American oil and gas giant ExxonMobil warned to ditch its plan to build the world’s low-carbon hydrogen project if the US government denies natural gas-fed facilities eligibility for the Inflation Reduction Act subsidies.
Exxon’s ultimatum
According to Bloomberg, Exxon CEO Darren Woods said on Monday that the company will cancel its low-carbon hydrogen project in Baytown, Texas, if the facility does not benefit from the IRA incentives.
“We’re investing billions of dollars to reduce the carbon intensity of our natural gas. Why would the regulation not give companies doing that any credit? That will basically instantly stop investments to reduce carbon intensity by the industry as a whole.”
Exxon CEO Darren Woods said at the CERAWeek by S&P Global conference on Monday
For context, the current IRA guidelines only offer projects that produce “green” hydrogen by utilizing water and renewable energy. Hydrogen Fuel News noted that the IRA provides green hydrogen subsidies of $3 per kilogram.
Low-carbon hydrogen facility project
ExxonMobil claims that it can produce “blue” hydrogen from gas by collecting carbon emissions. Therefore, it contends that the Houston-area facility should gain eligibility for the tax credits under the IRA.
CEO Woods noted that the US’ apparent preference for green hydrogen over blue hydrogen would unfairly favor particular technologies instead of prioritizing overall emission reduction.
According to Exxon, the project could generate 1B cf/day of hydrogen and capture 98% of associated carbon. These considered, it can aid in emission reduction at its adjacent oil refinery by as much as one-third.
Moving forward
Exxon’s Chief Executive emphasized the heavy dependence of the proposed project on the IRA incentives. However, the US government’s strong dedication to shifting to green hydrogen would make the two parties’ negotiations challenging.
As mentioned, the company has no intention of pursuing the project without government support. All that said, it would be interesting to see how the Biden administration and Exxon will decide on the matter at hand, which can potentially pave the way for a more diverse array of sustainable energies to cut emissions.
