Climate and Energy: A View to 2040 Peter W. Trelenberg

Manager, Environmental Policy and Planning

June 8, 2017

ExxonMobil Annual Outlook for Energy

0

250

500

750

Quadrillion BTUs

1.4%

-0.1%

OECD Non-OECD Total

2040

2015

Average Growth/Year 2015 to 2040

0.9%

0

50

100

150

200

250

Oil Natural Gas

Coal Other Renewable*

1.5%

-0.1%

2.6%

Nuclear

0.7% 2040

2015

Solar & Wind

5.8%

0.6%

Source: ExxonMobil 2017 Outlook for Energy: A View to 2040. * Includes hydro, geothermal, bio-energies.

• Developing nations will lead gains in GDP, energy use, driven by growing middle class

• Energy demand grows by 25%, well below GDP due to efficiency gains

• Oil and natural gas expected to meet about 55% of energy demand in 2040

• Lower GHG sources of energy expected to grow fastest

Global Energy Demand

0

10

20

30

40

2000 2020 2040

Energy-Related CO2 Emissions by Region

Billion Tonnes

CO2 Emissions Plateau Energy-related CO2 Emissions Peak in 2030s

Rest of Non OECD

OECD

Sources: ExxonMobil 2017 Outlook for Energy; UNFCCC COP21 Synthesis Report 2015, EM analysis

Range of 3rd party estimates of Paris

submissions

China

India

The 2°C Challenge

0

10

20

$0K $25K $50K

South Korea

0

10

20

$0K $25K $50K

0

10

20

$0K $25K $50K

0

10

20

$0K $25K $50K

Sources: EIA International Energy Statistics, ExxonMobil 2015 Energy Outlook; GDP per capita is PPP, constant 2005 $

GDP per Capita

CO2 Emissions and GDP per Capita 1980-2011

Tons CO2

per capita Non-OECD

2050 2°C scenario

2100 2°C

scenario

2015 Global Average 2°C Requires Immediate and Rapid Decarbonization

0 1 2 3 4 5 6 7 8 9 100 1 2 3 4 5 6 7 8 9 100 1 2 3 4 5 6 7 8 9 10

Moderate Mitigation Reduces Tail Risk

Sources: MIT Joint Program, Analysis of Climate Policy Targets Under Uncertainty, Webster, Sokolov, Reilly, et al, Sept. 2009

Probability Distribution of Temperature Increase 2000 to 2100

Average Global Surface Temperature Increase

No policy beyond 2005

450 ppm CO2

2°C Case

650 ppm CO2

°C

Significant Tail Risk Reduction

Options to Lower CO2 Emissions

Coal Natural Gas

Oil

Nuclear

Hydro

Biomass Renewables

• Efficiency • Fuel switching to natural gas

• Efficiency • Fuel switching to natural gas

• Efficiency • Fuel switching to natural gas

• Efficiency • Fuel switching to natural gas

• Electrification

• Electrification

• Electrification

• Carbon Capture and Storage

• Carbon Capture and Storage • Biofuels

• Biofuels

• Nuclear • Hydro, biomass, solar, wind, geothermal

• Biofuels

Source: ExxonMobil Energy Outlook 2017

0%

5%

10%

15%

20%

1960 1970 1980 1990 2000 2010 2020 2030 2040

Non-Carbon Share of Energy Flat Since Early 1990s

Modest Growth Anticipated Through 2040

Sources: 2017 ExxonMobil Energy Outlook; IEA World Energy Outlook 2015; MIT 2014 Energy & Climate Outlook

Hydro

Nuclear

Geothermal

Solar, Wind, & Bio

IEA New Policies MIT

2016

Non-Carbon Share of Energy

Excludes primitive biomass

Hydro

Nuclear

Geothermal Solar, Wind, & Bio

0%

5%

10%

15%

20%

25%

30%

1960 1970 1980 1990 2000 2010 2020 2030 2040

Hydro

Nuclear

Geothermal

Solar, Wind, & Bio

EM EO

IEA 450 “2°C”

IEA New Policies MIT

Non-Carbon Share of Energy Flat Since Early 1990s

Modest Growth Anticipated Through 2040

Sources: 2017 ExxonMobil Energy Outlook; IEA World Energy Outlook 2015; MIT 2014 Energy & Climate Outlook

EM EO

2016

Non-Carbon Share of Energy

Excludes primitive biomass

Complexity and Scale Limit Rate of Transformation

Source: IPCC AR5 WG3, Ch 10 (2014)

0

20

40

60

80

100

120

2015 2040 2040 Demand 2040 Demand by Sector

All Scenarios Require Reinvestment

Liquids Supply/Demand, Moebd

Source: Based on IEA sources, excludes biofuels

Existing Supplies

Natural decline in absence of further

investment

Existing Supplies

+87 Moebd

IEA New Policies

Scenario

Passenger Vehicles

Commercial Transport

Industry

Buildings

Other

Power

+57 Moebd

IEA 450 Scenario

0

500

1000

1500

Gas Oil Coal

Resources

Optimizing Carbon Budget – Advantages of Natural Gas vs Coal

Contained Carbon

Source: Kheshgi et al., Global Biogeochemical Cycles, 2003; IEA WEO, 2014; IPCC AR5, 2014

GtC

Reserves

No Carbon Capture No Reforestation

0

5

10

15

2000 2100 2200 2300

0

5

10

15

2000 2100 2200 2300

0

5

10

15

2000 2100 2200 2300

0

5

10

15

2000 2100 2200 2300

Emissions, GtC/yr

Remaining Carbon Budget

Remaining Carbon Budget

Remaining Carbon Budget

~2020

~2050

~2075

Peak Year

650 ppm 450 ppm

1000 ppm

0

4000

8000

12000

Gas Oil Coal

Optimizing Carbon Budget – Advantages of Natural Gas vs Coal

Source: Kheshgi et al., Global Biogeochemical Cycles, 2003; IEA WEO, 2014; IPCC AR5, 2014

0

5

10

15

2000 2100 2200 2300

0

5

10

15

2000 2100 2200 2300

0

5

10

15

2000 2100 2200 2300

0

5

10

15

2000 2100 2200 2300

Emissions, GtC/yr

Remaining Carbon Budget

Remaining Carbon Budget

Remaining Carbon Budget

~2020

~2050

~2075

Peak Year

650 ppm 450 ppm

1000 ppm

Coal

Natl Gas

NOx SOx Particulates

85% 99.98% 99.8%

Mercury

100%

CO2

57%

Emissions Comparison

Reduction

Coal

Nat.Gas

-50

50

150

250

ImprovedGasolineVehicles

Gas intoPower

Nuclear HybridVehicles

CarbonCapture and

Sequestration

Wind E85(corn)

Solar Electric Cars

Relative Cost of CO2 Emission Reduction Options Average U.S. CO2 Abatement Costs – Transport and Power

2016 - Dollars per tonne 500+

Source: ExxonMobil Energy Outlook 2017, EM Calculations

Carbonate Fuel Cell

Technology Helps Us Do More With Less

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1970 1980 1990 2000 2010 2020 2030 2040

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1970 1980 1990 2000 2010 2020 2030 2040

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1970 1980 1990 2000 2010 2020 2030 2040

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1970 1980 1990 2000 2010 2020 2030 2040

Global Average Intensity

Index

2015

Energy / GDP

CO2 / Energy

CO2 / GDP

Minimizing the Impact of our Operations

GHG -12%

Flaring -35%

NOx, SO2 and VOC emissions -46%

Cogeneration +28%

% Change 2015 vs 2006

Key Environmental Metrics

Net Equity CO2 – equivalent emissions

Millions of metric tons, cumulative

GHG Emissions Avoided from XOM Actions

-10

-8

-6

-4

-2

0

'11 '12 '13 '14 '15

Flare & vent reduction

Energy efficiency & cogeneration

Power Generation without Emissions

Natural gas

Exhaust (CO2) CO2 to storage

Power generation

Carbon capture Electricity Electricity

Today’s approach: Power consuming, complex

Our research: Natural gas power generation without CO2 emissions

Low Emissions Transportation Fuel

Sunlight

+ CO2 + H2O + Photosynthesis

Bio-fuels

Today’s approach: Small scale, competes with food and water

Our research: Large scale, global solutions, non-competitive with food and water

CO2 Capture Using Carbonate Fuel Cells

Source: ExxonMobil

Electricity Methane

Air

Power Turbine Electricity

Steam Generator

Exhaust Exhaust Exhaust

CO/H2 ~95% CO2 to Storage

Separation

Exhaust 100% CO2 Vented

Electricity

Methane

Carbonate Fuel Cell

Exhaust ~5% CO2 Vented