ExxonMobil says climate regulations to sharply cut oil demand by 2040

Fossil fuel major ExxonMobil Corporation has predicted that it expects global oil demand to drop sharply by 2040 if regulations aimed at limiting the impact of greenhouse gas emissions on climate are fully implemented.

Under this scenario, ExxonMobil projected world oil consumption would drop 0.4 per cent annually to 2040 to about 78 million barrels per day (bpd).

Reuters Newsagency reports that is about 25 per cent below current levels, which the United States Energy Information Administration puts at 98 million bpd.

The findings were contained in a report produced after ExxonMobil’s shareholders supported a climate-impact resolution last year and ExxonMobil’s board approved a plan to analyse the effects.

ExxonMobil’s climate-impact report comes roughly three years after almost 200 nations met and agreed the United Nations sponsored Paris Agreement to set a goal of limiting the rise in the world’s average surface temperatures.

President Donald Trump has since pulled the US out of the Paris Agreement, and it was unclear whether Paris Agreement policies would be fully implemented around the world.

The study added weight to arguments that laws and regulations to limit the rise in global temperatures to below two degrees Celsius from pre-industrial levels will succeed in curbing fossil fuel consumption.

Reuters reports ExxonMobil stopped short of laying out how efforts to limit carbon emissions could impact its business, data long sought by some shareholders.

In a separate report just published that did not take into account climate legislation, Exxon forecast population growth would drive oil demand higher by about 20 per cent by 2040.

That report said global carbon dioxide emissions are likely to peak by 2040, at about 10 per cent above 2016 levels, as consumption shifts to lower-emission natural gas, renewable energy and nuclear.

Exxon’s study saw demand for natural gas, considered a cleaner-burning fuel than oil, growing 0.5 per cent a year to about 445 billion cubic feet per day under the same scenario.

Demand for power generated by solar panels, wind turbines and other renewable sources is expected to rise 4.5 per cent annually through 2040 under this scenario, ExxonMobil said.

The report followed years of pressure by investors and environmental activists urging the company to describe the potential impact of a warming climate on its operations.

Last year, their climate-impact resolution was backed by 62 per cent of shares voted at ExxonMobil’s annual meeting.

The report came the same day that Exxon posted quarterly results that disappointed Wall Street, sending its shares down more than five per cent.

While sponsors of the shareholder resolution applauded Exxon for being more transparent than in years past, there was still frustration that the company did not disclose how climate policies would affect its finances.

“That is the meat that we’re missing in the sandwich here,” said Tracey Rembert of Christian Brothers Investment Services, a co-sponsor of the climate-impact resolution.

A spokesman for New York State Comptroller Thomas DiNapoli, who oversees state pension funds and was a resolution sponsor, said via e-mail: “We are looking at ExxonMobil’s report closely and look forward to discussing it with the company in the coming days.”