ExxonMobil takes the EU to arbitration over carbon capture mandate it says Europe can't meet

ExxonMobil takes the EU to arbitration over carbon capture mandate it says Europe can't meet.

ExxonMobil has started confidential arbitration against the European Union over its carbon capture rules, the Financial Times reported Wednesday, citing a European Commission memo. Reuters relayed the report.

The challenge targets Article 23 of the bloc's 2024 Net-Zero Industry Act. That provision requires major oil and gas producers to help build 50 million tonnes a year of CO2 injection capacity by 2030. According to the report, the Commission informed EU trade officials of the notice of arbitration last month and is preparing a response.

"Oil and gas companies are now compelled to provide CO₂ storage capacity despite the absence of a viable market for carbon capture and transportation, saddling industry with unrealistic timelines and increasing energy costs for all Europeans," Exxon said in a statement.

The case runs under the Energy Charter Treaty, a 1990s investment pact that lets companies sue governments for compensation. The EU withdrew from the treaty in June 2025, but a 20-year sunset clause still allows claims. Exxon affiliates in Belgium, Luxembourg and the United Kingdom filed a notice of dispute over the summer, Inside Climate News and the International Institute for Sustainable Development reported. The UK subsidiary may help the claim get around EU court rulings that bar arbitration between EU members.

Exxon and other producers are also challenging Article 23 at the EU General Court. William Druet of the NGO Bellona Europa told Gas Outlook that the arbitration opens "a second legal front" that would likely focus on compensation and could undermine investor certainty in a sector that is struggling to take off. A Commission spokesperson said the EU is "confident" its measures comply with the treaty.

The dispute is part of a wider industry push against Brussels' climate rules. Last month the EU delayed methane rules for imported oil and gas, and Exxon has lobbied the Trump administration against the bloc's corporate sustainability law. A company that markets carbon capture as a climate fix is now fighting a law that makes it build some.