Preparing for the future

Global energy use continues to grow because of the burgeoning world population as well as rising levels of affluence. This growth is expected to lead to a doubling in world demand for energy by 2050.

At the same time, there is increasing doubt about the extent to which new supplies of oil can be easily produced. Certainly, there are large resources of heavy oil and tar sands that can be used to supplement the existing supplies of lighter oil, but to use these sources requires more work, more technology and, in particular, more energy.

Action on climate change will encourage the development of new and renewable energy supplies. However, using fossil fuels is currently the only way to meet the rapidly increasing demand for energy, so they will continue to dominate the energy supply for many years to come.

It was the recognition of the existence of these three key factors – the continuing escalation in demand for energy, the challenge to ensure the energy supply to meet this demand, and concerns over climate change – that stimulated Shell to develop its latest energy scenarios: Scramble and Blueprints.¹

Under the Scramble scenario, policymakers give most attention to securing supplies of energy but less attention is given to more efficient use of energy – until supplies of energy become tight. Likewise, greenhouse gas emissions are not seriously addressed until there are major climate shocks. As a result, meaningful action on climate change is delayed by 20 years.

In Blueprints, growing action at the local level leads the way in addressing the challenges of economic development, energy security and environmental issues. As part of this scenario, carbon pricing is introduced, which stimulates the development of clean energy technologies as well as significant improvements in energy efficiency. This results in a set of shared responses that reduce carbon dioxide emissions by 2050 to much lower levels than happens in Scramble. For this reason, although Shell does not normally express a preference for one of its scenarios over another, it favours Blueprints.

Continuing growth in energy demand, the end of easy oil and climate change are truly international issues that no one company or country can fully address by itself. This situation has stimulated Shell to publicise its new scenarios on a wide stage to encourage everyone to think about how the world may develop. Our senior executives are introducing the new scenarios to government leaders as part of conversations that underline the need for action, and we are openly calling for bold changes in the world’s energy systems.

This will take some time to have an effect. In the meantime, Shell is managing its carbon-dioxide emissions through six reduction pathways. We are:

• increasing the efficiency of our operations and seeking first-quartile performance;
• establishing a substantial capability in carbon capture and storage (CCS);
• continuing to research and develop technologies that increase efficiency and reduce emissions in hydrocarbon production;
• aggressively developing low carbon dioxide sources of energy, including natural gas and low carbon dioxide fuel options;
• helping to manage energy demand by growing the market for products and services that help customers use less energy and emit less carbon dioxide; and
• working with governments and advocating the need for more effective carbon dioxide regulation. 

The energy system a century from now will be very different from that of today. But how will the transitions occur over the next few decades? There are no ideal answers, but some outcomes are clearly better than others, and although prices and technology will drive some of the changes, political and social choices will also be critical.

¹Shell energy scenarios to 2050