DALLAS—The way oil giant Exxon Mobil sees it, the global energy landscape won’t be radically different in 2040 than it is today.
Oil and gas will remain king, accounting for an even slightly larger share of the energy supply. Coal will fall behind natural gas to become the third-largest source of energy.
Exxon forecasts that emerging renewables such as solar and wind power will triple but remain small—just 4 per cent of the world’s energy. And carbon emissions will continue rising until around 2030, when cuts in industrialized nations gain traction lead an overall reduction.
Those are some of the highlights in the long-range outlook that Exxon Mobil Corp. released Monday. It is not likely to win an enthusiastic response from environmentalists, including some of the company’s dissident shareholders, who want a quicker pivot away from oil, gas and coal and faster progress to bring down carbon emissions.
Exxon officials say it is a dispassionate forecast, not a political document.
“Exxon Mobil uses the outlook to develop business strategies that underpin our billion-dollar investment decisions,” William Colton, the oil giant’s chief strategist, said in an interview. “We have every incentive to get it right.”
A great deal has happened since Exxon’s last long-term outlook in December 2014. Oil prices have plunged lower for longer than anyone expected. International sanctions that kept Iran largely out of the world oil market were lifted. And international negotiators meeting in Paris reached an unprecedented agreement to reduce the growth in emissions linked to climate change.
Yet Exxon’s new forecast is strikingly similar to the old one. Its main predictions:
- Global energy demand will rise 25 per cent from 2014 to 2040, led by developing nations in Asia, Latin America and the Middle East. The International Energy Agency recently forecast a one-third increase by 2040.
- Oil use will grow 25 per cent in that period, although it will account for a slightly smaller share of overall energy, and use of natural gas will jump 56 per cent.
- Together, oil and gas will account for 57 per cent of the world’s energy, up from 56 per cent in 2014.
- Coal’s share will slide from will slip to 20 per cent from 26 per cent.
- Nuclear and biomass will each account for 8 per cent of energy in 2040, hydro 3 per cent, and other renewables 4 per cent. Exxon thinks alternative fuels will become a staple in power generation but grow more slowly in transportation because of technology and cost issues.
- Carbon emissions will rise about 11 per cent between 2014 and 2040. Emissions will fall 21 per cent in industrialized nations but rise 32 per cent in developing ones, notably India and countries in Latin America.
Exxon sees a slightly smaller increase in carbon emissions than it forecast in December 2014 after adjusting for the earlier study’s different time period; 2010 to 2040. Technology and climate-change policies are among the reasons.
Energy researcher Jonathan Koomey of Stanford University called the Exxon emissions forecast “pretty typical of fossil-fuel industry and government forecasts,” which he said fail to consider the implications of meeting climate-change goals. At Paris, nearly 200 nations vowed to limit global warming below 2 degrees Celsius (3.6 degrees Fahrenheit) compared with pre-industrial levels.
Koomey said Exxon’s model looks like a “magic wand” scenario in which we don’t do much to address climate change for a couple more decades and count on the “speculative” notion that we will somehow develop and scale up technology to reduce carbon in later years.
Colton said Exxon took the December agreement in Paris into account when forecasting emissions. “We already had a good basis for estimating what was going to happen,” he said.
Colton declined to say whether Exxon believes the goals of the climate-change deal will be met. He said the company considers environmental policies on a country-by-country basis, “then we have to handicap what we think is really going to happen”—whether regulations will be delayed or whether they’ll take effect at all.
Some energy experts believe that low prices for fossil fuels are already undermining efficiency that could reduce emissions.
Fatih Birol, executive director of the International Energy Agency, which advises oil-importing countries, said last month that the recent fall in oil and gas prices will reduce the pressure on governments to boost energy efficiency in transportation and power-generation. Efficiency, he said, isn’t driven by altruistic environmental goals but rather by a desire to save money.
Shares of Exxon Mobil Corp. fell $1.10, or 1.5 per cent, to $75.47 in midday trading. Its shares have fallen 17 per cent over the past year.