keep the U.S. involved in the global effort to tackle climate change. Exxon has invested heavily in climate tech in recent years and plans to invest $20 billion in carbon capture and storage (CCS) technology by 2027. It also plans to invest heavily in hydrogen fuel and lithium mining. Exxon’s decision to make these investments was primarily driven by the introduction of federal tax credits under the Inflation Reduction Act (IRA).
Woods stated, “There needs to be an incentive to reward those investments and generate a return… If we find that those incentives dissipate or go away entirely, then that would definitely change our investment plans.”
While Exxon plans to expand its portfolio with new renewable energy projects, it does not plan to reduce its oil or gas output in the mid-term.
When it comes to Trump’s pledge to boost oil output in the coming years, CEOs seem unclear on how this might be achieved. Woods stated of Trump’s pledge, “I’m not sure how ‘drill, baby, drill’ translates into policy.”
Paris Agreement Withdrawal
During President Trump’s first day in office on Monday, he followed through with plans to withdraw from the 2015 Paris Climate Agreement. This move has been widely critiqued by the U.S. oil and gas industry.
Bethany Williams, a spokesperson for the American Petroleum Institute – whose members include Exxon Mobil and Chevron, emphasized that the organization has “long supported the ambitions of the Paris Agreement.”
During the COP29 climate summit in Azerbaijan late last year, Darren Woods called on Trump to keep the U.S. in the Paris Agreement. Woods said that repeatedly leaving and reentering the deal could lead to greater uncertainty in the energy sector.
Meanwhile, Anne Bradbury, the CEO of the American Exploration and Production Council, said, “It’s critical that any conversation about addressing climate change must be global in nature, and also recognize that America is the world leader in both energy production and emissions reductions.”
Other industry experts have suggested that the U.S. withdrawal from the agreement could lead to regulatory ambiguity and create greater uncertainty about which long-term strategy energy companies should follow – one centered around fossil fuel production or one looking towards transition.
The Takeaway
Overall, most U.S.-based energy executives are calling for an energy strategy rooted in continuity. They are asking the U.S. government for greater consistency in its energy policy, to support both continued fossil fuel production and the development of transition energy and technologies.
In October, Mike Wirth stated, “What really matters is consistent and coherent energy policy.”
Big Oil has long prioritized oil and gas production. However, following the launch of the IRA and other federal climate initiatives, the industry has benefited from the introduction of tax credits and other financial incentives, which have encouraged an unlikely industry to develop its renewable energy and cleantech offerings and embrace an energy outlook that includes both fossil fuels and green energy.
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