ExxonMobil Global Outlook: Our View to 2050: Review & Summary

     The first statement in this short outlook report is this:

“In 2050, the world will be different - vastly different.”

     They first note that energy access is a very real problem for many in the world and that global population and energy demand will continue to increase. They assert that 4 billion people. Basically, half of the world’s population lives “below the modern energy minimum.” They define ‘modern energy minimum’ as a per capita energy use of at least 50 million British thermal units (MMBtu) per year. Modern developed countries typically have a per capita energy use of three times that or more. Extreme poverty, lack of energy access, and lack of access to clean cooking fuels are three of the most pressing problems.

     ExxonMobil estimates that getting the unenergized world up to the energy minimum standards will require a 25% increase in energy use in those countries by 2050. This, combined, with a projected 10% decrease in energy use in developed countries would result in a net energy use increase of 15%. They also think that as energy efficiency continues to improve, as more renewables are deployed, and as CO2 abatement technologies like CCS ramp up, that global carbon emissions will begin to fall in 2030 and fall by 25% by 2050. That is less than the Paris Accord calls for but it is probably more realistic at this point.

     Their forecast for the global energy mix to 2050 suggests that oil and gas use will actually increase a little bit in BTU terms (but will decrease as a percentage from 56% to 54%) as coal use decreases from 24% to 13% of the global energy mix. They also predict that global solar and wind will increase by four times from 3% in 2023 to 12% in 2050. The graphic below compares ExxonMobil's scenario to some IEA and IPCC scenarios.

     They note that while oil & gas demand for transport via light-duty vehicles will decrease by 2050 its use in commercial transport (trucking, shipping, aviation) and in industry (chemicals and manufacturing) is predicted to increase. While wind and solar can power electricity they cannot power heavy industry and heavy transport, expected to make up 50% of energy requirements in 2050, in any viable way in the near term. Biofuels, hydrogen, and CCS will help but still will be limited in impact.

     They note that their analysis differs considerably from many net-zero by 2050 analyses such as the one by the IEA in that it does not set a target and work back to figure out how to get there. Instead, it considers all the factors such as likelihood of certain policies, costs, technological maturity, and the public’s ‘willingness to pay’ for faster decarbonization. Thus, theirs is a projection rather a scenario to get to a certain goal as the IEA and IPCC scenarios are. 

     They note that their analysis sees a strong need for continued oil and gas investment. Their numbers suggest that oil production is declining at a rate of about 15% per year, which is almost double the IEA decline rate projections of 8% per year. The development of unconventional assets, mainly shale and other ‘tight’ or low permeability reservoirs, results in higher initial decline rates. Thus, they conclude that no new investment to 2030, for example, would result in more than a two-thirds decrease in oil supply from 100 million barrels now to less than 30 million barrels in 2030. That would result in severe energy shortages and soaring costs. There really is no viable alternative, despite what the climate activists say. Thus, they conclude that any ‘keep it in the ground” strategy would not only be unfeasible but also unjust.

 

CEO Darren Woods commented:

 

“To get serious, three things are needed: supportive public policy, significant technology advancements, and a smooth transition from government subsidies to market-based mechanisms.”

 

     Biofuels, CCS, hydrogen, and the new technologies will no doubt increase and ramp up in the years ahead and scale up in the 2030s, but their impacts won’t be major for decades for a few simple reasons: cost, need for subsidization, and technological limitations.

 

     Finally, they list five key takeaways of the outlook:

 

1. All energy types will remain in the mix.

2. Renewables will grow the fastest.

3. Coal will decline the most.

4. Under any credible scenario, oil and natural gas remain essential.

5. Lower-carbon technology needs policy support to grow rapidly but ultimately must be supported by market forces.

 

 

References:

ExxonMobil Global Outlook. Executive Summary. Our View to 2050. August 2024. 2024 ExxonMobil Global Outlook Executive Summary