Adds details from the earnings call
ExxonMobil chief executive officer Darren Woods said hydrogen production tax credit 45V, a key component of former President Joe Biden's efforts to curb emissions, is critical to establishing a market for the zero-emissions fuel that can stand on its own.
Pointing to the company's Baytown Low-Carbon Hydrogen project in Texas as an example, Woods noted the project depends on 45V to be economically viable.
"We believe these incentives are critical to establishing a fully market-based future where hydrogen competes head-to-head with traditional fuels," Woods said in a call following the company's release of fourth-quarter earnings. "The end goal is clear: a system where no energy source remains dependent on government subsidies."
Woods' comments come as President Donald Trump has ordered a review of the previous administration's clean energy polices, reversing a moratorium on new LNG export facilities and pausing funding related to Biden's signature climate bill, 2022's Inflation Reduction Act, which established 45V as an incentive to kickstart US hydrogen production.
Woods noted that roughly 10pc of the company's capital expenditure is earmarked for "nascent, lower-emissions markets, where market forces have yet to fully take hold."
ExxonMobil expects its low-carbon business, which includes hydrogen, lithium and carbon capture and storage, to provide $2bn in earnings growth between now and 2030, chief financial officer Kathryn Mikells said on the earnings call.
ExxonMobil is developing what it describes as the largest low-carbon hydrogen plant in the world in Baytown, designed to produce 1bn cf/d of hydrogen from natural gas with carbon capture. If completed as designed, the project would represent nearly 10pc of the Biden administration's goal as laid out in the US National Clean Hydrogen Strategy and Roadmap, the company says on its website.
Most of the plant's production would be used to decarbonize its refinery operations at Baytown but the company recently signed an agreement to sell ammonia from the plant to European trading firm Trammo. Japanese power producer Jera has said it is considering 500,000 t/yr of ammonia offtake from the plant as part of its plans to take an equity stake in the project.
Earlier in January, ExxonMobil announced a technical breakthrough that would enable it to crack hydrocarbon molecules into olefins for plastics using furnaces that operate entirely on hydrogen fuel. The company said it is the first company to demonstrate this technology at industrial scale and is a part of "getting hydrogen-ready." The company is expected to make a final investment decision on the hydrogen plant later this year.
By Jasmina Kelemen