Exxon to buy renewable diesel from Global Clean Energy for five years

FILE PHOTO: An Exxon sign is seen at a gas station in the Chicago suburb of Norridge, Illinois, U.S., October 27, 2016. REUTERS/Jim Young/File Photo

(Reuters) - U.S. oil major Exxon Mobil said on Tuesday it has signed an agreement with Global Clean Energy to buy 2.5 million barrels of renewable diesel per year for five years to help reduce its carbon footprint.

Investors in recent years have increased pressure on fossil fuel companies, including Exxon Mobil, to reduce emissions, spend more on low-carbon energy and make disclosures on the impact of fossil fuel production on climate change.

The renewable diesel will be sourced from Global Clean Energy’s refinery in Bakersfield, California, starting 2022. The plant is among several traditional oil refineries being converted to manufacture renewable diesel, as demand for the alternative fuel continues to grow. Exxon said it plans to distribute the renewable diesel within California and potentially to other domestic and international markets.

In a first, a group of the world’s top oil companies set goals this year to cut their greenhouse gas emissions as a proportion of output, as pressure on the sector’s climate stance grows.

The 12-member group’s Oil and Gas Climate Initiative (OGCI), includes BP, Chevron, CNPC, Eni, Equinor, Exxon, Occidental Petroleum, Petrobras, Repsol, Saudi Aramco, Royal Dutch Shell and Total, which together account for over 30% of the world’s oil and gas production.

Reporting by Arundhati Sarkar in Bengaluru