Exxon Is Buying Its Way Into the Energy Transition
Its $4.9 billion Denbury acquisition gives the oil giant the largest network of carbon dioxide pipelines in the US and fits neatly into its carbon capture ambitions.
Climate activists stage a protest against fossil fuels and oil companies on the sidelines of the Global Climate Summit in Paris in June.
Photographer: Benjamin Girette/Bloomberg via Getty Images
Carbon capture is Exxon Mobil Corp.’s silver linings playbook. The latest chapter, around in draft form for a while, is the $4.9 billion acquisition of Denbury Inc., announced Thursday. Besides Uncle Sam, Wall Street is also doing its bit to help Exxon’s push into the carbon canceling business.
Carbon capture is the centerpiece of Exxon’s climate-related efforts for three big, silver-lined reasons. First, unlike renewable energy, which competes with oil and gas, capturing carbon complements Exxon’s core business and thereby may extend its lifespan. Second, unlike renewable energy, carbon capture hasn’t attracted a flood of investment competing away returns (reminiscent of shale’s boom years). So if it works at scale — a very big if — Exxon’s capital has an edge. Third, the Inflation Reduction Act’s carbon capture credits effectively provide Exxon with extremely patient venture capital to fund development (see this).