Why Exxon’s CEO Warns Republicans on Climate Policy Shifts

Image Name: Exxon’s CEO, Darren Woods

Image Credit: Politico

In a POLITICO interview, Darren Woods, the chair and CEO of Exxon Mobil, cautioned the incoming Trump administration against making significant changes to climate policies, highlighting the necessity of opposing carbon border taxes that some Republican lawmakers advocate.

Speaking from Baku, Azerbaijan, during the COP29 climate talks, Woods emphasized the significance of preserving stable climate policies to prevent making long-term objectives more difficult. He stated, “The challenge or the need to address global emissions isn’t going to disappear. Short-term actions could make long-term solutions much harder.”

This warning comes shortly after President-elect Donald Trump secured the presidency, promising to enhance U.S. fossil fuel production and reverse climate policies from the Biden administration. Trump’s anticipated withdrawal from the 2015 Paris Agreement has created uncertainty in climate diplomacy, as evidenced by his skepticism towards climate change, which he has repeatedly called a “hoax,” and his criticism of electric vehicle policies and renewable energy sources like wind and solar power.

Despite these views, several Republican lawmakers are opposed to the complete repeal of the Inflation Reduction Act (IRA), claiming that it has economic benefits. The law has been crucial in advancing sustainable energy initiatives and economic growth in a number of sectors.

Woods opposed carbon border tariffs. Woods was the CEO of Exxon after Rex Tillerson became Trump’s first Secretary of State. Imports made with carbon emissions higher than those in the United States would be subject to these charges. Trump’s first trade representative, Robert Lighthizer, and other Republicans have promoted this idea, arguing that it will help American businesses with smaller carbon footprints.

Woods said, “I think it’s a bad idea,” “Carbon border adjustments introduce unnecessary complexity and bureaucratic hurdles without being effective.”

Rather, Woods promoted a regulatory structure that was centered on the carbon intensity of goods. Under such a system, the government would have to set accounting guidelines and evaluate the carbon impact of different goods. “Regulation will play a significant role,” he stated.

The European Union’s carbon border adjustment mechanism has become a contentious issue at COP29, with countries like China, Brazil, India, and South Africa filing formal complaints against such trade measures, arguing they increase the cost of green technology in developing nations.

Similarly, initial objections to Biden’s IRA came from several countries, which argued that it favored U.S. companies and excluded foreign competitors. Trump has pledged to eliminate many of these incentives, but Woods expressed confidence that Exxon would adapt to any changes in IRA provisions that benefit the oil and gas industry, such as tax incentives for carbon capture, utilization, and storage technology.

“I’ve been advising consistency,” Woods said. “Our polarized political environment, with its fluctuating policies, isn’t beneficial for the economy.”

He criticized Biden’s energy strategies as “restricting traditional energy sources and pushing expensive alternatives,” but warned against completely abandoning climate initiatives. “Ignoring environmental performance can exacerbate the problem,” Woods cautioned.

Woods emphasized a thoughtful, rational approach to reducing emissions, suggesting that Trump’s administration could help by establishing a solid framework for global emission reductions. “Every country can set carbon intensity levels based on their circumstances,” he said, advocating for standards similar to those that reduced sulfur in marine fuel oil and automotive diesel.

Exxon has entered the carbon capture market to collect and store emissions from petroleum operations in underground reservoirs in Louisiana, Texas, and under the Gulf of Mexico. Although the IRA offers substantial tax benefits for this technology, environmental groups have condemned it.

Despite Biden’s push for green legislation, the United States remains the world’s leading producer of gas and oil, hitting record output levels. However, the United States is still a long way from meeting Biden’s goal of halving emissions from 2005 levels by 2030.

Woods’ comments mirror the sector’s overall concerns about policy unpredictability. As Republicans attempt to reverse Biden-era climate initiatives, powerful people like Exxon Mobil might be essential in developing a balanced strategy for climate action and economic stability.

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