The global population is expected to reach a staggering nine billion over the same period, but it isn't population growth that will drive the increase in energy demand. Instead, rising affluence and higher living standards in regions such as Africa, Latin America, the Middle East and India will be the biggest factors. ExxonMobil says this is due to "the human desire to sustain and improve the well-being of ourselves, our families and our communities."
This new affluent class of people is expected to fuel a dramatic increase in the number of households around the world—rising 50% to 2.8B by 2040. ExxonMobil says growth will be particularly strong in Africa, China, India and Latin America. These areas will account for about 60% of all households in the world by the end of the forecast. Additionally, the number of personal vehicles is expected to double to 1.6B vehicles worldwide.
Today, roughly 1.3B people, one-fifth of the world's population, lacks access to electricity and these new households will need energy for lighting, heating, cooking, hot water, air conditioning and refrigeration, ExxonMobil says. Filling this gap will lead electricity generation to be the fastest-growing source of energy demand through 2040, up around 80%. Other main sources of demand growth for electricity will come from industrial and commercial sectors.
While China is forecasted to remain the world's largest user of industrial energy, ExxonMobil says the country will see a peak in energy demand around 2030. Meanwhile, Africa and India will become the two main drivers of new demand over this time period as the number of households, retail stores and other commercial activities in those regions increases dramatically. Industrial demand for energy in India is expected to triple by 2040.
The total amount consumed isn't the only area of the energy sector set to experience changes in the coming decades. ExxonMobil also says "investments and new technologies, applied over many years and across multiple regions, will enable energy supplies to grow and diversify." While oil will remain the world's top energy source, natural gas will be the fastest-growing major energy source, with combined global demand rising about 60% from 2010 to 2040.
After peaking around 2025, demand for coal will experience its first long-term decline since the start of the Industrial Revolution as OECD countries and China shift toward lower-emitting sources of energy. However, oil, natural gas and coal will still account for about 80% of the world's energy demand in 2040.
These are extended projections, and in today's rapidly developing world, there will certainly be temporary setbacks and unforeseen events that could affect whether ExxonMobil's forecast holds true. However, when the world's largest energy company offers you a glimpse into where they believe the market is headed, you should definitely take notice.
Read ExxonMobil's Outlook for Energy
Frank Holmes, U.S. Global Investors
