Insight

The outlook for energy: A view to 2040

For many years, BP, with a certain amount of supporting fanfare, has produced an annual Energy Outlook, which takes a forward looking view of future energy supply and demand, accompanied by a welter of statistics and tables. The latest publication, released in January 2013, comprised projections through to 2030.
In March, with rather less fanfare but of comparable authority, substance and weight (131 pages), Exxon Mobil updated its annual review in a publication entitled Outlook for Energy: a View to 2040. Given its size and scale/spread as a supplier and presence in the global energy market, its key findings are worth capturing.
Oil will remain the number one global fuel
What are the key findings of this ‘window to the future?’
Oil will remain the number one global fuel. Natural gas will be the fastest growing major fuel with demand rising by 65%, overtaking coal for the number two spot. World oil demand, excluding biofuels, will rise to 105 million barrels per day by 2040 (88m bpd in 2012).
Efficiency will continue to play a key role in solving energy challenges. Energy-saving practices and technologies, such as hybrid vehicles and high-efficiency natural gas power plants, will help countries in the Organisation for Economic Cooperation and Development (OECD), including those in North America and Europe, keep energy use essentially flat, even as OECD economic output grows 80%.
Energy demand in developing nations (non OECD) will rise 65% by 2040 compared to 2010, reflecting growing prosperity and expanding economies. Overall, global energy demand will grow by 35%, even with significant efficiency gains, as the world’s population expands from about 7 billion people today to nearly 9 billion people by 2040, led by growth in Africa and India.
CO2 emissions from OECD countries will fall by 20%. Those from non-OECD countries will rise by 50%, to represent 70% of the world’s total. Energy related CO2 emissions will plateau by 2030 and then start to fall, the main driver being the substitution of gas for coal.
Transportation demand will grow by 40%, led by expanding commercial activity (trucks, aircraft, ships, trains), where growth will be 65% (of which 80% will come from developing countries) as economies and international trade grow. However, energy consumed by personal vehicles will gradually peak and then begin to fall as our cars, sports utility vehicles and small pickup trucks become much more fuel-efficient.
Diesel will account for 70% of fuel demand growth, with gasoline remaining relatively static in spite of the number of personally owned vehicles doubling.
Aviation – demand for fuels will rise by 75%.
Shipping – demand will increase by 90%.
Industry, residential and commercial sector demand will increase by 30%, with natural gas and electricity accounting for over 60% of fuel consumed in the latter.
Technology is enabling the safe development of once hard-to-produce energy resources; significantly expanding available supplies to meet the world’s changing energy needs.
Electricity generation – with this growth comes a greater demand for electricity. Today, and over the next few decades, this represents the largest driver of demand for energy. Through 2040, it will account for more than half of the increase in global energy demand, growing by almost 80% over 2010-2040.
Nuclear power and renewable energy will grow, while demand for coal peaks and then begins a gradual decline.
Evolving demand and supply patterns will open the door for increased global trade opportunities. Around 2030, the nations of North America will likely transition from a net importer to a net exporter of oil and oil-based products. The changing energy landscape and the resulting trade opportunities it affords will continue to provide consumers with more choices, more value, more wealth and more good jobs.
Plentiful energy supplies but no mention of price 
The Outlook is seen as providing ‘a window to the future’, helping to guide the company’s strategies and investments. Over the next five years, ExxonMobil expects to invest an eye-watering sum of approximately $185 billion in energy projects.
A key premise underlying the forecasts is that they are based on current technology, so by not allowing for future technological advances, it could be considered to err on the cautious side.
A significant omission from the Outlook is any projection, or commentary, around future price levels. With an underlying theme suggesting plentiful energy supplies over the period considered, this points to any upward price pressures being suppressed?
On the basis that we often struggle to forecast with any high degree of confidence price levels merely in the weeks/months ahead, the omission is probably a sensible one!
www.exxonmobil.com/energyoutlook