ExxonMobil energy outlook underlines the importance of efficiency

ExxonMobil, the world’s biggest publicly listed oil company, issued its annual long-term outlook on the world energy scene today. It provides a lot of information worth thinking about as the world works toward curbing carbon emissions at Copenhagen. First off, global energy demand in 2030, which is the year it looks out to, will be almost 35 per cent higher than in 2005.

But, beyond that, and possibly most important, is that that number would be a lot higher if it were not for energy efficiency gains already being racked up.

For example, Exxon notes, from 1980 to 2000, the energy it took to produce one unit of GDP fell by an average 1.2 per cent a year. This occurred for several reasons, among them new, energy-saving technologies. And Exxon expects efficiency gains to accelerate between 2005 and 2030, versus historial trends, with energy-per-GDP falling at an average global rate of 1.5 per cent a year.

This faster pace, Exxon says, will be driven by higher energy costs, government mandates and regulations, technology advances and expected carbon dioxide emissions costs in OECD countries. Improving efficiency at this rate, Exxon says, will save a significant amount of energy. In Exxon’s own words:

To see how energy efficiency works to curb energy-demand growth, imagine if the world’s economies grew as projected through 2030, but efficiency was held flat at 2005 levels. In that case, global energy demand in 2030 would not be almost 35 per cent higher than in 2005, as we currenty project; it would be about 95 per cent higher. Put another way, gains in energy efficiency through 2030 will curb energy-demand growth through 2030 by about 65 per cent.

So, to sum it up, the greatest source of energy in the future is finding ways to use energy more efficiently.

It is heartening to know that even if world governments continue to move slowly in coming up with a global framework by which to reduce global emissions, dramatic reductions in carbon emissions through efficiencies are being achieved.

Energy efficiency is not the only contributor seen by Exxon. While it does believe that in 2030, fossil fuels will remain the predominant energy sources, accounting for nearly 80 per cent of demand, Exxon projects 40 per cent of the world’s electricity will be generated by nuclear and renewable fuels.

Much of that will be nuclear. Exxon says wind, solar and biofuels will grow sharply through 2030, at nearly 10 per cent per year on average, yet because they are starting from such a small base, their contribution by 2030 will remain relatively small – at about 2.5 per cent of total energy.

It also singles out natural gas as the fossil fuel to watch. With the world intent upon charging for carbon emissions, whether by taxes or a cap-and-trade system, Exxon says that as the price of carbon dioxide increases, it would expect to see fuel switching from coal to natural gas. At $60 per ton, it says, natural gas is still very competitive. It notes that there has been an expansion in unconventional natural gas development, given improvements in technologies, particularly in the US, where it will satisfy more than 50 per cent of demand by 2030.

Nonetheless, the reality is that by 2030, global carbon dioxide emissions are likely to be about 25 per cent higher than they were in 2005, Exxon concludes. That is still too high and something the world must keep in focus as it discusses in Copenhagen where to take policy to reduce carbon emissions. Turning off the lights and heat when leaving home is not going to be enough to head off the doomsday scenerios of global warming.

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