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Keywords: Sustainability, Digital Transformation, Industrial AI, Industrial Cybersecurity, Energy Transition, ARC Advisory Group.
Overview
Sustainability, particularly through energy transition and decarbonization, was a major theme at this year’s ARC industry forum in Orlando. Wednesday executive keynotes were titled Commercializing Industrial Energy Transition and focused on sustainability related issues in industry and infrastructure. Leading end user executives shared their plans for increased investment in sustainability related initiatives, all of which will require advanced forms of technology to make them happen as well as new thinking around legacy investments. Energy transition and sustainability are now being woven into the core business strategies of most of the world’s largest industrial companies, who now have the mandate and opportunity not only to tackle environmental and social challenges, but to take advantage of the many commercial opportunities and competitive advantages that sustainability initiatives can offer.
Many companies are discovering that ramping up their digital transformation initiatives can also help them reach their sustainability goals. These goals are not always regulatory driven, and sustainability can provide business value across several dimensions, from increased energy efficiency to new processes for carbon capture and storage and hydrogen production and transportation. The following is a summary of the sustainability topics covered at the executive keynotes and panel discussions.
ExxonMobil Makes Significant Investments in Sustainability Businesses
Wade Maxwell, vice president of engineering at ExxonMobil Technology and Engineering, shared his company’s vision of "the and equation,” which addresses the issue of how a major integrated oil and gas company can continue to serve the global energy market while simultaneously reducing emissions and becoming more sustainable.
CCUS and Hydrogen Investments
As part of its $22 billion investment in sustainability over the next several years, ExxonMobil has inroads in CCUS, capturing more than 120 million metric tons of CO2 since its efforts began. The company has many active CCUS sites and hubs, and with the recent completion of the acquisition of major CCUS operator and petroleum company Denbury, ExxonMobil now has the largest owned and operated CO2 pipeline network in the US - adding more than 1,300 miles.
The company is also making a significant investment in direct air capture (DAC) methods for carbon capture, which remove CO2 directly from the atmosphere. According to Wade, DAC is one of the pivotal technologies for sustainability, and one world scale DAC plant can remove 1 million tons of CO2 per year.
The IEA anticipates that hydrogen will meet 10 percent of energy needs by 2050, and ExxonMobil is working to develop technology to produce hydrogen at a lower cost. The company is building the world's largest blue hydrogen facility in Baytown, Texas, which will produce 7 million tons per year of hydrogen when complete. You can view ARC’s recent CCUS Insight here for more information.
Other Sustainability Related Initiatives at ExxonMobil
Wade also discussed other sustainability related initiatives at ExxonMobil, including plastics recycling, where the company is increasing capacity to £1 billion per year by 2030. The company is also building a state-of-the-art renewable diesel facility in Canada, expanding capacity to 20,000 barrels per day by 2030 worldwide.
ExxonMobil also became a huge Lithium producer in 2023 with the acquisition of 120,000 gross acres of the Smackover formation in southern Arkansas, one of the most prolific resources of its kind in North America. The direct lithium extraction that will be used by ExxonMobil utilizes 2/3 less carbon intensity than conventional extraction methods. Wade also touched on the company’s use of drones and robots for emissions detection and pipeline and flare inspection.
Commercializing The Energy Transition: Day 2 Keynotes
The Day 2 executive keynotes began with a presentation from ARC vice president Mike Guilfoyle on commercializing the industrial energy transition. AI, clean energy transition, and analytics will be the three primary technologies moving forward, and analytics and AI will be the key enablers for clean energy technology. Though still in an emerging state, S\sustainability has been good business for both industrial suppliers and end users, and Mike briefly described the new ARC Sustainability Data as a Service (SDaaS) offering from ARC that helps clients quickly identify sustainability related opportunities in the world of industry and infrastructure. SDaaS can remove unpredictability, lower cost and complexity of decision making, and minimize the risk associated with those decisions.
Andrew Obin, Bank of America: The Role of Sustainability in Industrials
Andrew Obin, Research Analyst at Bank of America securities, is a perennial guest at the ARC Forum, and always provides an excellent financial perspective of what’s happening in the market for industrials. This year, Andrew’s presentation focused on the role of sustainability and energy transition issues. According to Andrew, climate related issues are dominating the public company conversation.
Prior to COVID, the US spent about .4 percent of GDP on sustainability related industrial policy, while Germany spent .5 percent or more, and other EU countries have spent more traditionally. Today, the US spends .8 percent of GDP on sustainability related industrial policy since the passing of the $1.8 trillion stimulus package. According to Andrew, the most recent stimulus is structured quite differently from what the US has done before. It doesn't peak until 2026 and will run until 2031. The stimulus was designed so that a lot of these projects are in “red states,” and $2.4 trillion is needed to address and meet net zero targets laid out for the US over the next five years, according to BofA (Bank of America) research.
Andrew stated that carbon footprint reduction does not need to be a dirty word. Most companies are enhancing energy efficiency and switching to clean energy sources. Carbon capture facilities have also been growing significantly. Under the Inflation Reduction Act, Section 45 Q tax credits for capturing carbon have increased to $85 per ton, and most companies can do this at a much lower cost, making CCUS extremely profitable, which is why we see so much activity in CCUS now, including the ExxonMobil acquisition of Denbury referenced earlier, the acquisition of Carbon Engineering by Occidental, and more.
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