President Joe Biden’s decision to halt new liquefied natural gas export licenses has been touted as a victory by climate activists. But Exxon Mobil CFO Kathy Mikells, who opposes the decision, said Biden’s call wasn’t environmentally friendly enough.
“Reducing production of [liquefied natural gas] actually harms the world achieving net zero sooner rather than later,” Mikells told Bloomberg. “It’s a mistake.”
The U.S. is the world’s largest exporter of LNG, a form of natural gas chilled into liquid form to reduce its volume and make it easier to ship. Because of the energy needed to condense the gas, LNG production is more environmentally taxing than conventional natural gas.
But compared with coal, Exxon argues, LNG is more environmentally friendly, producing about 40% fewer greenhouse gas emissions.
“Holding up LNG exports means less U.S.-produced natural gas is available to replace coal around the world,” an Exxon spokesperson told Fortune.
While natural gas burns more cleanly than coal or petroleum—which has helped U.S. power-plant emissions fall by 35% since 2005—its use was meant to be a temporary replacement for coal until once-expensive renewable energy became affordable and accessible. Not only is generating energy from the sun and wind now cheaper than oil and coal, but natural gas has shown its weaknesses. Made primarily of methane, a heat-trapping gas, natural gas can leak from wells and pipelines, creating emissions that rival that of coal.
The International Energy Agency argues that we haven’t weaned ourselves off natural gas fast enough: In order to reach worldwide net-zero emissions by 2050 and limit rising temperatures to 1.5 degrees Celsius—which could curb the effects of severe climate change—there should be no new oil or gas fields, the IEA says.
Exxon has another reason to oppose Biden’s export halt: Along with QatarEnergy, it plans to independently market LNG produced on the U.S Gulf Coast. Mikells told Bloomberg the project, under the joint venture Golden Pass, is scheduled to begin next year.
Biden’s decision to pause natural gas exports, announced last week, is part of the White House’s efforts to halve greenhouse gas emissions by 2030. The pause allows the Department of Energy to review the economic and environmental impacts of LNG projects looking to export to Asia and Europe, a process that will take several months, according to Energy Secretary Jennifer Granholm.
Beyond Exxon’s concerns over the LNG export halt, other industry groups claim that the pause could reverse efforts to curb Russia’s LNG exports across Europe. The oil and gas lobbying group American Petroleum Institute called Biden’s decision “a win for Russia and a loss for American allies, U.S. jobs, and global climate progress.”
Exxon’s wavering commitment to net-zero emissions
Exxon has used climate-friendly language for years, and CEO Darren Woods has frequently talked about the 2015 Paris Agreement with investors.
“If you were an alien dropped from outer space into that meeting, you would have thought this was a company focused on solving climate change,” Kathy Mulvey, the accountability campaign director in the climate and energy program at the Union of Concerned Scientists, told Fortune in 2021.
Despite its eco-friendly talk and goal of net-zero greenhouse gas emissions by 2050, Exxon’s actions have not always matched the fervor of its CEO’s speech.
Company scientists knew about the negative climate impacts of burning fossil fuels since the 1970s, but publicly denied it for decades. Exxon’s net-zero objective also falls short in addressing other environmental harms. Exxon’s net-zero emissions goals do not include Scope 3 emissions, or those caused by outside sources consuming its products, making the oil company only one of five Western oil majors not setting a target to eliminate those types of emissions.
According to Exxon’s 2023 Advancing Climate Solutions Report, the company does not target Scope 3 emissions because it involves fuel burned by customers and is therefore difficult to determine.
Activist investors have tried to change Exxon’s carbon emissions policy from the inside. In 2021, activist investor Engine No. 1 installed three directors on the Exxon board, against the company’s wishes, with the goal of pushing Exxon to reduce carbon emissions.
But these shareholder efforts have come up short. Climate activist investors on Thursday withdrew a petition for Exxon shareholders to vote on whether the company should establish targets to reduce Scope 3 emissions after Exxon filed a lawsuit against the investors, saying they were pushing an “extreme agenda” on the ballot. This is the first time Exxon has gone to court to block shareholder activists, and Exxon plans to continue with its lawsuit, despite the resolution’s withdrawal.
“We believe there are still important issues for the court to resolve,” an Exxon spokesperson told Fortune in a statement.
In the past, similar proposals to target Scope 3 emission reductions have failed miserably. Last year, 11% of the company’s shareholders voted in favor of a proposal to reduce emissions, less than half of the 27% supporting the proposal the year before.
