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Exxon Uses U.S. CCS Tax Credit to ‘Drive Up Profits, Keep Oil Flowing’

While carbon capture and storage is touted as a way to decarbonize fossil fuel production, colossal fossil ExxonMobil has been using a CCS facility in Wyoming to drive up profits and keep oil flowing by selling its captured carbon dioxide to other companies that use it to pump more oil, InsideClimate News reveals in a detailed report.

“The oil giant has long promoted its investments in carbon capture technology—a method for reducing greenhouse gas emissions—as evidence that it is addressing climate change, but it rarely discusses what happens to the carbon captured at the Shute Creek Treating Facility,” InsideClimate writes. After stripping the CO2 out of the natural gas the plant processes, “the company found a revenue stream for this otherwise useless, climate-warming byproduct: It began capturing the CO2 and selling it to other companies, which injected it into depleted oil fields to help produce more oil.”

The news story traces the origins of the Exxon CCS operation to 2008, when the U.S. Congress passed a tax credit aimed at encouraging companies to capture their CO2. When that happened, “the massive amounts of carbon dioxide captured at its Wyoming facility put the oil and gas giant in a position to claim more credits under the tax break than any other company,” ICN recounts, citing data from the Internal Revenue Service, the Securities and Exchange Commission, and a global think tank that tracks the technology.

“In the ensuing years, Exxon may have claimed hundreds of millions of dollars in tax credits,” all the while paying lobbyists to fight federal monitoring and oversight requirements to ensure the capture carbon didn’t re-enter the atmosphere.

“Environmental advocates say Exxon’s actions offer a prime example of how petroleum companies have used their adoption of carbon capture to deflect demands for more far-reaching action to combat climate change—like reducing fossil fuel production—while at the same time exploiting the technology for maximum profit,” InsideClimate states. “Such examples, they say, highlight the risks of relying on the carbon removal method to play a significant role in curbing global warming.”

While supporters within the U.S. environment community say the tax credit will help CCS gain wider commercial support, opponents see it as a fossil subsidy masquerading as climate policy.

“This is how the oil industry continues to win,” Greenpeace USA senior climate campaigner John Noël told InsideClimate’s Nicholas Kusnetz. “They get in the weeds, they have access and influence that the normal public doesn’t, and they’re able to manipulate the tax process and the regulatory process…in their favour. And that’s been happening since the first oil well.”

Read the rest of the InsideClimate News exposé here.