ExxonMobil (ticker: XOM) released its 2015 Outlook for Energy this week. The report is the company’s long-term global view of energy demand and supply, which ExxonMobil shares to promote understanding of the world’s energy future. The outlook examines energy supply and demand trends in 100 countries by using 15 demand sectors and 20 different energy types covering all manner of personal and business needs. This year’s edition covers predictions from 2015 to 2040.
Based on the outlook, ExxonMobil expects global energy demand to rise 35% from 2010 to 2040, due largely to the rapidly expanding global middle-class. By 2040, the Brookings Institution expects the global middle-class will number 5 billion people, representing more than half of the world’s total population. As projected, that middle class expansion –concentrated in India and China – will be the largest in history and, in addition to income gains, societal changes such as expanded infrastructure, electrification and urbanization, will contribute to a considerable increase in global energy demand.
The outlook identifies significant changes in the trade of oil and other liquids. North America will likely become a net exporter of liquids by 2020 as supplies of tight oil, NGLs and bitumen from oil sands increase. This is expected to open new trading opportunities as the Asia Pacific region’s net imports are projected to rise by nearly 80% by 2040. Africa’s liquids exports are expected to decline as local demand more than doubles, and Latin American growth in supplies is anticipated to outpace demand as supplies of deepwater and unconventional liquids expand.
North American unconventional gas production will nearly triple by 2040 and the region is expected to surpass the combined output of Russia and the Caspian region as the largest gas-producing area. In Asia Pacific, gas production is seen doubling by 2040, driven partly by unconventional production technologies. Demand in the region is expected to climb by about 170%, according to the outlook, meaning Asia Pacific will likely overtake Europe as the world’s largest gas importer.
Natural gas is expected to be the fastest-growing major fuel source during the outlook period as demand increases by about 65%. Half of that increase will come from the Asia Pacific region, led by China. Utilities and industrial operations are expected to account for about 80% of the demand increase worldwide, as operators increasingly choose natural gas because of its lower emissions and versatility as a fuel and feedstock. By 2040, natural gas is expected to account for more than 25% of global energy use, surpassing coal in the overall mix.
Demand for coal is expected to rise through 2025 and then decline as China’s economic growth gradually slows and it follows the shift seen in the Organization for Economic Co-operation and Development (OECD) countries toward cleaner fuels. Global coal demand is expected to remain most prominent in Asia Pacific, primarily to support growing power-generation requirements.
Oil is still expected to remain the number one energy source and demand will increase by nearly 30%, driven by expanding needs for transportation and chemicals. During an analyst meeting covering the outlook, William Colton, VP for Corporate Strategic Planning for ExxonMobil, said “Oil remains uniquely attractive for transportation as liquid fuels continue to set the standard for convenience and performance in terms of energy density and the ability to store large amounts of energy in a small volume.”
Renewable energy expected to account for 15% of global demand by 2040
William Colton said about renewables, “Please note that the renewables of wind, solar and bio-fuels have the fastest growth rate [in demand.] They’re growing faster than any other fuel.”
Wind, solar and biofuels are expected to increase about 6% a year on average through 2040, when they will be approaching 4% of global energy demand. Renewables in total will account for about 15% of energy demand in 2040. Nuclear energy is expected to nearly double from 2010 to 2040, with growth in Asia Pacific, led by China, accounting for about 75% of the increase.
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