Download our analysis of the ExxonMobil Outlook here
On the day government ministers landed in Lima, Peru, for the COP20 climate talks, ExxonMobil suggested they might as well all go straight back home.
The company’s economists have done their calculations and found that fossil fuels will continue expanding for the coming decades. So the ministers are wasting their time trying to save the climate.
Today ExxonMobil released its Outlook for Energy, which it has published annually since 2005. It predicts that oil and gas use will expand throughout the period to 2040, and oil will remain the world’s largest fuel source.
In the past, most international climate summits haven’t given oil companies very much to fear. But this time round they may be getting more nervous, with proposals on the table to phase out fossil fuel emissions by 2050.
The good news? ExxonMobil’s outlook is not a forecast; it’s the company’s fantasy. This became clear as we looked deeper into the numbers.
ExxonMobil has got its forecasting wrong before. In its first Outlook in 2005, it predicted wind and solar would provide 1% of the world’s energy by 2030. Wind and solar achieved this share in 2012, after 7 years rather than 25. The world’s use of those two clean energy sources has grown rapidly, by an average rate of more than 25% per year.
So ExxonMobil won’t make the same mistake again, right? Wrong. The company is predicting growth of just 7% in wind and solar use from 2010 to 2025, leading to a market share of just 2% in 2025 and 3% in 2040.
ExxonMobil is expecting this crash in growth rates just at the time that the new technologies are becoming cost-competitive with natural gas, coal and nuclear. For example, wind and residential solar are already as cheap as gas power in Japan, the USA and much of Europe.
While wind and solar are used in power generation, oil is used mainly in transportation. So the technological challenge to oil is from electric vehicles (EVs).
Like renewables, EVs are getting rapidly cheaper. Given improvements in battery technology, investment bank UBS projects that EVs could be cost-competitive with oil-fuelled cars by 2020, even without subsidies.
In last year’s outlook, ExxonMobil took a different view, expecting batteries to stay costly, and EVs to make up only 5% of the vehicles on the road by 2040. This year, same conclusion, for a different, unspecified reason: “Even though battery costs are likely to fall in coming decades, electric vehicles will continue to face significant challenges as other alternatives also improve.” Which alternatives? A technology so advanced they can’t even tell us what it is…
There is another huge assumption behind ExxonMobil’s outlook: governments won’t take any significant action on climate change. Not just at the current conference in Lima or in Paris next year, but for the next two decades.
Responding earlier this year to the latest science on what’s needed to keep warming below an average of 2°C, the company said, “the scenario where governments restrict hydrocarbon production in a way to reduce [greenhouse gas] emissions 80 percent during the outlook period is highly unlikely”.
That’s one hell of an assumption. It neglects the political impacts of more property damage, and of disruption to food production and water supplies. It neglects the political impacts of increasing numbers of economists, military leaders and even some corporations calling for action to stop climate change. And, most important, it neglects people power: we saw it in the streets of New York in September, and we are only going to see it grow.
ExxonMobil’s forecast can only be correct if all three of those assumptions turn out to be right: the growth of renewables crashes, advances in batteries stall and governments take negligible action.
The reality is that ExxonMobil is not trying to give a realistic picture of the future; it is describing the future it wants to see. It knows that its best chance of derailing climate action is to make fossil fuel dominance look inevitable.
It was with this in mind that ExxonMobil first published its Outlook for Energy in 2005, according to Steve Coll’s book Private Empire. Research by ExxonMobil’s public relations department identified a target audience for the outlook, which it labelled ‘informed influentials’: policymakers, thinktanks, financial analysts and economists. But will they still believe the company?
With renewables steaming ahead and climate change on everyone’s mind, ExxonMobil looks increasingly desperate.
Exactly — they are visioning the world they wish to see — and we need to change that by demanding and forcing a serious carbon fee and rebate to be passed in the U.S. at the federal level in two years, to cut into their profit margins. They (ExxonMobil) are charging an internal carbon tax. They know it’s coming but we need to wake up the people to make it actually happen. So wake up!
As an Exxon Mobil shareholder (for historical reasons), I find Exxon’s conduct reprehensible. Since I am not wealthy and need to watch out for my assets, I fear that I do not own Exxon; it owns me. I am sure that many people of conscience
are in the same position. If we begin to divest, and reinvest in renewables, perhaps the drop in stock values will motivate large investors to pressure the corporation to change course.
I welcome opinions.
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