ExxonMobil outlined a plan for a "lower-carbon" future based on significant carbon capture and storage (CCS), but also continued fossil fuel use, in a plan that drew faint praise from activist investors Wednesday.

The US oil giant, long criticized by environmentalists for dragging its feet on climate change and renewable energy, emphasized the potential for CCS in reducing emissions.

ExxonMobil said it is working towards a long-term transition to low-carbon energy, while continuing to develop oil and gas in the short- and middle-run.

"We are committed to playing a leading role in greenhouse gas reductions," Chief Executive Darren Woods told analysts.

But he said, "We must also work to meet the continual demand for energy, which is essential to modern life."

Activists praised ExxonMobil's shift in tone during the presentation, which showed the company no longer seeks long-term oil and gas production growth and said it would use any extra cash to reduce debt rather than boost drilling.

But critics noted the plan falls short of European rivals such as Royal Dutch Shell and Total, which have set targets to reach net-zero carbon emissions and invested in renewable energy.

ExxonMobil's plan "risks continued long-term value destruction," said Engine No.1, an activist investor group that focuses on climate change and has nominated four directors to the company's board.

At the heart of the company's emerging climate strategy is CCS, which captures emissions from industrial sources including refineries and chemical plants and injects them deep into geologic formations for permanent storage.

ExxonMobil has planned $3 billion in new CCS investments over the next five years.

But its plans also include a 2021 capital budget of between $16 and $19 billion, with heavy oil and gas upsteam investments in the US Permian Basin as well as in Guyana and Brazil.

- Shifting politics -

In its presentation, ExxonMobil said CCS has potential to be more cost effective than other green solutions, with a $2 trillion addressable market by 2040.

CCS has been discussed for more than a decade but remains used at relatively modest levels worldwide, but many policymakers still see it as part of the toolbox for mitigating climate change.

ExxonMobil pointed to an International Energy Agency projection that CCS could mitigate up to 15 percent of global emission by 2040.

The ExxonMobil push comes amid shifting US political dynamics around climate change, with the United States rejoining the Paris climate agreement and Congress refocusing on the topic after it was largely ignored under former president Donald Trump.

The American Petroleum Institute earlier this week said it is considering supporting a carbon tax, a dramatic reversal for the organization, which opposed Congress's last major legislative attempt to price carbon more than a decade ago.

Woods said Wednesday he also favors pricing carbon so that the market can "effectively allocate resources to deliver CO2 reduction in the lowest possible cost to society."

- Enough progress? -

Andrew Logan, director of the oil and gas program at investor activist group Ceres, said ExxonMobil's investment in CCS are not that significant given the massive funds needed to advance the technology.

"Given that CCS is dramatically underscaled and hasn't progressed much in the last 10 years, $3 billion doesn't do very much," said Logan, who noted there has been much more impressive technological progress on solar and wind energy -- ventures shunned by ExxonMobil.

The company is making "incremental progress" on its climate policies, but still falls short of other oil majors.

"While Exxon is moving forward, the gap between what they and their competitors are doing seems to be growing," he said.

Woods said the industry still needs a "breakthrough" in technology to make CCS projects affordable, and also highlighted the need for government regulation to allow widespread development.

"We don't have the path to net zero today," he said at a briefing with reporters. "We have the objective of getting there and our is to figure out how we can make that happen and to decarbonize."

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