ExxonMobil projects sharp drop in global oil demand under Paris Accord

Exxon Mobil Corp said yesterday that it expects a sharp drop in global oil demand by 2040 if regulations aimed at limiting greenhouse gas emissions on climate are fully implemented.

Under this scenario, Exxon's projected world oil consumption will drop 0.4 per cent annually by 2040 to about 78 million barrels per day (bpd), about 25 per cent below current levels, which the US Energy Information Administration puts at 98 million bpd.

The findings form part of a report produced after Exxon's shareholders last year supported a climate-impact resolution and Exxon's board approved a plan for analysing the impact.

According to commentators, the company's climate-impact report, "Energy & Carbon Summary" comes around three years after almost 200 nations met in Paris to set a goal of capping the rise in the world's average surface temperatures.

President Donald Trump later pulled the US out of the Paris climate accord, and it remains unclear whether the Paris accord policies would be fully implemented around the world.

The study lends weight to arguments that laws and regulations aimed at capping the rise in global temperatures to less than 2 degrees Celsius (3.6 degrees Fahrenheit) from pre-industrial levels will succeed in cutting fossil fuel consumption.

According to the company's projections, global oil demand would fall by 0.4 per cent a year by 2040 to help meet the Paris climate accord's goals.

As per the company's projections, renewables and natural gas will play larger roles to meet rising global energy demand, while crude oil and coal consumption will fall.

The company expects current global oil demand to fall from 98 million barrels a day to 78 million barrels, a major drop from current consumption. Demand for cleaner-burning natural gas would grow by 0.9 per cent a year, the study projects.

However, in reality, global oil demand continues to rise even as natural gas consumption grows closer to 1.5 per cent a year, according to the US Energy Department.