Throughout history, the evolution of energy and technology has enabled economic growth and human progress.
by William M. Colton
For nearly all of human history, wood and other natural materials have been burned for heating and cooking needs. Then about 200 years ago fossil fuels began to emerge in the global energy mix, fueling dramatic progress in many countries. The steam engine powered by coal helped give birth to an Industrial Revolution. This was followed by the discovery of petroleum, which helped commercialize the automobile and connect economies through expansive trade networks. Today, energy comes from a wide variety of sources, including oil, natural gas, coal, nuclear, wind, solar, hydro, and other renewables. And this energy is used to power everything from supercomputers to smartphones.
This gradual evolution of energy has occurred as a direct result of technological innovation and society’s aspirations for progress and better living standards. These same forces continue to shape the world’s ever-changing energy landscape. Every year, ExxonMobil conducts a comprehensive global analysis of energy demand and supply trends. Over the next quarter century, we see population growth, along with economic, social, and technological development, contributing to a significant increase in global energy demand. Even as societies use energy much more efficiently, we estimate that energy demand will increase nearly 25 percent by 2040, roughly equivalent to the current energy demand of North America and South America combined.
New supplies of affordable, reliable energy will be needed to support increased living standards around the globe. But in today’s world another key challenge has emerged in society’s quest for progress: the need to address the risks of climate change. The world’s desire for practical solutions to address these risks will play a significant role in defining our energy future.
As governments develop policies to meet the goals set forth in the Paris agreement, we can expect human ingenuity and technological advances to propel change. Ongoing improvements in energy efficiency, new energy supply options and emerging technologies will help slow the growth of CO2 emissions. In fact, ExxonMobil’s Outlook projects that global energy-related CO2 emissions are likely to peak during the 2030s and then begin declining. This is all the more impressive when you consider that global GDP is expected to double by 2040.
How the world achieves these emissions reductions will vary by region and country. As expected, developed economies are likely to see the fastest rate in emission reductions. We project that the combined share of energy used in the U.S. and Europe OECD nations will decline from about 30 percent in 2015 to close to 20 percent in 2040, similar to China’s share of world energy demand.
But even among the OECD nations, there will be divergent paths toward achieving a lower- carbon future. For example, the U.S. and Germany have pursued two very different approaches to reducing CO2 emissions. As a result of technological advances, the U.S. is experiencing an energy renaissance which has pushed a shift toward the use of natural gas. Because natural gas emits up to 60 percent less carbon dioxide than coal when used for power generation, its use has been instrumental in reducing U.S. carbon dioxide emissions to levels not seen since the 1990s. These impressive achievements are the direct result of innovative technologies that were developed and deployed within the contours of a free market.
In contrast, Germany’s Energiewende has favored a more top-down approach, phasing out nuclear and providing significant financial incentives and support to promote the greater use of renewable sources like wind and solar. Both countries have seen a drop in emissions, but the U.S. cut the CO2-intensity of its power generation by more than double the amount of Germany from 2005 to 2015. Meanwhile, electricity costs have risen to a much higher level in Germany than they have in the United States over the past decade.
This is a reminder that societies have choices when it comes to energy transitions, and those choices come with different costs, benefits and tradeoffs. Market-based, technology-neutral policies can help encourage innovation and provide cost-effective results. With its superior engineering knowledge and the right policies in place, Germany can continue to be a world leader in clean-energy solutions.
A global energy evolution is underway, promising to help fuel better living standards for billions. At ExxonMobil, we do our best to project where that evolution is headed as part of our Outlook analysis, but we are also taking an active role in the transformation. We are expanding access to cleaner-burning natural gas, investing in promising technologies like innovative carbon capture technologies and next-generation biofuels, and we are partnering with universities and other research institutions around the globe to develop breakthrough innovations. Industry, governments, and consumers – we all have a role to play in this progress toward a brighter energy future.
About:
William M. Colton is Vice President, Corporate Strategic Planning at Exxon Mobil Corporation,Irving (TX), US.
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