Exxon sees oil use, carbon emissions soaring

The world's largest energy company says demand for fossil fuels will soar; sees little hope for corn-based ethanol.

By Steve Hargreaves, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- ExxonMobil delivered its annual long term energy forecast Tuesday, saying that it expects the world will use 60% more energy in 2030 than in did in 2000. But despite this spike in demand, the oil giant does not expect to see any increase in the use of renewable energy sources from 2006 levels.

Exxon (Charts) also said the amount of carbon dioxide in the atmosphere is expected to soar as a result, but that it would be far cheaper to limit carbon output by regulating power plants instead of vehicles.

Despite supply concerns, the company added that it foresees few problems bringing more oil and gas to market, and that the current price of oil is actually higher than it needs to be to bring oil to market.

In a presentation to analysts, Jaime Spellings said that worldwide economic growth is expected to outpace Exxon's projected energy demands.

"As the global economy grows, the demand for energy grows," he said. "But the curve is flattening. Developing and adapting energy-efficient technology is crucial."

Spellings singled out the car as one area ripe for more conservation technology, noting that recent advances in fuel economy had been largely offset by gains in vehicle weight.

He said the world would use fossil fuels to meet about 80 percent of its total energy demand in 2030, about the same proportion as today.

Hydro and nuclear power currently make up most of the remaining 20 percent.

Spellings said renewable energy, while growing rapidly, will continue to provide just several percent of the world's total energy needs by 2030.

He referred to slides saying that in 2005 it took 13 percent of the country's corn production to make the ethanol that accounted for just 2 percent of the country's gasoline demand.

He also said that ethanol's lower energy yield makes it generally more expensive than gasoline, even with oil at $60 a barrel.

Spellings said even cellulosic ethanol or ethanol made from sugar cane could not compete with gasoline on a cost basis.

"This provides some perspective on ethanol's prospects as an alternative fuel," he said.

Many people disagree with Exxon's take on renewable energy technologies, and forecast that renewables will make a much bigger contribution to the world's energy mix in the next quarter century.

Exxon and global warming

With rising energy use, Spellings said the amount of carbon in the atmosphere is expected to increase by 1.6 percent annually.

That would be a nearly 50 percent increase in carbon dioxide, the main global warming gas, from current levels.

"Rising CO2 emissions provide risks to society that could prove to be significant," he said.

Spellings again referred to charts showing that the cheapest way to control carbon emissions is through changes at power plants, not vehicles.

The charts said that by 2030 over 15 billion tons of carbon dioxide are expected to come from power plants, while only five billion tons is thought to come from "light duty transport."

Exxon said the cost avoiding a ton of carbon emissions is less than $50 for most using technologies like gas, nuclear or a coal plant that buries its carbon underground as opposed to a conventional coal power plant.

It said saving a ton of carbon by using cellulosic ethanol in light vehicles would cost over $100, while relying on hybrids would cost nearly $250 compared to a standard gasoline engine.

While acknowledging that power plants are indeed a problem, Daniel Becker, the Sierra Club's director for global warming, lambasted Exxon over its reasoning.

"They are using numbers to make a point, and that point is 'don't make us do anything, make others do it first,'" said Becker. "That is a very irresponsible position for the world's largest and most profitable company to take."

Exxon's enthusiasm for renewable energy, at least publicly, has always been a bit more restrained than some of its competitors like BP (Charts) or Royal Dutch Shell. (Charts)

Spellings, in response to a question as to whether he thought the world was moving to mandatory carbon caps, noted that Exxon already deals with mandatory carbon caps in many countries, and that it hasn't been too much of a burden.

Spellings said Exxon didn't buy into the theory of "peak oil," which argues that worldwide production rates are either declining now or will do so very shortly.

"From an engineering standpoint, we are very comfortable with being able to add to the resource base," he said.

The challenge, he said, was more political - getting access to the resources in countries that might have governments hostile to western oil companies.

But he said that Exxon's long term outlook assumes it will be able to get access in a free market system.

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.