The Outlook for Energy: A View to 24 216
5 Introduction The Outlook for Energy: A View to 24 1 16 Global fundamentals Meeting growing demand 17 Transportation 26 Residential and commercial 32 Industrial 4 Electricity generation The Outlook for Energy is our long-term global view of energy demand and supply. Its findings help guide our long-term investments, and we share The Outlook to help promote better understanding of the issues shaping the world s energy future.
48 54 7 Lowering emissions Fulfilling future supply Energy today and tomorrow 58 Liquids 64 Natural gas 72 Data 78 Glossary
4
Energy today Energy is integral to our lives in the 21st century. Energy keeps us warm, cools us down, and cooks our meals. It helps us connect with our children, and lights the garages and labs of entrepreneurs and inventors building a better world. Energy harvests our food, fuels our factories, builds our cities, and cleans our water. It keeps us mobile and connected with others near and far. The 21st century already has witnessed major changes in how people use energy for example, Internet-connected smartphones were introduced only around 2; today there are more than 2.5 billion of them worldwide. This century also has seen tremendous advances in energy technology including the ones that unlocked North America s vast resources of unconventional oil and natural gas. Together, these technologies have ushered in a new era of energy abundance and diversity. Today, our energy can come from deep below the ocean floor, beds of shale rock, nuclear fission, biofuels, the wind and the sun. And importantly, development and use of each of these energy sources continues to evolve in ways that reduce impacts on the environment. Another positive trend is our ability to find ways to use energy far more efficiently, curbing growth in energy usage and emissions. The world uses about 1 percent less energy per unit of economic output than it did in 2, with half of this gain occurring since 21. Still, the need for energy remains vast. Global demand for energy rose by about one-third from 2 to 214, with China accounting for about half of this growth. Meeting growing energy demand is an ongoing challenge, recognizing the scale of supplies required to meet the needs of 7 billion people each day. The use of oil alone representing just one-third of the world s energy consumption is now approaching 95 million barrels a day, enough to power a car 1 billion miles, or 4 million times around the world. Several themes remain true today: Modern energy is fundamental to our standards of living; practical options for meeting people s energy needs continue to expand, including those related to efficiency; and the energy industry is huge, growing and connecting regions through trade. While energy supplies are evolving, fundamentals on the demand side have been undergoing their own dynamics. Many economies continue to struggle, even more than five years after the global recession, while others, including that of China, continue to expand significantly, albeit at a more modest pace. Even so, global economic output has risen about 5 percent since 2, with better living standards for hundreds of millions of people. Visit exxonmobil.com Subscribe exxonmobilperspectives.com Follow @exxonmobil 5
Energy tomorrow Over The Outlook period to 24, consumers and businesses will drive an ongoing evolution in energy needs, shaped by waves of economic growth and advances in technology. At the same time, both supply and demand will be affected by a wide range of government policies, including ones that seek to expand access to modern energy and those that aim to reduce the risks of global climate change. In this time frame, we expect oil, natural gas and coal to continue to meet about 8 percent of global demand. For a century, these sources have been the foundation of the modern energy that has enabled modern living. Today, they remain abundant, reliable and affordable, and available on the scale required to serve 7 billion people 24 hours a day. Still, significant changes are coming. The biggest expected growth will be in natural gas, which provides a practical energy solution for many applications while also providing a significant cost advantage versus other options to help reduce climate change risks. Renewable energy and nuclear power also are expected to see significant growth over this period, together accounting for about two-thirds of the increase in energy demand for power generation. Policies to address greenhouse gas (GHG) emissions will increasingly influence the energy landscape. In our view, after rising more than 5 percent from 199 to 214, global energy-related CO 2 emissions will likely peak around 23. We expect the member nations of the Organisation for Economic Co-operation and Development (OECD), where CO 2 emissions are declining, to lead this shift. However, China will also play a significant role as its emissions peak around 23. We see this global shift being enabled in large part by substantial gains in energy efficiency in all regions. With strong gains in energy efficiency and significant changes in the world s energy mix driven by economics and climate policies we expect the CO 2 intensity of the global economy to be cut in half by 24. Thanks to economic development opportunities powered by abundant energy, we see the world standing at the cusp of decades of enormous growth and better living standards for billions of people. The period to 24 is expected to reflect a dramatic expansion of the world s population and the global middle class. Living conditions will improve as millions of people gain access to electricity, which will lead to benefits such as better education and modern healthcare. From 214 to 24, we see global demand for energy rising by 25 percent. This increase is equivalent to the total energy used in North America and Latin America today. We expect energy demand growth to be led by a 45 percent increase across non-oecd countries, while demand in OECD countries will be essentially flat. Energy efficiency will play a huge role in slowing the growth in global demand, as energy use per unit of economic output is likely to fall by 4 percent. 6
To keep pace with demand, the world will need to pursue all economic energy sources. In 24, oil and natural gas will likely be nearly 6 percent of global supplies, while nuclear and renewables will be approaching a 25 percent share. We can expect that new technologies will continue to create new energy options for our growing world. We don t know yet what all those technologies will be, but history tells us that the best ones will be affordable, available on a commercial scale, and not overly reliant on government support. Enabling these technologies will require policies that promote innovation, investments and free trade. One of the constants in life is change. Another is energy. By understanding the trends described in The Outlook, we can better anticipate how much and which kinds of energy the world will need in the future. This insight helps guide our investments as we work to help safely meet the world s need for affordable, reliable energy the energy that helps create and add value to modern living for people everywhere. Base year switches to 214 This year s Outlook forecasts growth in energy demand of about 25 percent from 214 to 24. The use of 214 as the base year in this year s report is a change from recent Outlooks, which used 21. We made this adjustment to help provide a better perspective on expected changes in energy demand and supply to 24, since energy markets have evolved quite a bit since 21. For comparison, this year s Outlook also forecasts energy demand growth of about 35 percent from 21 to 24, consistent with recent Outlooks. Visit exxonmobil.com Subscribe exxonmobilperspectives.com Follow @exxonmobil 7
Developing nations will lead gains in GDP and living standards Our energy to 24: Seven things to know While developed economies still enjoy the world s highest standards of living, we expect that China, India and many other nations will see strong growth in GDP and living standards to 24. Not coincidentally, developing nations also are expected to lead the world in energy demand growth. Modern energy is one of mankind s most complex endeavors, and its path is shaped by countless forces. However, we see seven key themes that will play a major role in defining our global energy landscape through 24. Per capita income in OECD nations is expected to rise by almost 6 percent 214-24; non-oecd nations rise about 135%. Energy is fundamental to standards of living As incomes rise, billions of people in developing nations will rise into the middle class; many of them will be able to afford amenities that already are commonplace elsewhere, such as temperature-controlled homes, cars, and appliances like refrigerators, washing machines and computers. 8 In 214, there were about 1 cars per 1 people in China. By 24, this is expected to rise to about 3. Economics and policies will impact the energy mix Increasingly, the mix of fuels that consumers use to meet their energy needs will be reshaped by economics and government policies, especially those aimed at reducing CO2 emissions associated with energy use. In general, demand will shift toward cleaner fuels like natural gas, renewables and nuclear. The share of the world s electricity that is generated by coal will likely drop to about 3 percent in 24, from over 4 percent in 214.
Natural gas grows more than any other energy source Demand for natural gas is growing rapidly in part because it is the cleanest-burning major fuel. Gas also is abundant and versatile; it is used heavily in the power generation and industrial sectors, and also is emerging as a fuel for certain types of transportation. Technology has the highest potential and the greatest uncertainty Advances in technology have tremendous potential to help meet our energy and environmental goals, but the pace of change is difficult to predict. Recent breakthroughs in unconventional oil and gas production are already reshaping the world s energy supply. There is also significant emphasis on technology advances to improve energy efficiency and the prospects for batteries, renewables and nuclear power. 4% of the growth in global energy demand from 214-24 is projected to be met by natural gas. Oil will remain the world s primary fuel We expect oil to continue to be the world s leading fuel, driven by demand for transportation fuels and by the chemical industry, where oil provides the feedstock to make plastics and other advanced materials. 1/3 of the world s energy is expected to be provided by oil in 24. CO2 intensity of the global economy to be cut in half We expect that as economies continue to grow, improved efficiency and lower-carbon fuels will mean that by 24, the amount of energy-related CO2 emissions associated with a dollar of global GDP will have dropped by half. Global average fuel economy for light-duty vehicles is expected to improve by 8%. Global energy-related CO2 emissions are expected to peak by about 23 and then begin declining. 9
Global fundamentals What will the world s energy needs look like in 24 and beyond? Answering this question begins with recognizing the fundamental forces that continue to shape long-term energy trends in nations around the world. These forces include population growth, demographic shifts and economic expansion. Through 24, we see China, India and other non- OECD countries home to seven-eighths of the world s population needing much more energy to fuel economic development and rising living standards. On the other hand, the U.S., Europe and other OECD nations will see declines in overall energy demand and emissions, even as their economic output continues to grow. All around the world, we expect energy efficiency to continue to improve, and a greater share of demand to be met by cleaner fuels. In part, these gains will be the result of governments and consumers seeking to meet their demand for energy while also addressing the risks of climate change. 1
The world s demand for energy is driven by many factors, but the two biggest are population and economic growth. By 24, the world s population will have reached 9 billion up from about 7.2 billion today and global GDP will have more than doubled. This growth will create more need for affordable, reliable energy energy for homes, transportation, business and industry. We see global energy demand rising by about 25 percent from 214 to 24. This is a significant increase, but would have been far higher (exceeding 11 percent) if we did not foresee steep improvements in energy efficiency across all demand sectors. China and India lead growth in energy demand Although energy demand worldwide is projected to rise by 25 percent, global totals can be misleading because trends will vary greatly by nation. We anticipate some developed economies to see net declines in overall energy demand through 24. We believe that at this point in time, the future of energy is best understood by looking at three distinct groups of nations: China and India. By 24, India will have passed China as the world s most populous nation, with 1.6 billion people. China and India also lead the developing world in raising standards of living and achieving technology improvements. Both nations are starting to take steps toward adopting additional policies on energy and climate change. Together, we see China and India accounting for almost half the projected growth in global energy demand to 24. A group of 1 Key Growth countries whose rising populations and living standards will drive strong increases in energy demand. This group comprises Brazil, Mexico, South Africa, Nigeria, Egypt, Turkey, Saudi Arabia, Iran, Thailand and Indonesia. Collectively, these 1 nations account for about 3 percent of the projected growth in energy demand through 24. OECD32 is a group of developed nations including the United States and all other OECD members except Mexico and Turkey, which we include in Key Growth. Already enjoying relatively high living standards and widespread use of advanced technology, these economies are expected to expand at a relatively moderate pace, while their populations remain stable. OECD32 nations have some of the most aggressive policies on improving efficiency and curbing emissions. Energy demand in the OECD32 group is expected to decline by 5 percent from 214 to 24. While population and GDP are reliable indicators of a country s energy demand, they don t tell the whole story. We also need to look at the citizens themselves. Are they young or old? Rich or poor? Living in a modern city or a rural community? The answers to these questions help determine how much a country s economy will grow, and how much energy its citizens will need. Visit exxonmobil.com Subscribe exxonmobilperspectives.com Follow @exxonmobil 11
Long-term trends in demographics, productivity and income Countries with a relatively high percentage of working-age citizens (ages 15 to 64) tend to have faster economic growth, provided there are sufficient job opportunities in those economies. A relatively large working-age group is an important factor supporting future economic growth in India, the Key Growth group and other developing nations. On the other hand, aging populations will continue to pose a challenge to economic growth in the OECD32. Aging will also impact China s potential growth. By 24, more than 2 percent of China s population will be age 65 or older, up from just 9 percent today. But for people and families everywhere, what matters most economically is incomes and the living standards those incomes can support. A simple measure of income is GDP per capita. Through 24, per capita GDP will rise widely across the globe, but we expect that the gains will be strongest in the non-oecd, particularly China and India. By 24, per capita income in China and India is expected to be more than three times today s level; in Key Growth countries, it will be on average almost twice as high. Because of these rising incomes, we expect the world to see the largest expansion of the global middle class in history. The Brookings Institution estimates that the number of people earning enough to be considered middle class will grow from just over 2 billion in 214 to nearly 5 billion in 23, with most of the growth centered in India and China. At the same time, China, India and other developing nations continue to experience the urbanization shift that permeated the developed world in the 2th century. By 24, close to 65 percent of the world s population will live in cities, up from under 55 percent today. These shifts in developing nations are expected to have significant impacts on energy demand. As people rise into the middle class and move from rural to city settings, their per capita consumption of modern energy tends to increase rapidly. This growth is tied to a wide range of uses everything from refrigerators to cars to office buildings to the energy needed to manufacture consumer goods. 25% increase in energy demand by 24. That s like adding another North and Latin America. 12
Near-term dynamics in the global economy and energy market In 29, the world economy experienced the worst global recession in the post-world War II years. Since then, apart from an initial rebound in 21, recovery has been slow and uneven across various regions of the world. Today, there are limited signs of improvement in developed economies, led by the United States. On the other hand, there have been economic headwinds coming from developing countries, including slowing growth in China, and declines in the prices of commodities, including energy, upon which many developing economies depend. Times like these are a reminder of how energy and the economy are intertwined. In the pre-industrial era, lack of access to modern energy constrained economic growth and living standards. That condition unfortunately still holds today in some less-developed countries. But for much of the world, modern energy continues to move the economy and society forward. At the same time, the ups and downs of the global economy inevitably feed back to the energy market. These cycles are the norm, not the exception. While we recognize the importance of looking at short-term dynamics of the energy market at this juncture of world economic recovery, we also believe that by focusing more on the long-term forces shaping energy trends, the public and policymakers can have a stronger foundation upon which to meet future energy needs in a safe, secure and environmentally responsible way. Visit exxonmobil.com Subscribe exxonmobilperspectives.com Follow @exxonmobil 13
Charting the numbers Global fundamentals projections Demographics Demographics Billion people Billion 4 people 4 GDP Trillion 21$ 16 14 Rest of World 14 Population is growing, life spans are increasing and birth rates are slowing. Incomes are rising and poverty is on the decline. In non-oecd countries, where seven-eighths of the world lives, billions are about to join the middle class. The percentage of people living in urban settings continues to rise. These fundamentals are the starting point for The Outlook, because they are the megatrends that drive energy demand. Using data from the United Nations, World Bank, the International Monetary Fund and other sources, together with our own analysis, we seek to understand how population, demographic and economic shifts will shape the world in years to come. Our conclusion: Global energy demand will rise by about 25 percent from 214 to 24, with all of the growth coming from the non-oecd. 3 3 2 2 1 1 1 25 4 1 25 4 1 25 4 1 25 4 1 25 4 1 OECD32 25 4 1 China 25 4 1 India 25 4 Key 1 Growth 25 4 1 Rest 25 4 OECD32 China India Key Growth of Rest World Source: World Bank, ExxonMobil estimates of World Source: World Bank, ExxonMobil estimates World population grows 25 percent, from 7.2 to 9 billion 214-24 India has nearly 1.6 billion people by 24, passes China as most populous OECD32, China see working-age group (15-64) shrink to 24, while others see large gains In most regions, under-14 group shrinks or decelerates due to declining birth rates In all regions, population age 65 and older 4 4 4 4 4 expands as 4 life expectancy 4 rises 4 3 3 OECD32 OECD32 3 3 China China 3 3 India India 3 3 Age 65+ Age 65+ Age 15 64 Age 15 64 Age 14 Age 14 4 4 Key Key growth growth 3 3 ROW ROW 12 1 8 6 4 2 2 22 24 Key Growth India China OECD32 DATA AS OF 9/23/215 GDP DATA AS OF 9/23/215 DATA AS OF Economic "1" 179 growth 75 171drives increased AS OF "1" 179 75 171 AS OF OECD32 Chin need "25" for 183 energy 692 237 OECD32 Oct. 27, 215 "" 36186 219 "25" 183 692 237 OECD32 Oct. 27, 215 "4" 181 669 293 APPROVED BY Global GDP more than doubles 36716 237 "4" 181 669 293 APPROVED Dong BY Fu 37286 259 214-24; developing countries "1" 243 983 112 Dong Fu 3832 285 lead "1" growth 243 983 112 3928 314 XXA 15XOM EO- China "25" 247 16 984 192 4227 349 XXA 15XOM EO- China OECD32 "25" 247 grows 984 192 about 65 percent, GlblDemographics.ai ROW "4" 25 89 31 41393 394 but "4" share 25 of 89 world 31 GDP shrinks GlblDemographics.ai42478 45 IN ENERGY OUTLOOK ON PAGE XXA 42531 493 IN ENERGY OUTLOOK ON PAGE XXA almost "1" 15 364 percent 781 61 by 24 Key Growth 4149 538 "1" 364 12 781 61 NAME India "25" 358 959 12 "1" 42183 595 42826 65 China rises to almost 2 percent NAME Dong Fu India "25" 358 959 12 of world "4" 335 GDP, 172 close 159 to U.S.; Dong Fu "4" 335 172 159 India exceeds 5 percent 8 "1" 325 698 6 Key "1" 325 698 6 "25" 343 855 16 Key growth "25" 343 855 16 growth "4" 359 969 182 "4" 3594 969 182 "1" 728 1351 124 VERSION FILE FILE INFO INFO CHART OWNER CHART OWNER ATTENTION: OWNER India Data list is used to drive the black and white chart, which is then used as a Data list is used to drive the black and template for the color China chart. Bars and lines white chart, which is then used as a are cut and pasted from the black and template for the color chart. Bars and lines white template and are highly accurate. are cut and pasted from the black and However, the color chart is NOT linked to white template and are highly accurate. the database and is NOT driven by the However, the color OECD32 chart is NOT linked to data; it is a piece of artwork buiilt by a the database and is NOT driven by the human. Therefore, the editor needs to data; it is a piece of artwork buiilt by a thoroughly proof the final artwork, not human. Therefore, the editor needs to JUST the data list. thoroughly proof the final artwork, not Len JUST Shelton the data Public list. and Government Affairs 43345 7 43921 754 44668 89 45612 866 46671 925 47725 986 48778 149 49834 1113 "2" 5895 118
24 GDP per capita Thousand PPP$ 75 Urbanization ratio Percent 1 Urbanization ratio VERSION FILE INFO CHART OWNER ATTENTION: OWNER Energy demand Quadrillion BTUs 12 Percent 1 OECD32 1 8 Turkey 1 Energy savings China OECD32 Indonesia 5 8 Indonesia Turkey 8 1 6 China Indonesia DATA AS OF 9/23/215 Indonesia 8 More developed regions Rest of World 6 OECD32 6 63.8 India 8 More developed regions China 4 42.6 Key Growth Turkey 25 India 17.9 4 6 India India Key growth 4 24.5 Turkey China India 6 ROW 2 14.4 2 4 214 India OECD32 China 2 OECD32 4.3 4 China 12.3 China OECD32 China India Key Rest 198 2 22 24 2 2 22 24 Growth of World India 5.4 Source: United Nations Key growth 198 12.9 2 22 24 2 ROW 8.4 Source: United Nations 12 8 9 1 2 3 4 ROW ENERGY Key Growth 8 9 1 2 3 4 1 DATA AS OF 9/22/2 OECD32 has highest income of Close to 65 percent of world AS OF Global demand for energy rises India AS OF OECD32 China IndiaKe any region; up almost 6 percent population lives in cities by 24; Oct. 2, 215by 25 percent 214-24 China Oct. 16, "" 215 216 47 19 8 AS OF 214-24 OECD32 tops 8 percent 215 49 19 APPROVED BY APPROVED BY Demand could have more than OECD32 215 51 19 Dong Fu Oct. Dong 16, Fu215 China s GDP per capita more than Developing nations will experience DATA AS OF 9/23/215 doubled without efficiency gains 218 58 2 6 APPROVED BY 222 66 21 triples to 24, reaches today s large rural-to-urban shifts China XXA India 15XOM Turkey EO- All More demand developed growth Indonesia comes from XXA Dong 15XOM Fu EO- 223 73 22 OECD level DATA AS OF 9/23/215 223 79 23 China s urbanization rate "8" hits 19.4 PersonaIncome.ai 23.1 43.78 developing 7.2 world, but China 22.1 Urbanization.ai 4 225 84 25 India s GDP 75per capita also triples, 75 22.9 China 24.3 India 52.448 Turkey IN ENERGY OUTLOOK ON plateaus 71.4 More developed PAGE XXA Indonesia around 23 26.1 XXA 15XOM EOnearly 75 percent in 24, up from IN ENERGY OUTLOOK 22 ON PAGE 87 XXA26 "9" "8" 26.4 19.4 25.5 23.1 59.23 43.78 72.4 7.2 3.6 22.1 Urbanization.ai while Key Growth nearly doubles about 2 percent in 198 21 91 28 31 22.9 26.6 24.3 62.123 52.448 Demand 73.3 71.4 in OECD32 2 falls 36.1 26.1 by "1" 218 97 29 NAME NAME IN ENERGY OUTLOOK ON PAGE XXA Global middle class expands by India rises, but over half its "" "9" people 35.9 26.4 Dong 27.7 25.5 Fu64.741 59.23 5 74.2 72.4 percent 214-24 3.6 42 Dong Fu 214 17 3 212 11 32 billions; leads to new energy demand still live in rural settings by 2442.5 31 29.2 26.6 67.783 62.123 75.8 73.3 45.9 36.1 NAME 214 114 33 Data list is used to drive the black and 5 5 "1" "" 49.2 35.9 3.9 27.7 7.715 64.741 77.1 74.2 49.9 42 1 2 Data 3 Dong 35 4 list is used Futo drive the black and white chart, which is then used as a white chart, which is then used 212 as a 116 34 55.6 42.5 template 32.7 29.2 for the color 73.397 67.783 chart. Bars 78.3 75.8 and lines 1253.7 45.9 template for the color chart. Bars and lines are cut and pasted from the black and are cut and pasted from the 212 black and 118 35 "2" "1" 61 49.2 white template 3.9 34.8 and 7.715 75.73 are highly accurate. 77.1 79.3 57.2 49.9 white Data list template is used and to drive are highly the black 213 accurate. and 121 36 However, the color chart is NOT linked to However, white chart, the which color is chart then is used NOT as linked a to the database and is NOT driven by the Constant Intensity the template database Line for the 65.4 55.6 37 32.7 73.397 77.659 8.4 78.3 6.3 53.7 and color is NOT chart. driven 213 Bars by and 123 the lines 38 data; it is a piece of artwork buiilt by a 1 data; are cut it and is a piece pasted of from artwork the black buiilt and by a human. Therefore, the editor needs to human. white template Therefore, and the are editor highly 214 needs accurate. 126 to 39 "3" "2" 68.7 61 39.5 34.8 79.288 75.73 81.5 79.3 57.2 63 Visit exxonmobil.com Subscribe exxonmobilperspectives.com thoroughly proof the final artwork, not Follow @exxonmobil thoroughly However, the proof color the chart final is artwork, NOT linked 214 not to 129 15 4 JUST the data list. JUST the database the data and list. is NOT driven by the 25 25 71.1 65.4 42.1 37 8.61 77.659 8.4 82.5 65.2 6.3 data; it is a piece of "2" artwork 213 buiilt by 132 a 41 Len Shelton Public and Government Affairs 8 Len human. Shelton Therefore, Public the and editor Government needs to Affairs VERSION VERSION FILE INFO FILE INFO CHART OWNER CHART OWNER ENTION: ATTENTION: OWNER OWNER
Meeting growing demand People use energy in many ways every single day. These needs will grow in coming decades as populations and living standards continue to rise. Income growth and urbanization in developing economies are expected to spur demand for fuels used in the home, as well as the energy needed to produce and ship all types of manufactured goods. The number of cars on the world s roads will rise by 8 percent. But, we see the biggest growth coming from electricity, the invisible energy that the modern world expects 24/7 to provide light, heat and power to our homes, buildings and industries. By 24, the generation of electricity is expected to account for 4 percent of all the energy used in the world. 16
Transportation We want this to go there We want that to come here I need to go there You need to come here. Such are the patterns of modern life that stimulate demand for the energy that allows us to drive to work, take the train to visit friends, or fly to another city to close a business deal or spend time with loved ones. Modern living also drives demand for the energy that fuels global commerce. It is the energy that delivers raw materials to a manufacturing plant, and the energy that makes it possible for food, medicine or the latest modern conveniences to travel thousands of miles to a local market or even directly to your home. In the coming decades, advances in technology will continue to create cleaner, more efficient transportation and significant fuel savings. Even so, we see global demand for transportation continuing to rise as a growing middle class and higher incomes mean more cars on the road and increased commercial activity. Global energy demand for transportation is projected to increase by about 3 percent from 214 to 24. Essentially all of this growth is projected to come from non-oecd countries, where transportation demand will likely rise by about two-thirds. In these countries, more cars and increased use of heavy-duty vehicles is likely to more than offset the impact of better fuel efficiency, while increased economic activity will promote a rise in marine, aviation and rail transportation. In OECD32 countries, transportation demand is expected to decline about 1 percent through 24, reflecting relatively mature levels of economic development, modest population growth, and the rising use of advanced technologies that boost fuel efficiency without sacrificing mobility. More cars on the road, but more miles per gallon Today, there are close to 1 billion light-duty vehicles (LDVs) in the world. OECD32 nations have about 57 cars per 1, people, a level that reflects relatively high incomes, mature automobile markets and modern road networks. But in less-developed nations, vehicle penetration is far lower at only about 7 cars per 1, people on average. As incomes rise in these countries, people are likely to purchase a lot more cars, many for the first time. In fact, we expect the global light-duty fleet to rise by close to 8 million vehicles by 24 with about 9 percent of this growth outside the OECD32 countries. Visit exxonmobil.com Subscribe exxonmobilperspectives.com Follow @exxonmobil 17
Even so, vehicle penetration in developing countries is projected to be only about one quarter of OECD32 levels by 24. Lower incomes account for much of this gap, but other factors include extensive and growing use of motorcycles in non-oecd countries, as well as access to expanding public transportation networks. In general, cars and other light-duty vehicles are becoming much more fuel efficient, thanks to changes in personal preferences and ongoing advances in technology, stimulated in part by regulations such as stricter fuel economy standards. The average car on the road will likely travel about 45 miles per gallon (mpg) in 24, compared to about 25 mpg in 214. Because of this improved fuel economy, demand for fuel for light-duty vehicles is expected to decline by about 4 percent in the OECD32 even as its number of cars rises by about 95 million (about 15 percent). In developing countries, however, light-duty demand is expected to rise by about 5 percent, as better fuel economy only partially offsets a near tripling of cars on the road. Globally, energy demand for light-duty vehicles will likely peak around 22, then decline close to 1 percent to 24. 18
Improved fuel economy is tied to advances in technology. Examples include vehicle light-weighting through durable plastic components, better tire liners, and advanced engine and powertrain systems. Customer preferences drive innovation as well. Today s new cars offer a wide range of functionality and performance, and buyers continue to seek vehicles that best meet their needs. Conventional (non-plug-in) hybrid-electric vehicles tend to be the most practical and affordable of the advanced models, providing about 3 percent better fuel economy compared to conventional gasoline-powered cars, even as these cars also improve. In fact, improving fuel economy in gasoline-fueled cars is one of the most cost-effective ways to reduce GHG emissions, especially when compared to electric cars. We expect conventional hybrids to jump from about 2 percent of new-car sales in 214 to more than 4 percent by 24. In contrast, plug-in hybrids and fully electric cars are likely to account for less than 1 percent of new-car sales globally in 24. Heavy-duty transport grows with trade Driving the growth in energy for transportation in every region is commercial transportation. We see heavy-duty vehicles becoming the largest energy-consuming segment of the transportation sector by 23. This is not surprising given the role of trucking in sustaining modern life, and the projected growth in economic activity and trade. Global energy demand for heavy-duty vehicles is expected to increase by about 45 percent from 214 to 24, with about 85 percent of the growth coming from non-oecd32 countries, where economic activity is increasing most rapidly. We anticipate demand in China increasing by about 5 percent, while demand in India more than doubles. Key Growth countries demand is expected to increase by more than 5 percent. To put this in perspective, the expected increase in these 12 countries is more than the current demand in North America. 8% more mpg Technology improvements will help us travel farther with the same fuel. 214 24 Visit exxonmobil.com Subscribe exxonmobilperspectives.com Follow @exxonmobil 19
Aviation, marine and rail - the fastest-growing subsectors Just as economic growth and trade will spur demand for energy for heavy-duty vehicles, we also expect the world to see more demand for ships, planes and trains to carry supplies to factories and goods to markets. In total, energy demand from these three subsectors will likely grow by about 65 percent. In fact, the use of aviation, marine and rail transportation will likely increase to such an extent that their combined energy demand is expected to equal about 85 percent of the amount used by light-duty vehicles in 24, up from about 5 percent in 214. We expect over 9 percent of the demand to be met by oil through 24, reflecting its advantages as a practical, energy-dense and cost-effective source of fuel to meet the needs in these sectors. Growing diesel demand The vast majority of transportation energy needs today are met by oil, with gasoline being the most prominent fuel. We expect that oil will still be predominant in 24 close to 9 percent of transportation energy though we expect the product mix to shift significantly toward diesel fuel, driven in large part by strong growth in commercial transportation and relatively flat gasoline demand. Today, diesel accounts for about 35 percent of the total energy used for transportation. By 24, we expect this share to be about 4 percent, surpassing gasoline, reflecting growth of about 8 MBDOE or close to 45 percent. Most of the diesel fuel used for transportation about 8 percent is consumed by heavy-duty vehicles. Diesel engines are well-suited to pulling heavy loads, and for the foreseeable future, we expect diesel to remain predominant in the heavy-duty sector. Diesel also is used to power some light-duty vehicles, as well as marine vessels and trains. Among these uses, the most significant growth is likely to occur in the marine sector, where new emission standards will encourage greater penetration of low-sulfur diesel fuels in place of fuel oil. Partially offsetting this growth will likely be a decline in diesel use among light-duty vehicles, reflecting growing favor toward conventional and hybrid gasoline cars. 2 Led by heavy-duty trucking, commercial transportation demand expected to increase about 55%.
The promise of natural gas fuel Natural gas holds great promise for the transportation sector due to its potential to reduce fuel costs and also help meet emerging emission requirements. Today, natural gas represents about 2 percent of total transportation demand, but this share is likely to rise to about 5 percent in 24. Most of this growth will come from heavy-duty vehicles, a segment where natural gas may present a practical option to reduce fuel costs. Although trucks designed to run on natural gas are significantly more expensive than diesel trucks, economic opportunities to use compressed natural gas (CNG) or liquefied natural gas (LNG) may exist in regions where supply is abundant. We expect natural gas use in trucking will increase by almost 3 percent from 214 to 24, with its share of global heavy-duty vehicle demand rising to about 7 percent, up from 3 percent. We expect China and the United States to account for about 5 percent of this global demand in 24. We also anticipate natural gas demand in the marine sector to increase significantly, stimulated by new emission standards. By 24, gas is likely to account for about 1 percent of total marine fuels, up from less than 1 percent now, with about two-thirds of the growth in developing countries. Visit exxonmobil.com Subscribe exxonmobilperspectives.com Follow @exxonmobil 21
Charting the numbers Transportation projections Global transportation demand MBDOE 75 Transportation demand by region MBDOE 3 22 When we look at the transportation sector, one feature is clear: increasingly, demand growth is led by heavy-duty trucks and other commercial transportation (airplanes, ships and trains). For decades, energy for personal vehicles has been growing strongly. But by 24, in terms of fuel consumption, commercial transportation will double that of light-duty vehicles. We anticipate the vast majority of vehicles to continue to run on products made from oil. However, we also see natural gas making significant headway as fuel for fleet vehicles, such as trucks and buses, as well as ships. 5 25 2 22 24 two-thirds 75 of global transportation demand Commercial 5 25 Personal Commercial Light-duty road Global energy demand for transportation to rise by about 3 percent 214-24 Commercial transport (trucks, air, rail, ships) up about 55 percent as economic output doubles By 24, commercial activity accounts for Light-duty fuel usage holds steady as fuel economy gains offset larger fleet 2 1 1 25 4 1 25 4 1 25 4 1 25 4 1 25 4 OECD32 China India Key Growth Rest of World DATA AS OF 9/1/215 Personal Commercial "" 1758 2294 17872 OECD32 2283 countries account AS OF for half of global 1845 22437 transportation demand 1875 2359 DATA AS today OF Oct. 9/1/215 2, 215 19366 Growth 24377in transport demand APPROVED 214-24 "1" BY will "25" "4" "5" 19669 25135 OECD32 26924.8 Todd Onderdonk 25536.3 2372 come from outside OECD32 279 25799 China 4526.6 8244 197.8 247 China s 2696 demand India will rise by XXA about 1491.3 15XOM 8 percent, 2972.5 493.8 EO- 2645 2776 Key Growth 727.7 1254.6 12384.6 while India s will nearly triple 2732 26613 Rest of World GlblTransDmnd.ai 9479.5 1355.3 16445.7 "1" 2158 IN ENERGY OUTLOOK ON PAGE Demand 28122in Key Growth countries, Rest of XXA 21822 2865 World will rise about 5 percent 22126 2932 NAME 22612 OECD32 29653 demand will fall by Todd close Onderdonk to "15" 23197 29752 1 percent 214-24 23676 3111 Data list is used to drive the black and 3 white chart, which is then used as a 23962 3673 template for the color chart. Bars and lines 2473 31243 are cut and pasted from the black and white template and are highly accurate. However, the color chart is NOT linked to 24118 31851 the database and is NOT driven by the data; it is a piece of artwork buiilt by a 241 3248 human. Therefore, the editor needs to thoroughly proof the final artwork, not "2" 23889 33125 JUST the data list. 23857 33772 2 VERSION FILE INFO CHART OWNER ATTENTION: OWNER Len Shelton Public and Government Affairs
Global transportation demand by fuel MBDOE 75 Commercial transportation demand by sector MBDOE 5 Commercial transportation by region MBDOE 5 5 Other Natural gas Jet fuel Fuel oil 4 3 Rail Marine Aviation 4 3 Asia Pacific 25 Diesel Gasoline 2 1 Heavy-duty road 2 1 Africa Middle East Russia/Caspian Latin America Europe North America 2 21 22 23 24 2 22 24 2 22 24 DATA AS OF 9/1/215 DATA AS OF 9/1/215 TranRoadHeavy TranAir TranMarine TranOther North Am Europe Latin Am "2" 12821 4587 3761 925 "2" 5736 4661 1729 Close to 95 percent of current transportation Trade, economic growth spur close to Commercial 1396 4471 transportation 362 914is driven by 5475 472 1737 AS OF AS OF 13313 4519 3676 93 5523 484 1742 energy needs DATA are met AS OF by oil 1/29/215 55 percent rise in commercial transport Nov. 12, needs 215 economic growth and trade 13755 453 3818 983 Oct. 5635 19, 215 4937 171 Gasoline Diesel Fuel Oil Kero/Jet Gas Other 5 Gasoline demand flattens vehicle fuel Demand for on-road heavy-duty APPROVED vehicles BY All 14436 areas see 4796 rising 4124 commercial 121 transport; APPROVED 577 BY 5187 1892 "2" 19248 1247 266 4523 59 831 Todd Onderdonk"25" 1477 4974 4317 173 "25" 5974 5333 1935 economy improves rapidly (trucks, buses) rises 45 percent 214-24 OECD32 up 2 percent 214-24 Todd Onderdonk "21" 22353 1717 3485 529 533 1122 15124 527 4544 112 644 5549 1955 Demand for "22" diesel grows 23868 45 percent 267 3565 6186 Aviation, 13 marine, 1423 rail demand XXA also grow, 15XOM EO- Asia 4 15918 Pacific 5153 accounts 4774 for 5 1115percent XXA of 6319 15XOM 5695 EO- 273 "23" 23676 24783 398 747 5 239 1718 16272 5126 4631 148 5967 5687 2216 214-24 as truck and marine needs expand rising about 65 percent in total "24" 228 2767 3516 8648 3461 242 TransDmndByFuel.ai commercial transport energy growth CommTransDmndByS 16213 4861 4568 97 5458 545 2177 IN ENERGY OUTLOOK ON PAGE XXA Jet fuel demand to rise by 55 percent as air By 3 24, 4 percent of commercial "21" IN ENERGY 5741 OUTLOOK 5427 ON PAGE 2356 X Heavy-duty vehicles close to 6 percent of "21" 17214 589 485 115 17438 5234 4866 1112 5786 5414 2439 travel keeps increasing worldwide commercial 4 demand through 24 transportation demand is in Asia Pacific NAME 17949 5275 4688 112 NAME5794 5274 2575 Natural gas grows as a transport fuel, mainly for Todd Onderdonk North 18434 America 5489 and 4569 Africa 1161 combine for Todd 5965 Onderdonk 5164 2693 2 18427 5619 458 1198 5931 597 2715 commercial fleets 75 3 TranOther 25 percent of global demand growth Data list is used to drive the black and "215" 1864 5686 4588 1233 "215" Data list is 641 used to drive 5121 the black and 272 white chart, which is then used as a white chart, which is then used as a template for the color chart. Bars and lines 18911 5796 471 1265 template for 6151 the color 5161 chart. Bars and 2734 lines are cut and pasted from the black and are cut and pasted from the black and white template TranMarine and are highly accurate. 1 19231 594 4823 1285 white template 6238 and are 525 highly accurate. 2773 2 However, the color chart is NOT linked to However, the color chart is NOT linked to Other the database and is NOT driven by the 19583 612 4952 134 the database 632 and is NOT 5253 driven by 2821 the data; it is a piece of artwork buiilt by a data; it is a piece of artwork buiilt by a human. Therefore, TranAir the editor needs to 19947 6124 585 1323 human. Therefore, 642 the 535 editor needs 2878 to thoroughly proof the final artwork, not 5 Visit exxonmobil.com Subscribe Gas exxonmobilperspectives.com thoroughly proof the final artwork, not "22" Follow 2318 "22" 6484 5361 2933 JUST the data list. @exxonmobil 6239 5224 1344 23 JUST the data list. 2692 2 25 6352 21 215 22 5361 225 23 1 1366 6563 5417 2993 VERSION FILE INFO CHART OWNER ATTENTION: OWNER Len Shelton Public and Government Affairs VERSION FILE INFO CHART OWNER ATTENTION: OWNER Len Shelton Public and Government Affai
Transportation projections Light-duty vehicle demand trends MBDOE 1 Light-duty vehicle fleet by region Millions 75 Light-duty vehicles and motorcycles Billions 2. 8 1.5 Light-duty vehicles 5 6 United States Key Growth 1. Motorcycles 4 China 25 2 Europe OECD India.5 2 22 24 Asia Pacific OECD 1 25 4 1 25 4 1 25 4 1 25 4 1 25 4 DATA AS OF 9/1/215 OECD32 China India Key Growth Rest AP OECD Euro OECD US KeyGrwth China India of World "" 1.34349 3.74832 8.24746 1.69773.47597.21318 1.36946 3.74928 8.358 1.78623.513922.235968 1.39951 3.76822 8.5264 1.89165.617525.255873 1.39466 3.7517 8.59322 2.1255.68582.281331 "5" Amount of fuel used by light-duty vehicles to 1.4253 3.76366 All 8.85513 regions 2.14647 will.88675 add more.297297 light-duty vehicles Global LDV fleet will likely grow by 8 percent AS OF AS OF 1.4421 3.73861 8.91286 2.3327.85241.316282 decline in U.S., other OECD through 24 DATA AS OF 9/1/215 Oct. 2, 215 from 2 214 to 24, reaching about Oct. 1.7 billion 3, 215 1.39284 3.7672 8.98661 2.44774.96479.34792 Non-OECD share of global light-duty demand Expanding middle class means "1" more APPROVED people BY "25" "4" APPROVED BY 1.41635 3.7938 8.86973 2.69118 1.48.386497 Non-OECD has only about one-third of LDVs OECD32 57277 65325 696132 rises from 4 percent now to 6 percent in 24 can afford cars Todd Onderdonk Todd Onderdonk 1.39972 3.7339 8.63797 2.87955 1.19235.422517 worldwide today but will likely China 58616 271184 41388 MOTORCYCLES account for "1" 1.41647 3.66737 8.5392 3.2731 1.19697.475538 Growth led by China, India whose fleet 1719 grows 56939 149339 about 8 percent of the increase to 24 China s LDV demand grows, then flattens as fuel XXA 15XOM EO- XXA 15XOM EO- "1" 1.4258 3.62375 8.81445 3.21 Key 1.38639 Growth.516558 94674 1947 296846 15 economy improves and car penetration slows 1.42575 3.58614 25 8.6153 percent 3.39874 to more than 4 million Rest 1.6411 of World.55348 LtDtyVhclDmndTrnds.ai Global motorcycle fleet is likely to 8972 133395 1925 LtDtyVhclFltByReg.a nearly double, TOTAL CARS 1.46187 3.49318 8.49948 3.62781 1.76999.566933 IN ENERGY OUTLOOK ON PAGE XXA reaching 1 billion by 24, led by India, IN ENERGY China OUTLOOK ON PAGE XXA LDV 1 demand outside the OECD and China will Around 225, China will pass the U.S. as the India 1.4819 3.44945 8.5956 3.69577 1.97296.6818 and Indonesia "15" grow about 5 percent nation with most LDVs 1. 1.48876 3.4456 8.7829 3.8386 2.15967.645316 NAME NAME 75 Todd Onderdonk About 9 percent of motorcycles are Todd in the Onderdonk non-oecd, 1. 1.45111 3.36862 8.98317 3.95555 2.32896.73167 8 China 1 1.484 3.2935 9.696 4.124 2.49247.738876 where car penetration is relatively low and motorcycles 1. Data list is used to drive the black and Data list is used to drive the black and 1. 1.36135 3.21788 8.89683 4.2267 2.6427.776174 white chart, which is then used as a offer an affordable alternative white chart, which is then used as a "2" 1. Key Growth template for the color chart. Bars and lines template for the color chart. Bars and lines 1.31273 3.1492 8.76232 4.3324 2.77193.81541 are cut and pasted from the black and are cut and pasted from the black and 6 1 white template and are highly accurate. white template and are highly accurate. 1.26544 3.613 8.51411 4.42225 2.8797.855583 However, the color chart is NOT linked to However, the color chart is NOT linked to 1. the database and is NOT driven by the the database and is NOT driven by the United States "2" 1.2266 2.97877 8.3729 4.49536 52.9671.898815 4 data; it is a piece of artwork buiilt by a data; it is a piece of artwork buiilt by a 5 1. human. Therefore, the editor needs to human. Therefore, the editor needs to 24 1.1851 2.9745 8.1473 4.5512 3.8779.943656 thoroughly proof the final artwork, not thoroughly proof the final artwork, not 1. 4 JUST the data list. JUST the data list. Europe OECD 1.15172 2.83922 7.99328 4.59356 3.18927.989642 25 "25" 1. VERSION FILE INFO CHART OWNER ATTENTION: OWNER Len Shelton Public and Government Affairs 2 22 24 VERSION FILE INFO CHART OWNER ATTENTION: OWNER "" Len Shelton Public and Government Affairs DA T
Light-duty vehicle fleet by type Billions 1.75 1.5 1.25 1..75.5.25 21 215 22 225 23 235 24 *Plug-in hybrid electric vehicles DATA AS OF 9/1/215 Hybrid vehicles become more commonplace by 24 Fleet Gasoline Diesel Nat Gas & LPG Hybrids Elec/Plug-in/Fuel Cell By 24, one "21" of every four 697191 cars on 15333 the world s roads 17775 3772 7 will be a hybrid "215" 82897 131933 22343 11955 95 "22" 925845 163268 339 313 498 Conventional "225" cars (primarily 13113 gasoline-powered) 174395 366 will 5856 9999 remain most "23" popular to 1113969 24 168826 41543 115864 21134 "235" 1118538 15165 4734 249211 4192 Plug-in electric "24" cars see 12875 modest gains; 137173 cost and 53477 458722 7125 functionality remain barriers Natural gas remains challenged as a fuel for most personal vehicles 175 15 125 1 Electric/PHEV*/fuel cell Hybrids Natural gas/lpg Diesel Gasoline Visit exxonmobil.com Global vehicle fuel efficiency Average mpg 75 5 25 Average liters per 1 kilometers 5 Fuel economy Consumption 21 22 23 24 75 Range Offset to High Cars AS OF and other LDVs to become more fuel-efficient through Oct. 27, 24 215 VERSION Range Low APPROVED 5 BY Average fuel economy will rise from 25 mpg 5 to about World Average Todd Onderdonk 45 mpg Average XXA 15XOM fuel consumption EO- will drop by half, to about 5 LtDtyVhclFltByTyp.ai liters/1 km 25 IN ENERGY OUTLOOK ON PAGE XXA 25 On-road fuel economy varies significantly by region FILE INFO CHART OWNER ATTENTION: OWNER NAME Todd Onderdonk Elec/Plug-in/Fuel Cell Data list is used to drive the black and white chart, 1which is then used 2as a 25 3354 template 5 for the color chart. Bars and lines 1 Hybrids are cut and pasted from the black and white template and are highly accurate. However, the color chart is NOT linked to 5 the database and is NOT driven by the data; it is a piece of artwork buiilt by a human. Therefore, 4 the editor needs to Nat Gas & LPG Subscribe exxonmobilperspectives.com thoroughly proof the final artwork, not Follow @exxonmobil JUST the data list. 4 Range Offset to High Len Shelton Public and Government Affairs 4 3 2 1 75 DATA AS OF 1/3/215 Consumption Low High Avg "1" 7.45 6.27 "1" 9.8 7.33 6.26 9.76 7.25 6.19 9.7 7.18 6.14 9.61 7.1 6.8 9.53 6.81 6.12 "15" 9.39 6.52 6.13 9.21 6.15 6.15 9 5.81 6.18 8.77 5.51 6.37 8.54 "2" 5.26 6.49 "2" 8.31 5.7 6.54 8.8 4.91 6.55 7.87 4.77 6.53 7.67 4.63 6.49 7.48 "25" 4.5 6.45 "25" 7.3 4.37 6.41 7.13 4.24 6.37 6.96 4.12 6.28 6.8 4.1 6.16 6.65 "3" 3.94 5.98 "3" 6.51 "35" 3.7 5.2 "35" 5.82 "4" 3.47 4.77 "4" 5.3 2 25 3354 25