Exxon’s new greenwashing ploy

The oil giant claims it can eliminate more than 90 percent of emissions from gas-powered AI facilities. Critics say that’s nonsense.

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Graphic by Tess Abbot

ExxonMobil has a new plan to sell more methane gas in a warming world: Frame it as a climate-friendly solution for artificial intelligence.

The fossil fuel giant is proposing to build massive gas-fired data center campuses—complete with power plants and pipeline infrastructure—to power the immensely energy-intensive AI boom. It’s also promising that this will be totally fine for the planet, because Exxon will remove 90 percent of the emissions from those facilities with taxpayer-funded carbon capture.

“We can offer a low-carbon data center where more than 90 percent of the emissions are captured and abated,” Exxon CEO Darren Woods said in an October earnings call.

He repeated the claim a few weeks later in an interview with the Wall Street Journal. “We can provide low-carbon data centers,” Woods said, “removing about 90 percent plus of the carbon to help solve the emissions associated with this short-term need and demand.”

Woods’s claims were not challenged in either venue. But according to energy experts, they should have been, because carbon capture has never been used successfully at a commercial gas-fired power plant in the U.S., and no existing carbon capture facility has ever consistently achieved a 90 percent capture rate.

“I’d like to see a commercial scale facility that runs for a period of time that’s actually capturing that level of CO2,” said Anika Juhn, an energy data analyst at the independent think tank Institute for Energy Economics and Financial Analysis. “But I think we are seeing an example of the great greenwashing that [carbon capture] is, and people jumping on that bandwagon.”

And people are indeed jumping on the bandwagon, despite carbon capture’s shaky track record. Last week, major utility company NextEra Energy told investors it would work with Exxon to build a “carbon-abated” gas-powered facility at a yet-to-be-determined site in the Southeast, where it will be connected to the oil giant’s existing carbon dioxide pipeline network running through Texas, Louisiana, and Mississippi. The companies will then sell the 1.2 gigawatt site to a potential big tech customer that will use the capacity—enough to power 750,000 homes.

It remains to be seen whether Exxon and NextEra will actually be able to capture all the carbon emissions they say they will. But if they can’t, their promise of “low-carbon” AI could easily transform into a sprawling build-out of high-polluting methane gas infrastructure—one with lasting consequences for both the climate and communities nearby.

A taxpayer-funded greenwashing campaign

Exxon isn’t the only fossil fuel company powering the AI boom. Other companies including Chevron, Energy Transfer, and Enbridge have made their own forays into directly supplying data centers with gas pipelines and power plants.

But Exxon is one of the only companies explicitly telling investors that it will build “low-carbon data centers” using carbon capture. Woods said that “in the near to medium term, [Exxon is] probably the only realistic game in town” to accomplish that feat.

It’s unclear where Woods’s confidence comes from, as Exxon has never used carbon capture on a commercial-scale gas-fired power plant. Its only major operating carbon capture project, the Shute Creek facility near its gas field in LaBarge, Wyoming, is used to capture emissions from gas processing. But as of 2022, about 95 percent of the carbon captured there was sold for enhanced oil recovery—a process of injecting carbon underground in order to extract more oil. Around 3 percent was sequestered, and the remaining 50 percent was vented into the atmosphere.

As a whole, carbon capture technology has been plagued by a history of failure. Half of the carbon capture projects announced over the past decade have been cancelled or delayed, according to data and analysis firm Wood Mackenzie. And when it has worked, the technology has mostly been used to drill for more oil.

“Everywhere and anywhere it’s been applied, [carbon capture] has been a financial boondoggle,” said Tyson Slocum, director of the energy program at the consumer advocacy group Public Citizen. “There’s nothing sustainable about this proposal.”

Even if they did launch and work as promised, carbon capture projects would likely fall short of companies’ emissions-saving claims. Projections typically exclude emissions produced by the equipment itself,methane leaks during gas extraction and transport, or when the carbon capture system is offline. The EPA also does not independently verify the capture rates companies self-report—and that was before the agency proposed to stop collecting greenhouse gas reporting data altogether.

There’s also ample evidence that oil companies know carbon capture won’t work as promised. Beginning in 2016, Exxon discussed ways to avoid publicly acknowledging that carbon capture was limited in its capacity to reduce emissions, according to internal documents and company whistleblowers. But the company marketed the technology to the public and policymakers as a climate solution anyway.

To make this risky investment, Exxon will have help from taxpayers. Today, companies receive $85 per ton of carbon captured in tax credits under 45Q, a federal tax incentive the company spent years lobbying for under the premise that it would encourage significant emissions reductions.

What, exactly, would happen to the carbon once it’s captured? That’s unclear. While Exxon says it would store the carbon emissions produced at its data center site, there are frequently no details from the company as to where its captured carbon actually wound up. And there are few places to securely store captured carbon, according to a study published in the journal Nature. Typically, the carbon is stored in depleted oil and gas fields or saline aquifers deep underground in sedimentary rock formations. But the majority of those are off limits because they are likely to leak the carbon back into the atmosphere, contaminate groundwater, or trigger earthquakes (among other geographical and practical limitations).

Without federal oversight and often operating in states with lax regulatory enforcement, those details might not matter much to companies. The technology has primarily been used for enhanced oil recovery, which is usually considered storage by industry, even though the process results in more emissions. Enhanced oil recovery is now equally rewarded by tax credits, thanks to restructuring of 45Q by the Trump administration and Congress.

“Once the CO2 gets into that pipeline, we don’t really know where it’s going, what is going to be done with it,” said Juhn.

Exxon did not respond to requests for comment for this story by the time of publication.

What happens if Exxon’s “low-carbon” data centers fail?

The stakes are high if Exxon’s carbon capture promises don’t come to fruition, as has been the fate of some of the company’s other “low-carbon” investments.

Powering AI requires staggering amounts of energy and produces equally staggering emissions. Data centers could make up anywhere from 6.7 to 12 percent of total U.S. electricity consumption by 2028, the Lawrence Berkeley National Laboratory calculated. Another study, published last month by researchers at Cornell University, found that at its current rate of growth and without “substantial reliance on highly uncertain carbon offset” mechanisms, U.S. data centers could annually emit as much carbon dioxide as 10 million cars by 2030.

Energy experts have warned that building new fossil fuel projects is incompatible with preserving a livable climate, and that carbon capture “cannot be used to maintain the status quo.”

At the local level, advocates worry the buildout will come with new and compounded harms to nearby communities. Exxon says its new data center will be sited in Mississippi or Louisiana—close to the company’s expansive carbon dioxide pipeline network, which is used to transport the carbon captured from industrial sources. This year, the Trump administration revoked federal safety regulations over carbon dioxide pipelines, which have caused disastrous ruptures and leaks in both states.

The companies have acquired 2,500 acres of land for the project, according to NextEra, the largest renewable developer in the country (perhaps lesser known for its long list of controversies or for helping fund Trump’s ballroom).

Carbon capture is facing increasing backlash across the political aisle in Louisiana, where the Louisiana Department of Energy and Natural Resources—an agency that has faced scrutiny for failing to enforce regulations on the oil and gas industry—now has regulatory oversight over the state’s CO2 injection wells. Already burdened by pollution from extensive petrochemical development along the Gulf Coast, residents have found themselves battling additional pipelines and “low-carbon” facilities in their backyards.

Now come gargantuan data centers. This year, three new Entergy gas plants were approved in northeast Louisiana to power a $10 billion data center owned by Meta. After the first 15 years, the cost of those plants will fall onto ratepayers.

James Hiatt, a former oil and gas worker and founder of the local advocacy group For A Better Bayou, said communities have had little say in the fate of such projects. “It’s these economic developers and these profiteers from elsewhere that continue to come into our state and promise jobs and prosperity and deliver nothing,” he said, except for “the climate chaos that we are experiencing every day.”

For A Better Bayou was one of more than 230 local and national advocacy groups last week urging Congress to impose a national moratorium on data centers over their massive electricity and water consumption, contributions to climate change, and role in driving up energy prices. Voters in political battlegrounds across the country are also protesting the buildout, which could saddle ratepayers with liabilities if the AI investment bubble bursts.

For Hiatt, the Exxon deal is an ominous sign of things to come. After decades of fossil fuel development in the state, “Louisiana should have streets paved with gold,” he said. “The reality is, we’re subsidizing billion-dollar corporations to cause harm to our own communities.”

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