March 2017, Vol. 244, No. 3

Features

ExxonMobil’s Energy Outlook Projects Population, Economic Growth to Drive Demand

Global population growth of nearly 2 billion, a doubling of worldwide economic output and rapid expansion of the middle class in emerging economies are all expected to contribute to energy demand growth of about 25% from 2015-2040, according to ExxonMobil’s 2017 Outlook for Energy: A View to 2040. 

By 2040, world population is expected to reach 9.1 billion, up from 7.3 billion today. Over that same period, global GDP will effectively double, with non-member countries of the Organization of Economic Co-operation and Development (OECD) seeing particularly high levels of economic growth. This means rising living standards in essentially every corner of the world, and billions of people joining the global middle class.

This economic expansion, coupled with growing numbers of people, will help drive up global energy demand by about 25% by 2040, similar to adding another North America and Latin America to the world’s current energy demand.

The Outlook stresses that the world will need to pursue all economic energy sources to keep up with this considerable demand growth. Oil and natural gas will likely be nearly 60% of global supplies in 2040 while nuclear and renewables will grow about 50% and be approaching a 25% share of the world’s energy mix.

Energy demand in member nations of the OECD is likely to be flat to 2040 while demand in non-OECD nations is expected to increase 40% as prosperity expands and access to modern energy increases.

Growth in global energy demand will be led by greater electrification of the global economy. Fifty-five percent of demand growth over the next quarter century will be tied to power generation needed to support the increasingly digital and plugged-in lives of society, suggests the Outlook, the company’s annual long-range supply-and-demand energy forecast.

Average electricity use per household will rise about 30% between 2015 and 2040. The share of the world’s electricity generated by coal is expected to fall to 30% from 40% in 2015 as the use of lower-emission energy sources including natural gas, nuclear and renewables, increases.

With the global middle class more than doubling to about 5 billion, the number of cars, sport-utility vehicles and pickups are expected to increase about 80% to 1.8 billion vehicles by 2040. During the same period, average new car fuel economy will improve from about 30 miles per gallon (mpg) to nearly 50 mpg, reflecting significant strides in efficiency of conventional vehicles and a shift in the fleet mix favoring hybrid vehicles, the report shows.

Global energy-related carbon dioxide emissions are expected to peak during the 2030s and then gradually decline. This is supported by an increasing shift to less carbon-intensive energy for power generation and higher energy efficiency across all sectors. The challenge of providing energy supplies that power the global economy is coupled with the need to do so in ways that reduce energy-related greenhouse gas emissions and mitigate the risk of climate change.

The next quarter century will witness several developments driven by technology advances and policy decisions that will substantially affect the world’s greenhouse gas emissions profile. As policymakers develop mechanisms to meet the goals set forth in the 2015 Paris climate agreement, the research and development efforts of scientists, engineers and entrepreneurs will propel energy’s evolution.

Advances will promote not only new energy supply options and greater energy efficiency, but also emerging opportunities for technologies like carbon capture and storage (CCS). Between 2015 and 2040, innovation in the transportation sector will deliver significant increases in fuel economy for cars and commercial vehicles.

Also forecast is a shift in the types of energy used for electricity generation, led by natural gas and renewables. Coal’s share of power generation has been falling and will continue to drop, with gains being made by less carbon-intensive energy sources such as natural gas, nuclear, wind and solar.

The initial result will be a continued slowdown in the growth of global carbon dioxide emissions. Global energy-related CO-2 emissions are likely to peak during the 2030s and begin to decline – all the more remarkable considering the fact that global GDP is expected to double in the period from 2015-2040.

Supply

As shown in the accompanying graph, oil remains the primary fuel, essential in transportation and chemicals, while gas demand rises the most, largely to meet increasing needs for electricity and to support rising industrial demand. 

Oil and gas are projected to supply about 55% of the world’s energy need though 2040. Conversely, coal’s share falls as the OECD and China turn to lower emission fuels. Also noted is the almost doubling of nuclear demand from 2015 -2040 led by China. Wind, solar and biofuels are expected to show a combined growth of 5% per year, accounting for about 4% of global energy demand.

LNG Exports

As noted in the report, the outlook for LNG export supplies diversifies as demand grows. Significant new exports are expected from the United States, Canada, Australia and East Africa. Moreover, North America will become the largest LNG exporter from growth in unconventional gas production.

As to supply, LNG is projected to remain highly competitive due to abundant gas resources and many aspiring exporters, while low-cost LNG supply sources will be advantaged in the marketplace.

Other key findings:

• Natural gas demand will expand significantly, accounting for about 40% of the projected growth in global energy demand.

• Nuclear and renewable energy sources – including bio-energy, hydro, geothermal, wind, and solar – are also likely to account for 40% of the growth in global energy demand to 2040.

• Oil will provide about one-third of the world’s energy in 2040, remaining the No. 1 source of fuel, with growth driven by commercial transportation and chemicals demand. Average global fuel economy for new light-duty vehicles is expected to improve by about two-thirds.

• Carbon intensity of the global economy is likely to be reduced by 45% through 2040, reflecting significant gains in the energy efficiency of economies worldwide and a gradual transition to lower carbon-intensive energy types.

• Global energy-related carbon dioxide emissions could peak during the 2030s and begin to decline, even as global economic output doubles from 2015-2040.
• North America, which for decades had been an oil importer, is likely to become a significant net exporter by 2025.

• India is likely to surpass China as the world’s most populous nation by 2025. The two countries are expected to account for about 45% of the growth in global energy demand.

Outlook is ExxonMobil’s long-range forecast developed by its economists, engineers and scientists through data-driven analysis. It examines energy supply and demand trends for approximately 100 countries, 15 demand sectors and 20 different energy types. ExxonMobil uses the forecast as a foundation for its business strategies and to help guide multibillion-dollar investment decisions.

For further information, visit www.exxonmobil.com/energyoutlook.