Natural gas will be the world’s biggest gainer among today’s principal energy sources of gas, coal, oil and nuclear, Exxon Mobil projects in its latest long-term outlook.
The Irving-based energy giant, said Thursday that by 2025, gas will overtake coal as the world’s No. 2 energy source, behind crude oil. By 2040, it said, natural gas production will rise 65 percent worldwide.
“Two significant developments in natural gas – shale gas production in North America and the growth of the global LNG (liquified natural gas) market – are likely to play a major role in expanding and reshaping natural gas supplies over the coming decades,” Exxon says.
Use of coal, now the chief fuel for electricity and the second most important fuel in the world after oil, will flatten in the next decades and slip to third place as countries shift to cleaner natural gas.
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Nuclear power and renewable sources like solar and wind will see bigger percentage increases than either oil or gas, but will still lag coal. Nuclear power is expected to account for 8 percent of global supply, up from 5 percent today, while solar, wind and biofuels go from 1 percent of supply to 4 percent, even after growing 5.9 percent a year through 2040.
World energy demand will be driven by the desire for higher living standards in developing economies, offsetting slow declines in demand from today’s industrial nations, the company predicts. Demand for electricity and transportation fuels will grow even as economies get more efficient and governments put a price on pollution, pushing total energy demand up by 35 percent by 2040..
“People want a warm home, a refrigerator, a TV, someday a car, and a cellphone,” said William Colton, Exxon’s vice president for corporate strategic planning, in an interview.
There are ample supplies of fuel to meet the world’s demands, according to the report, and Colton concludes that average annual growth of 1 percent per year is manageable for the world’s energy companies.
Exxon’s outlook is noted by investors and policymakers, and used by Exxon to shape its investments. “The last thing we want to do is delude ourselves about the future,” Colton said. “We make billion-dollar decisions on this.”
The report’s conclusions largely agree with those reached in other long-term energy forecasts, including a recent report by the International Energy Agency.
Exxon expects governments to impose costs on fossil fuel consumption and subsidize renewable energy in an effort to reduce emissions of gases that scientists say are causing climate change. Exxon expects those costs to be roughly $80 per ton of carbon dioxide– a price that may be explicit in the form of a carbon tax or baked in to the cost of new technology and equipment needed to meet stricter emissions limits.
“In one way or another governments will put in place policy that will increase the cost of hydrocarbons, whether it’s on supply or consumption,” said Ken Cohen, Exxon’s vice president of public and government affairs.
Energy-related carbon dioxide emissions are expected to continue to grow through 2030, before leveling off and beginning a slow decline.
Traditional fossil fuels will remain abundant, thanks to improvements in drilling technology, Exxon predicts. Drillers have learned to extract oil and gas from formations deep offshore and in shale and other rocks that were once impossible to tap. The amount of oil that can be extracted with today’s technology is growing, even though the world burns 90 million barrels of it every day.