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Oil giant Occidental wants to remake itself as a climate tech leader in Texas

Oil giant Occidental wants to remake itself as a climate tech leader in Texas


Occidental stands to profit off both its oil business and the pollution that it creates by building massive carbon removal projects in Texas.

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An oil pumpjack in the shadows as the sun sets.
An oil pumpjack pulls oil from the Permian Basin oil field on March 14th, 2022.
Photo by Joe Raedle/Getty Images

One of the biggest oil producers in the US has a new kind of product in its lineup, one that’s supposed to clean up the climate pollution that’s still coming from its petroleum business. Its plan is to sell customers supposedly green credentials that they can show off to the world. That risks giving polluters a license to keep polluting, critics say, and positions Big Oil as a heavyweight in the carbon removal and trading business.

This is all going down in Texas, where oil giant Occidental recently announced plans for a massive climate tech project. Occidental signed an agreement to lease over 100,000 acres within the historic King Ranch, where it plans to build “direct air capture” (DAC) plants capable of filtering millions of tons of carbon dioxide out of the air. Once the CO2 is out of the atmosphere, the plan is to stuff the greenhouse gas underground, where it can’t heat up the planet. Then, Occidental can churn out credits for each ton of CO2 they capture and sequester.

Giving polluters a license to keep polluting

“At King Ranch our intention is to use DAC to provide carbon removal credits that other industries and companies, particularly those that are hard to decarbonize like aviation, or net-zero pledged companies, can purchase to reach their climate goals,” William Fitzgerald, a spokesperson for Occidental subsidiary 1PointFive told The Verge in an email following the King Ranch announcement. The company declined an interview to discuss its plans further.

It’s a scheme that’s similar to other carbon offset credits. Offsets work like this: companies pay to support forestry or renewable energy projects, and the good those projects do for the planet is supposed to make up for the company’s emissions. That allows companies to claim that they’re carbon neutral even if their pollution grows. They’re just balancing out their carbon accounting, perhaps by planting a certain amount of trees for every ton of CO2 they release.

Now, companies also have the option of investing in a direct air capture plant instead of a forest to clean up its mess. But that doesn’t get at the root of the problem, environmental advocates tell The Verge, because it doesn’t stop the company from polluting in the first place.

“It’s all flawed. It’s deeply flawed because ultimately, this gives the fossil fuel industry an out. So corporations, the fossil fuel industry, they can go on with business as usual,” says Tamra Gilbertson, climate justice program coordinator at the Indigenous Environmental Network based in North America.

Human activity has pumped so much greenhouse gas pollution into the atmosphere that figuring out how to remove some of that carbon dioxide has become “unavoidable,” according to a major climate report published by the United Nations Intergovernmental Panel on Climate Change this year. But that report also emphasizes that carbon removal should tackle those legacy emissions and any stubborn emissions that persist from truly hard to decarbonize industries like aviation since large planes can’t run on renewable energy the way cars or trucks can because the batteries we have so far are just too heavy to fly.

In other words, carbon removal credits from direct air capture shouldn’t be a Get Out of Decarbonizing Free card for polluters that can choose to switch to renewables like wind and solar power. So even for proponents of direct air capture, “how those credits are used is actually a big part of the question right now,” says Danny Cullenward, policy director at CarbonPlan, a nonprofit that analyzes climate solutions. If a company purchases carbon removal credits on top of slashing its own pollution, then it might actually be able to tackle some of that legacy pollution that’s heating up the planet.

Cullenward also thinks carbon removal credits can avoid some of the faulty carbon accounting that has plagued traditional carbon offset projects. Those carbon offsets already have an ugly track record of failing to reduce emissions. But it could be much easier to measure exactly how much CO2 a DAC plant captures than to estimate how much additional CO2 a reforested area draws down, for example. Cullenward also sees oil and gas companies proving useful in managing and storing captured CO2 because of their experience working with underground wells.

Still, even folks less skeptical of Occidental’s sashay into the carbon removal business diverge on what that means for the future of the fossil fuel industry. “It’s not ‘everything oil is evil’, but it is absolutely the case that we don’t want direct air capture so that we can continue to do oil and gas production,” Cullenward says.

Occidental has already used its plans to capture carbon in Texas to sell “net-zero oil”

On the other hand is Josh Rhodes, a research scientist at The University of Texas at Austin who studies energy systems. He doesn’t see so much bad in Occidental keeping some of its oil and gas business afloat as long as the company deals with the pollution it creates. “If they’re able to do that in a carbon-free way, I guess my own opinion is I’m fine with it because at the end of the day people need energy and we need to clean up the climate,” Rhodes says.

Occidental has already used its plans to capture carbon in Texas to sell “net-zero oil.” It’s basically just oil that’s been extracted with the help of CO2, which fossil fuel companies shoot into depleting oil fields in a process called “enhanced oil recovery.”

And while that branding attracted Occidental’s first big net-zero oil customer this year, it pisses off environmentalists. “These oil and gas corporations are actually using a technology that’s been purported to help reduce emissions [to] extract oil that would not be economically feasible to extract if not for these methodologies,” says Adrien Salazar, policy director at the nonprofit Grassroots Global Justice. “It is incredibly frustrating to see that the oil and gas operations are pivoting to try to pitch these false solutions in order to continue making profits off of their products.”

For groups like the Indigenous Environmental Network that represent people who’ve borne the brunt of environmental damage from fossil fuels, direct air capture and carbon trading are still schemes that polluters hide behind. And any plan to manage carbon dioxide without considering the other harms that come with extracting, spilling, and burning fossil fuels are dangerous distractions for Gilbertson, who points to the fact that coal mining and pipeline development affect Indigenous peoples’ territories.

In some ways, a lot of the hype around direct air capture is extremely premature. This technology still has to prove that it can perform at commercial scale. Right now, just 18 direct air capture facilities operate around the world. Their combined capacity, capturing 0.01 million metric tons of CO2 each year, is a tiny fraction of what Occidental hopes to accomplish. The company’s goal is to capture some 30 million tons of CO2 in Texas a year.

Even though it is very far away from that goal, it’s already selling some of its products to customers looking for a green solution to their problems. 1PointFive, the Occidental subsidiary deploying direct air capture in Texas, has already sold 400,000 metric tons of carbon removal credits from its first DAC project to aerospace company Airbus. That project just broke ground this year and isn’t slated to come online until late 2024. So Airbus and Occidental are counting proverbial chickens before they hatch.

“Maybe [Occidental]’s just reading the writing on the wall,” says Rhodes. “While this may be a very small, expensive thing to do right now. In the future, it could be much more lucrative, particularly if they’re some of the first movers to market and able to provide a service that will only become more popular.”

The world ultimately needs to phase out fossil fuel production in favor of renewable energy to stop climate change from reaching a whole new magnitude of devastation, a large consensus of research finds. With that in mind, other startups are deploying direct air capture facilities without ties to fossil fuels, like a plant in Iceland that will capture carbon for companies including Microsoft for upward of $600 a metric ton.

But the biggest direct air capture plans in the works yet are Occidental’s, which give fossil fuel interests a major platform in the carbon removal and trading business. Tech giants including Stripe, Meta, and Alphabet have also invested heavily in direct air capture. Proponents see that investment as critical to ensuring that the technology can scale up enough to make a significant impact on the climate. Otherwise, direct air capture stays prohibitively expensive. Detractors, meanwhile, worry that polluting industries are gaining too much influence when it comes to crafting climate solutions.

“I think we’re going to see a split in the direct air capture community between firms that have decided not to engage in legacy oil and gas operations at all,” Cullenward says. “And those that are engaging directly.”