ExxonMobil thinks global oil consumption will remain steady until 2050 and that the transition to renewable energy will not dampen demand for fossil fuels. It also warned of energy price shocks if investor turned their backs fossil fuel extraction. Exxon’s prediction runs counter to the International Energy Agency and competitor BP.
The U.S. energy giant is the world’s second-wealthiest oil company by market capitalization, after Saudi Aramco. It forecast last week that crude demand will stay above 100 million barrels a day over the next 25 years, a prediction that assumes a transition to renewable energy will fail to curb the world’s thirst for fossil fuels.
Exxon projects 67% of the global energy mix in 2050 will be supplied by oil, natural gas and coal, down from 68% last year. BP sees consumption falling to 75 million barrels per day and the IEA to 54.8 million by the same year, as long as governments hit their pledges.
“It’s hard to know for sure why Exxon say what they’re saying. But in general scenarios like this are supposed to make one think differently about the present – or to reinforce existing patterns of thought, of course,” Doug Parr, chief scientist and policy director at environmental protection group Greenpeace U.K., told Lube Report “And just like Saudi Aramco projecting high future usage, it can be seen as signaling to investors and shareholders that future exploration and production is not a stranded asset risk,” Parr said.
Despite continuing strong demand for oil and gas, Exxon forecast carbon emissions would decline 25% by 2050 due to greater energy efficiency and increased use of renewable energy. It also claims its carbon capture and storage efforts, for which it will receive millions in government subsidies, will be significant, while critics say CCS has failed to deliver.
Exxon predicts that as electric vehicle market penetration grows apace, oil refining for automotive fuel will shrink by 25% by 2050. At the same time, demand from industry will offset declines.
(This article has been updated since it was published to include comment from Doug Parr.)