The energy transition is too often framed as an “either-or” proposition, says the chief executive of Exxon Mobil Corporation.

“Our position is that it has to be an ‘and’ equation — one where we continue to produce fuels needed for today’s energy system given the incredibly important role that affordable and reliable energy plays in economic growth and people’s prosperity, and then at the same time [we] work to develop technologies and grow businesses that reduce emissions,” Darren Woods, chair and CEO of ExxonMobil, said Monday morning in Calgary.

Woods was a panelist for the kick-off plenary session, entitled “Energy Transition: The Path to Net Zero,” on the opening day of the 24th World Petroleum Congress.

ExxonMobil has been focused on showing that you can do both, he said.

Since 2016, the company has reduced its carbon intensity by about 10 per cent while it has been growing production across its upstream and chemical businesses, and reinvesting in reconfiguring its refineries.

“So we’re trying to demonstrate that while we make progress in this broader ambition to reduce emissions and to help solve this challenge of climate change, … at the same time we need to continue to meet existing demand while the world transitions to a lower carbon energy system.”

Key drivers to accelerate the transition

Woods believes people underestimate the size of the global energy system and the challenges of moving from what we have today, where incentives exist, to a new system where he said there is no incentive to pay for the cost of that transition.

“In the short term, we need policy — policy all around the world — that focuses on the key objective of emissions reduction versus what we’ve seen develop in a lot of places around the world, which are policies that focus on eliminating today’s available energy system, more specifically oil and gas.”

There will come a time when the use of oil and gas begins to transition, he added, although he believes both are always going to be needed.

“The real challenge that we have as an industry and as a world is to reduce the emissions associated with the combustion of oil and gas.

“We need clear, consistent policy that focuses on that effective statement versus one that looks to eliminate what today is an incredibly important source of energy. That’s really important: good policy, clear policy, and consistent policy.”

Besides policy, a second way to accelerate the transition is to focus on breakthrough technologies.

“We need significant advances in technologies … and I think we need more funding and breakthrough technologies so that we can lower the cost of addressing emissions.”

The challenge with carbon capture and storage is “today with the technology set we’ve got you need high concentrations of CO2 streams to make it affordable even with the subsidies that exist.”

He said it will be important for industry to develop new technologies — or receive higher incentives — to capture less-intense CO2 streams or less concentrated CO2 streams.

“I’m convinced that industry as whole will make progress in that space. I think it’s absolutely critical that we do.”

Woods said a third plank to accelerate the energy transition is the development of markets for carbon reduction.

“Governments cannot afford to subsidize [emission reductions] in perpetuity.”

In the U.S., Woods said the Inflation Reduction Act (IRA) is being used to catalyze investment and to start the work to grow new value chains for carbon reduction.

“But ultimately market forces are going to have to come into play. We’re going to need a market for carbon reduction. And so that would be a third critical component to solve the problem.”