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Speaker 1: Welcome to zero. I am Akshatrati. Today Egxon's new tactic.

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Speaker 1: An oil CEO walks into a climate conference. No, it's

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Speaker 1: not a joke. Actually, these days it's not even an

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Speaker 1: uncommon occurrence. But it is still a big deal when

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Speaker 1: that CEO is Darren Woods, who leads Exonmobile Corporation. Regardless

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Speaker 1: of where this interiview happened, I would have jumped on

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Speaker 1: the opportunity. Far too few oil CEOs opened themselves up

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Speaker 1: to journalistic scrutiny. That it was at a climate conference

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Speaker 1: in Baku, Azerbaijan only made it more interesting. And this

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Speaker 1: was not Darren's first rodeo. He became the first Exon

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Speaker 1: CEO ever to attend a climate conference at COP twenty

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Speaker 1: eight in Dubai last year. When we spoke, it was

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Speaker 1: only days since the US election result had come out,

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Speaker 1: and Darren had things to say about Donald Trump that

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Speaker 1: I wasn't expecting. He also had strong ideas about how

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Speaker 1: Eggxon can be a positive force on climate. Now that

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Speaker 1: might seem odd. It is among the world's largest oil

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Speaker 1: companies and it has increased oil production quite a lot

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Speaker 1: over the last few years. There is also a well

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Speaker 1: documented history of companies like Eggxon showing doubt about climate

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Speaker 1: science to slow down climate action. But something has clearly

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Speaker 1: changed and it's worth hearing Darren's take. Welcome everybody to

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Speaker 1: a live taping of the Zero Podcast at COP twenty nine,

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Speaker 1: and welcome to the show, Darren.

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Speaker 2: Thank you. It's good to be so here.

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Speaker 1: We are in Baku, And before I get to important questions,

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Speaker 1: let me ask you what are you doing for fun?

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Speaker 1: While you're in od Zerbaijan. People keep recommending to me

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Speaker 1: that I should take a bath in crude oil. It's

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Speaker 1: a thing that a famous spa offers over here, and

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Speaker 1: I fact checked it and it's real.

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Speaker 2: I'm not doing that. I got in last night and

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Speaker 2: I'm spending the day here talking to a number of

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Speaker 2: people trying to share ex Molble's perspective on how we

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Speaker 2: can contribute to this challenge that we're all discussing this week.

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Speaker 1: So let's get to business. Then, many people here will

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Speaker 1: see Eggxon as a barrier to tackling climate change. But

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Speaker 1: you're here at a cop. You're here at a cop

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Speaker 1: for the second time, so you clearly don't think so

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Speaker 1: why do you come to a cop?

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Speaker 2: Well, I think one of the things that's been happening

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Speaker 2: over the last several years is the challenge of significantly

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Speaker 2: reducing emissions while continuing to meet the growing demand for

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Speaker 2: affordable energy is a tough challenge to solve. I think

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Speaker 2: the paulice that have been pursued to date are very

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Speaker 2: narrowly focused on limiting the supply of traditional sources and

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Speaker 2: trying to drive more expensive alternatives. That frankly isn't accomplishing

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Speaker 2: the overall objective. If you look at where we stand today,

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Speaker 2: oil is that record levels of demand a coal, gasoline, diesel,

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Speaker 2: and so I think while wind and solar, elected vehicles

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Speaker 2: are going to play a very important role, they're necessary,

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Speaker 2: they're not sufficient. We need more solutions. Frankly, as a company,

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Speaker 2: we think we can bring those solutions to bear. If

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Speaker 2: you look at what we're doing today, we have the

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Speaker 2: only large scale carbon caption storage system in the world.

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Speaker 2: We've got five customers with almost seven million tons per

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Speaker 2: am of contracted storage for CO two. No other company

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Speaker 2: in the world has that. We're developing the world's largest

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Speaker 2: virtually carbon free hydrogen facility in the US. We've got

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Speaker 2: plans to build that if the IRA legislation gets translated

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Speaker 2: into regulation. We're developing a new technique for producing lithium

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Speaker 2: to supply battery markets. We're doing work on carbon and

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Speaker 2: we have an opportunity to build a new type of

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Speaker 2: anode for batteries which have the potential to increase battery

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Speaker 2: capacity by thirty percent. And so a lot of things

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Speaker 2: we're doing across the very broad spectrum of opportunities, leveraging

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Speaker 2: our core capabilities to try to help reduce the world's emissions.

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Speaker 1: But COP is mainly about countries negotiating over I will

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Speaker 1: say laborious text because I've seen some of that text.

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Speaker 1: What conversation do you have as a corporate CEO here

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Speaker 1: at COP that are beneficial to you as a company.

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Speaker 2: Well, I think it's trying to make sure we have

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Speaker 2: a good understanding of where people are, what their concerns are,

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Speaker 2: where they're focused at. You know, there are a lot

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Speaker 2: of ambitions and aspirations that come out of the COP discussions.

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Speaker 2: We're very focused on the action and how do you

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Speaker 2: go from ambition to plan. So we're trying to help

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Speaker 2: provide a perspective from a company in an industry that

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Speaker 2: has a very long history of taking ambitious plans or

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Speaker 2: ambitious objectives in trans leading those into real war plans

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Speaker 2: and ultimately putting steel in the ground and building facilities

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Speaker 2: to accomplish them.

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Speaker 1: So we are going to unpack a lot of the

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Speaker 1: solutions you've talked about, but before we dive deeper into that,

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Speaker 1: I think it's worth addressing too elephants in this room,

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Speaker 1: Trump and Trust. Let's start with Trump. Do you think

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Speaker 1: Donald Trump, he's going to be in his second presidential

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Speaker 1: term in the US in January, do you think Donald

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Speaker 1: Trump is a threat to global climate action?

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Speaker 2: I think you know, if you look at the time

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Speaker 2: scale it's going to be required to address this challenge,

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Speaker 2: and the way that we think about it is a

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Speaker 2: long term investment. There's work that has to be done,

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Speaker 2: and so I'm not sure that any one administration is

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Speaker 2: going to significantly advance the pace of the transition or conversely,

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Speaker 2: significantly slow the pace. I think there's a lot of

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Speaker 2: work that needs to be done across the world, a

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Speaker 2: lot of sectors that need to be advancing the work

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Speaker 2: in this space. Frankly, we need more comprehensive policy, things

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Speaker 2: that encourage and tap into the capabilities of companies and

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Speaker 2: markets to reduce submissions. We're leaving a lot of opportunity

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Speaker 2: on the table today as a global society, as governments

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Speaker 2: around the world, there's a lot of work to be

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Speaker 2: done here. I don't think we're depending on anyone administration

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Speaker 2: or anyone country, frankly, to advance the global objectives.

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Speaker 1: So even as the president of the largest economy in

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Speaker 1: the world, the second largest emitter, if it's a four

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Speaker 1: year term, you're not that worried, But you do want

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Speaker 1: to see policies. And we know that Trump pulled the

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Speaker 1: US out of the Powis Agreement the first time around.

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Speaker 1: He has said that he will do so again. You

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Speaker 1: have said that you would see that as a mistake.

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Speaker 1: Trump pulling the US out of the Powis Agreement will

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Speaker 1: be a mistake. Why would it be a mistake.

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Speaker 2: First of all, what I'd say is the world needs

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Speaker 2: to find ways to reduce submissions in a thoughtful, constructive way,

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Speaker 2: in a consistent approach. We need to do that while

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Speaker 2: we're balancing the needs of people around the world to

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Speaker 2: have affordable energy. And so we call it the end equation.

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Speaker 2: You got to do both. You can't focus on one

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Speaker 2: at the exclusion of the other. That's going to require

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Speaker 2: a global effort. There's no one country that's going to

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Speaker 2: solve this problem. And so I do think in a

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Speaker 2: coord that brings together the world community to focus on

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Speaker 2: this subjective, which I believe is needed, is an important

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Speaker 2: accord in one that countries should stay in. And I

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Speaker 2: think the focus out to be not necessarily on pulling

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Speaker 2: in and out of the agreement, but finding a constructive

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Speaker 2: way to advance the goals of the agreement without compromising

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Speaker 2: economic growth, without compromising the growth in people's prosperity all

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Speaker 2: around the world. And there is the opportunity to do that.

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Speaker 2: I just don't think we've seen the policy manifest themselves

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Speaker 2: to achieve it.

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Speaker 1: Yet there is also a chance that he doesn't just

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Speaker 1: pull the US out of the Paris Agreement, that he

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Speaker 1: pulls the US out of the UN Climate Treaty. Now,

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Speaker 1: from a presidential perspective, they can't just rejoin a treaty.

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Speaker 1: So say there's a new president who does care about

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Speaker 1: climate change, who comes to power after Trump, They'll have

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Speaker 1: to go to the Senate, And as you know, the

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Speaker 1: Senate is really divided, and a likelihood of getting a

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Speaker 1: two thousand majority to join a climate treaty seems very

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Speaker 1: far fetched right now. So there could be irreversible consequences

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Speaker 1: of a Donald Trump election. Does that not wor you?

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Speaker 2: I We're very focused on what we as a company

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Speaker 2: can do to contribute to this space. We're not a

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Speaker 2: political entity, and so I mean I continue to stay

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Speaker 2: focused on the long term. We serve global markets. We

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Speaker 2: work all around the world, and that's what we're focused

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Speaker 2: on doing, is taking our capabilities and contributing. We're doing

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Speaker 2: work not only in the US, but in Asia, in

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Speaker 2: Singapore and Indonesia, looking for opportunities to help with that.

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Speaker 2: And so we'll continue to look for and pursue the

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Speaker 2: opportunities where there's a need and a desire for us

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Speaker 2: to contribute.

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Speaker 1: So if there's more energy transition opportunities outside of the US,

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Speaker 1: you already have a global company, you'll pursue those opportunities outside. Yeah,

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Speaker 1: let's look at the domestic front. We know under Trump

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Speaker 1: last time around, you saw lower corporate taxes. That means

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Speaker 1: for corporations, higher profits. He has said he wants to

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Speaker 1: cut taxes further and that would mean even higher profits

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Speaker 1: than the last time around. But he's also said he's

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Speaker 1: going to roll back regulations domestically in the US, and

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Speaker 1: you've talked about how having that back and forth that

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Speaker 1: uncertainty is bad for business. But do you think the

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Speaker 1: higher profits will make up for the regulatory uncertainty that

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Speaker 1: is coming.

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Speaker 2: Yeah, I'm not sure. I would look at profitability and

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Speaker 2: regulatory uncertainty as a plus and a minus, or a

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Speaker 2: balancing factor. I actually consider those two very separate things.

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Speaker 2: I think there is a role for smart regulation, effective regulation.

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Speaker 2: There's also a role to eliminate unproductive and inefficient regulation,

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Speaker 2: and so that's a separate category. We're supportive of regulation

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Speaker 2: for the industry. We think it's important, but we think

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Speaker 2: it's important to have cost effective, productive regulation that's consistent

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Speaker 2: to allow business to get businesses a runway to implement

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Speaker 2: that regulation. I also believe that spurring economic growth is

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Speaker 2: an important element of not only making the economy more successful,

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Speaker 2: but then lifting people up and raising their standards are living.

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Speaker 1: Can you give some examples of regulations that you think

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Speaker 1: are ineffective and should go.

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Speaker 2: I think you know, what we're looking for is making

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Speaker 2: sure that the intent of the regulation is clear and

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Speaker 2: that the regulations are set in such a way that

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Speaker 2: you achieve that intent at the lowest possible cost, that

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Speaker 2: it's practical that it can be implemented in the timeframe

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Speaker 2: that's suggested. But no specific regulations come to mind, any

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Speaker 2: specific ones now.

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Speaker 1: So one thing that may happen is Donald Trump gets

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Speaker 1: a trifecta. You know, he's won the presidency, he's won

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Speaker 1: the Senate, Republicans have won the Senate. There is a

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Speaker 1: likelihood that they get the House as well, and that

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Speaker 1: gives them a mandate which could in principle allow them

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Speaker 1: to take actions such as repealing many of the things

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Speaker 1: that are there under the Inflation Reduction Act. You brought

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Speaker 1: it up, you said, IRA is something that you're looking

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Speaker 1: forward to. You're hoping that rules will be settled, the

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Speaker 1: tax credits for all kinds of climate solutions that you

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Speaker 1: mentioned earlier. Do you think the repeal of some parts

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Speaker 1: of the IRA will happen and do you welcome that?

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Speaker 2: So let me maybe start with why we think the

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Speaker 2: IRA makes sense. And if you look around the world

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Speaker 2: and a lot of the climate policies that are being pursued,

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Speaker 2: they pick winners and losers, and they choose a technology

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Speaker 2: and insist that that then gets pursued. The advantage of

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Speaker 2: the IRA was it focused on outcomes carbon intensity. Our

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Speaker 2: view was that's if you're going to mandate carbon emissions reductions,

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Speaker 2: you ought to focus on the outcomes that you're looking for,

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Speaker 2: put in place the regulations to dictate those outcomes, and

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Speaker 2: then let companies, individual businesses, the market figure out how

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Speaker 2: best to meet those outcomes. And that's what the IRA

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Speaker 2: has done. And so we're supported of the IRA and

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Speaker 2: that it approached emissions reductions in the right way. And

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Speaker 2: what it allowed us to do as a company then

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Speaker 2: is basically draw on all of our resources. So we

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Speaker 2: are today investing to decarbonize the production of natural gas

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Speaker 2: in the permium. I can take that decarbonized natural gas.

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Speaker 2: I can move it down a pipeline system that I

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Speaker 2: operate that I control the emissions on. I can bring

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Speaker 2: it into my facility where I operate and control the emissions,

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Speaker 2: and convert that GOPE wanted to zero methane into hydrogen,

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Speaker 2: capture the CO two that's released in that conversion, and

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Speaker 2: store that so that I get a near zero hydrogen source.

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Speaker 2: And I can do that and then qualify for the

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Speaker 2: incentives that the IRA has. That's what we like about

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Speaker 2: the IRA, and frankly, the IRA reflected what the administration

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Speaker 2: felt like the people of America wanted them to do.

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Speaker 2: The Trump, as you say, if he gets all three

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Speaker 2: the two houses in the White House, he has a mandate.

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Speaker 2: He will then interpret what the people of America want.

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Speaker 2: And our job is to respond to what work the

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Speaker 2: people around the world want. We deliver on the needs.

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Speaker 2: We use our capabilities to help address society's needs. We

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Speaker 2: don't determine what those needs are.

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Speaker 1: But the Inflation Reduction Act you're saying is technology neutral?

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Speaker 1: Is it so? Because the tax skurits are different for

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Speaker 1: different technologies. Some tax skrates have much more money than others.

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Speaker 1: And yes, they are all geared towards reducing emissions, not

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Speaker 1: just emissions intensity. They are geared towards reducing absolute emissions

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Speaker 1: because they were geared towards the US being able to

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Speaker 1: hit its climate goals, which it currently isn't on track,

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Speaker 1: but the IRE would have start to put it on track.

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Speaker 2: So so why I say it's technology agnostic is it's

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Speaker 2: focused on a carbon intensity for say, hydrogen, a carbon

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Speaker 2: intensity level right doesn't specify a technology to achieve that level.

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Speaker 2: There may be an underlying assumption as to what technology

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Speaker 2: you need in order to reach that. But from my

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Speaker 2: perspective and what we're advocating for is irrespective of what

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Speaker 2: technology you use, if you can achieve that level, you

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Speaker 2: should qualify for the credits. So that makes it technology agnostic.

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Speaker 1: So let's take the example of hydrogen, because that's something

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Speaker 1: that you have worked on quite consistently. So within the IRA,

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Speaker 1: there's a tax cred called the forty five V tax Credit.

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Speaker 1: Currently there's a lot of back and forth going around

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Speaker 1: to figure out what the rules of that tax credit

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Speaker 1: would be. Most of the rules right now, if they're written,

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Speaker 1: would prefer that that hydrogen is produced from renewable energy only.

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Speaker 1: So you take solar and wind power, you put that

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Speaker 1: into an electrolyzer, you split water, you create hydrogen. You

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Speaker 1: are arguing that there should be another route allowed to

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Speaker 1: be counted under those tax credits, which is to take

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Speaker 1: natural gas, do carbon capture, So do steam methane reformation,

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Speaker 1: convert that into hydrogen capture the CEO to bury that,

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Speaker 1: do you think you'll succeed in getting the equivalency between

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Speaker 1: what is known as green hydrogen coming from renewables and

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Speaker 1: what is known as blue hydrogen that comes from carbonator.

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Speaker 2: Actually, if you look at the legislation, it doesn't specify

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Speaker 2: a color. Yes, it's the regulations that come from the

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Speaker 2: legislation that will then specify how that. But the legislation

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Speaker 2: is very focused on carbon intensity levels. The regulations will

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Speaker 2: then tell you how you qualify to meet those carbon

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Speaker 2: intensity levels. And there are ways to do that today

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Speaker 2: to meet high levels or low levels of carbon intensity,

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Speaker 2: high tiering within the legislation that doesn't require a color.

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Speaker 2: And all we're saying is if I decarbonize my natural gas,

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Speaker 2: I spend billions of dollars to reduce the emissions associated

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Speaker 2: with production and natural gas, that as a company, I

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Speaker 2: should get credit for that. And frankly, that's what you

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Speaker 2: want to do. You want to incentivize our industry to

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Speaker 2: invest the money to reduce the emissions associated with production

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Speaker 2: and natural gas. That's what we're doing today, and what

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Speaker 2: we're advocating for is that that reduction gets reflected when

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Speaker 2: we're trying to qualify for a credit within the IRA.

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Speaker 2: If that happens, which is what I think the intent

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Speaker 2: of the legislation was, then that will justify the investments

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Speaker 2: that we're making and the investment in the blue hydrogen.

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Speaker 2: If it doesn't happen and they want to incentivize green

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Speaker 2: hydrogen and electoralizers, we're not in that business. We won't

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Speaker 2: make the investments. That's how it'll work.

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Speaker 1: It's billed as the world's largest hydrogen plant. How much

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Speaker 1: is it going to cost if you do get these

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Speaker 1: tax credits?

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Speaker 2: A lot, no number, no number for you. Billions here, here's.

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Speaker 1: One way to think about numbers. Right this year, in

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Speaker 1: the first three quarters, Exon has given shareholders twelve billion

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Speaker 1: dollars back in dividends, fourteen billion dollars as shareholder buyback.

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Speaker 1: So you're just buying your own stockback. That's twenty six

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Speaker 1: billion dollars in the first three quarters. If I calculate

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Speaker 1: the cost of this hydrogen plant, it's a few billion

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Speaker 1: dollars two three four billion dollars. You could be doing

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Speaker 1: that without the tax credits. Why don't you?

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Speaker 2: Well, I have a responsibility shareholders, not my money, and

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Speaker 2: so my job is a business and this is I

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Speaker 2: think one of the challenges that as you look at

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Speaker 2: incentivizing all aspects of an economy, we all have different

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Speaker 2: roles to play. I take shareholders money, and I have

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Speaker 2: a responsibility to generate a return on that shareholder money,

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Speaker 2: and so it's critical for me to make sure that

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Speaker 2: the investments that I'm making generate return for the shareholders.

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Speaker 2: If I can't do that, if I have more money

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Speaker 2: than I can productively invest and get a return, I

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Speaker 2: have a responsibility to return that money to the shareholders

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Speaker 2: so that they can invest in some other company to

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Speaker 2: generate a return. So what I'm doing doing is balancing

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Speaker 2: across the portfolio. I'm frankly building a business and have

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Speaker 2: a strategy that allows me to be successful. And frankly,

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Speaker 2: any scenario that you can forecast going forward, if you

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Speaker 2: want to take the IA net zero a very extreme

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Speaker 2: decarbonization scenario, if you look at the businesses that we've

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Speaker 2: established within the company, the core capabilities that we're building

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Speaker 2: those businesses on. In that scenario, using the assumptions of

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Speaker 2: the IA, I grow earnings and I grow cash flow.

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Speaker 2: That's good for my shareholders. I'm responsible for doing that.

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Speaker 2: You can take the other extreme and say we don't

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Speaker 2: make any progress with the transition. I'm using the same

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Speaker 2: core capabilities and I can grow earnings in cash flowd

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Speaker 2: with my business, and so what you want. What you need,

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Speaker 2: What the world needs is a transition that companies can

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Speaker 2: make money in and generate returns on. Otherwise you're not

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Speaker 2: going to drive the investment that you need. So I

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Speaker 2: think you know what the world I'd be focused on

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Speaker 2: is finding ways to profitably manage the transition. Because we

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Speaker 2: can't afford to give to give that away, governments can

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Speaker 2: afford to pay that and subsidize it in perpetuity. We've

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Speaker 2: got to find a market that rewards for decarbonization.

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Speaker 1: So take the example of carbon capture, which you talked about.

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Speaker 1: You said you have seven million tons per anem of

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Speaker 1: contracted carbon capture facility right.

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Speaker 2: Now close to that.

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Speaker 1: Yeah, Now that is if you took all your emissions,

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Speaker 1: which is Scope one, two and three, less than two

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Speaker 1: percent of your total emissions. If you exclude Scope three,

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Speaker 1: it's still less than ten percent of your total emissions.

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Speaker 1: But Exxon has a reputation for getting results, has top

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Speaker 1: notch engineers, has the resources. You bought Denberry, a company

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Speaker 1: that has carbon dioxide pipelines and that supports a lot

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Speaker 1: of your carbon capture business. Are you betting now that

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Speaker 1: because of your spend on Denbury, that carbon capture is

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Speaker 1: going to be a viable business without subsidies.

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Speaker 2: So I would tell you today, if you look at

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Speaker 2: the drives to invest in the transition, there aren't any

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Speaker 2: market forces or incentives to invest, which is why government

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Speaker 2: policy is either mandating or subsidizing. And that's true across

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Speaker 2: all the transitions. To go from the system that we

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Speaker 2: have today to a less carbon intensive systems is going

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Speaker 2: to require money, and it's going to be more expensive.

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Speaker 2: And so the trick is to start down that path,

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Speaker 2: you've got to drive the cost of technology down. And

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Speaker 2: so I would tell you as we've started this business,

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Speaker 2: we've leveraged the IRA and the government incentives as a

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Speaker 2: catalyst to get started while we work on the technologies

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Speaker 2: to lower the cost. But ultimately this has to transition

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Speaker 2: away from government subsidies and then to market driven investments,

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Speaker 2: because ultimately that's what it's going to take to be

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Speaker 2: successful if you want to roll this out across every

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Speaker 2: economy around the world.

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Speaker 1: But you've done that for other types of hydrocombon technologies.

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Speaker 1: You've done it for offshore drilling, you've done it for

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Speaker 1: shale technology where you did not have subsidies, you did

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Speaker 1: have to take real big risks with the technology, and

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Speaker 1: the market rewarded us, and the market reported because you executed,

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Speaker 1: you've made the technology viable. And now if I look

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Speaker 1: at your per barrel cost of oil over the past

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Speaker 1: few years, they've been falling as a result of your

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Speaker 1: investments in a technology. So I understand the theory completely

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Speaker 1: that if you invest in a technology and you build

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Speaker 1: projects at scale, you can drive down the cost. But

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Speaker 1: you've done that so far really well for the hydrocarbon

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Speaker 1: exploration and extraction technologies. But the set of investments when

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Speaker 1: it comes to climate solutions is still very small.

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Speaker 2: So nobody will pay you for me. And that's the

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Speaker 2: sad fact today is nobody will pay us for emissions reductions.

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Speaker 2: I could provide sustainable aviation fuel, but no airline will

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Speaker 2: sign a contract with me to provide it because it's

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Speaker 2: more expensive than existing aviation fuel. That's the challenge of

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Speaker 2: the transition is it's going to be more expensive and

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Speaker 2: today the market won't bear that additional cost. And so

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Speaker 2: as a company that has a responsibility to invest and

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Speaker 2: generate a return, I got to find ways to do

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Speaker 2: that without market forces that exist today, without the demand

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Speaker 2: or the customer base. That's willing to pay for it.

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Speaker 2: That's the challenge in this space.

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Speaker 1: And one thing where people could start to pay for

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Speaker 1: these solutions, And something that you have argued for over

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Speaker 1: a decade is to have a carbon price, a broad based,

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Speaker 1: economy wide carbon price. Now, if you look at the

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Speaker 1: politics of a global broad based carbon price, it doesn't exist.

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Speaker 1: There is no global government that's going to put a

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Speaker 1: carbon price at a global level. Even at a national level,

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Speaker 1: when many countries have tried to put a carbon price,

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Speaker 1: look at your northern neighbor, Canada, the politics has become

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Speaker 1: really toxic. So what you do have today is regional

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Speaker 1: carbon pricing. You know, the European Union has been quite

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Speaker 1: successful in certain sectors. It has a carbon price. In

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Speaker 1: the US, you have California, you have some Northeastern states

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Speaker 1: that have a carbon price. We know that under a

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Speaker 1: Trump presidency there is going to be very unlikely that

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Speaker 1: there will be a even conversations about based carbon price

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Speaker 1: across the US. So what specific regulations will you ask

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Speaker 1: for now that you can't get a broad based carbon

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Speaker 1: price in the US.

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Speaker 2: We've been advocating differently recognizing the political challenges of a

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Speaker 2: carbon price or a carbon tax and I would also say,

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Speaker 2: as we've worked through how that would function globally, it

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Speaker 2: falls apart because of the reasons that you said that

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Speaker 2: those prices change as you move around the nation. What

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Speaker 2: we're now advocating from what we've been talking about is

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Speaker 2: starting first with establishing a global carbon accounting system. You know,

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Speaker 2: it's amazing to me today if you think about what

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Speaker 2: we're trying to do as a planet, as a world,

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Speaker 2: that we want to reduce emissions, but today we have

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Speaker 2: no mechanism for accounting for all those missions. And so

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Speaker 2: step number one is establish a global mechanism for accounting

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Speaker 2: for carbon so that we know where all the carbon's

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Speaker 2: being generated. As a chemistry person, you will know that

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Speaker 2: CO two gets created one time. We ought account for

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Speaker 2: that so we know where it's coming from. You get

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Speaker 2: a carbon accounting system in place around the world, you

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Speaker 2: can then start to calculate what the carbon intensity is

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Speaker 2: for every aspect of your economy and for all the

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Speaker 2: products those economies are making. If you have a carbon

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Speaker 2: intensity for the products that you're making, governments can now

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Speaker 2: start to specify what the carbon intensity of the products

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Speaker 2: sold in their markets. Have to be very similar to

435
00:23:14,440 --> 00:23:17,399
Speaker 2: how today we sell diesel all around the world, but

436
00:23:17,480 --> 00:23:20,959
Speaker 2: we have different desulfurization requirements for the desers, so different

437
00:23:21,040 --> 00:23:24,200
Speaker 2: specs for sulfur and diesel as you move around the world.

438
00:23:24,480 --> 00:23:27,639
Speaker 2: And so there is an approach today that exists that

439
00:23:27,720 --> 00:23:30,320
Speaker 2: we meet day in and day out to meet a

440
00:23:30,480 --> 00:23:33,480
Speaker 2: specification for the products that we sell globally. Doesn't require

441
00:23:33,640 --> 00:23:37,240
Speaker 2: barriers or trade carbon border or border adjustments or anything

442
00:23:37,280 --> 00:23:38,919
Speaker 2: like that. If you want to sell a product in

443
00:23:38,920 --> 00:23:41,640
Speaker 2: that market, you have to meet that specification. We could

444
00:23:41,680 --> 00:23:45,240
Speaker 2: establish carbon intensity specifications for products in any market, and

445
00:23:45,280 --> 00:23:46,840
Speaker 2: if you want to sell a product in that market,

446
00:23:46,920 --> 00:23:48,960
Speaker 2: you have to meet that carbon intensity specification.

447
00:23:49,200 --> 00:23:53,000
Speaker 1: But the system you're describing already exists, so which we're

448
00:23:53,040 --> 00:23:55,480
Speaker 1: sitting at a cop meeting, which is under the U Entreaty.

449
00:23:56,320 --> 00:23:59,960
Speaker 1: Under the Unreaty, every country has to report their annual

450
00:24:00,119 --> 00:24:04,360
Speaker 1: greenhouse gas accounting two different greenhouse gases into the UN.

451
00:24:04,480 --> 00:24:06,840
Speaker 1: So that exists at a country level. The second thing

452
00:24:06,880 --> 00:24:08,960
Speaker 1: that exists, which was created in two thousand and one,

453
00:24:09,240 --> 00:24:12,840
Speaker 1: is the Greenhouse Gas Protocol, which is created by not

454
00:24:12,880 --> 00:24:17,879
Speaker 1: for profits and by corporations to come up with a voluntary,

455
00:24:18,280 --> 00:24:21,080
Speaker 1: rules based system that you report under. So when we

456
00:24:21,119 --> 00:24:23,880
Speaker 1: talk about Scope one, two and three direct and indirect

457
00:24:23,880 --> 00:24:26,720
Speaker 1: emissions that is under the Greenhouse Gas Protocol. So what

458
00:24:26,840 --> 00:24:28,680
Speaker 1: exactly are you trying to reinvent here?

459
00:24:28,800 --> 00:24:31,000
Speaker 2: I'm very familiar with that. I'm not trying to reinvent

460
00:24:31,040 --> 00:24:33,480
Speaker 2: anything that's not a carbon accounting system. Because you account

461
00:24:33,480 --> 00:24:36,359
Speaker 2: for the carbons. Several times you have people double in

462
00:24:36,400 --> 00:24:40,160
Speaker 2: triple counting carbon. That's not an accounting system. It has

463
00:24:40,200 --> 00:24:42,680
Speaker 2: to add up to global emissions. You can't have multiple

464
00:24:42,680 --> 00:24:46,440
Speaker 2: people counting the same molecules of CO two. You need

465
00:24:46,480 --> 00:24:49,080
Speaker 2: to establish where that's coming from in the As you

466
00:24:49,160 --> 00:24:52,320
Speaker 2: add up those emissions across different reporters, it should all

467
00:24:52,320 --> 00:24:54,919
Speaker 2: add to the same total. You couldn't do that today

468
00:24:54,960 --> 00:24:56,879
Speaker 2: with the JHG protocol.

469
00:24:56,440 --> 00:24:58,240
Speaker 1: You can't do it with the GG protocol. But the

470
00:24:58,440 --> 00:25:00,000
Speaker 1: UN system does exactly.

471
00:25:00,000 --> 00:25:02,280
Speaker 2: You can't manage at a country level. You can't manage

472
00:25:02,320 --> 00:25:04,960
Speaker 2: you need. You need carbon accounting for a product level

473
00:25:05,000 --> 00:25:07,080
Speaker 2: so that you can start to understand what the carbon

474
00:25:07,119 --> 00:25:10,760
Speaker 2: intensity of the product is. That will then drive different

475
00:25:10,960 --> 00:25:14,120
Speaker 2: manufacturers of that product to try to meet these carbon

476
00:25:14,200 --> 00:25:18,720
Speaker 2: intendency specifications. That's exactly think about desulfurization of diesel. There's

477
00:25:18,760 --> 00:25:22,639
Speaker 2: no country wide desulfurization number. It's done at a product

478
00:25:22,760 --> 00:25:26,280
Speaker 2: level so manufacturers can meet those specifications. That does not

479
00:25:26,480 --> 00:25:27,240
Speaker 2: exist today.

480
00:25:27,440 --> 00:25:31,600
Speaker 1: So the GREENOSKT protocol, if you ignore Scope three, does

481
00:25:31,600 --> 00:25:33,960
Speaker 1: include Scope one and two, which are direct emissions. They

482
00:25:34,080 --> 00:25:36,680
Speaker 1: if you only added Scope one and two emissions.

483
00:25:36,240 --> 00:25:39,080
Speaker 2: I will guarantee you that everyone's calculating those things differently.

484
00:25:39,080 --> 00:25:42,320
Speaker 2: There's not a consistent standard as you move around the world,

485
00:25:42,440 --> 00:25:45,760
Speaker 2: around the countries, or even between businesses. That's the challenge.

486
00:25:45,880 --> 00:25:47,879
Speaker 2: That's the difference between sitting at a table like this

487
00:25:47,960 --> 00:25:50,280
Speaker 2: and talking about it and running a business like I

488
00:25:50,400 --> 00:25:53,199
Speaker 2: have to actually deliver on those things. There is not

489
00:25:53,359 --> 00:25:55,639
Speaker 2: a consistent approach. That's what we're advocating for.

490
00:25:55,800 --> 00:25:58,119
Speaker 1: So one thing that axand does really well is be

491
00:25:58,160 --> 00:26:01,000
Speaker 1: able to lobby for outcomes you want that would help

492
00:26:01,200 --> 00:26:04,000
Speaker 1: support many of the goals that you've stated. Are you

493
00:26:04,119 --> 00:26:06,720
Speaker 1: lobbying for new rules and carbon accounting, what are they?

494
00:26:07,080 --> 00:26:09,960
Speaker 2: Well, that's what we're asking xon. Molbill can't create a

495
00:26:10,000 --> 00:26:13,119
Speaker 2: global system, but we are talking to governments around the

496
00:26:13,119 --> 00:26:16,159
Speaker 2: world to suggest that they form a basis to start

497
00:26:16,200 --> 00:26:19,240
Speaker 2: this work to establish a system for accounting for carbon

498
00:26:19,280 --> 00:26:23,159
Speaker 2: around the world, establish protocols for how you calculate carbon

499
00:26:23,160 --> 00:26:25,840
Speaker 2: intendency for different products, and then each government has the

500
00:26:25,880 --> 00:26:29,439
Speaker 2: opportunity to set carbon intensity specifications. We are working to

501
00:26:29,520 --> 00:26:32,840
Speaker 2: try to see that idea and then to get governments

502
00:26:32,880 --> 00:26:34,439
Speaker 2: around the world to start driving that.

503
00:26:34,680 --> 00:26:36,800
Speaker 1: So one place that might have been happening, and tell

504
00:26:36,840 --> 00:26:39,119
Speaker 1: me if that's true, is when the SEC in the

505
00:26:39,240 --> 00:26:42,800
Speaker 1: US was working towards reporting rules on Scope one and

506
00:26:42,800 --> 00:26:46,480
Speaker 1: two emissions for corporations. Were you engaged in those conversations

507
00:26:46,520 --> 00:26:48,119
Speaker 1: when they ask for a request for comment? Did you

508
00:26:48,160 --> 00:26:49,920
Speaker 1: send in a request for comment asking for what rules

509
00:26:49,960 --> 00:26:50,119
Speaker 1: you do?

510
00:26:50,240 --> 00:26:52,280
Speaker 2: Yeah, we did, And I'd say the SEC is not

511
00:26:52,400 --> 00:26:56,480
Speaker 2: the body for establishing carbon accounting system across It's there's

512
00:26:56,520 --> 00:26:59,679
Speaker 2: a it's not a gap accounting system. It needs it

513
00:26:59,720 --> 00:27:01,960
Speaker 2: needs to be like a gap accounting system where you

514
00:27:02,040 --> 00:27:05,040
Speaker 2: have consistent approach. But as you know CO two is

515
00:27:05,359 --> 00:27:08,000
Speaker 2: there's a science that sits behind and so the SEC

516
00:27:08,080 --> 00:27:09,760
Speaker 2: is not the body to do that. You need a

517
00:27:09,800 --> 00:27:13,159
Speaker 2: regulatory body. Well, that's what we've got to establish. This

518
00:27:13,200 --> 00:27:15,680
Speaker 2: is a brand new approach that we're trying to establish,

519
00:27:15,960 --> 00:27:19,400
Speaker 2: consistent with what we've done in other areas of our products,

520
00:27:19,400 --> 00:27:21,359
Speaker 2: but this is one that has to be established today.

521
00:27:21,359 --> 00:27:24,560
Speaker 2: There's a transportation organization that does that for water fuels today.

522
00:27:24,760 --> 00:27:26,680
Speaker 2: That could be one area, but this is an opportunity

523
00:27:26,720 --> 00:27:34,879
Speaker 2: to do it across an entire economy.

524
00:27:35,960 --> 00:27:38,879
Speaker 1: After the break, more of my conversation with x On

525
00:27:38,920 --> 00:27:42,320
Speaker 1: CEO Darren Wards. By the way, if you've been enjoying

526
00:27:42,320 --> 00:27:44,680
Speaker 1: this episode, please take a moment to rate and review

527
00:27:44,720 --> 00:27:47,640
Speaker 1: the show on Apple Podcasts and Spotify. It helps other

528
00:27:47,680 --> 00:27:58,240
Speaker 1: listeners find the show. So let's come to some of

529
00:27:58,320 --> 00:28:01,600
Speaker 1: the other climate solutions that you talked about. You have

530
00:28:01,720 --> 00:28:05,000
Speaker 1: said in the past that as exit mobile, the thing

531
00:28:05,000 --> 00:28:09,000
Speaker 1: you want to invest in in climate solution space is molecules,

532
00:28:09,240 --> 00:28:14,240
Speaker 1: not electrons. Now, when I heard that, and I knew

533
00:28:14,240 --> 00:28:15,800
Speaker 1: that I was going to talk to you, I thought,

534
00:28:15,880 --> 00:28:18,639
Speaker 1: on this table, there's a chemical engineer and that's me,

535
00:28:19,520 --> 00:28:22,520
Speaker 1: and I'm arguing for more renewables, and there's an electrical

536
00:28:22,560 --> 00:28:26,280
Speaker 1: engineer that's you, and you're arguing for molecules not electrons.

537
00:28:26,480 --> 00:28:27,320
Speaker 1: How did that happen?

538
00:28:27,520 --> 00:28:30,040
Speaker 2: Well, I run a business that's in a molecule business.

539
00:28:30,200 --> 00:28:32,800
Speaker 2: That's what happened. I think you know what we when

540
00:28:32,880 --> 00:28:34,840
Speaker 2: I first got into this job, a lot of pressure

541
00:28:34,920 --> 00:28:37,159
Speaker 2: to move into wind and solar and we looked at that.

542
00:28:37,200 --> 00:28:39,080
Speaker 2: I mean, we recognize the need for the world to

543
00:28:39,080 --> 00:28:41,400
Speaker 2: carbonize and whether or not we could contribute something in

544
00:28:41,440 --> 00:28:43,360
Speaker 2: that space. But if you look at what our core

545
00:28:43,400 --> 00:28:47,440
Speaker 2: capabilities are where we have developed competitive advantage. It's not

546
00:28:47,520 --> 00:28:48,600
Speaker 2: an electron business.

547
00:28:48,680 --> 00:28:48,800
Speaker 1: Right.

548
00:28:48,960 --> 00:28:51,200
Speaker 2: People think that we're in the energy business because we

549
00:28:51,240 --> 00:28:55,360
Speaker 2: supply fuel for energy, but we provide fuel for mobility

550
00:28:55,400 --> 00:28:57,640
Speaker 2: for cars. This doesn't put us in the transportation business

551
00:28:57,760 --> 00:29:00,520
Speaker 2: or as an automaker. So we're folks Stone what do

552
00:29:00,560 --> 00:29:03,520
Speaker 2: we do today? Today? We explore for, and produce and

553
00:29:03,600 --> 00:29:07,680
Speaker 2: then manage and transform hydrogen and carbon molecules to a

554
00:29:07,760 --> 00:29:10,640
Speaker 2: variety of products that meet the critical needs of society.

555
00:29:10,640 --> 00:29:14,080
Speaker 2: That's what we do goes far beyond combustible products. That's

556
00:29:14,080 --> 00:29:16,000
Speaker 2: where our strengths are. And so as we looked at

557
00:29:16,000 --> 00:29:19,240
Speaker 2: those capabilities, how can we apply that then to this

558
00:29:19,400 --> 00:29:22,280
Speaker 2: challenge of reducing emissions and the solutions we've come up

559
00:29:22,320 --> 00:29:24,120
Speaker 2: with as our low carbon solutions business.

560
00:29:24,400 --> 00:29:29,160
Speaker 1: And one of those solutions is biofuels in your portfolio,

561
00:29:30,520 --> 00:29:34,040
Speaker 1: and your push on biofuels has been quite interesting. You

562
00:29:34,080 --> 00:29:36,520
Speaker 1: spend roughly three hundred and fifty million dollars trying to

563
00:29:36,560 --> 00:29:40,560
Speaker 1: convert algae into biofuelds. My colleagues worked on a story

564
00:29:40,880 --> 00:29:43,880
Speaker 1: where they found that you also spend sixty million dollars

565
00:29:43,920 --> 00:29:46,440
Speaker 1: on just TV advertising telling the world that you're working

566
00:29:46,480 --> 00:29:49,120
Speaker 1: on it, but now you've wound that down and you're

567
00:29:49,160 --> 00:29:51,240
Speaker 1: not investing in it because you don't see that it's

568
00:29:51,280 --> 00:29:53,760
Speaker 1: working out as a climate solution. So what are the

569
00:29:53,840 --> 00:29:57,440
Speaker 1: lessons from the failure of algae for biofuels that you

570
00:29:57,480 --> 00:29:59,160
Speaker 1: will apply to future climate solutions.

571
00:29:59,160 --> 00:30:01,000
Speaker 2: Well, I think you know. The challenge here is when

572
00:30:01,000 --> 00:30:04,080
Speaker 2: you're trying to develop breakthrough technologies, you never know whether

573
00:30:04,160 --> 00:30:06,760
Speaker 2: or not that's going to be successful. And I think

574
00:30:06,800 --> 00:30:09,680
Speaker 2: that's the case for algae. Was we recognized when we

575
00:30:09,680 --> 00:30:12,320
Speaker 2: were pursuing that that we had to make some significant

576
00:30:12,360 --> 00:30:16,240
Speaker 2: breakthroughs in the productivity of the oil productivity of algae

577
00:30:16,240 --> 00:30:18,360
Speaker 2: if we were going to be successful, and we worked

578
00:30:18,560 --> 00:30:21,080
Speaker 2: on that for several years to try to make those advances,

579
00:30:21,080 --> 00:30:24,000
Speaker 2: But it became very clear as we were working our

580
00:30:24,000 --> 00:30:26,440
Speaker 2: way and actually achieving some of the milestones, that we

581
00:30:26,440 --> 00:30:28,400
Speaker 2: were not going to get to the level of productivity

582
00:30:28,400 --> 00:30:32,400
Speaker 2: that would allow us to effectively scale that technology to

583
00:30:32,480 --> 00:30:34,880
Speaker 2: meet this much broader demand out there. And so we

584
00:30:34,960 --> 00:30:38,520
Speaker 2: had to come to the conclusion that while this held promise,

585
00:30:38,600 --> 00:30:41,040
Speaker 2: it wasn't going to solve the problem, which then had

586
00:30:41,120 --> 00:30:43,920
Speaker 2: us pivot to other technology areas. We're now working on

587
00:30:44,080 --> 00:30:47,920
Speaker 2: a direct air capture technology that is a huge hill

588
00:30:47,960 --> 00:30:50,080
Speaker 2: to climb. There's a huge lot of breakthroughs that we

589
00:30:50,120 --> 00:30:52,520
Speaker 2: need there. So we have built a prototype we're working

590
00:30:52,560 --> 00:30:54,920
Speaker 2: hard on that. We talk about the work that we're

591
00:30:54,920 --> 00:30:56,880
Speaker 2: doing in a direct air capture I can't promise you

592
00:30:56,920 --> 00:30:59,120
Speaker 2: today that we will be successful in it, but what

593
00:30:59,200 --> 00:31:01,280
Speaker 2: I can promise you is we're committed to trying to

594
00:31:01,280 --> 00:31:03,920
Speaker 2: make it successful. And I think that's what you actually want,

595
00:31:04,040 --> 00:31:07,120
Speaker 2: is you want companies that have capabilities around the world

596
00:31:07,160 --> 00:31:10,440
Speaker 2: to be looking for ways that they can innovate and

597
00:31:10,520 --> 00:31:13,680
Speaker 2: drive advancements and technologies to solve this problem. Not all

598
00:31:13,680 --> 00:31:15,920
Speaker 2: of them are going to be successful, but the more

599
00:31:15,960 --> 00:31:19,280
Speaker 2: companies you have doing that, leveraging their core capabilities, the

600
00:31:19,320 --> 00:31:21,800
Speaker 2: better chance we have as a planet of finding a solution.

601
00:31:21,920 --> 00:31:24,240
Speaker 2: And so that's what we're working on, and we're continuing

602
00:31:24,240 --> 00:31:26,520
Speaker 2: to look for other We've got other technologies that we're

603
00:31:26,560 --> 00:31:30,880
Speaker 2: advancing to try to reduce emissions, but they're in the

604
00:31:31,000 --> 00:31:35,280
Speaker 2: very early stages, they require technical breakthroughs. Yep, we're working those.

605
00:31:35,360 --> 00:31:37,520
Speaker 2: We'll talk about them as we go forward, and hopefully

606
00:31:37,560 --> 00:31:40,080
Speaker 2: we'll find some that are successful. But I can't guarantee it.

607
00:31:40,560 --> 00:31:43,480
Speaker 1: But sixty million dollars on TV advertising, surely one of

608
00:31:43,520 --> 00:31:46,320
Speaker 1: the lessons might be not to advertise a solution before

609
00:31:46,400 --> 00:31:47,360
Speaker 1: it's working well.

610
00:31:47,400 --> 00:31:49,479
Speaker 2: I think it's important for people to know what we're trying.

611
00:31:49,800 --> 00:31:51,800
Speaker 2: If you want to limit only talking about the things

612
00:31:51,800 --> 00:31:53,840
Speaker 2: that are going to absolutely work, it'll be an awful

613
00:31:53,920 --> 00:31:56,760
Speaker 2: quiet world out there. And I think, you know, trying

614
00:31:56,760 --> 00:32:00,480
Speaker 2: to make sure that everyone recognizes the need for a

615
00:32:00,520 --> 00:32:04,680
Speaker 2: diversified set of solutions and that you've got many companies

616
00:32:04,720 --> 00:32:07,040
Speaker 2: around the world working hard to try to find those solutions.

617
00:32:07,120 --> 00:32:09,760
Speaker 2: It's important. I would argue, what we haven't done enough

618
00:32:09,840 --> 00:32:11,920
Speaker 2: is to help people understand how we are trying to

619
00:32:11,920 --> 00:32:14,920
Speaker 2: contribute in this space. And so almost the opposite, I

620
00:32:14,920 --> 00:32:17,160
Speaker 2: would suggest we need to do more to help people

621
00:32:17,240 --> 00:32:20,560
Speaker 2: understand the work that we're doing to be a meaningful

622
00:32:20,560 --> 00:32:21,760
Speaker 2: contributor in this space.

623
00:32:22,000 --> 00:32:25,520
Speaker 1: So if you look at the wider business you're here

624
00:32:25,520 --> 00:32:28,280
Speaker 1: at a cop you know that one of the agenda

625
00:32:28,360 --> 00:32:31,240
Speaker 1: items that was agreed on at COP twenty eight, which

626
00:32:31,480 --> 00:32:34,000
Speaker 1: was being argued on in Day one over here is

627
00:32:34,400 --> 00:32:38,280
Speaker 1: how does the world transition away from fossil fuels now.

628
00:32:38,720 --> 00:32:41,080
Speaker 1: One of the things that's happened among the oil majors

629
00:32:41,400 --> 00:32:46,360
Speaker 1: where Egxon has really pulled ahead of all your peers, Shell, Chevron, BP,

630
00:32:47,240 --> 00:32:51,320
Speaker 1: is that Egxon has really increased its production of oil

631
00:32:51,640 --> 00:32:54,520
Speaker 1: over the past few years. And that's proven to be

632
00:32:54,560 --> 00:32:58,160
Speaker 1: a hugely profitable strategy with two things. One price is

633
00:32:58,160 --> 00:33:00,640
Speaker 1: going up, but also your cost of battle of all

634
00:33:00,720 --> 00:33:05,120
Speaker 1: going down, and that's made Shell and Chevron envious of

635
00:33:05,120 --> 00:33:08,200
Speaker 1: what Exon is doing. There's also risk though, say the

636
00:33:08,280 --> 00:33:11,680
Speaker 1: energy transition does speed up at some point, does it

637
00:33:11,720 --> 00:33:13,600
Speaker 1: not wory you you might have stranded assets.

638
00:33:14,040 --> 00:33:16,760
Speaker 2: No, because I'd tell you if you look at oil

639
00:33:16,760 --> 00:33:19,000
Speaker 2: production around the world, first point to make is it's

640
00:33:19,000 --> 00:33:21,680
Speaker 2: a depletion resource. Is a depleting resource. So every barrow

641
00:33:21,760 --> 00:33:24,360
Speaker 2: you produces a barrow you don't have. If you look

642
00:33:24,400 --> 00:33:26,640
Speaker 2: at the supply of oil today in the market, with

643
00:33:26,760 --> 00:33:29,120
Speaker 2: the amount of unconventional oil that's come on out of

644
00:33:29,160 --> 00:33:33,400
Speaker 2: the US, that mix has changed pretty dramatically. Unconventional oil

645
00:33:33,400 --> 00:33:36,240
Speaker 2: depletes at a much faster rate, and so with zero

646
00:33:36,360 --> 00:33:41,160
Speaker 2: investment going into the industry to produce more oil. That

647
00:33:41,200 --> 00:33:44,720
Speaker 2: depletion rate is about fifteen percent per year, and that

648
00:33:44,880 --> 00:33:48,720
Speaker 2: is an extremely steep decline rate, and so the industry

649
00:33:48,800 --> 00:33:52,440
Speaker 2: has to invest significant amount of money just to hold

650
00:33:52,520 --> 00:33:55,960
Speaker 2: production flat. And so as you look at the world,

651
00:33:56,040 --> 00:33:59,080
Speaker 2: the challenge is maintaining enough production to meet the demand

652
00:33:59,480 --> 00:34:02,760
Speaker 2: in the near medium term. And because that depletion curve

653
00:34:02,960 --> 00:34:05,640
Speaker 2: will catch up to you very quickly. The energy system

654
00:34:05,680 --> 00:34:08,319
Speaker 2: is huge. The transition is going to take time. And

655
00:34:08,440 --> 00:34:11,040
Speaker 2: if we make advances in other technologies, if the right

656
00:34:11,160 --> 00:34:14,280
Speaker 2: kind of policies come into place to incentivize the transition

657
00:34:14,400 --> 00:34:17,839
Speaker 2: and move there faster, depletion will take care of the

658
00:34:17,880 --> 00:34:21,000
Speaker 2: resources that are out there today being produced, and investments

659
00:34:21,000 --> 00:34:25,239
Speaker 2: should shift then from that portfolio to a portfolio of

660
00:34:25,840 --> 00:34:28,520
Speaker 2: the new energy sources of the new transition. That's what

661
00:34:28,560 --> 00:34:32,360
Speaker 2: our strategy does. Because we're using the same core capabilities.

662
00:34:32,640 --> 00:34:36,399
Speaker 2: I can put my reservoir engineers onto storing co two

663
00:34:37,080 --> 00:34:39,799
Speaker 2: looking for Brian water with lithium in it, or for

664
00:34:39,840 --> 00:34:42,799
Speaker 2: exploring for oil, and which every one of those businesses

665
00:34:42,840 --> 00:34:46,239
Speaker 2: are more successful and grows faster, I shift the resources there,

666
00:34:46,239 --> 00:34:50,480
Speaker 2: same with my project's organization. I have that opportunity, that flexibility,

667
00:34:50,719 --> 00:34:52,839
Speaker 2: so that I can thrive as a business well into

668
00:34:52,840 --> 00:34:55,560
Speaker 2: the future, irrespective of the scenario that we see.

669
00:34:56,560 --> 00:34:59,239
Speaker 1: Earlier, you were talking about investors when we talked about

670
00:34:59,280 --> 00:35:01,560
Speaker 1: how much money you've going back to investors this year,

671
00:35:01,640 --> 00:35:05,440
Speaker 1: twelve billion dollars in dividends, putteen billion dollars in share buybacks.

672
00:35:05,960 --> 00:35:10,080
Speaker 1: You said that investors are smart people. They can do

673
00:35:10,120 --> 00:35:12,440
Speaker 1: what they want with that money, right, And you've been

674
00:35:12,480 --> 00:35:15,440
Speaker 1: a close watcher of investors even before you became CEO.

675
00:35:15,520 --> 00:35:17,600
Speaker 1: You were in the investor relations role at some points

676
00:35:17,600 --> 00:35:20,920
Speaker 1: in your career during exone. Now it seems to me

677
00:35:21,400 --> 00:35:25,840
Speaker 1: that investors are looking at companies like Exon, not just you,

678
00:35:25,960 --> 00:35:29,799
Speaker 1: but the oil majors in general, and they want as

679
00:35:29,880 --> 00:35:32,879
Speaker 1: much of the profit as possible extracted. But they also

680
00:35:32,920 --> 00:35:35,200
Speaker 1: want you to be very disciplined in what types of

681
00:35:35,360 --> 00:35:39,040
Speaker 1: new oil and gas projects you invest in. Is that

682
00:35:39,080 --> 00:35:40,040
Speaker 1: a right assessment.

683
00:35:40,160 --> 00:35:42,280
Speaker 2: What investors want is to make sure that you're spending

684
00:35:42,280 --> 00:35:44,439
Speaker 2: that money wise and you're going to generate every turn,

685
00:35:44,560 --> 00:35:47,000
Speaker 2: and so yes, the way we look at it, discipline

686
00:35:47,040 --> 00:35:49,799
Speaker 2: investment means investing only in the projects where you have

687
00:35:49,840 --> 00:35:53,240
Speaker 2: an advantage that will be resilient to the down cycles

688
00:35:53,239 --> 00:35:57,920
Speaker 2: because these capital intensative commodities. Businesses have price cycles that

689
00:35:58,040 --> 00:35:59,879
Speaker 2: we have a high price and you move into low price.

690
00:35:59,880 --> 00:36:02,680
Speaker 2: That is a that's they constant in this business. You're

691
00:36:02,680 --> 00:36:05,200
Speaker 2: always moving through these cycles, and so the investments that

692
00:36:05,239 --> 00:36:08,280
Speaker 2: we make have to be robust to the down cycles.

693
00:36:08,680 --> 00:36:11,480
Speaker 2: They have to be advantaged versus the rest of industry.

694
00:36:11,760 --> 00:36:15,360
Speaker 2: They have to be capital efficient. That's what discipline investing.

695
00:36:15,040 --> 00:36:18,239
Speaker 1: Is, and it shows up in your capital expenditure. Say

696
00:36:18,280 --> 00:36:22,360
Speaker 1: you compare yourself during the twenty tens to the twenty twenties.

697
00:36:22,640 --> 00:36:25,640
Speaker 1: You're spending a lot less on your capital expenditure even

698
00:36:25,680 --> 00:36:28,480
Speaker 1: as your oil production is higher than it was back then.

699
00:36:29,600 --> 00:36:31,440
Speaker 1: Would you say One of the ways in which investors

700
00:36:31,480 --> 00:36:34,320
Speaker 1: are thinking about this is that they want not just Egxon,

701
00:36:34,440 --> 00:36:36,760
Speaker 1: but oil companies in general to run in a harvest

702
00:36:36,800 --> 00:36:39,320
Speaker 1: mode where they draw down the profits and the investors

703
00:36:39,320 --> 00:36:41,640
Speaker 1: then invest in the companies they think are building the

704
00:36:41,680 --> 00:36:44,719
Speaker 1: climate solutions. And Egxon does the job of a good

705
00:36:44,719 --> 00:36:47,920
Speaker 1: corporation of producing the profits that it needs, but maybe

706
00:36:48,000 --> 00:36:51,640
Speaker 1: shrinks eventually because the world doesn't need as much fossil fuel.

707
00:36:51,760 --> 00:36:54,640
Speaker 2: Well, I think the facts are counter to that. The

708
00:36:54,680 --> 00:36:56,799
Speaker 2: world needs more fossil fuels. If you look at the

709
00:36:56,840 --> 00:36:59,440
Speaker 2: demand today, as I mentioned at the beginning, demand for

710
00:36:59,520 --> 00:37:02,840
Speaker 2: world today is at record levels. It'll grow going into

711
00:37:02,960 --> 00:37:05,080
Speaker 2: next year. And so that's I think the thing you

712
00:37:05,120 --> 00:37:07,320
Speaker 2: have to You know, we as a very large company,

713
00:37:07,360 --> 00:37:10,319
Speaker 2: represent probably about three percent of the world's oil and

714
00:37:10,360 --> 00:37:13,560
Speaker 2: gas supply, and so as a company, we're not going

715
00:37:13,600 --> 00:37:15,560
Speaker 2: to dictate how much oil and gas gets used in

716
00:37:15,600 --> 00:37:18,000
Speaker 2: the world. In fact, there's no single company that's going

717
00:37:18,040 --> 00:37:21,480
Speaker 2: to dictate that. What dictates the amount of oil that

718
00:37:21,520 --> 00:37:23,520
Speaker 2: gets used in the world is one what is the

719
00:37:23,760 --> 00:37:27,360
Speaker 2: available alternatives that meet the collection of needs, one of

720
00:37:27,400 --> 00:37:30,080
Speaker 2: them being affordability, one of them being reliability, one of

721
00:37:30,120 --> 00:37:32,760
Speaker 2: them being availability. You've got to have an energy supply

722
00:37:32,800 --> 00:37:36,320
Speaker 2: that does That depends on how quickly economies are growing,

723
00:37:36,600 --> 00:37:39,120
Speaker 2: it depends on how quickly people's prosperity are living. So

724
00:37:39,160 --> 00:37:40,840
Speaker 2: those are the things they are going to drive demand,

725
00:37:41,239 --> 00:37:43,439
Speaker 2: and then the challenge for our industry is to meet

726
00:37:43,440 --> 00:37:47,160
Speaker 2: that demand and to meet those different criteria, and as

727
00:37:47,200 --> 00:37:50,000
Speaker 2: we continue to work for ways to decarbonize and meet

728
00:37:50,040 --> 00:37:53,440
Speaker 2: those needs with lower emissions, that's the challenge that we face.

729
00:37:53,640 --> 00:37:57,080
Speaker 2: But you can't stop meeting those needs to reduce emissions

730
00:37:57,080 --> 00:38:00,520
Speaker 2: because now you basically create more and more human hardship.

731
00:38:00,640 --> 00:38:02,879
Speaker 2: This is the challenge that I started this conversation with

732
00:38:03,000 --> 00:38:04,680
Speaker 2: is you've got to find a way to do both.

733
00:38:06,239 --> 00:38:09,040
Speaker 1: But if there are no ideologies and there are just incentives.

734
00:38:09,040 --> 00:38:12,120
Speaker 1: We talked through how the incentive to reduce emissions will

735
00:38:12,160 --> 00:38:14,520
Speaker 1: come from carbon pricing, because that will allow people to

736
00:38:14,600 --> 00:38:18,000
Speaker 1: make choices for lower carbon products at a cost that

737
00:38:18,160 --> 00:38:21,120
Speaker 1: is the right cost for those products versus the cost

738
00:38:21,160 --> 00:38:24,600
Speaker 1: that society bars from climate change. If carbon pricing is

739
00:38:24,680 --> 00:38:27,680
Speaker 1: not going to happen, as we've talked about the political

740
00:38:27,840 --> 00:38:31,960
Speaker 1: infeasibility of it, I use supportive of just direct regulation

741
00:38:32,160 --> 00:38:35,160
Speaker 1: to reduce emissions because something has to cause.

742
00:38:35,280 --> 00:38:38,720
Speaker 2: That's what I'm suggesting when I talk about a carbon

743
00:38:38,760 --> 00:38:43,080
Speaker 2: accounting system, a global carbon accounting system, and then a

744
00:38:43,280 --> 00:38:47,040
Speaker 2: mechanism for calculating carbon intensity at a product level, and

745
00:38:47,080 --> 00:38:51,280
Speaker 2: then a regulation that sets the specification for carbon intensity

746
00:38:51,320 --> 00:38:53,960
Speaker 2: for that market, so that every country can set the

747
00:38:53,960 --> 00:38:57,080
Speaker 2: carbon intensity specifications for the products sold in that market.

748
00:38:57,239 --> 00:38:59,680
Speaker 2: That gets rid of the need for these very inefficient

749
00:38:59,719 --> 00:39:02,319
Speaker 2: come or some carbon border adjustments. So yeah, that's what

750
00:39:02,360 --> 00:39:05,280
Speaker 2: we're talking about regulation. As I said at the beginning,

751
00:39:05,400 --> 00:39:09,520
Speaker 2: is there's a need for smart, efficient, thoughtful regulation. We

752
00:39:09,600 --> 00:39:11,160
Speaker 2: think this is an area we could do that and

753
00:39:11,200 --> 00:39:12,200
Speaker 2: the world could do that in.

754
00:39:12,400 --> 00:39:15,560
Speaker 1: So one place where regulations have had an impact to

755
00:39:15,600 --> 00:39:19,520
Speaker 1: some extent is methane. You set a target to reduce

756
00:39:19,520 --> 00:39:22,600
Speaker 1: methane emissions by eighty percent by twenty thirty and you

757
00:39:22,719 --> 00:39:25,200
Speaker 1: say you are on track. There's a reduction of sixty

758
00:39:25,239 --> 00:39:29,800
Speaker 1: percent as of last year, but why not go further

759
00:39:29,960 --> 00:39:32,480
Speaker 1: because your colleagues at the Oil and Gas Climate Initiative

760
00:39:32,520 --> 00:39:35,200
Speaker 1: have a zero methane emissions by twenty thirty target.

761
00:39:35,560 --> 00:39:37,760
Speaker 2: That's what we're doing. We're part of that commitment.

762
00:39:37,840 --> 00:39:39,959
Speaker 1: Yeah, yeah, so you want to go beyond the eighty

763
00:39:40,000 --> 00:39:41,600
Speaker 1: percent that you've set already.

764
00:39:41,280 --> 00:39:45,200
Speaker 2: So it's a near zero methane what's basically possible is

765
00:39:45,560 --> 00:39:47,719
Speaker 2: what the industry is committing to, and we're part of

766
00:39:47,760 --> 00:39:49,960
Speaker 2: that commitment and we're that's what we're working our way to.

767
00:39:50,239 --> 00:39:53,080
Speaker 1: Okay, So that because that right now the official target

768
00:39:53,320 --> 00:39:54,719
Speaker 1: is eighty percent reduction by you.

769
00:39:54,640 --> 00:39:56,640
Speaker 2: Said by twenty thirty eight, Yes, so when you want

770
00:39:56,680 --> 00:39:58,880
Speaker 2: to get nearly at near zero, when we get so

771
00:39:58,920 --> 00:40:01,280
Speaker 2: it's an eight percent reduction gets this down to near zero.

772
00:40:02,400 --> 00:40:05,480
Speaker 1: Now, the second elephant in the room that I wanted

773
00:40:05,520 --> 00:40:07,520
Speaker 1: to bring up, but we got sidetracked into a lot

774
00:40:07,520 --> 00:40:13,200
Speaker 1: of other discussion is one about trust, and it is

775
00:40:13,239 --> 00:40:15,480
Speaker 1: worth acknowledging here. A lot of people in this room

776
00:40:15,640 --> 00:40:18,839
Speaker 1: will be familiar with Exon's history around so in doubt

777
00:40:18,920 --> 00:40:22,120
Speaker 1: on climate science, just load down climate action. At one point,

778
00:40:22,120 --> 00:40:25,799
Speaker 1: Exon employed some of the world's best climate scientists. They

779
00:40:25,840 --> 00:40:29,240
Speaker 1: predicted very accurately, what would happen if you keep burning

780
00:40:29,239 --> 00:40:33,200
Speaker 1: fossil fuels and we are living with those consequences today.

781
00:40:33,360 --> 00:40:36,800
Speaker 1: You've said multiple times Exon is a different company today.

782
00:40:38,200 --> 00:40:41,120
Speaker 1: But given Exon's history, why should people trust you?

783
00:40:41,239 --> 00:40:45,040
Speaker 2: Now? Yeah, Well, I think what you've described there's you

784
00:40:45,040 --> 00:40:47,120
Speaker 2: can debate. I think the facts around that. I think

785
00:40:47,160 --> 00:40:49,480
Speaker 2: we had two scientists working thirty or forty years ago.

786
00:40:49,719 --> 00:40:51,759
Speaker 2: These are things that happened thirty or forty years ago.

787
00:40:52,200 --> 00:40:53,920
Speaker 2: I think what people had to focus on what have

788
00:40:54,040 --> 00:40:56,799
Speaker 2: we been doing, what are we committing to do, and

789
00:40:56,840 --> 00:40:58,759
Speaker 2: what are we demonstrating that we're doing. And as I

790
00:40:58,800 --> 00:41:00,240
Speaker 2: come back to you, if you look at the things

791
00:41:00,239 --> 00:41:03,399
Speaker 2: that we're doing today, we're investing more than any other

792
00:41:03,440 --> 00:41:06,919
Speaker 2: company across a broader array of solution sets to try

793
00:41:06,920 --> 00:41:11,719
Speaker 2: to help economies decarbonize. I think that's what we can

794
00:41:11,760 --> 00:41:13,839
Speaker 2: be expected to do, or what should be expected of us,

795
00:41:13,840 --> 00:41:15,759
Speaker 2: and I think we're working harder to deliver on that.

796
00:41:15,800 --> 00:41:16,920
Speaker 2: But at the end of the day, you've got to

797
00:41:16,920 --> 00:41:20,640
Speaker 2: have supportive policy in lieu of a market but ultimately

798
00:41:20,680 --> 00:41:22,880
Speaker 2: you got to have market forces.

799
00:41:24,239 --> 00:41:27,120
Speaker 1: But when we talk about those efforts, which you say,

800
00:41:27,120 --> 00:41:29,799
Speaker 1: we're thirty forty years ago, now you were at the

801
00:41:29,840 --> 00:41:32,000
Speaker 1: company at the time you joined in nineteen ninety two,

802
00:41:32,320 --> 00:41:34,360
Speaker 1: Many of these efforts were done in the nineties and

803
00:41:34,440 --> 00:41:37,200
Speaker 1: the two thousands. I know you weren't in a role

804
00:41:37,400 --> 00:41:40,680
Speaker 1: which made the decisions whether these efforts go forward or not.

805
00:41:41,120 --> 00:41:43,560
Speaker 1: But you are in charge of the entire company today,

806
00:41:44,200 --> 00:41:47,480
Speaker 1: and the questions I'm asking you are questions that your

807
00:41:47,480 --> 00:41:51,240
Speaker 1: predecessors took actions on, and now you're answering those questions.

808
00:41:51,840 --> 00:41:55,120
Speaker 1: Twenty years from now, your successors will be answering questions

809
00:41:55,120 --> 00:42:00,160
Speaker 1: about the actions you take today. So that will be

810
00:42:00,200 --> 00:42:03,799
Speaker 1: a time when climate impacts will be worse. And I'm

811
00:42:03,800 --> 00:42:07,760
Speaker 1: saying will because that's a scientific certainty, as exon scientists

812
00:42:07,760 --> 00:42:10,720
Speaker 1: have predicted so what are you doing now to protect

813
00:42:10,760 --> 00:42:12,319
Speaker 1: your legacy At EGXON.

814
00:42:12,600 --> 00:42:15,719
Speaker 2: We're trying to solve the problem is leveraging the capabilities

815
00:42:15,719 --> 00:42:17,920
Speaker 2: that we have as a company. That's what we've been

816
00:42:17,960 --> 00:42:20,759
Speaker 2: talking about this whole podcast. I mean, the reality is

817
00:42:20,800 --> 00:42:23,359
Speaker 2: there's no one company out there doing more than we're doing.

818
00:42:23,600 --> 00:42:24,960
Speaker 2: If you look at the amount of money that we're

819
00:42:25,000 --> 00:42:27,640
Speaker 2: investing on an annual basis, the commitments on an average

820
00:42:27,640 --> 00:42:30,200
Speaker 2: annual basis, it's a third of what the US EPA

821
00:42:30,239 --> 00:42:33,719
Speaker 2: is spending. That's one company doing that. So again, I'm

822
00:42:33,719 --> 00:42:35,560
Speaker 2: not claiming that we're going to solve the problem, and

823
00:42:35,640 --> 00:42:37,719
Speaker 2: I'm claiming is we're going to use our capabilities to

824
00:42:37,800 --> 00:42:40,439
Speaker 2: contribute to solving that problem. I think that's all that

825
00:42:40,480 --> 00:42:42,560
Speaker 2: we can ask of ourselves as a company, and that's

826
00:42:42,600 --> 00:42:45,040
Speaker 2: what we're doing. Thank you, Dare, thank.

827
00:42:44,880 --> 00:43:00,719
Speaker 1: You, thank you for listening to zero. Now for the

828
00:43:00,800 --> 00:43:06,360
Speaker 1: sound of the week, that's the sound of the heaters

829
00:43:06,520 --> 00:43:09,640
Speaker 1: keeping us warm in the Bakwu Stadium here at COP

830
00:43:09,640 --> 00:43:13,200
Speaker 1: twenty nine. If you like this episode, please take a

831
00:43:13,200 --> 00:43:15,640
Speaker 1: moment to rate or review the show on Apple Podcasts

832
00:43:15,640 --> 00:43:19,040
Speaker 1: and Spotify. Share this episode with a friend or with

833
00:43:19,120 --> 00:43:22,319
Speaker 1: someone who has had a crude oil bar at a SPA.

834
00:43:23,120 --> 00:43:25,000
Speaker 1: You can get in touch at zero port at bloomberg

835
00:43:25,040 --> 00:43:28,640
Speaker 1: dot net. Zero's producer is Mighty le Rau, Bloomberg's head

836
00:43:28,640 --> 00:43:31,200
Speaker 1: of podcast is Sage Bauman, and head of Talk is

837
00:43:31,200 --> 00:43:34,440
Speaker 1: Brendan Nunan. Our theme music is composed by Wonder Day

838
00:43:35,040 --> 00:43:38,280
Speaker 1: Special thanks to Kevin Crowley, jend De, Louis schwan Wagner,

839
00:43:38,480 --> 00:43:42,960
Speaker 1: Aaron Rudkoff, Jessica Beck and Ethan Steinberg. Thanks also to

840
00:43:43,000 --> 00:43:46,239
Speaker 1: the Atlantic Council, the International Chamber of Commerce and Uwe

841
00:43:46,440 --> 00:43:50,040
Speaker 1: sabiovski I am Akshatrati Band