Main content | back to top
News and Media Releases
Shell future energy scenarios: "zone of uncertainty" ahead
“Signals & Signposts” updates our thinking by taking into account the impact of the global economic and financial crisis. Over the next four decades, the world’s energy system will see profound developments. Heightened collaboration between civil society and the public and private sectors is vital if we want to address economic, energy and environmental challenges. Partnerships must be grounded in commercial reality, but energy and environmental developments have to accelerate in the right direction. We must widen and deepen the debate across industry and geographical boundaries.
- We believe that the world is entering an era of volatile transitions and intensified economic cycles. The recession interrupted the oil and commodity price boom but it may return. Emerging nations like China and India are going through materially intensive development and a tighter market will continue to put pressure on prices and generate volatility. Improvements in policy-making and strong gains in productivity have helped economies to grow without inflation in the last two decades. We do not believe the moderating effect of this combination of good policies, good practices, and good luck will continue into the future..
- We are seeing a step change in energy use. Developing nations, including population giants China and India, are entering their most energy-intensive phase of economic growth as they industrialise, urbanise, build infrastructure, and increase their use of transportation. Demand pressures will stimulate alternative supply and more efficiency in energy use — but these alone may not be enough to offset growing demand tensions completely. Underlying global demand for energy by 2050 could triple from its 2000 level if emerging economies follow historical patterns of development.
- In broad-brush terms, natural innovation and competition could spur improvements in energy efficiency to moderate underlying demand by about 20% over this time. Ordinary rates of supply growth – taking into account technological, geological, competitive, financial and political realities – could naturally boost energy production by about 50%. But this still leaves a gap between business-as-usual supply and business-as-usual demand of around 400 EJ/a – the size of the whole industry in 2000. This gap – this zone of uncertainty – will have to be bridged by some combination of extraordinary demand moderation and extraordinary production acceleration.
- Supply will struggle to keep pace with demand. By the end of the coming decade, growth in the production of easily accessible oil and gas will not match the projected rate of demand growth. While abundant coal exists in many parts of the world, transportation difficulties and environmental degradation ultimately pose limits to its growth. Meanwhile, alternative energy sources such as biofuels may become a much more significant part of the energy mix — but there is no “silver bullet” that will completely resolve supply-demand tensions.
- Smart urban development, sustained policy encouragement and commercial and technological innovation can all result in some demand moderation. But so can price-shocks, knee-jerk policies and frustrated aspirations. Timescales are a key factor. Buildings, infrastructure and power stations last several decades. The stock of vehicles can last 20 years. New energy technologies must be demonstrated at commercial scale and require 30 years of sustained double-digit growth to build industrial capacity and grow sufficiently to feature at even 1–2% of the energy system. The policies in place in the next five years shape investment for the next 10 years, which largely shape the global energy picture out to 2050.
- The global economic crisis has coincided with a shift in geopolitical and economic power from west to east. This decisive shift is transforming the global economic and political system. The change is gradual, but its potential consequences are profound. The economic crisis in the west may accelerate this trend. Future generations may see 2008 as the turning point. The world faces a period of uncertain global politics. Strategic fault lines are emerging. Rising powers are increasingly and confidently asserting what they see as their national interests. This is undermining global mechanisms for ensuring collective security.
- Environmental stresses are increasing. Even if it were possible for fossil fuels to maintain their current share of the energy mix and respond to increased demand, CO2 emissions would then be on a pathway that could severely threaten human well-being. Even with the moderation of fossil fuel use and effective CO2 management, the path forward is still highly challenging. Remaining within desirable levels of CO2 concentration in the atmosphere will become increasingly difficult.
Shell International Media Relations: +31 (0)70 377 3600
Notes to editors
Royal Dutch Shell plc
Royal Dutch Shell plc is incorporated in England and Wales, has its headquarters in The Hague and is listed on the London, Amsterdam, and New York stock exchanges. Shell companies have operations in more than 90 countries and territories with businesses including oil and gas exploration and production; production and marketing of liquefied natural gas and gas to liquids; manufacturing, marketing and shipping of oil products and chemicals and renewable energy projects. For further information, visit www.shell.com.
The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this press release “Shell”, “Shell group” and “Royal Dutch Shell” are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. ‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this press release refer to companies in which Royal Dutch Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as “associated companies” or “associates” and companies in which Shell has joint control are referred to as “jointly controlled entities”. In this press release, associates and jointly controlled entities are also referred to as “equity-accounted investments”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect (for example, through our 24% shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.
This press release contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘intend’’, ‘‘may’’, ‘‘plan’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘probably’’, ‘‘project’’, ‘‘will’’, ‘‘seek’’, ‘‘target’’, ‘‘risks’’, ‘‘goals’’, ‘‘should’’ and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this press release, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for the Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserve estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this press release are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Royal Dutch Shell’s 20-F for the year ended December 31, 2009 (available at www.shell.com/investor and www.sec.gov). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this press release, Feberuary 14, 2011. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this press release.
The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We may have used certain terms in this press release that SEC's guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov. You can also obtain these forms from the SEC by calling 1-800-SEC-0330.