Exxon Mobil Corp. said on Wednesday it signed with U.S. steel maker Nucor Corporation a carbon capture and sequestration (CCS) contract, its first from a hard to abate industry.

Source: Reuters

Exxon last year inaugurated a business dedicated to making money from burying underground carbon dioxide (CO2) produced by companies looking to reduce their own atmospheric emissions. The U.S. oil producer is targeting a market it calculates has potential to reach $4 trillion globally by 2050.

The contract value was not disclosed. The technology needs to gain scale before becoming profitable.

Unlike its European peers, which are investing in traditional renewable energies like solar and wind, Exxon's $17 billion energy transition strategy is mostly focused on reducing emissions from its own operations and charging clients to do the same for them.

Exxon will capture, transport and store up to 800,000 metric tons (Mt) per year of carbon CO2 from Nucor's manufacturing site in Convent, Louisiana, starting in 2026. The site produces a raw material used to make steel, a highly polluting process.

The deal brings Exxon's CCS customers to 5 Mt per year.

There are around 35 commercial facilities in the world applying carbon capture and sequestration, with a 45 Mt capacity, according to the International Energy Agency (IEA).

Project developers have announced ambitions for over 200 new capture facilities to be operating by 2030, capturing over 220 Mt per year, the IEA says.

Exxon calculates CCS annual volumes would need to expand to 7.6 billion Mt by 2050 for the world to achieve the IEA's Net Zero Emissions scenario.