Energy Musings - September 2, 2025

New energy forecasts for 2050 show a greater role for oil and natural gas but a reduced role for coal. Renewable energy's share increases. Shock: IEA quietly revamps its energy policy!

The Changing Outlook For Energy

Three interesting developments occurred in outlooks for long-term energy markets last week.

First, ExxonMobil released its Global Outlook to 2050. It reflects the company’s view on the evolution of global energy markets over the next 25 years, and it guides ExxonMobil’s business strategy. Interestingly, the company also presented a review of how their 2015 forecast for energy markets in 2024 performed. This is something few forecasters offer. In many cases, they hope you don’t go dig up their prior forecasts.

Secondly, European energy research firm Thunder Said Energy wrote in its daily email that it had reviewed all its research for the year to date and, as a result, had revised the firm’s outlook for 2050 power consumption by fuels. Like ExxonMobil, Thunder Said Energy upgraded its projected consumption of oil and gas, while reducing its wind energy projection. They held firm on their projection for solar power’s contribution.

Probably the most significant was the final development. It was the decision by the International Energy Agency (IEA) to reintroduce its Current Policies Scenario (CPS) forecasting model in its flagship World Energy Outlook report. This is a significant policy reversal, which comes after numerous nations, including the United States, Japan, Korea, and Canada, have challenged the reality of the Stated Policies Scenario (STEPS). Moreover, it was an acknowledgement that basing projections on the aspirations of governments results in failed forecasts.

The switch from CPS to STEPS came in 2019. CPS was often referred to as “Business as Usual.” CPS uses policies and regulations as written without assuming that those with end-dates will automatically be extended. STEPS has been criticized for its forecast tilt in favor of using more green energy and less fossil fuels.

Earlier this year, Robert McNally, president of energy research firm Rapidan Energy and former energy advisor for President George W. Bush, wrote an op-ed for the Wall Street Journal. He slammed the IEA for being “neutered” by “climate politics.” He wrote that the EIA’s energy modeling is posing “significant risks” to global energy systems by encouraging underinvestment in oil and gas, thereby undermining “its vital security mission.”

A former IEA official noted, in an email exchange with us, that the IEA was referring to “energy security” more frequently in its public announcements. He reminded us that energy security was the original mandate of the IEA when it was established in 1974. The agency was created to assist Western nations in managing the limited oil supplies available during the Arab Oil Embargo.

It will be interesting to see what the IEA foresees about future oil demand (still peaking in 2030?), given the policy switch. Will the IEA back off from its frantic table-pounding for a rapid transition from fossil fuels to renewables?

ExxonMobil’s Outlook

Looking at the energy world’s progress to 2050, ExxonMobil sees renewables growing the fastest, while coal is expected to decline the most. This appears to be consistent with the conventional view of future energy market developments. The question is the pace of growth and decline. Notably, ExxonMobil projects that crude oil and natural gas will still account for more than half of global energy consumption in 2050, just as they do today. The rising living standards of developing economies drive a 25% increase in their energy consumption, which, in turn, contributes significantly to the growth in global energy demand.

Rising living standards will necessitate increased output from industries and higher transportation demand, both of which will require more energy. The good news is that ExxonMobil projects global carbon emissions falling by 25%, but the pace of any energy transition will depend on affordability. Their final key point was that “Sustained oil and natural gas investment is more important than ever,” a point that Exxon Mobil Chairman and CEO Darren Woods makes every time he meets with the public and the media. Failure to invest sufficiently in finding and developing more oil and gas guarantees that it will take much higher oil prices to entice the necessary investment in the future. This point goes to the earlier observation about the importance of affordability in driving the energy transition.

We were fascinated to read the accounting of ExxonMobil’s projections for the 2024 energy market based on its 2015 outlook. We reflected on the world of 2015 as we reviewed the company’s assessment. Oil prices had just crashed after peaking at about $100 per barrel in mid-2024. The phrase “Lower for longer” was the guiding view of the oil industry’s future oil price outlook. The world’s economy was performing well, as it was more than half a decade beyond the Great Financial Crisis. China’s economy continued to grow, which helped boost global oil demand. However, rising oil output, aided by the emergence of the U.S. oil shale revolution, left Saudi Arabia struggling to retain its market share. Fear of losing its market share in Asia is what prompted Saudi Arabia’s willingness to open its export spicket and crash oil prices.

In its review, ExxonMobil presented a chart showing that fuel shares had remained relatively stable from 2015 to 2024, while total use increased. The chart included commentary on significant economic and market events impacting global energy consumption. This chart visualized the remarkable stability of the fuel mix, despite the rhetoric that an energy transition was underway.

Shares of energy fuels have remained stable over the past decade.

Equally impressive was the ExxonMobil 2024 projection scorecard. Of the nine fuel shares projected in 2015, the ExxonMobil outlook only missed on three – both biomass/other and nuclear shares were one percentage point lower than predicted, while solar/wind’s share was two percentage points higher. That is quite impressive for a decade forecast, especially considering the energy market operates under a multitude of geopolitical, economic, and environmental pressures.

ExxonMobil did well in forecasting fuel market shares a decade later.

What does ExxonMobil think about the global energy mix over the next decade? A single chart showed their projection for fuel mix in 2050 compared to the actual mix in 2024. They also presented two other long-term projections: the IEA’s STEPS and a forecast from the Intergovernmental Panel on Climate Change (IPCC), which uses its model to limit global temperatures from rising more than the 2ºC average temperature increase.

Fossil fuel’s share of energy shrinks as renewable energy grows.

In 2050, ExxonMobil projects that oil and natural gas will supply more than half of total energy, while coal, the third fossil fuel, will see its share decline substantially. It also foresees a much larger share of total energy coming from non-biomass renewables, primarily wind and solar. Apart from those fuels, the comparison between ExxonMobil’s outlook and that of the IEA STEPS projection is similar.

Oil demand plateaus but does not collapse like other scenarios.

This chart illustrates ExxonMobil's projections for each fuel’s contribution to change over the next quarter-century. It projects oil reaching ~105 million barrels per day (MBD) by 2050, up from around 100 MBD today. Natural gas is projected to grow to ~500 billion cubic feet per day by 2050, representing a 20% increase from current levels. The growth of natural gas will help reduce the need for more coal.

The ExxonMobil Outlook’s projection for oil and gas demand is driven by industry and commercial transportation needs, which, combined, make up 75% of global oil demand, more than 40% of natural gas demand (excluding off-site electricity), and ~50% of electricity demand in 2050.

ExxonMobil also sees global electricity growing 70% by 2050. Rising living standards in developing countries drive growth. Solar and wind generation is the primary beneficiary of electricity growth. The use of those fuels is projected to increase more than fourfold, from <15% of the world’s electricity generation to >40%.

The differences between ExxonMobil’s Outlook and the IEA STEPS projections compared to the IPCC scenario are significant. The primary differences are that the IPCC projects less than a third of the coal’s share projected in the other scenarios, and significantly less use of oil and natural gas. On the other hand, the IPCC is counting on a dramatically greater share of total energy coming from wind, solar, and bioenergy fuels than the other scenarios.

We will be interested in seeing the IEA’s next 2050 energy market projection following its policy shift to the CPS model. While the chart showed how similar ExxonMobil’s and the IEA’s STEPS outlooks are, we suspect the IEA’s CPS forecast will be even closer to ExxonMobil’s.

Thunder Said Energy’s Outlook

As we were wading through the ExxonMobil Outlook report, we were interested in Thunder Said Energy’s note that it was revising its 2050 energy outlook based on the firm’s energy research conducted in 2025. They conduct detailed research into the technologies being touted as solutions for a rapid global energy transition. Their research is based on exploring the economics and feasibility of technologies that are being relied upon in meeting the projections.

Thunder Said Energy presented their forecast in the following chart. The firm uses an electricity measure to forecast global energy needs. Based on its research, the firm is skeptical of the dramatic increases in power demand predicted for AI and data centers, at least at the assumed pace.

Another forecast predicts that fossil fuels will be needed in 25 years.

When we calculate fuel shares in 2050, Thunder Said Energy’s forecast calls for a slightly greater share for oil and gas than in the STEPS projection. In percentage terms, the firm sees oil use growing by 6% and natural gas consumption increasing by 5%. Solar power output is unchanged, but wind falls by 30%. It sees 50% more non-biomass renewables and a two-thirds less coal share compared to STEPS.

Thunder Said Energy predicts that global energy consumption, measured in terawatts of electricity, will grow at about 2% per year until 2050. In its revised forecast, the firm increased its shares from oil and natural gas, while lowering its share from wind power. They are optimistic about solar’s role in the future global energy mix, based on its economic advantages compared to wind, along with technological improvements in solar panels and equipment.

The reason for their upgrading oil’s share is because of their extensive global data and research into the current and future economics of electric vehicles compared to internal combustion engine cars and trucks. This research leads the firm to halve its prior EV forecast. That is a huge change! We suspect that some of the reduction is due to the market success that hybrid vehicles are having compared to battery electric vehicles. Hybrid vehicles require the continued use of gasoline and diesel, as well as increased electricity. The hybrid success has been noted and is being supported by leading global automobile manufacturers and energy producers.

We were interested in Thunder Said Energy’s view of the liquefied natural gas (LNG) market. They see global consumption increasing by 2.5 times, from 400 million tons per year in 2024 to nearly 1,100 million tons in 2050. The consumption increase raises LNG’s share of total energy from 13% to 23%.

The global LNG increase will primarily come from the Middle East and the United States, with a small contribution from Australia and Africa. Russia is also expected to increase its LNG shipments, likely from its Arctic LNG plants. Russia just delivered its first cargo of Arctic LNG to China, demonstrating the political alignment of these two adversaries of the U.S.

The U.S. and Middle East prosper from global LNG demand growth.

Increasingly, energy producers and energy forecasters are recognizing the growing importance of natural gas for generating electricity and supplying economies with fuel for industrial processes and home heating. These needs are growing worldwide, and the increased use of gas helps reduce carbon emissions.

To the shock of climate activists, the physics and economics of energy are proving the fallacy that a massive switch from fossil fuels to renewables will produce a cheaper and reliable energy system. Consumers are pushing back on this strategy as they discover the increased costs in their energy bills and an increased frequency of blackouts and brownouts.

As companies, regulators, and governments back away from the green agenda, every company involved in our global energy systems is being forced to reassess its prior energy forecasts. That is the first step necessary for them to revise business strategies and energy policies. That activity is underway, and we expect to see announcements of more revised energy outlooks. We remind readers of Energy Musings that some of the leading energy consultants who have been cheerleading for the energy transition have begun to acknowledge that such an event is not happening. The green energy tide is shifting.