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The discussion

On 3 February 2010, in the Residence Palace, European Voice hosted a discussion of the latest edition of ExxonMobil's 'Outlook for energy: a view to 2030' report.

Presented by Todd Onderdonk, senior energy advisor for ExxonMobil, the report outlines the company's projections for energy demand and production to 2030. The format included:  comments by Alan Riley from City University London, followed by questions and answers moderated by Simon Taylor, news editor at European Voice.

Photo: European Voice

Among the highlights of this year's edition: 

• Energy demand will be 35% higher than 2005 levels, most of this increased demand coming from developing countries.
  
• Although there will 300 million more cars on the road in 2030, energy demand for personal light-duty vehicles is not expected to grow above the current level of 20 million barrels oil equivalent per day (MBOED). This is due to higher fuel efficiency.
  
• Of the 1.125 billion personal-use cars, two-thirds of these cars will be gas-powered, one-sixth will be diesel-powered, and one-ninth will be advanced (hybrid, electric) vehicles.
  
• Energy demand will increase to over 600 quadrillion BTUs [ndr 175,000 terawatt-hours (TWh)]. Of this demand, 80% will be met with generation from fossil fuels, 70% of which will be coal and oil.
  
• Global CO2 emissions will increase by 25% over 2005 levels, all of this growth coming from non-OECD countries.
  
• Electricity use will double, expanding to 30,000 TWh, two-thirds of which will come from non-OECD countries.
  
• In Asian Pacific countries, however, over half of the nearly 120 quadrillion BTUs [ndr 35,000 TWh] demand for power generation will come from coal.
  
• OECD countries are projected to reduce CO2 emissions by 15% of 2005 levels. Significant additional reductions will need to take place to reach an 80% reduction of 2005 levels by 2050.

Photo: European Voice

The commentator, Professor Alan Riley from City University London, said ExxonMobil's report injected a “dose of reality” into a conversation too often plagued by questions of “what should we do” at the expense of “what is possible given where we are”.

Alan Riley urged developed countries not to overlook that 1.5 billion people currently live without access to electricity. Additionally, he cautioned that number is more likely to increase than decrease.

He offered a sobering assessment of the capital investment required for significant changes to the current energy infrastructure. A single nuclear plant takes ten years to bring on line, he observed.

Riley emphasized the importance to Europe of the expansion of drilling for unconventional gas in permeable rock. The concentration of unconventional gas in countries outside Europe could lead to an increase in the supply of gas coming in to Europe from the outside.

In the ensuing discussion, questions touched upon the prices of oil and gas and their likely evolutions, the future of electric cars and the factors which could stimulate a de-carbonisation of energy.

Onderdonk and Riley were reluctant to offer precise forcasts of the future price of oil, but did confess that they would be hugely surprised if the cost reached $150 per barrel again. Expected diversification of energy sources and technological developments should play a role in stabilising oil prices in the face of growing demand.

When asked by Matt Hinde, from the permanent representation of the UK to the EU, about the relatively modest penetration of electric cars in ExxonMobil's market forecasts for vehicles, Onderdonk replied that projections had been increased because of the growing interest in electric vehicles. Penetration, however, would ultimately depend on the ability of these new technologies to lower their costs. Alan Riley added that fully electric cars would have to compete for quite some time with combustion engine cars benefiting from ever improving technology. They might turn out “a favourite in the race which never makes it to the starting line".

Asked by Yuriy Vitrenko from Naftogas Urkaine about the future of the gas market in Europe, Riley predicted that the changing energy exploration and production landscape would accelerate a decoupling of oil and gas prices in the medium and long term, which would improve energy security for Europe. This might prove an opportunity for neighbouring countries such as Ukraine and Russia to modernise their infrastructure, he said.

Photo: European Voice

The last part of the debate focused on the relative efficiency of emission trading schemes (ETS) compared with a carbon tax to accelerate a shift towards greener technologies. Frank Bao from RWE challenged Riley on his preference for a carbon tax. Riley said it created less distortion in markets and was less susceptible to political interference, a point of view shared by Onderdonk. Maria-Rosa Virdis from the European Commission gave the rationale for choosing an ETS over a tax: institutional arrangements in the EU made a unified carbon tax impossible to implement, and the ETS allows a cap to be set on total emissions, i.e. a measurable objective.