The Outlook predicts a rise in electric vehicles as well as efficiency improvements in conventional engines, both trends likely leading to a peak in liquid fuels use by the world’s light-duty vehicle fleet by 2030. However, oil will continue to play a leading role in the world’s energy mix, the report finds.

Our in-depth analysis shows that even if every light-duty vehicle in the world was fully electric by 2040, the demand for liquids could still be similar to levels seen in 2013. This is because of growing demand from commercial transportation and the chemical sector.

—T.J. Wojnar, vice president for Corporate Strategic Planning

In the forecast, global transportation-related energy demand grows close to 30% from 2016 to 2040. Although personal mobility demands continue to increase, higher efficiency and more electric vehicles lead to a peak and decline in light-duty vehicle energy demand. However, growth in economic activity and personal income drives increasing trade of goods and services, leading to higher energy demand in the commercial transportation sector. Heavy-duty vehicle growth is the largest sector by volume, but aviation grows the largest by%age. Source: ExxonMobil. Click to enlarge.

The growth in transportation energy demand is expected to account for about 60% of the growth in liquids fuel demand.

Continued economic growth, particularly in non-OECD countries, will result in increased demand for all transportation services. However, recent data show a decoupling of economic growth and transportation energy demand, reflecting growing efficiency. Significant increases in future fuel economy across all transportation modes will lead to a further decoupling of transportation services and energy demand, the report finds.

Rising incomes will increase demand for personal mobility in the form of cars and motorcycles, the report projects. Motorcycles, which offer a lower-cost entry point to personal mobility, will see particularly high ownership in Asia Pacific, although the region will also lead significant growth in car ownership. In the OECD, while total vehicle ownership increases significantly, the number of cars per 1,000 people increases only about 10%.

Were this increase in demand realized with the current fleet mix and fuel efficiency, there would be a significant increase in energy demand for personal mobility. However, major gains in the fuel efficiency of conventional vehicles leads to a major reduction in the energy needed.

Changes in the fleet mix (e.g., increasing hybrids and electric vehicles) play a much smaller role in limiting energy demand for light-duty vehicles. Source: ExxonMobil. Click to enlarge.

The Outlook suggests that changes in the fleet mix (e.g., increasing hybrids and electric vehicles) play a much smaller role in limiting energy demand for light-duty vehicles. Nevertheless, the report predicts stron electric fleet growth driven by decreasing battery costs, increasing model availability and continued support from government policies. In total, full hybrid, plug-in hybrid, and electric-only vehicles will be approaching 40% of global light-duty vehicle sales in 2040, compared to about 3% in 2016, according to the report.

However, since future battery costs and government policies remain uncertain, there is a wide range of perspectives on future electric vehicle growth. Third-party estimates for 2040 range from a factor of three higher and lower than the Outlook’s.

According to the Outlook analysis, for every additional 100 million electric vehicles on the road in 2040, liquids demand could fall by ~1.2 million barrels per day. However, even if the entire light-duty fleet is electrified in 2040, total liquids demand could be approximately the same as in 2013.

However, the report observes, recent consumer preferences have slowed the increase in fuel efficiency of new vehicle sales in both the OECD and non-OECD. Thus, while the Outlook forecasts new car fuel efficiency trends will be well aligned with government policies, a continuation of recent trends in consumer preferences could add more than 2 million barrels per day of liquids demand by 2040.

Other key findings from this year’s Outlook include:

• In 2040, oil and natural gas continue to supply about 55% of the world’s energy needs; oil continues to provide the largest share of the energy mix with demand rising about 20% driven by commercial transportation and chemicals.

• Nuclear and renewable energy sources are likely to account for nearly 40% of the growth in global energy demand to 2040.

• The share of the world’s electricity generated by coal is expected to fall to less than 30% in 2040 from approximately 40% in 2016.

Energy & Carbon Summary. ExxonMobil also release a second report: Energy & Carbon Summary: Positioning for a Lower-Carbon Future. The report highlight ExxonMobil’s analysis of 2 degree Celsius (2 ˚C) scenarios and includes sensitivity analyses on electric vehicle penetration and renewables deployment. They are in response to a 2017 shareholder resolution seeking additional climate disclosures about the impacts of technology advances and global climate change policies on the company.

The Energy & Carbon Summary and a new special section in the annual Outlook include consideration of the impact on future energy demand from an analysis of multiple lower-carbon scenarios published by the Stanford University Energy Modeling Forum. The forum’s scenarios are publicly available and are used for analytical purposes, including by the UN’s Intergovernmental Panel on Climate Change.

The global scenarios assessed by ExxonMobil, which include a full range of energy technologies, contemplate limiting global greenhouse gas (GHG) emissions to have a likely chance of holding atmospheric concentrations to the equivalent of 450 parts per million CO₂ in 2100; these scenarios are generally considered to be consistent with pathways that would limit global average temperature rise in 2100 to 2 ˚C above pre-industrial levels.

The company’s analysis of these 2 ˚C scenarios examined the mean of the annual average demand growth rates of the various model outputs between 2010 and 2040 for multiple sources of energy. This analysis of these 2 ˚C scenarios indicates: total energy demand increases about 0.5% per year; oil demand decreases about 0.4% per year; natural gas demand increases about 0.9% per year; coal demand decreases about 2.4% per year; and renewables demand increases about 4.5% per year.

All energy sources remain important across the assessed 2 ˚C scenarios to 2040. As a result of ongoing demand coupled with natural hydrocarbon field decline, trillions of dollars of additional investment in oil and gas production will be required, including to meet a 2 ˚C pathway. Based on the average growth rates of assessed 2 ˚C scenarios, natural gas demand is estimated to increase to 445 billion cubic feet per day by 2040; oil demand is estimated to decline to 78 million barrels per day by 2040.

This chart shows global energy intensity (left axis) and CO2 emissions intensity (bottom axis). From 1980 to 2015, there have been large gains in efficiency, though energy-related CO2 emissions rose from 18 billion to 33 billion tonnes. The blue circle shown for 2040 indicates these emissions are projected to be about 36 billion tonnes even with significant gains in efficiency and CO2 emissions intensity. To be on a 450 ppm, or hypothetical 2 °C pathway, the performance in 2040 likely needs to be significantly closer to the purple line, implying faster gains in efficiency and/or faster reductions in CO2 emissions per unit of energy. This would increase the chance of reaching a 2 °C pathway, with further gains required between 2040 and 2100. Source: ExxonMobil. Click to enlarge.