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Energy demand

Global energy demand will continue to rise through 2040, reflecting its fundamental link to growing prosperity and better living standards for an increasing population worldwide.

Energy demand projections

Energy efficiency improvements will help curb the growth in global energy demand to about 25 percent over the period to 2040, while global economic output nearly doubles. To put this in perspective, if world energy demand grew as fast as estimated GDP, energy demand growth could be about four times the projected amount.

Emerging markets in non-OECD nations will account for essentially all energy demand growth, led by the expanding economies in the Asia Pacific region.

Continuing urbanization and a significant expansion of the middle class, particularly in China and India, will help drive this trend, highlighted by greater access to modern energy in homes, rising industrial demand, and significant increases in personal and commercial transportation needs.

Electrification and gradual decarbonization continue as significant global trends. Energy demand for power generation accounts for about 50 percent of global demand growth. Energy sources shift toward cleaner fuels such as natural gas, renewables and nuclear.

Global energy demand varies by sector

  • Energy used in each sector reflects economic supply options and their general fitness for purpose
  • Electricity generation is the largest and fastest-growing demand sector, reflecting strong growth in global electricity demand
  • A wide variety of energy types will support electricity generation, with natural gas, renewables and nuclear increasing their share
  • Natural gas demand increases significantly and gains share in all sectors
  • Oil demand grows to support commercial transportation and chemical needs

Energy demand shifts toward non-OECD

  • Global demand reaches 680 quadrillion British thermal units in 2040, up nearly 25 percent
  • Non-OECD share of global energy demand reaches about 70 percent in 2040, as efficiency gains and slowing economic growth in the United States and OECD nations help keep energy demand relatively flat
  • China and India contribute about 45 percent of world energy demand growth
  • The combined share of energy used in the United States and in European OECD nations will decline from about 30 percent in 2016 to close to 20 percent in 2040, similar to China’s share of world energy demand

Global energy mix shifts to lower-carbon fuels

  • Renewables and nuclear see strong growth, contributing close to 40 percent of incremental energy supplies to meet demand growth
  • Natural gas grows the most of any energy type, reaching a quarter of all demand
  • Oil will continue to play a leading role in the world’s energy mix, with growing demand driven by commercial transportation needs and feedstock requirements for the chemicals industry
  • Coal use remains significant in parts of the world, but loses substantial share as the world transitions toward energy sources with lower emissions

Transportation energy projections

Advancements in transportation have shrunk our world, while opening up new vistas and possibilities. One consequence of billions of people joining the global middle class in the next quarter century is that it will lead to greater travel, additional cars on the road and increased commercial activity.

Global transportation-related energy demand is projected to increase by close to 30 percent. At the same time, total miles traveled per year by cars, sport utility vehicles (SUVs) and light trucks will increase about 60 percent, reaching about 14 trillion in 2040. As personal mobility increases, average new-car fuel economy (including SUVs and light trucks) will improve as well, rising from about 30 miles per gallon now to close to 50 miles per gallon in 2040.

The growth in transportation energy demand is expected to account for about 60 percent of the growth in liquids fuel demand. Liquids demand for light-duty vehicles is expected to be relatively flat to 2040, reflecting better fleet fuel economy and significant growth in electric cars.

Transportation energy demand growth driven by commerce

  • Global transportation-related energy demand grows close to 30 percent from 2016 to 2040
  • Personal mobility demands continue to increase, but higher efficiency and more electric vehicles lead to a peak and decline in light-duty vehicle energy demand
  • Growth in economic activity and personal income drives increasing trade of goods and services, leading to higher energy demand in the commercial transportation sector
  • Heavy-duty vehicle growth is the largest sector by volume, but aviation grows the largest by percentage

Global transportation energy demand relative to GDP

  • Growth in personal mobility (vehicle miles traveled) and commercial transportation services (ton-miles of freight, passenger-miles of air travel) has tracked with GDP
  • Continued economic growth, particularly in non-OECD countries, will result in increased demand for all transportation services
  • Recent trends show a decoupling of economic growth and transportation energy demand, reflecting growing efficiency
  • Significant increases in future fuel economy across all transportation modes will lead to a further decoupling of transportation services and energy demand

Commercial transportation grows in all aspects

  • Economic and population growth is concentrated in non-OECD countries, which leads to the biggest growth in commercial transportation services in these regions
  • Asia Pacific leads growth, rising to 40 percent of total sector’s energy demand
  • Efficiency gains resulting from improvements in fuels, engine design, aerodynamics, body design and logistics across commercial modes of travel lead to significant reductions in the rate of energy demand growth
  • Electrification in most commercial transportation grows slowly due to upfront costs, range limitations, payload requirements, and infrastructure development

Access to personal mobility increases

  • As incomes rise, individuals want more personal mobility, so demand for cars and motorcycles increases
  • Motorcycles offer a lower-cost entry point to personal mobility, with ownership particularly high in Asia Pacific
  • Car ownership significantly increases in non-OECD countries, with Asia Pacific leading the growth
  • In the OECD, while total vehicle ownership increases significantly, the number of cars per 1,000 people increases only about 10 percent

Efficiency mitigates light-duty demand growth

  • Increasing access to vehicles drives a worldwide increase in personal mobility-related energy demand growth
  • Assuming the current fleet mix and fuel efficiency, there would be a significant increase in energy demand for personal mobility
  • However, major gains in the fuel efficiency of conventional vehicles leads to a major reduction in the energy needed
  • Changes in the fleet mix (e.g., increasing hybrids and electric vehicles) play a much smaller role in limiting energy demand for light-duty vehicles

Electric vehicles grow rapidly

  • Currently there are approximately 2 million electric vehicles in the global fleet, or about 0.2 percent of the total
  • Recently, some car manufacturers and governments have announced plans to limit future vehicle sales to those with an electric motor, including hybrids plug-in hybrids and battery electric vehicles
  • The electric vehicle fleet will see strong growth driven by decreasing battery costs, increasing model availability and continued support from government policies
  • Future battery costs and government policies are uncertain, hence there is a wide range of perspectives on future electric vehicle growth, with third-party estimates for 2040 ranging from a factor of three higher and lower than the Outlook

Liquids demand trajectory uncertain but resilient

  • Sensitivities help assess potential impacts to light-duty liquids demand using alternate assumptions around electric vehicle penetration, changes in fuel efficiency or broader mobility trends
  • For every additional 100 million electric vehicles on the road in 2040, liquids demand could fall by ~1.2 million barrels per day; if the entire light-duty fleet is electrified in 2040, total liquids demand could be approximately the same as in 2013
  • Alternatively, recent consumer preferences have slowed the increase in fuel efficiency of new vehicle sales in both the OECD and non-OECD
  • While the Outlook forecasts new car fuel efficiency trends will be well aligned with government policies, a continuation of recent trends in consumer preferences could add more than 2 million barrels per day of liquids demand by 2040

Residential and commercial energy projections

As populations grow and prosperity rises around the world, we will need more energy to power homes, offices, schools, shopping centers and hospitals. Combined residential and commercial energy demand is projected to rise by more than 20 percent through 2040. About 90 percent of this demand growth will be met by electricity. Led by the growing economies of non-OECD nations, average worldwide household electricity use will rise about 30 percent between 2016 and 2040.

Energy efficiency plays a big role within the residential and commercial sectors as modern appliances, advanced materials and policies shape the future.

Residential and commercial demand shifts to non-OECD

  • Growth in households, rising prosperity and expanding commercial activity will spur demand for lighting, heat and power in homes and offices
  • Residential and commercial energy demand will rise over 20 percent by 2040, consistent with overall population growth
  • Essentially all growth will be in non-OECD nations, where demand will rise close to 40 percent
  • Africa and China will each account for about 30 percent of the increase in residential and commercial energy demand

Residential energy use reflects efficiency gains

  • Household energy use continues to improve, reflecting more efficient buildings, appliances and consumer products
  • Demand for electricity is growing across all regions
  • People in Africa and Asia Pacific still rely on biomass products to a large degree; more than 2.5 billion people worldwide lack access to modern energy for cooking, and about 1 billion people lack access to electricity

Electricity demand surges

  • Energy shifts reflect rising living standards and increasing urbanization through 2040
  • Electricity use increases 70 percent, accounting for nearly all the growth in total energy demand from 2016 to 2040; electricity reaches a share of 40 percent in 2040
  • Natural gas use grows about 20 percent, keeping its share around 20 percent through 2040
  • Oil demand decreases, though usage of liquefied petroleum gas increases as a cooking fuel replacing biomass
  • Biomass demand peaks, aided by growing access to modern energy in non-OECD nations

Household electricity up in non-OECD

  • Residential electricity use will rise about 75 percent by 2040, driven by a nearly 150 percent increase in non-OECD nations
  • Electricity use per household will rise about 30 percent globally, as household use in non-OECD countries rises about 70 percent
  • Electricity use per household in OECD nations will be flat-to-down as efficiencies help limit electricity requirements
  • Residential electricity use in Africa and India is likely to increase about 250 percent, though both areas will continue to lag in terms of electricity per household

Industrial energy projections

Energy and industry have a long history together, and their future remains intertwined. Energy fuels industries of all kinds, from microchip manufacturing to skyscraper construction, food processing to pharmaceuticals, agriculture to zero-emission vehicle production. Consumer demand for the many and varied products that industries offer has provided the impetus to unlock new sources of energy supply from the industrial revolution to the shale revolution.

As global prosperity continues to expand, industrial energy demand will increase. Most of the growth occurs in emerging markets. The chemicals industry is the industrial sub-sector with the highest rate of growth, as demand for plastics and other petrochemical products outpaces GDP in many regions.

Industrial energy demand growth would be much higher if not for the persistent pursuit of energy efficiency improvements. The Outlook anticipates technology advances, as well as the increasing shift toward cleaner-burning fuels such as electricity and natural gas.

Industry undergirds global economic expansion

  • The industrial sector includes the energy used to build cities, power factories, refine fuels and produce food
  • Manufacturing jobs contribute to rising prosperity, while also making products to meet consumer preferences for cars, clothing, cosmetics and computers
  • Almost half of the world’s energy is used for industrial activity
  • Overall, industrial energy demand rises about 20 percent from 2016 to 2040; the chemicals sector grows 40 percent
  • Improving industrial energy efficiency conserves fuel and reduces emissions

Oil, gas and electricity fuel industrial growth

  • Industry uses energy both as a fuel and as a feedstock for chemicals, asphalt, lubricants, waxes and other specialty products
  • Industrial fuel powers boilers, motors, compressors, robots, forklifts and cranes
  • Oil, natural gas and electricity each contribute about one-third of industrial energy growth; oil growth is mostly due to its use as a chemical feedstock
  • Use of coal and oil as industrial fuels declines in favor of natural gas and electricity, as companies strive to reduce their direct emissions
  • Coal continues to play a role in steel and cement manufacturing

Heavy industry migrates to emerging markets

  • Steel, cement and manufacturing are essential to urban infrastructure development
  • Heavy industry demand rises steadily in emerging markets in Asia, Africa, the Middle East and Latin America
  • China’s path forward mirrors the mature regions, as its economy transitions to higher value manufacturing and services after a decade of soaring, energy-intensive growth
  • Demand grows by 75 percent in the emerging markets, but is essentially flat in the mature regions and China

Heavy industry energy evolves toward cleaner fuels

  • New industry is attracted to regions with access to abundant, affordable energy, an able workforce and balanced policies
  • Electricity and natural gas are manufacturers’ fuels of choice because of their convenience, versatility and lower direct emissions
  • Climate policies boost natural gas demand in mature markets; air quality management spurs switching from coal to natural gas in China
  • Abundant natural gas supplies give manufacturers a competitive edge in Africa, the Middle East and parts of Latin America
  • Coal’s use declines in China but doubles in coal-producing India and emerging Asia

Consumer demand propels chemicals growth

  • Consumer demand for plastics, fertilizer and other chemical products increases with rising incomes
  • Olefins and aromatics are basic building blocks for plastics, adhesives and other consumer products; consumer demand outpaces GDP growth
  • Manufacturers see plastics as light-weight, durable materials that can improve the performance of their products, from packaging to auto parts to medical devices
  • The chemicals sector uses energy both as a fuel and as a feedstock
  • Chemicals energy demand grows by 40 percent from 2016 to 2040

Rising prosperity lifts chemicals energy demand

  • Since chemicals production is energy-intensive, there is usually a competitive advantage for manufacturers to locate plants near low-cost feedstock and fuel sources
  • The U.S. chemicals industry expands using abundant, low-cost natural gas liquids which are largely a byproduct of unconventional oil and natural gas production
  • Asia Pacific’s petrochemical production grows as rising incomes stoke consumer demand
  • Affordable energy (feedstock and fuel) supplies prompt investment in the Middle East, Africa and Latin America; chemicals industry energy demand more than doubles in each region
  • Mature regions remain important contributors to global chemicals production

Chemicals production relies on oil and natural gas

  • Feedstock comprises about two-thirds of chemicals energy demand; fuel one-third
  • Oil and natural gas account for about 75 percent of chemicals energy demand today, and nearly all of the growth from 2016 to 2040
  • Naphtha and natural gas liquids are primarily used as feedstock; natural gas is used as both a feedstock (notably for fertilizer) and a fuel
  • Natural gas liquids consumption about doubles from 2016 to 2040, as unconventional oil and natural gas production in the United States expands supply
  • Naphtha remains the dominant feedstock in Asia; the Middle East relies on natural gas liquids and natural gas

Electricity and power generation projections

Demand for electricity continues to rise as it is the energy used in powering wide applications ranging from lighting to home appliances to global e-commerce and digital services. Power generation uses the broadest array of fuels: coal, natural gas, nuclear and renewables such as hydroelectricity, solar and wind.

As electricity use rises, the types of fuels used to generate electricity will shift, globally and regionally. Policies seeking to address climate change and air quality will influence the choice of sources, with wind and solar, natural gas, and nuclear fueling growth in power generation.

Electricity sources shift

  • Global electricity demand grows by 60 percent from 2016 to 2040, driven by demand in the residential and commercial, industrial and transportation sectors
  • Industrial share of demand reduces as China’s economy shifts from heavy industry to services and lighter manufacturing; transportation’s share doubles to 2 percent in 2040
  • The world shifts to lower carbon sources for electricity generation, led by natural gas, renewables such as wind and solar, and nuclear
  • Coal provides less than 30 percent of the world’s electricity in 2040, down from about 40 percent in 2016

Natural gas and renewables dominate growth

  • Wind and solar grow significantly, supported by policies to reduce CO2 emissions as well as cost reductions, and lead growth as sources for electricity generation
  • Natural gas grows significantly, with growing demand from OECD countries, China and countries where natural gas is domestically available
  • Nuclear demand grows, with more than 50 percent of this growth coming from China
  • Hydropower growth makes up more than 80 percent of growth in the other renewables category
  • Coal-fired generation grows in many Asia Pacific countries due to electricity demand growth as well as favorable economics and supportive policy environments

Renewables penetration increases across all regions

  • Globally, wind and solar’s share of delivered electricity grows significantly from about 5 percent in 2016 to about 17 percent in 2040
  • Wind and solar see strong growth in North America and Europe, and provide more than 20 percent of delivered electricity in 2040
  • Renewables growth in Asia Pacific supports local air quality and energy diversity goals
  • The Middle East and Africa see growth in solar due to reduced costs and favorable solar resource
  • While capacity utilization improves over time, intermittency still limits worldwide wind and solar utilization to about 30 percent and 20 percent respectively in 2040

Electricity generation highlights regional diversity

  • About 60 percent of the growth in electricity demand will come from Asia Pacific
  • Mix of electricity generation sources will vary significantly by region
  • The United States and Europe lead shift away from coal, with significant gains in natural gas, wind and solar
  • China’s coal share of electricity generation falls with nuclear, renewables and natural gas meeting close to all electricity demand growth
  • The Middle East, Africa and the rest of world draw on natural gas where domestically available
  • Favorable economics drive coal-fired electricity in Asia Pacific; India’s use of coal for electricity more than doubles from 2016 to 2040

Natural gas is a key fuel for reliable electricity generation

Different policy or technology choices can impact outcome

  • Natural gas is reliable and efficient for baseload electricity generation; its flexibility also makes it well suited to meet peak demand and back-up intermittent renewables
  • The role of natural gas in the electricity generation mix varies by country: natural gas-rich regions rely heavily on natural gas-fired electricity, while importing regions balance the use of natural gas with other fuels
  • The Outlook reflects ExxonMobil’s best views of technology improvements and policy evolution; sensitivities test the impact of alternate pathways on natural gas demand for electricity generation
  • An accelerated deployment of solar and wind due to swifter cost declines and/or even more generous, targeted-support policies could reduce natural gas demand
  • Conversely, stronger public sentiments against nuclear or coal and/or a shift toward more technology-neutral carbon abatement policies could increase the role of natural gas for baseload electricity generation

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Sources
3. Energy demand as used in this Outlook refers to commercial and non-commercial energy (e.g., traditional biomass) consumed as a fuel or used as a feedstock for the production of chemicals, asphalt, lubricants, waxes and other specialty products. Coal demand includes metallurgical coal. Gas demand includes flared gas. To avoid double counting, derived liquids (e.g., from gasto-liquids) and synthetic gas (e.g., from coal-to-gas) are only accounted for in their final form (i.e., liquid or gas) and not in the energy type from which they were derived (i.e., gas or coal). The fuel and loss involved in the conversion process is accounted
for in the energy industry sub-sector.
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