You’re out of free articles.
Log in
To continue reading, log in to your account.
Create a Free Account
To unlock more free articles, please create a free account.
Sign In or Create an Account.
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Welcome to Heatmap
Thank you for registering with Heatmap. Climate change is one of the greatest challenges of our lives, a force reshaping our economy, our politics, and our culture. We hope to be your trusted, friendly, and insightful guide to that transformation. Please enjoy your free articles. You can check your profile here .
subscribe to get Unlimited access
Offer for a Heatmap News Unlimited Access subscription; please note that your subscription will renew automatically unless you cancel prior to renewal. Cancellation takes effect at the end of your current billing period. We will let you know in advance of any price changes. Taxes may apply. Offer terms are subject to change.
Subscribe to get unlimited Access
Hey, you are out of free articles but you are only a few clicks away from full access. Subscribe below and take advantage of our introductory offer.
subscribe to get Unlimited access
Offer for a Heatmap News Unlimited Access subscription; please note that your subscription will renew automatically unless you cancel prior to renewal. Cancellation takes effect at the end of your current billing period. We will let you know in advance of any price changes. Taxes may apply. Offer terms are subject to change.
Create Your Account
Please Enter Your Password
Forgot your password?
Please enter the email address you use for your account so we can send you a link to reset your password:
The good, the bad, and the hedge
America’s largest oil and gas company just secured the missing elements for it to become one of the nation’s most powerful players in the nascent carbon capture and storage industry.
ExxonMobil announced last week that it was purchasing Denbury Inc., giving it access to an extensive network of pipelines for transporting carbon dioxide and land holdings for injecting the pollutant underground. The nearly $5 billion all-stock sale is the biggest “carbon management” deal yet.
Carbon management is an emerging industry premised on constructing a labyrinth of factories and pipelines to capture emissions from the smokestacks of industrial facilities, and also directly from the atmosphere, and pump them into the Earth’s crust. Exxon has espoused its work on carbon capture for years, but the company’s investments have never matched its rhetoric, fueling accusations of greenwashing. Now, it suddenly seems to be positioning itself to become this carbon maze’s lead architect.
What does it all mean? The Biden administration and many clean energy researchers believe carbon capture may be the only way to reduce emissions from certain sectors like chemical manufacturing, steel making, and cement production — at least in the near term. Some argue that a company like Exxon has the expertise and capital to build this infrastructure, and that carbon management presents a new potential business model for the company. But the idea is controversial among many climate advocates who worry that it will serve solely to give Exxon and others license to continue digging up and selling fossil fuels.
Of course, it’s impossible to know Exxon’s intentions without being in the boardroom. But when I spoke to experts about what the acquisition of Danbury signaled, three theories emerged about the company’s motivations.
Exxon has claimed to be a leader in carbon capture for years, but until recently, the company’s only U.S. project consisted of a single site in Wyoming where Exxon processes natural gas. The carbon collected there was sold to other fossil fuel companies, including Denbury, to inject into depleted oil wells in order to squeeze more crude out of the ground — a technique known as enhanced oil recovery.
But the company has been under increased shareholder pressure over the last several years to do more to reduce its emissions and invest in clean industries. Exxon has long lagged its peers in even disclosing its carbon footprint, let alone setting targets to reduce it. But after activist investors won three seats on Exxon’s board in 2021, the company launched a Low Carbon Solutions business focused on carbon capture, clean hydrogen, and biofuels.
In just the past year, the new outfit has made deals with a handful of industrial emitters throughout the Gulf Coast to manage their carbon dioxide emissions. Exxon has announced contracts to haul off the carbon captured from an ammonia plant in Louisiana — the largest greenhouse gas emitter in the state — as well as a steel plant owned by Nucor and a yet-to-be-built hydrogen plant in Baytown, Texas. It also formed a partnership with Mitsubishi Heavy Industries, which has developed a leading solution for capturing carbon from industrial smokestacks.
The deal with Denbury will significantly speed up the company’s ability to deliver on those agreements. It gives Exxon access not only to 1,300 miles of carbon dioxide pipelines, but also to underground storage capacity estimated at 2 billion metric tons of CO2 — close to a third of what the U.S. emitted in 2021.
To Neil Quach, a former oil and gas analyst for Citigroup and UBS who now works at the think tank Carbon Tracker, the deal shows that Exxon is taking the low carbon future seriously — at least more seriously than its peers like Chevron. He recently authored a paper criticizing Exxon’s strategy, arguing that the company’s oil and gas portfolio was “highly vulnerable to the energy transition.”
“I’ve been arguing that they have to get into transition businesses in a more material way, and this is one step toward that,” he told me. At the same time, though, he noted that the $5 billion deal was still only a drop in the bucket — Exxon turned a $56 billion profit last year and is valued at $400 billion.
Though Exxon appears to be starting to build out a material carbon capture business, to some observers, the key question is, to what end?
“I’m not too enthralled with this purchase,” Dennis Wamsted, an energy analyst at the Institute for Energy Economics and Financial Analysis, and frequent critic of carbon capture, told me. “I see it as a way for Exxon to harvest subsidies from the U.S. government,” he said. “I don’t see this as a legitimate business effort by Exxon to lower its impact on the climate going forward.”
Wamsted was referring to tax credits for carbon capture that were recently juiced by the Inflation Reduction Act. Companies can now earn up to $85 for every metric ton of CO2 they collect from the smokestacks of factories and sequester — making it a potentially profitable endeavor for the first time.
There’s no question that Biden’s signature climate policy is a key motivator for Exxon and also Denbury. Previously, Denbury’s business model centered on using carbon dioxide for enhanced oil recovery. But the company has recently been scooping up acreage in Alabama, Louisiana, Mississippi, Texas, and Wyoming — 10 sites in all — for pure carbon sequestration.
This is what the tax credits were designed to do — otherwise, why would Exxon or Denbury bother spending money to bury carbon when it’s free to dump it into the atmosphere and profitable to use it to extract oil?
I asked Wamsted what would constitute a legitimate effort and whether it matters if Exxon is “harvesting subsidies” if the result is to lower emissions. But he’s not convinced the efforts will actually lead to climate-relevant results. Wamsted acknowledged that it’s challenging to cut emissions from certain industries like steelmaking in other ways, but he’s skeptical that carbon capture will ultimately be the best way to do it. In the case of Nucor, for example, Exxon’s project won’t fully eliminate the emissions produced by the steel plant.
“If there are things that work in five years I’ll give them credit for it,” Wamsted said, “but we have a very short timeframe here to try to get our carbon emissions under control.”
Many of Wamsted’s concerns, like of the safety and security of storing carbon underground, are shared by communities that live near Exxon’s potential injection sites, which could be a hurdle for the projects as they unfold. Many in the environmental justice movement fear that carbon capture will extend the life of polluting plants they would rather see shut down, and could even amplify the risks of living near these sites.
“In the real world, this is an experiment,” Beverly Wright, the executive director of the Deep South Center for Environmental Justice, told The Washington Post. “And this experiment is going to be conducted on the same communities that have suffered from the oil and gas industry.”
If there are two potential futures — one where the world allows the production of fossil fuels for decades to come, and one where production is forced to wind down — perhaps Exxon is just trying to prepare for both scenarios.
“When I looked at the Exxon investment in Denbury, I was curious if it actually signaled a change in how the company was thinking about the future,” Andrew Logan, the senior director of oil and gas at the sustainable investing nonprofit Ceres, told me. “Is it actually thinking the world is going to proceed toward decarbonization, and investing accordingly? Or is this just a way to cover the bases in case things don’t go as they expect?”
Since the Inflation Reduction Act completely changed the economics of carbon capture, Exxon doesn’t have to have had some big change of heart about the energy transition to see it as a good bet. And there’s no indication the company is slowing down its fossil fuel business. CEO Darren Woods announced in early June that he aimed to double the amount of oil Exxon fracks in the U.S. in the next five years. The acquisition of Denbury also comes with significant oil production capacity, including a new enhanced oil recovery project called the Cedar Creek Anticline expected to produce 12,500 barrels per day by late 2024. But in taking over Denbury’s pipelines, Exxon is also better positioned to grow its carbon capture business if it makes sense to.
One of the reasons deciphering all this is so hard is that for a long time the promise of carbon capture technology was used as a way to slow progress, and now it could actually bring about real world emission reductions. But that still depends on how it’s implemented, and whether or not it enables the continued use of fossil fuels.
“In a way, it makes it more complicated because you’re actually gonna see stuff built in a way that we haven’t for the last two decades,” said Logan. “But it still does not remove the need to take much more ambitious steps to bring down emissions elsewhere in the industry.”
Log in
To continue reading, log in to your account.
Create a Free Account
To unlock more free articles, please create a free account.
A conversation with VDE Americas CEO Brian Grenko.
This week’s Q&A is about hail. Last week, we explained how and why hail storm damage in Texas may have helped galvanize opposition to renewable energy there. So I decided to reach out to Brian Grenko, CEO of renewables engineering advisory firm VDE Americas, to talk about how developers can make sure their projects are not only resistant to hail but also prevent that sort of pushback.
The following conversation has been lightly edited for clarity.
Hiya Brian. So why’d you get into the hail issue?
Obviously solar panels are made with glass that can allow the sunlight to come through. People have to remember that when you install a project, you’re financing it for 35 to 40 years. While the odds of you getting significant hail in California or Arizona are low, it happens a lot throughout the country. And if you think about some of these large projects, they may be in the middle of nowhere, but they are taking hundreds if not thousands of acres of land in some cases. So the chances of them encountering large hail over that lifespan is pretty significant.
We partnered with one of the country’s foremost experts on hail and developed a really interesting technology that can digest radar data and tell folks if they’re developing a project what the [likelihood] will be if there’s significant hail.
Solar panels can withstand one-inch hail – a golfball size – but once you get over two inches, that’s when hail starts breaking solar panels. So it’s important to understand, first and foremost, if you’re developing a project, you need to know the frequency of those events. Once you know that, you need to start thinking about how to design a system to mitigate that risk.
The government agencies that look over land use, how do they handle this particular issue? Are there regulations in place to deal with hail risk?
The regulatory aspects still to consider are about land use. There are authorities with jurisdiction at the federal, state, and local level. Usually, it starts with the local level and with a use permit – a conditional use permit. The developer goes in front of the township or the city or the county, whoever has jurisdiction of wherever the property is going to go. That’s where it gets political.
To answer your question about hail, I don’t know if any of the [authority having jurisdictions] really care about hail. There are folks out there that don’t like solar because it’s an eyesore. I respect that – I don’t agree with that, per se, but I understand and appreciate it. There’s folks with an agenda that just don’t want solar.
So okay, how can developers approach hail risk in a way that makes communities more comfortable?
The bad news is that solar panels use a lot of glass. They take up a lot of land. If you have hail dropping from the sky, that’s a risk.
The good news is that you can design a system to be resilient to that. Even in places like Texas, where you get large hail, preparing can mean the difference between a project that is destroyed and a project that isn’t. We did a case study about a project in the East Texas area called Fighting Jays that had catastrophic damage. We’re very familiar with the area, we work with a lot of clients, and we found three other projects within a five-mile radius that all had minimal damage. That simple decision [to be ready for when storms hit] can make the complete difference.
And more of the week’s big fights around renewable energy.
1. Long Island, New York – We saw the face of the resistance to the war on renewable energy in the Big Apple this week, as protestors rallied in support of offshore wind for a change.
2. Elsewhere on Long Island – The city of Glen Cove is on the verge of being the next New York City-area community with a battery storage ban, discussing this week whether to ban BESS for at least one year amid fire fears.
3. Garrett County, Maryland – Fight readers tell me they’d like to hear a piece of good news for once, so here’s this: A 300-megawatt solar project proposed by REV Solar in rural Maryland appears to be moving forward without a hitch.
4. Stark County, Ohio – The Ohio Public Siting Board rejected Samsung C&T’s Stark Solar project, citing “consistent opposition to the project from each of the local government entities and their impacted constituents.”
5. Ingham County, Michigan – GOP lawmakers in the Michigan State Capitol are advancing legislation to undo the state’s permitting primacy law, which allows developers to evade municipalities that deny projects on unreasonable grounds. It’s unlikely the legislation will become law.
6. Churchill County, Nevada – Commissioners have upheld the special use permit for the Redwood Materials battery storage project we told you about last week.
Long Islanders, meanwhile, are showing up in support of offshore wind, and more in this week’s edition of The Fight.
Local renewables restrictions are on the rise in the Hawkeye State – and it might have something to do with carbon pipelines.
Iowa’s known as a renewables growth area, producing more wind energy than any other state and offering ample acreage for utility-scale solar development. This has happened despite the fact that Iowa, like Ohio, is home to many large agricultural facilities – a trait that has often fomented conflict over specific projects. Iowa has defied this logic in part because the state was very early to renewables, enacting a state portfolio standard in 1983, signed into law by a Republican governor.
But something else is now on the rise: Counties are passing anti-renewables moratoria and ordinances restricting solar and wind energy development. We analyzed Heatmap Pro data on local laws and found a rise in local restrictions starting in 2021, leading to nearly 20 of the state’s 99 counties – about one fifth – having some form of restrictive ordinance on solar, wind or battery storage.
What is sparking this hostility? Some of it might be counties following the partisan trend, as renewable energy has struggled in hyper-conservative spots in the U.S. But it may also have to do with an outsized focus on land use rights and energy development that emerged from the conflict over carbon pipelines, which has intensified opposition to any usage of eminent domain for energy development.
The central node of this tension is the Summit Carbon Solutions CO2 pipeline. As we explained in a previous edition of The Fight, the carbon transportation network would cross five states, and has galvanized rural opposition against it. Last November, I predicted the Summit pipeline would have an easier time under Trump because of his circle’s support for oil and gas, as well as the placement of former North Dakota Governor Doug Burgum as interior secretary, as Burgum was a major Summit supporter.
Admittedly, this prediction has turned out to be incorrect – but it had nothing to do with Trump. Instead, Summit is now stalled because grassroots opposition to the pipeline quickly mobilized to pressure regulators in states the pipeline is proposed to traverse. They’re aiming to deny the company permits and lobbying state legislatures to pass bills banning the use of eminent domain for carbon pipelines. One of those states is South Dakota, where the governor last month signed an eminent domain ban for CO2 pipelines. On Thursday, South Dakota regulators denied key permits for the pipeline for the third time in a row.
Another place where the Summit opposition is working furiously: Iowa, where opposition to the CO2 pipeline network is so intense that it became an issue in the 2020 presidential primary. Regulators in the state have been more willing to greenlight permits for the project, but grassroots activists have pressured many counties into some form of opposition.
The same counties with CO2 pipeline moratoria have enacted bans or land use restrictions on developing various forms of renewables, too. Like Kossuth County, which passed a resolution decrying the use of eminent domain to construct the Summit pipeline – and then three months later enacted a moratorium on utility-scale solar.
I asked Jessica Manzour, a conservation program associate with Sierra Club fighting the Summit pipeline, about this phenomenon earlier this week. She told me that some counties are opposing CO2 pipelines and then suddenly tacking on or pivoting to renewables next. In other cases, counties with a burgeoning opposition to renewables take up the pipeline cause, too. In either case, this general frustration with energy companies developing large plots of land is kicking up dust in places that previously may have had a much lower opposition risk.
“We painted a roadmap with this Summit fight,” said Jess Manzour, a campaigner with Sierra Club involved in organizing opposition to the pipeline at the grassroots level, who said zealous anti-renewables activists and officials are in some cases lumping these items together under a broad umbrella. ”I don’t know if it’s the people pushing for these ordinances, rather than people taking advantage of the situation.”