Exxon forecasts global oil demand will fall by 2040 to 78 mn barrels a day

Exxon Mobil said on Friday that it expects global oil demand to drop sharply by 2040 if regulations aimed at limiting the impact of greenhouse gas emissions on climate are fully implemented.

Under this scenario, Exxon projected world oil consumption will drop 0.4 per cent annually in 2040 to about 78 million barrels per day (bpd). That is about 25 per cent below current levels, which the U.S. Energy Information Administration puts at 98 million bpd.

The findings were contained in a report produced after Exxon’s shareholders supported a climate-impact resolution last year and Exxon’s board approved a plan to analyse the effects.

Exxon’s climate-impact report comes roughly three years after almost 200 nations met in Paris to set a goal of limiting the rise in the world’s average surface temperatures.

President Donald Trump has since pulled the United States out of the Paris climate accord, and it was unclear whether Paris accord policies would be fully implemented around the world.

The study added weight to arguments that laws and regulations to limit the rise in global temperatures to below 2 degrees Celsius (3.6 degrees Fahrenheit) from pre-industrial levels will succeed in curbing fossil fuel consumption.

But Exxon stopped short of laying out how efforts to limit carbon emissions could impact its business, data long sought by some shareholders. In a separate report published on Friday that did not take into account climate legislation, Exxon forecast population growth will drive oil demand higher by about 20 per cent by 2040.

Exxon’s study saw demand for natural gas, considered a cleaner-burning fuel than oil, growing 0.5 per cent per year to about 445 billion cubic feet per day under the same scenario.

Demand for power generated by solar panels, wind turbines and other renewable sources is expected to rise 4.5 per cent annually through 2040 under this scenario, Exxon said.

The report followed years of pressure by investors and environmental activists urging the company to describe the potential impact of a warming climate on its operations. Last year, their climate-impact resolution was backed by 62 per cent of shares voted at Exxon’s annual meeting.

The report came the same day that Exxon posted quarterly results that disappointed Wall Street, sending its shares down more than 5 per cent.

While sponsors of the shareholder resolution applauded Exxon on Friday for being more transparent than in years past, there was still frustration that the company did not disclose how climate policies would affect its finances.

“That is the meat that we’re missing in the sandwich here,” said Tracey Rembert of Christian Brothers Investment Services, a co-sponsor of the climate-impact resolution.

A spokesman for New York State Comptroller Thomas DiNapoli, who oversees state pension funds and was a resolution sponsor, said via e-mail: “We are looking at Exxon’s report closely and look forward to discussing it with the company in the coming days.”

Exxon on Friday also published its annual outlook for energy demand. In that report, the company does not take into account a scenario to limit temperature rise and projects energy supply and demand rising for the foreseeable future.

The report said global carbon dioxide emissions are likely to peak by 2040, at about 10 per cent above 2016 levels, as consumption shifts to lower-emission natural gas, renewables and nuclear.

“It’s a dual challenge — we need to meet society’s growing need for energy while addressing the risks of climate change,” Exxon Chief Executive Darren Woods said in a press release.