Occidental Petroleum’s net-zero emissions strategy is a ‘license to pollute,’ say critics

This article by Grist was published here as part of the global journalism collaboration Covering Climate Now.

More than any other fossil fuel company, Occidental Petroleum — known as Oxy — has built its climate strategy around innovations that capture carbon dioxide before it is emitted or pull it directly from the air. The Texas-based oil giant, which had revenue of more than $23 billion last year, says on its website that these “visionary technologies” will help it achieve net zero greenhouse gas emissions and enable a low-carbon future.

Scientists agree that such technologies will be necessary to limit global warming. However, a new analysis by the nonprofit Carbon Market Watch shows that Oxy’s plans for them are less focused on sustainability and more on creating a “license to pollute.” The analysis describes Oxy’s focus on carbon capture and removal as an “expensive business-as-usual fig leaf” allowing the company to claim emissions reductions while continuing to profit from the sale of fossil fuels – renamed “net-zero oil” and ” sustainable aviation fuels.”

The company “makes all this talk about meeting the goals of the Paris Agreement, but it clearly flies in the face of it,” said Marlène Ramón Hernández, carbon removal expert at Carbon Market Watch and co-author of the report. “We need to phase out fossil fuels, not extend their lives.”

Oxy first unveiled its net-zero emissions strategy in 2020, making it the first U.S. oil company to do so. Today, Oxy describes this strategy with the four R’s: The company says it will “reduce” operational emissions, “revolutionize” carbon management, “remove” carbon from the atmosphere, and “reuse/recycle” to produce new low- or zero-emission greenhouse gas emissions. – emission products. Its overarching goal is to achieve net zero emissions from its operations and indirect energy consumption by 2040.

According to Carbon Market Watch, this is where the problems begin. Despite Oxy’s commitment to net zero energy across operations and energy consumption, emissions associated with the oil and gas it sells are much less clear. These emissions, called Scope 3 emissions, accounted for more than 90 percent of Oxy’s greenhouse gas footprint in 2022. The company has expressed an “ambition” to eliminate them by 2050.

However, Oxy does not plan to reduce Scope 3 emissions by phasing out oil and gas production, but by investing in carbon dioxide removal. The main goal is direct air capture, or DAC – a technology that uses large fans and chemical reactions to separate carbon dioxide from the air. An Oxy subsidiary called Oxy Low Carbon Ventures announced in 2022 that it would deploy up to 135 DAC installations by 2035, and last year Oxy bought a large DAC technology company for $1.1 billion.

Some Oxy DAC designs are already in the pipeline. The largest, called Stratos, is being built in the Permian Basin, a huge oil field in Texas. If it reaches its rated capacity to capture half a million tons of carbon dioxide per year – which Oxy expects it will achieve by mid-2025 – it will be 14 times larger than the largest DAC installation in the world. (The plant, owned by Swiss company Climeworks, began operations in Iceland this week with a rated capacity of 36,000 metric tons of CO2 per year).

However, for DAC to achieve net carbon removal, the captured carbon must be permanently removed from the atmosphere. This is usually achieved by enclosing it in rock formations. However, Oxy CEO Vicki Hollub said this would be a “waste of a valuable product” and plans to use the captured carbon instead. In one application, it would be converted into synthetic electrofuels – low-emission fuels produced from chemical components using electricity – and sold to other companies.

The other main application is a process known as enhanced oil recovery, in which CO2 is injected into oil and gas wells to extract hard-to-reach fossil fuel deposits. This forms the basis of Oxy’s “net zero oil” claims. The company’s logic is that atmospheric carbon dioxide injected into the ground cancels out any new emissions from the oil and gas it uses. Last December, in an interview with NPR, Hollub said this approach meant there was “no reason not to produce oil and gas indefinitely.”

Earlier at a conference last March, Hollub told his audience that DAC would be “the technology that will help sustain our industry over time,” extending its social license to operate for “60, 70, 80 years.”

Neither Carbon Market Watch nor independent experts Grist expressed support for this approach. Charles Harvey, a professor of civil and environmental engineering at MIT who was not involved in the report, called it “absurd” to use captured carbon to produce so-called sustainable aviation fuels; these fuels will eventually be burned, releasing the captured carbon back into the atmosphere.

In fact, the entire process may result in a mesh increase in greenhouse gas emissions because DAC is an energy-intensive process, often powered by fossil fuels. Oxy has no publicly announced plans to power its carbon capture and removal facilities with renewable energy. “They will release more CO2 than they capture,” Harvey said.

As for “net-zero oil,” Carbon Market Watch calls it “an oxymoron and a logical fallacy.” A 2021 analysis by the U.S. Department of Energy’s National Energy Technology Laboratory suggests that this application would also result in net positive emissions – both because just running a DAC plant uses so much energy (likely provided by fossil fuels) and because that every metric ton of carbon dioxide injected into oil fields produces two to three barrels of oil. Each barrel of oil generates half a metric ton of carbon dioxide when burned, which means that each metric ton of carbon dioxide used to produce net zero oxy oil could result in 1 to 1.5 tons of CO2 emissions.

Hernández said she is also concerned about Oxy’s plans to generate carbon credits from DAC projects. Although none of the planned DAC facilities have been built yet, Oxy has already pre-sold or is in negotiations to sell the carbon credits generated by the DAC, equivalent to between 1.63 million and 1.98 metric tons of carbon dioxide, according to Carbon Market Watch calculations. If a company uses the same captured carbon to offset its own emissions AND generate credits that can be used to offset another company’s emissions. “This is a blatant double-counting problem,” Hernandez told Grist.

Oxy did not respond to Grist’s request for comment.

Holly Jean Buck, assistant professor of environment and sustainability at the University at Buffalo, said responsible use of DAC is possible. Even a lunar project like Stratos could be seen as having important demonstration or research value. “It’s about finding out if the technology will work in the real world,” Grist said.

That said, she agreed that there are ways Oxy can make its DAC program more credible. “They can commit to building renewable energy to power it,” she proposed, or donate the technology to developing countries.

Buck and several other scientists say fossil fuel companies should do more of this research — or at least foot the bill for it — to take responsibility for their role in the climate crisis. Harvey, however, argues that such research and implementation have opportunity costs that are expensive. He and other researchers estimated that it would cost the Stratos Oxy plant $500 to capture each ton of carbon dioxide. (The company expects costs to fall to about $200 per ton by 2030.)

Every dollar spent on DAC is a dollar not spent on more reliable, immediate emissions reductions. “Before you get there, you have to do something low-hanging fruit,” he said, like building renewable energy for non-DAC purposes, insulating homes, installing heat pumps or connecting more batteries to the grid using existing renewable energy sources.

“Almost anything is better” than a DAC, Harvey said.

In a significant first step towards a more credible net zero strategy, Hernández suggested that Oxy abandon its aggressive plans to produce more oil and gas because it is inconsistent with scientists’ calls to dramatically cut production to limit global warming to 1.5 degrees Celsius ( 2.7 degrees Fahrenheit). “He’s actually planning to increase oil production, so he clearly has no intention of going net zero,” she said.