Part 1: Ramping Energy Demand Clashes with UN’s Environmental Goals

May 22, 2023 | Macro Insights, No Bull Economics

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From 2021 to 2050, ExxonMobil forecasts that 85% of the population growth will be driven by developing countries, which in turn, will drive a +15% increase in energy demand. While Exxon’s outlook projects efficiency gains that will reduce energy use per capita in developed countries, developing nations are expected to increase energy use per capita as they pursue improved living standards.

Commentary

  • Energy and human development are tightly linked, according to ExxonMobil. Between now & 2050, the world population is expected to grow to almost 9.7B from 7.8B (up +24%) while GDP is expected to more than double as undeveloped countries begin to modernize.
  • Billions of people in developing economies are expected to see their incomes grow, translating to more demand for electricity as well as for homes, transportation, consumer goods, and the energy to power them (many across the globe will have access to reliable energy for the first time).
  • Notably, the UN’s Intergovernmental Panel on Climate Change (IPCC) goal to reduce the global temperature by -2°C requires that the total primary energy demand on a worldwide basis will only marginally increase, from zero to 0.4% per year on average from 2010 to 2050, based upon the assumption that energy efficiency improvements would almost entirely offset population & economic growth.
  • However, even if it is possible to attain these energy efficiencies, the -2°C goal will also require a complicated & extraordinarily expensive pivot to clean fuels to replace the use of traditional fossil fuels.
Exxon Energy Outlook Graph

Source: 2023-advancing-climate-solutions-progress-report.pdf (exxonmobil.com)

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