Natural gas and oil will remain paramount in expanding economic prosperity through 2050, even as the world changes and the overall energy mix evolves, according to ExxonMobil.
The latest Global Outlook, ExxonMobil’s view to 2050, provides the foundation for the integrated major’s annual business plan. The long-term assessment analyzes economic trends, technology advances, consumer behavior and climate-related public policy.
ExxonMobil economists made clear that renewables are becoming a bigger part of the energy mix, but it’s going to be a gas and oil world for decades to come.
“Yes, changes in the world’s overall energy mix are coming,” economists said. “But the global outlook and various third-party scenarios are clear – oil and natural gas will remain essential.”
Overall, gas and oil are expected to hold a 54% share of the world’s energy mix by 2050. That is only 2% lower than the actual 2023 mix. Hydro, wind, solar and geothermal together are forecast to account for 15% of the energy share from 6% in 2023. Bioenergy is projected to climb 1% to 10%, and nuclear power should rise by 1% to 6%. Coal’s share, however, drops to 13% by midcentury from 25% in 2023.
Expanding industrial activity and electric generation are forecast to drive natural gas consumption over the period. Oil consumption is expected to climb because of commercial transport and chemicals.
Oil demand alone is expected to remain above 100 million b/d over the next 25 years, according to ExxonMobil. The assumption is based on forecasts for a slower energy transition than some experts have visualized. BP plc, which also publishes an annual energy outlook, in July said natural gas demand would expand over the period, but oil consumption would decline.
While the world will be “different” in 2050, providing “reliable, affordable energy that drives economic prosperity and better living standards, while reducing greenhouse gas emissions, will remain just as critical as it is today,” the ExxonMobil researchers said.
“Achieving this balance will require wind, solar, oil and natural gas, as well as nearly every other form of available energy – because access to energy drives human development and quality of life.”
All Of The Above
All energy types “will remain in the mix,” according to ExxonMobil. “Renewables will grow the fastest” while coal will decline the most. Under any “credible scenario,” though, gas and oil will remain essential.
Economists also gave a nod to some government intervention to rapidly expand lower-carbon technology. Ultimately, though, low-carbon projects “must be supported by market forces.”
During the recent second quarter conference call, CEO Darren Woods previewed the findings. Worldwide energy demand overall is expected to be 15% higher in 2050 than it is today.
“We see all demand holding steady at around 100 million boe/d in 2050,” Woods said. “Demand for renewables and natural gas grows considerably.”
The report noted that “sustained investment” is essential to quench the world’s thirst for energy – of all kinds.
“As it becomes more obvious that heavy industry and commercial transportation will not be meaningfully powered by renewables, the world will come to rely more on technologies where we have an advantage,” including in hydrogen, biofuels and carbon capture and storage (CCS).
Energy leaders, Woods said, have to take a “serious approach to the transition.”
As Woods and some of his peers have repeatedly said, the focus should be “on moving the world from high-carbon to low-carbon energy, not simply from oil and gas to wind and solar. The data, science and economics all support this as fundamentally necessary.”
Meanwhile, wind and solar are projected to account for a fourfold increase by 2050. That should spur “the biggest changes to the energy landscape,” researchers noted. However, commercial transportation and industrial activity are forecast to account for nearly half of the world’s emissions in 2050. “Wind and solar will play a limited role in these sectors.”
Policymakers have “to get serious” to reach net-zero emissions, Woods said. Supportive public policies, technology advancements and a smooth transition from government subsidies to market-based mechanisms are key to advancing workable solutions, he said.
“Where no market exists and initial costs are high, incentives make sense to get things started. But government incentives cannot – and should not – be in place forever. To get to net-zero, markets must be developed to encourage reduced emissions.”
Speeding up action by the private sector requires the “right policy framework,” Woods said. He hailed the Biden administration's Inflation Reduction Act as it “focuses on an outcome of carbon intensity and does not pick winners and losers.” In turn, Canada’s Clean Fuel Regulations allow biofuels co-processing to achieve a lower carbon intensity outcome.
