ExxonMobil: Electric vehicles will not significantly alter long-term global oil demand

Reaching net-zero emissions by mid-century is a clear goal, but the path is fraught with danger. A major hurdle is projected global population growth, which the United Nations estimates will increase from eight billion to nearly 10 billion by 2050, driven largely by developing economies. This surge in population presents the challenge of providing affordable energy to meet basic needs, stimulate economic growth and raise living standards, especially in the developing world.

According to ExxonMobil’s latest Global Energy Outlook, total energy use is projected to increase by 15% between now and 2050, alongside the growing population.  This includes a 25% increase in developing countries, while developed nations are expected to see a 10% decline. Crucially, this rising energy demand must be met with efforts to reduce carbon emissions.

The world’s leading energy companies provide regular positions on the future of global energy with the release of energy outlooks or transition pathways. Some offer scenarios that work backwards from a hypothetical outcome, identifying the key requirements to achieve a desired result. Others, like ExxonMobil’s latest outlook, are a projection of the future based on current knowledge.

There is broad agreement among the energy majors on the approach to meeting global climate ambitions. Commonalities include the need for a diverse mix of technologies, renewables like solar and wind are set to expand rapidly, and electrification is identified as a key driver of the transition. Oil and gas are still projected to play a significant role, requiring substantial ongoing investment —contrary to the International Energy Agency’s (IEA) stance that no new investment in these sectors is needed.

Individual company outlooks diverge when it comes to the pace of the transition, the scale of investment, and the level of reliance on certain technologies.

ExxonMobil published its latest Outlook in August 2024. In it, the United States’ largest oil company forecast that oil demand will stay above 100 million barrels per day (bpd) in 2050, consistent with today’s levels. Under any “credible scenario” oil and natural gas remain essential, says ExxonMobil. 

While bp, Shell and TotalEnergies all acknowledge the enduring role of oil and gas, ExxonMobil’s forecast is the most aggressive. This may partly justify its uncompromising 2024 output target of 4.3 million barrels of oil and gas per day, 30% more than key U.S. competitor, Chevron. In contrast, bp previously announced a flagship target to cut oil production to two million barrels of oil equivalent per day (boed) by 2030—the only major oil company with a reduction target. 

In bp’s Energy Outlook 2024, released in July 2024, the company projects oil consumption will gradually decline to 75 million bpd in 2050, following a peak in 2025.  However, bp notes that this “Current Trajectory” scenario is still not aligned with a 2°C carbon budget. In Shell’s Energy Transition Strategy 2024, oil demand slows in the latter half of this decade and may begin to decline in the 2030s, due to increasing vehicle efficiency and the rise of electric vehicles.

Despite the rapid adoption of electric vehicles around the globe, ExxonMobil believes they will not significantly impact long-term global oil demand. ExxonMobil says that even if every new car sold after 2035 were electric–an unlikely scenario–crude oil demand would still be 85 million bpd in 2050, the same as it was in 2010. 

ExxonMobil’s bullish stance on oil is driven by a projected 30% increase in industrial oil demand and a 10% rise in commercial transport (including shipping, trucking, and aviation), offsetting the 25% decline in demand from light-duty vehicles.

bp considers declining oil use in road transport the single biggest driver of falling consumption, a combination of improving vehicle efficiency and an increase in alternative fuels—led by the electrification of cars and trucks. However, declines are offset in the first half of their outlook by the increasing use of oil as feedstock, especially in the petrochemicals sector.

Fossil fuels—oil, natural gas (56%), and coal (25%)—currently account for around 80% of the global energy mix. ExxonMobil expects oil and gas will continue to be the largest energy source in 2050, making up 54% of the global energy mix. Coal use is projected to decline from 25% to 13%, displaced by lower-emission sources, including natural gas.  

French multinational TotalEnergies, released its most recent Energy Outlook in November 2023. Based on current trends, TotalEnergies projects that 70% of the world’s primary energy demand will be met by fossil fuels in 2050 (oil 25%; gas 24%; coal 20%). Similarly, bp expects fossil fuels will contribute two-thirds of primary energy by mid-century, with coal declining by just over a third to around 17% of global energy.

Natural gas is seen as a critical component in the energy transition, particularly in replacing coal. However, there are conflicting views on its future role. According to bp, whether natural gas demand rises or falls over the next 25 years depends on the pace of the energy transition. On the current trajectory, demand for natural gas increases by a fifth, to 25% of primary energy by 2050. In a more aggressive scenario, natural gas could fall to half its current level, says bp.

All the energy majors acknowledge the need for ongoing investment in oil and gas as demand decreases slower than the natural decline in oil fields. “Global oil and natural gas supplies would virtually disappear without continued investments,” says Chris Birdsall, Exxon economics, energy and strategic planning director. 

The shift to more short-cycle unconventional assets, primarily shale and dense rock formations is notable, as oil and gas production from these sources declines faster, says Birdsall.  In its outlook, ExxonMobil suggested that assets are naturally declining at a rate of 15% per year, meaning global oil supplies could drop over 15 million bpd in the first year alone without new investment. These estimates are higher than Shell, who specified that the natural decline of the world’s oil and gas fields is around 4-5% a year. 

Renewables (including hydro, wind, solar and geothermal)) as part of the global energy mix, grow from 6% to 15% in ExxonMobil’s analysis. This includes a fourfold increase in solar and wind, from 3% to 12%, by 2050–significantly lower than the IEA’s renewables estimate in its Stated Policies “STEPS” Scenario (21%). Electricity use as part of the world’s total energy mix will grow by 80% by 2050, says ExxonMobil. Most of this growth is driven by increasing demand in emerging economies.  

The share of renewables in primary energy “more than doubles” in bp’s position, from a little over 10% in 2022 to more than a quarter by 2050. Under TotalEnergies’ “Current Course & Speed” scenario, solar & wind power (11%), hydropower (3%) and bioenergy (9%) approach a quarter of primary energy demand. However, the company suggests that this energy scenario is not sustainable, generating too many emissions. 

Carbon dioxide emissions begin to fall for the first time by 2030 and will decline by approximately 25% by 2050 despite the increase in energy demand, says ExxonMobil. Commercial transportation and industrial activity alone account for half of the world’s emissions in 2050–due to the limited role of solar in these sectors, they say. bp expects emissions to start to fall earlier, by the middle of this decade.

ExxonMobil emphasised the importance of scaling up solutions to produce carbon-free hydrogen, expand biofuels and advance carbon capture, utilisation and storage (CCUS). In the CCUS process, emissions are captured, transported via pipeline to suitable geologic formations, and permanently stored deep underground.