Saudi Aramco CEO Amin Nasser told attendees at CERAWeek by S&P Global, a global energy conference, that global leaders should "abandon the fantasy of phasing out oil and gas."

When asked about those comments, ExxonMobil Chairman and CEO Darren Woods (XOM) tells Yahoo Finance's Julie Hyman that things like wind and solar power and the rise of EVs are a "necessary but not sufficient set of solutions" to the energy transition. Instead, Woods proposes a "broader" set of solutions is needed, including things like carbon capture and storage, hydrogen, and biofuels. Woods credits the Inflation Reduction Act (IRA) for opening "the aperture on other opportunities to reduce emissions above and beyond what wind and solar can do."

When it comes to the IRA, Woods calls it "technology agnostic." The legislation "says what you should focus on is achieving an outcome which is lower carbon intensity for a product," Woods says, and as a result, the door is opened to other businesses to help achieve that goal, something Exxon is a "fan" of.

The legislation has come under fire from Republicans, with Trump campaign officials telling the Financial Times that the former president would "gut" the IRA if he were reelected to the White House. If that were to happen, Woods says Exxon would be "responsive" to changes made by a new administration, but that "ultimately the world needs to decarbonize. We need to do more to reduce emissions. And I think the IRA is a good step towards that in terms of being technology agnostic, focus on reducing the emissions and lowering the carbon intensity of society. And I think that's the right approach."

One of the big issues facing ExxonMobil right now is Chevron's (CVX) $53 billion deal to buy Hess (HES). Exxon, Hess, and China National Offshore Oil Corporation all have a stake in the Stabroek Block in Guyana. Exxon claims it has a right of first refusal when it comes to Hess's Guyana stake and has filed for arbitration with the International Chamber of Commerce. Woods says there are three reasons why the arbitration is important: to confirm and preserve their preemption rights, learn how Chevron values the assets in the Hess deal, and to "understand the value of that preemption right and what's in the best interest of the corporation and for our shareholders."

Editor's note: This article was written by Stephanie Mikulich.

Key video moments

00:00:25 Woods on reframing the energy transition

00:02:15 Woods discusses what works in the Inflation Reduction Act

00:04:39 How to balance the need for fossil fuels with the need to reduce emissions

00:06:28 Woods talks plans to be net zero in the Permian Basin by 2030, carbon capture technology

00:08:30 Woods on Chevron-Hess deal and Guyana

Video Transcript

JULIE HYMAN: I'm Julie Hyman. You're watching "Yahoo Finance." and I'm here at the CERAWeek by S&P Global Conference in Houston, Texas, where a big topic of conversation, as we've been talking about, has been the energy transition. But there has been a reframing of the conversation by some around the energy transition.

One of those folks is Darren Woods. He is the CEO of ExxonMobil. And he's joining me right now. Thanks so much for being here.

DARREN WOODS: Glad to be here.

JULIE HYMAN: I really appreciate it. When I say reframing the transition, it's because you, among others, have said, we're going to need oil and gas for a little while here. Another comment on this front that really struck me today was from the CEO of Saudi Aramco who said it was a fantasy that we could phase out oil and gas. And he said, instead, we should be investing in them.

Fantasy is a pretty strong word. And I'm curious what your thinking is around that, and whether you think you've been successful in moving the conversation on this front.

DARREN WOODS: So I think our emphasis has been, one, recognizing the solution set that the world has been pursuing with wind and solar and EVs is a necessary, but not sufficient set of solutions. And that we've needed a much broader set of solutions to try to drive the change and the transition that everybody is hoping for.

One that involves skill sets that frankly companies like ExxonMobil and our industry can bring to bear. And so that with the Biden administration and the IRA starting to open the aperture on other opportunities to reduce emissions above and beyond what wind and solar can do. So carbon capture and storage are really important part. Hydrogen, low-carbon hydrogen is an important part of that. Biofuels is an important part of decarbonizing the world and society.

And so that conversation is starting to evolve. And people are becoming more accepting of that. And that's what we're focused on. At this stage, when we have this huge challenge in front of us of decarbonizing the energy system is we need more solutions not less. And I think we're seeing that conversation happen.

And because we've been so narrowly focused, the times going to take to achieve it has been slowed. I think one of the reasons for what you heard with Amin is that idea that is, the longer it takes to transition, the longer you're going to need traditional fuel sources.

JULIE HYMAN: I'm glad you brought up the IRA, as well, as something that spurred investment here. We're, obviously, in a presidential election here in the United States. And former President Trump has talked about getting rid of the IRA. Obviously, it's legislation. So he couldn't do it alone.

But he could weaken it. And depending on what happens to Congress, as well, maybe, he could get more people on board. Sounds like you're a fan of the IRA. It's been helpful in some ways to your industry. So what are your thoughts on whether that could potentially be weakened?

DARREN WOODS: Well, I think in terms of the IRA, our view is if the society wants to decarbonize, the way to do that is to focus on the source of the issue, which is emissions and the focus on looking at carbon intensity and setting standards for carbon intensity, which the IRA did.

And so it, basically, is technology agnostic. It says, what you should focus on is achieving an outcome, which is lower carbon intensity for a product. That makes us a fan, because that says, it opens up the opportunity for other businesses and industries to participate to try to meet that.

And that's why we're supportive of it and why we've been looking at investing in that. Ultimately, the decision as to how quickly you drive emissions reduction. It's going to be a function of what society wants, which will be represented through the political process and the rules that come.

So if there's a change in the administration, and they choose to take a different path, then we're responsive to that. But I think, ultimately, the world needs to decarbonize. We need to do more to reduce emissions. And I think the IRA is a good step towards that in terms of being technology agnostic, focus on reducing the emissions, and lowering the carbon intensity of society. And I think that's the right approach.

JULIE HYMAN: So all else being equal, you would not want President Trump to try to eliminate.

DARREN WOODS: I think there's back and forth. One administration or one party comes into power and the other one comes back and flip flopping is not good for making progress in this space. It's not good for business. It's not good for society as a whole. We need consistency in this space.

And so I would argue for have the right kind of bipartisan debates, get to a solution set that people can agree on, and then implement that and sustain it consistently so that the businesses can then begin to plan around that and make the kind of investments that we need to in order to drive emissions reductions.

JULIE HYMAN: So the trajectory that we're on currently, where we are still seeing growth of demand for oil and gas, production of oil and gas, at the same time, as you talked about concomitant with the growth in other types of energy sources, and with carbon capture technologies, are you confident we can stay on this trajectory and also mitigate the worst effects of climate change, some of the climate catastrophes that we've begun to see crop up over the past several years?

DARREN WOODS: I think one of the challenges is the way the problem has been stated in the past is we need to get rid of fossil fuels, natural gas crude, and coal. And I think what we should stay focused on is we need to get rid of the emissions associated with the combustion of those things.

And I believe that while there are some circumstances where you need to get rid of the products, and you can't continue to combust, there'll be other circumstances where you just deal with the emissions. And so carbon capture and storage allows you to continue to use existing energy systems, but capture the emissions associated with the combustion in those energy systems. That will be a very important part of the solution.

If you look at what we're trying to do in our Permian, the unconventional business, we are actually growing production and reducing emissions. And we've got a net zero emissions plan by 2030 for our Permian production, which is actually growing over this time frame.

So you can do both. But you've got to be very thoughtful about it. And I think, again, it comes back to the focus ought to be on how best do we reduce the emissions. In some cases, it means getting rid of existing energy systems. In other cases, it means dealing with the emissions associated with those energy systems.

And we should be open to either one of those. If we open our minds and just stay focused on the right problems, I think we can make a lot of progress a lot more quickly than we have been.

JULIE HYMAN: 2030 is not that far away. How far are you towards that goal? Because we've seen some carbon capture both by you all and other companies. But it hasn't really scaled as of yet. So are you expecting to see a big acceleration in the next six years?

DARREN WOODS: So in the Permian, the net zero for the Permian is the emissions associated with our production of oil and gas. And so we're on track to meet that objective. And so we're electrifying. We're putting in renewable power systems or contracting for renewable power too. And so that's on track. And we're going to achieve that. Very confident in that.

Carbon capture and storage is a brand new industry. And one of the big challenges we've had in that space is you're creating a brand new value chain with a technology that historically is used for another purpose, that's moving along. But it is going to take time.

But just to give you an example of the scale that our industry can bring to this, we've got three contracts with an industrial gas supplier, with a steel plant, and with a fertilizer company to capture their CO2 and to store it. Five million tons per annum.

That storage-- that capturing of that CO2 and storing it is the equivalent of all the electric vehicles that have been sold in the US in total. So just three deals at scale is equivalent to the entire electric vehicle fleet in the United States.

JULIE HYMAN: And when are you there? In other words, you signed the deal.

DARREN WOODS: We signed the deal. So we're starting to build the facilities. And we will be bringing those facilities on 2025, 2026 time frame.

JULIE HYMAN: Got you.

DARREN WOODS: And then that business will continue to grow. We invested in a CO2 pipeline system that allows us to basically transport that CO2. We've got the ability to do the drilling and to manage the reservoir. And we have the technology to capture the CO2. And so we're putting together that value chain, signing deals.

We've got a group that's continuing to work on additional deals. And our expectations will continue to grow and capture more and more CO2. And it will make a big difference.

JULIE HYMAN: I'd be remiss if I didn't ask you about Guyana, while I have you here, which I know has been a big subject of conversation. Chevron's acquisition of Hess that you all now want arbitration over its interest in Guyana, in particular, what's the best case outcome of all of that for you?

DARREN WOODS: So we've got three objectives with respect to that. First, it's a little bit of context. The Guyana development I think will go down as one of the most successful Deepwater developments in the history of the industry. And the success of that development is in large part driven by all the work that we've been doing to grow that value, to develop that resource effectively and expeditiously.

The contract that we signed with those partners give us a right that if any one partner chooses to leave the venture, there's a change in control, s that s existing partners have the right to preempt and have an option to participate in that change.

We're trying to preserve that. We maintain and confirm our pre-emption rights, the right of first refusal on the deal. That's objective number one. As part of that process then in sustaining that right or confirming that right is understand what is-- take the Chevron-Hess transaction. What is the value of the Guyana assets within that transaction?

And so that gives us an understanding of the value for the asset. And then the third step would be for us as, a company, to understand the value of that pre-emption right. And what's in the best interests of the corporation and for our shareholders.

And so those are the three objectives that we have with them.

JULIE HYMAN: If the agreement is preserved as is, just as it was with Hess, in a Hess under Chevron, is that satisfactory?

DARREN WOODS: Well, the preemption right gives us a value opportunity with respect to taking on additional shares of the Guyana asset.

JULIE HYMAN: So you're still assessing that.

DARREN WOODS: That only happens with the change in the control.

JULIE HYMAN: Got it.

DARREN WOODS: So you've got to-- it's only available to us at a change in the control. So when Hess sells to Chevron, that's a change in control. And so we have an opportunity then to evaluate that opportunity for the company, and whether we want to participate further in the Guyana asset.

And once Chevron has that, it'll be the next change in control that we'd have to wait for.

JULIE HYMAN: What will determine whether you want to participate further?

DARREN WOODS: The economic--

JULIE HYMAN: Just the value--

DARREN WOODS: value of it, to subscribe to it, and then how that fits within our opportunity set.

JULIE HYMAN: All right. Well, we'll be in touch then about whether it does. Darren Woods, thank you so much. Really appreciate it.