Key Themes From Exxon’s View Of 2040

Earlier this week, Exxon Mobil released a report called ‘The Outlook For Energy: A View to 2040‘. Such reports are always great for identifying trends, once you accept the erroneous nature of trying to predict energy trends nearly 30 years into the future. I initially pulled a bunch of info and charts before realizing what I had was rather long and boring, so I have culled it down to these three themes: total energy demand growth, transportation growth, and industrial demand growth. 


The first graphic highlights energy demand out to 2040. The key takeaways are:

–Developed nations (a.k.a. the OECD) show energy demand is going to be relatively flat over the coming decades, even though economic output is set to increase by 80%
–All energy demand growth will come from developing countries (a.k.a. the non-OECD). The chart on the left breaks this down with, yep, China leading the charge
–Global energy demand will be 35% greater in 2040 than it was in 2010
–Global electricity demand will grow by 85% over the outlook period (which is not surprising when presented with the fact that currently 1.3 billion people globally don’t have access to electricity)
–The world’s population will rise by more than 25% from 2010 to 2040 to reach 9 billion
–75% of the world’s population will reside in Asia Pacific and Africa
–India will have the largest population by 2040 at 1.5 billion, with China’s peaking around 2030 at 1.4 billion
–By 2040, CO2 emissions in OECD countries will be 20% lower than in 2010. Non OECD emissions will rise by about 50% as energy demand rises by 65%. Non-OECD nations will account for 70% of global emissions by 2040
–Oil will remain the largest single source of energy, growing around 25%
–Natural gas will grow faster than any other fuel source, with demand up 65% by 2040
–Coal, natural gas, and oil still make up approximately 80% of total global energy in 2040
–Nuclear energy is predicted to double from now to 2040
–Although wind, solar, and biofuels will show rapid growth, they will still account for less than 4% of total global energy in 2040


The second theme tackles transportation. Here are the key takeaways:

–Transportation-related energy demand will increase by more than 40% from 2010 to 2040, with heavy duty transportation growing by 65%
–Vehicles on the road will double from 800 million to 1.6 billion
–Conventional gasoline and diesel engine vehicles will make up a smaller share of demand, falling to 50% by 2040
–Gasoline demand will drop by a third in North America due to fuel efficiency and ‘hybridization’
–Hybrid vehicles will account for 40% of total vehicles in 2040
–Global fuel demand from personal vehicles will edge higher to 2020 then gradually decline as smaller, lighter vehicles and improved fuel efficiency offsets the increasing number of cars
–Although the role of natural gas as a transportation fuel is set to increase, it will only make up 4% of the global mix by 2040, up from 1% today
–LNG fleet vehicles (= heavy duty transportation) is seen as the biggest driver of natural gas demand, but will still only account for 6% of total heavy duty vehicle demand in 2040


The third and final theme is the changing landscape of industrial demand, with these takeaways:

–Industrial energy demand will grow by more than 30% to 2040
–90% of the increase in industrial energy demand comes from heavy industry and chemicals
–Demand growth for plastics and other advanced products makes chemicals the fastest-growing sector
–China’s industrial demand will decline by nearly 20% from 2025 to 2040 as its economy matures and energy efficiency improves
–The industrial sector will consume approximately 90% as much energy as the transportation and residential / commercial sectors combined
–Industrial demand for energy in India will nearly triple by 2040
–Developing nations will account for 70% of global industrial demand by 2040
–Electricity and gas will meet over half of industrial demand by 2040
–Oil use will grow by 30%, driven by strong growth in chemical feedstock

So what are the key takeaways from these takeaways? Developing nations are driving growth across the energy spectrum, while increasing energy efficiency and more moderate growth in developed nations will help to keep demand in check.

Yet what doesn’t change a great deal, despite changing global dynamics, is the prevalence of hydrocarbons across all parts of the globe and across the various aspects of demand. Although 2040 may feel like it is a world away, the reality is that it really doesn’t look that different.