Fossil Fuel Investment Needed in Decades to Come: ExxonMobil

ExxonMobil Corp. has projected the world will not meet 2050 emission reduction targets and expressed backing for sustained investment in the oil and gas industry in decades to come, saying fossil fuels will remain essential to the economy.

"Overall, energy-related CO2 [carbon dioxide] emissions are projected to peak at more than 34 billion metric tons sometime this decade and then decline to 25 billion metric tons in 2050", the energy giant said in an outlook report this week.

That would be over twice the target curbs by 2050 to keep global temperature increases below two degrees Celsius, according to ExxonMobil.

"The average of the IPCC’s [Intergovernmental Panel on Climate Change] Lower 2 degrees C scenarios requires emissions to fall to around 11 billion metric tons by 2050", the Irving, Texas-based company said, citing figures from the sixth assessment report of the United Nations body published 2022.

The economic growth of developing nations will drive energy demand through 2050, and while renewables and lower-emission options are taking a bigger share in the consumption mix, petroleum and natural gas will still account for 54 percent in 2050, ExxonMobil said.

"The critical question is how that growing energy demand will be met", it said, batting for oil and gas, reasoning that these fossil fuels are more abundant and cheaper.

While the biggest changes in the energy mix between now and 2050 will be the rise of solar and wind and the decline of coal, "[t]he utility of oil and natural gas in meeting the world’s needs remains unmatched", the outlook said.

"They are energy dense, portable, available, and affordable — and serve as essential raw materials for many products we use today."

"Oil use is expected to decline significantly in personal transportation but will remain essential for the industrial processes and heavy-duty transport like shipping, long-haul trucking, and aviation that underpin economic growth", the report added. "Consider: If every new passenger car sold in the world in 2035 were an electric vehicle, oil demand in 2050 would still be 85 million barrels per day, the same as it was around 2010.

"Natural gas use is projected to increase by more than 20 percent by 2050 given its utility as a reliable and lower-emissions source of fuel for electricity generation, hydrogen production, and heating for both industrial processes and buildings."

ExxonMobil said given these critical roles it is essential the world sustains investment in oil and gas through 2050 as production naturally falls five to seven percent a year.

"Fossil fuels remain the most effective way to produce the massive amounts of energy needed to create and support the manufacturing, commercial transportation, and industrial sectors that drive modern economies", it said. "For this reason, a critical goal of any energy transition will be the affordable decarbonization of these economic sectors that account for half of all energy-related emissions."

Drivers of Energy Transition

ExxonMobil went on to present three factors that would be pivotal toward achieving emission reduction goals: policy support, technological solutions and societal-level incentives.

"An energy transition is underway, but it is not yet happening at the scale or on the timetable required to achieve society’s net-zero ambitions", the company said.

On public policy support, it said, "Incentives like those in the U.S. Inflation Reduction Act can provide the necessary catalyst to begin scaling up low-carbon solutions". The law was passed August 2022 seeking to strike a balance between energy security and climate resilience such as by providing incentives. It aims to fast-track or incentivize the development of both fossil fuels and renewables such as wind energy, among other provisions.

"Permitting reform is needed to accelerate the deployment of these [low carbon] solutions, a factor recognized in the European Union’s Net-Zero Industry Act", the outlook said.

"Other policy priorities include enhanced transparency so that market participants have sufficient time to adapt to changes, and a recognition of the importance of keeping supply matched with demand to help minimize economic hardships on consumers."

ExxonMobil also presented three "scalable technologies" as key to cutting climate-endangering emissions: carbon capture and storage, hydrogen and biofuels.

On societal-level incentives, it said, "Governments across the world can't afford to pay in perpetuity to reduce the amount of emissions needed to be removed or avoided".

"Ultimately, to achieve global emission-reduction goals, the world will need to move to widespread adoption of markets where society as a whole incentivizes driving emissions down."

ExxonMobil said projected figures and analyses in its outlook reports use data from the International Energy Agency, the United Nations, financial analysis firms and other third parties.

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