Panel, Fireside Chat
A Conversation with John Podesta and Exxon Mobil CEO Darren Woods | Global Conference 2024
- Transition Goals and Timeline:
- The global transition aims to reach "net zero," defined as removing as much carbon from the atmosphere as is emitted, driven by the findings of the 2018 IPCC 1.5°C report which highlighted catastrophic differences between 1.5°C and 2°C warming.
- The U.S. government has set a net zero goal by 2050, with a specific interim target to cut emissions by 50% from 2005 levels by 2030.
- The Inflation Reduction Act (IRA) serves as the primary legislative vehicle to support these targets, representing the largest historical investment in clean energy and climate proofing.
- Private Sector Progress and Investment:
- Global clean tech capital expenditure reached $1.7 trillion last year, surpassing the $1 trillion spent in the fossil fuel industry.
- In the U.S. energy mix, solar accounted for over 50% of new generation capacity both domestically and globally for the first time.
- Since the current administration took office, $388 billion has been invested in the clean tech sector, including capital from traditional energy companies like ExxonMobil.
- Electric vehicle (EV) adoption in the U.S. has quadrupled since the current President assumed office.
- Strategic Disagreements on Methodology:
- Carbon Accounting: Darren Woods (ExxonMobil) argues that a robust global carbon accounting system is essential to prioritize cost-effective solutions, noting current policies lack cost-benefit analysis (e.g., U.S. EV policies cost roughly $400 per ton of CO2 reduced vs. $85 for carbon capture incentives).
- Urgency vs. Analysis: John Podesta counters that while accounting is useful for prioritization, it should not delay action given the acute urgency of climate impacts, such as record-breaking global temperatures and extreme weather events.
- Solution Set: Both agree on an "all of the above" approach requiring diverse technologies including renewables, carbon capture, low-carbon hydrogen, and biofuels, though they debate the speed of implementation and the necessity of market mechanisms versus government subsidies.
- Operational Challenges and Bottlenecks:
- Permitting: Both panelists identify permitting delays and legal frameworks as critical impediments to project construction, necessitating government action to streamline sector-specific approvals (e.g., transmission, offshore wind).
- Regulatory Certainty: The private sector cites the delay in translating IRA legislation into final regulations as a barrier to investment; Woods notes that guidance on sustainable aviation fuel and clean hydrogen is currently being updated to provide the certainty needed for shareholder returns.
- Supply Chains: There is a strategic imperative to reduce dependency on China for clean technology supply chains, which are viewed as relying on unfair state support and high embodied carbon emissions.
- ExxonMobil Strategic Moves:
- The acquisition of Pioneer Natural Resources is intended to apply advanced extraction technologies to lower production costs and recover more oil efficiently.
- ExxonMobil has accelerated its own internal net zero timeline for the Pioneer acquisition from 2050 to 2035, integrating it with an existing Permian Basin net zero target of 2030.
- The company is developing end-to-end value chains for carbon capture and storage, low-carbon hydrogen, and environmentally friendly lithium extraction from brine.
- Trade and Global Policy:
- Trade in carbon-intensive goods (steel, aluminum, cement) currently fails to account for the "embodied carbon" of production, effectively subsidizing high-emission manufacturing, particularly in China.
- The EU is leading with a Carbon Border Adjustment Mechanism (CBAM) to penalize carbon-intensive imports.
- Policy Divergence: Podesta and Woods agree on the need for carbon accounting to value clean imports, but Woods suggests that established carbon intensity specifications could achieve similar goals without the administrative complexity of a new border tax.
- The U.S. is expected to propose its own trade-related carbon policies in the upcoming Congress or the second Biden administration term to prevent undercutting by dirtier global competitors.
- Future Outlook:
- The transition requires scaling up capabilities to manage "molecules" (carbon, hydrogen, biofuels) in addition to "electrons" (electricity).
- Global success depends on enabling the "Global South" to grow economically while reducing emissions, requiring cost reductions and market mechanisms that do not replicate Western carbon costs for developing nations.
- Moving from government-subsidized deployment to market-driven forces is identified as the critical next step for sustaining long-term decarbonization.