Exxon Mobil Corp on Monday said efficiencies and increased use of renewable fuels will cut by half the carbon intensity of the world’s economy by 2040 but climate policies will increase the cost of greenhouse gas emissions, according to the company’s latest long-term outlook.
Exxon and others in the oil industry have been under increasing pressure from shareholders to detail the resilience of their business model to climate change after a global climate agreement reached in Paris in December set the world on a course to transform its fossil-fuel driven economy.
Because of efforts to reduce greenhouse gases and efficiency gains, Exxon sees energy-related carbon dioxide emissions peaking around 2030 before starting to decline, while emissions in developed countries are seen falling by about 20 percent from 2014 to 2040, it said.
“The climate accord reached at the recent COP 21 conference in Paris set many new goals, and while many related policies are still emerging, the outlook continues to anticipate that such policies will increase the cost of carbon dioxide emissions over time,” said William Colton, vice president of Exxon Mobil Corporate Strategic Planning.
As policies evolve, the Irving, Texas company said it continues to assume that climate policies that increase the costs of emissions will reach an implied cost in developed nations of about $80 per tonne in 2040.
Exxon said it expects wind power and solar power to see strong growth, helped by policies that favor or mandate their use. Wind and solar are expected to account for more than 10 percent of global electricity generation in 2040, up from 4 percent in 2014.
Still, the company sees oil, natural gas and coal continuing to meet almost 80 percent of the world’s energy needs through 2040.
Global liquids output is seen rising to 112 million barrels per day (mbpd) in 2040, up from 93 mbpd in 2014, with supply growth coming from both non-OPEC and OPEC member nations.
Most of the supply gains are expected to come from technology-driven supplies including so-called tight oil locked in rock, natural gas liquids and oil sands and deepwater production, it said.
Tight oil is expected to account for 10 percent of global output by 2040, up slightly from the prior forecast of 7 percent.
Exxon, which uses the long-term outlook to plan its business, forecast demand growth of 25 percent by from 2014 to 2040, similar to its views last year.