The Trump administration is cutting funding to 24 green energy projects totaling $3.7 trillion, 70% of which received approval toward the tail end of the Biden administration. Oil giant ExxonMobil (XOM 0.70%) got caught in the crosshairs of these cuts. It stands to lose $332 million in funding for a carbon capture and sequestration (CCS) project at its refinery complex in Baytown, Texas. Meanwhile, one of its customers will lose funding for a project linked to Exxon.

Exxon believes carbon capture and storage could eventually grow into a $4 trillion global market opportunity in the coming decades. Here's a look at the projects getting funding cuts and whether it will impact the oil stock's ability to grow shareholder value in the future.

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Drilling down into the Baytown project

Exxon is working to develop the world's largest low-carbon hydrogen and ammonia production facility at its Baytown refinery complex. The facility would produce 1 billion cubic feet of low-carbon hydrogen per day from natural gas and more than 1 million tons of low-carbon ammonia per year. The company will use the hydrogen for its olefins plant at Baytown, which makes building blocks for things like plastics, detergents, and adhesives. It will sell the low-carbon ammonia to global customers (Exxon inked a deal to sell 250,000 tonnes per year to Japan's Marubeni last month). 

A key aspect of this facility is an associated carbon capture and sequestration project, which would be one of the largest in the world. The project would have the capacity to store up to 10 million metric tons of carbon dioxide per year, equal to the emissions of over 2 million cars.

The company estimates that the project would capture 98% of the associated carbon dioxide produced by the facility each year. That low emission profile is appealing to customers like Marubeni. The Japanese company plans to use low-carbon ammonia to fuel a power plant supporting its steelmaking operations. That company agreed to acquire an equity interest in Exxon's project to support its development.

Exxon has called Baytown a landmark project and a game changer for its ability to produce low-carbon fuels. The company had hoped to make a positive Final Investment Decision (FID) on the project this year, putting it on track to start producing in the 2027-2028 time frame. However, the FID is contingent on a supportive government policy, which no longer appears to be the case.

Calpine's project gets cuts, too

Exxon could also feel an indirect impact from the Trump administration's cuts. Power producer Calpine had previously received up to $270 million in funding for its Baytown CCS project in Texas and a second $270 million award for another project in California. The Texas project would capture 95% of the carbon dioxide emissions of its Baytown Energy Facility.

This cut could also have an impact on Exxon's CCS ambitions. The oil company inked a deal with Calpine in April to transport and store up to 2 million metric tons of carbon dioxide from its Baytown Energy Center. That would have enabled the energy company to deliver even lower-carbon-natural gas power to customers. That deal was Exxon's sixth contract with customers to transport and store carbon dioxide through its integrated network of pipelines and underground storage hubs.

A headwind to watch

ExxonMobil sees a huge opportunity ahead for lower-carbon energy. The oil giant is pursuing up to $30 billion in lower emissions investment opportunities like Baytown and CCS transportation and storage projects to support companies like Calpine. It has the potential to add new sources of growth for the oil giant. Further, many of its low-carbon projects would produce less volatile earnings than its oil and gas business because long-term, fixed-rate contracts would back these investments.

However, while CCS is a potentially massive opportunity, it's not a major near-term growth driver for Exxon. The company expects to invest $140 billion into major capital projects and its Permian Basin development plan over the next several years, which it believes will fuel $20 billion of additional earnings and $30 billion in incremental cash flow by 2030. So, the potential loss of the Baytown projects shouldn't derail the oil giant's plan to grow shareholder value in the coming years.