Oil and natural gas will still make up more than half of the world’s energy mix in 2050 despite efforts to transition away from fossil fuels, according to a forecast published by Exxon Mobil on Monday.
Fossil fuels currently represent about 80% of the world energy mix, according to the Paris-based International Energy Agency. Oil demand will plateau after 2030 but remain roughly at current levels of more than 100 million barrels per day through 2050, according to Exxon’s forecast.
Stubborn oil and gas demand jeopardizes the goal of achieving net-zero carbon dioxide emissions by 2050 to keep global warming at 1.5 degrees Celsius. The IEA has said the pathway is narrowing to achieve the world’s climate goals.
Demand for oil to make gasoline will decline over the next 25 years, but fuel for cars is only a portion of total crude consumption, according to Exxon. The majority of crude is used for manufacturing, chemical production and heavy transportation such as aviation, according to the company. This will also be the case in the future, according to the forecast.
The oil major projected that oil demand would remain at 85 million bpd in 2050 even if every new car sold in 2035 is an electric vehicle. That’s roughly the same level of demand as in 2010.
Renewable energy sources are growing quickly, with global capacity increasing 50% in 2023 compared to the prior year, according to the IEA. Electric vehicle sales could reach 17 million this year, according to the organization.
The oil industry has pushed back against curtailing production to meet climate goals. Saudi Aramco CEO Amin Nasser said in March that the energy transition is failing, calling the idea of phasing out oil and natural gas a “fantasy” as demand continues to rise in emerging economies.
Exxon said investments in new projects are needed to keep pace with global demand. The shift to extracting crude from shale formations, which decline more quickly, means production would naturally fall at a rate of 15% annually, according to the oil major.
Exxon warned global oil supplies would fall dramatically if investment in new production comes to a halt. This would cause a supply shock, soaring energy prices and an economic crisis, according to the company. With no new investment, global oil supplies would decline by more than 15 million bpd in the first year, according to Exxon.