Positioning for a lower-carbon energy future
Energy is essential. Accessible and affordable supplies of energy support the ability to meet the basic requirements of life and fuel society's progress around the world.
As the world’s population grows to more than 9bn in the next two decades, rising prosperity will increase energy demand, particularly in developing countries. Stable and affordable energy supplies will make it possible for more people to access the healthcare, transportation and education that contribute to quality of life and improved living standards.
With this increased energy demand comes the potential for greater environmental impacts, including greenhouse gas emissions and the risks of climate change. As a global community, we need to manage environmental impacts as we meet this growth in demand. This is society’s dual challenge.
Considering 2°C scenarios
Many uncertainties exist concerning the future of energy demand and supply, including potential actions that societies may take to address the risks of climate change.
Since 1992, when nations around the world established the United Nations Framework Convention on Climate Change (UNFCCC), there has been an international effort to assess the risks of climate change.
Oil and natural gas remain foundational, even in models with the lowest level of energy demand.
The Paris Agreement, entered into in December 2015, “aims to strengthen the global response to the threat of climate change… by holding the increase in the global average temperature to well below 2°C above pre-industrial levels”.
Considerable work has been done in the scientific and economic community to explore potential energy pathways to achieve the Paris Agreement’s 2°C goal. A comprehensive multi-model study coordinated by the Energy Modeling Forum 27 (EMF27)(1) at Stanford University brings together many energy-economic models to assess possible technology and policy pathways associated with various climate stabilisation targets, partially in support of the fifth assessment report of the Intergovernmental Panel on Climate Change (IPCC).
The chart in Figure 1 includes EMF27 scenarios and energy demand projections for 2040 based on the IEA’s Sustainable Development Scenario (SDS). The IEA specifically notes that its SDS projects global energy-related CO2 emissions that are “fully in line with the trajectory required to meet the objectives of the Paris Agreement on climate change”.
In fact, the SDS projects global energy-related CO2 emissions in 2040 at a level 55pc lower than the IEA’s Stated Policies Scenario(2), which projects emissions generally in line with the aggregation of current national commitments under the Paris Agreement.
All energy sources remain important across all the assessed 2°C scenarios, although the mix of energy and technology shifts over time. Oil and natural gas remain foundational, even in models with the lowest level of energy demand. Natural gas demand grows due to its many advantages, including lower GHG emissions.
For more information about the results of this multi-model study, the details can be found in our 2020 Energy & Carbon Summary (pages 9-10).
Positioning for a lower-carbon energy future
Natural gas demand is expected to grow from 2017 to 2040, largely from expanding industrial activity and increasing use in power generation as utilities switch to lower-emission fuels. ExxonMobil is progressing 12mn t/yr of low-cost LNG supply opportunities to meet growing global demand. As one of the largest natural gas producers in the US and a significant producer of LNG around the world, ExxonMobil is well positioned to support the projected demand shift from coal to natural gas for power generation and industrial use.
Natural gas is a versatile, abundant and lower-emission fuel. The use of natural gas in power generation plays an important role in reducing global emissions. When considering lifecycle emissions, natural gas emits up to 60pc lower GHGs and produces significantly fewer air pollutants than coal for power generation. Natural gas also provides a reliable source of power to supplement renewable energy when wind or solar power is not available.
The IEA specifically recognises that “[g]as can play an important supporting role in energy transitions by replacing more polluting fuels; it may also deliver services that are difficult to provide cost-effectively with low-carbon alternatives, such as peak winter heating, seasonal storage, or high temperature heat for industry”.
12mn t/yr – Exxonmobil low-cost LNG supply opportunities
Natural gas is a reliable and flexible fuel for electricity generation, a cleaner industrial fuel and convenient for home use.
Natural gas trade is a critical link between resource-rich regions and demand centres in Asia Pacific and Europe. New LNG export projects are expected to diversify the market and meet a substantial part of the growth in natural gas demand to 2040.
LNG enables transportation of natural gas from supply centres to customers safely and cost-effectively. ExxonMobil is one of the largest natural gas producers in the world and a leader in LNG.
Continue the discussion
The foregoing are excerpts of ExxonMobil’s 2020 Energy & Carbon Summary published on 28 January 2020 (with modifications made to define acronyms which were defined elsewhere in the Energy & Carbon Summary) and are subject to the statements contained therein. To continue to learn about how ExxonMobil is addressing the dual challenge of managing environmental impacts whilst meeting growth in energy demand please download our 2020 Energy & Carbon Summary.
This material is not to be used or reproduced without the permission of Exxon Mobil Corporation. All rights reserved.
To learn more about ExxonMobil LNG please visit: https://www.exxonmobillng.com/
To learn more about the Paris Agreement please use this link: https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement
To learn more about the 2°C scenarios please look at: https://corporate.exxonmobil.com/Energy-and-environment/Looking-forward/Outlook-for-Energy/Pursuing-a-2C-pathway
(1) EMF was established at Stanford in 1976 to bring together leading experts and decision makers from government, industry, universities and other research organisations to study important energy and environmental issues. For each study, the forum organises a working group to develop the study design, analyse and compare each model’s results and discuss key conclusions. https://emf.stanford.edu/about
(2) IEA World Energy Outlook 2019, pages 46-47