The world will require all forms of energy over the next quarter century to meet a greater than one-third increase in demand that will be driven by population growth, improved living standards and expanded urbanization, according to ExxonMobil’s Outlook for Energy: A View to 2040, which was released today.
“Understanding global energy trends is absolutely critical for effective energy policy,” said Rex W. Tillerson, chairman and chief executive officer of Exxon Mobil Corporation (NYSE: XOM). “The world depends on safe, reliable and affordable energy development to support economic growth and our modern way of life.”
In its annual forecast, ExxonMobil projects that future energy needs - expected to be about 35 percent higher in 2040 than 2010 - will be supported by more efficient energy-saving practices and technologies, increased use of less-carbon-intensive fuels such as natural gas, nuclear and renewables as well as the continued development of technology advances to develop new energy sources. Without gains in efficiency, global energy demand could have risen by more than 100 percent.
Driving increased energy demand is anticipated population growth that will reach nearly 9 billion in 2040 from about 7 billion today, and a projected doubling of the global economy - at an annual growth rate of nearly 3 percent - largely in the developing world where rising living standards will continue to lift millions of people out of poverty.
The outlook projects that oil and natural gas will continue to meet about 60 percent of energy needs by 2040. Liquid fuels - gasoline, diesel, jet fuel and fuel oil - will remain the energy of choice for most types of transportation because they offer a unique combination of affordability, availability, portability and high energy density.
An expected 25 percent increase in demand for oil, led by increased commercial transportation activity, will be met through technology advances that enable deep-water production and development of oil sands and tight oil.
Natural gas will continue to be the fastest-growing major fuel source as demand increases by about 65 percent. Natural gas is projected to account for more than one quarter of all global energy needs by 2040 and it is expected to overtake coal as the largest source of electricity.
Nuclear energy will see solid growth despite some countries scaling back their nuclear expansion plans following the 2011 Fukushima incident in Japan. Growth will be led by the Asia Pacific region, where nuclear output is projected to increase from 3 percent of total energy in 2010 to nearly 9 percent by 2040. Renewable energy supplies - including traditional biomass, hydro and geothermal as well as wind, solar and biofuels - will grow by nearly 60 percent. Wind, solar and biofuels are likely to make up about 4 percent of energy supplies in 2040, up from 1 percent in 2010.
Energy used for power generation will continue to be the largest component of global demand and is expected to grow by more than 50 percent by 2040 as improved living standards that come with urbanization and rising incomes lead to increased household and industrial electricity consumption through wider penetration of electronics, appliances and other modern conveniences. The growth reflects an expected 90 percent increase in electricity use, led by developing countries where 1.3 billion people are currently without access to electricity.
The Outlook for Energy is ExxonMobil’s long-term global view of energy demand and supply and its findings help guide investments that underpin the company’s business strategy. The outlook is developed by examining energy supply and demand trends in more than 100 countries and 15 demand sectors, such as transportation, industrial and power generation. Twenty different types of energy that will be available to future consumers are evaluated while taking into account assessments of future technologies, government policies and cross-border trade flows.
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