Exxon sees oil demand down 20% in 2040; or maybe it'll be up

Image: ExxonMobil

If climate change curbs live up to their promise, oil demand may fall 20 per cent by 2040, Exxon Mobil Corp. says in one forward-looking report. But a more likely scenario is it will grow by 20 per cent, the company says in separate outlook.

The reports were both released Friday. Which one to believe?

The first comes in response to a shareholder vote last year that demanded Exxon publish the risks it faces if the world hits its carbon-emissions goal to limit global warming to 2 degrees Celsius above pre-industrial levels. The second is what the Irving, Texas-based explorer uses “to help guide multibillion-dollar investment decisions,” according to its preamble.

In both instances, the study authors say the world will still need trillions of dollars of investment in fossil fuels to meet its energy needs over the next two decades.

The business outlook, as might be expected, is more hawkish. Its findings show oil and natural gas still supplying about 55 per cent of the world’s energy needs by 2040, with oil the biggest contributor. Coal is expected to fall to less than 30 per cent in 2040 from approximately 40 per cent in 2016.

Electric and hybrid cars will approach 40 per cent of light-vehicle sales by 2040, compared to three per cent in 2016, it said.

Climate Change

The climate change report says oil demand will drop to 78 million barrels a day by 2040 under a scenario whereby global temperatures do not rise by more than 2 degrees Celsius above pre-industrial levels by 2100.

Both reports show demand for natural gas rising strongly.

Darren Woods, Exxon’s chief executive officer, says in that report the company needs “to meet society’s growing need for energy while addressing the risks of climate change.”

That’s not enough to appease climate change campaigners.

“ExxonMobil’s own analysis assumes the world will continue to burn through oil and gas to drive their profits and keep us on a path toward global temperatures well above the 2 degree Celsius target,” said Kathy Mulvey, a campaign manager at the Union of Concerned Scientists, in an email.

“Nowhere do they foresee carbon emissions bending rapidly toward zero – as they must well before 2040,” she wrote.

© 2018 Bloomberg L.P