Oil giant Exxon has broadly accepted the science behind climate change and global warming. It does not, however, regard the Paris Climate Agreement or any future climate regulations as an impediment to its operations.
The simple – and undoubtedly true – reason for this is fundamentally depressing: even concerned environmentalists are not prepared to make the necessary changes to their lifestyles that switching from fossil fuels to renewables would entail. More importantly, the wider public would recoil in horror from any serious consideration of the sacrifices involved in rapidly ceasing to use fossil carbon fuels.
Exxon’s calculation that the general public is simply not prepared to cut our energy use in any meaningful way is reflected in their 2017 energy outlook. According to the report, the global energy mix in 2040 will not look much different to the mix today:
Coal use will have declined significantly, with gas and nuclear taking up the slack. Wind and solar will grow dramatically, but from so low a base that they barely affect the overall energy mix; most likely taking over from older renewables like hydroelectric. Gas looks set to be the big growth fuel, taking the place of coal in electricity generation and oil in chemicals and fertilisers.
Although the proportion of oil in the overall energy mix may fall slightly, Exxon does not see any viable alternative to oil in the transport sector:
Gas and electric powered vehicles will grow, but not as rapidly as global transport needs as a whole, so that overall oil consumption will grow. Indeed, this is the story across the economy. In residential/commercial, industrial, and especially electricity generation, renewable energy will be needed as an addition to fossil carbon fuels rather than as a replacement for them.
In practice, the Exxon report is an exercise in wishful thinking… but not in a good way. Like so many forecasters in so many areas of life, Exxon simply assume that tomorrow will be much the same as today, only bigger. They assume early twenty-first century economic growth will continue along the same trajectory as late twentieth-century growth (taking the crash of 2008 as a temporary interruption). They ignore the economics of energy altogether, merely assuming that we can replace cheap and abundant fossil carbon fuels with expensive and scarce ones without having a significant impact on global demand.
This is fanciful to say the least. The one thing that the experience of US fracking has shown us is that “Goldilocks is dead.” Energy companies need an oil price above $75 a barrel to make unconventional oil break even. But oil at $75 per barrel causes a recessionary collapse in demand. It is this, rather than climate campaigning or renewable energy technology that will finally wean humanity off our addiction to fossil carbon… not because we will choose to give up our cars, our flights abroad, our central heating and air conditioning, our social media or our demand for cheap consumer goods and services. Only when spiking oil prices render these things unaffordable will we wake up to the follies of our unsustainable lifestyles. By then, of course, it will be too late.