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The shape of things to come?
“New Lens Scenarios” for the challenge of changing times.
The decisions that we make today are the key to our future.
This is true for individuals, commercial organisations and even nation states.
Trying to predict which choices will be most beneficial can be extremely difficult, and these challenges become progressively harder as we look further ahead and try to assess the consequences of future events.
There is no doubt that we live in changing times.
By 2050, the global population will be about nine billion and, with millions of people climbing out of poverty, global energy demand could be as much as 80% higher than it is today.
That is one of the conclusions from Shell’s “New Lens Scenarios”, which were launched at the Center for Strategic and International Studies in Washington, USA, by Peter Voser, Chief Executive of Royal Dutch Shell, and Jeremy Bentham, Head of Shell’s Scenarios Team.
These new scenarios examine economic, political and energy supply trends to predict what might happen over the coming decades.
Making predictions on this scale may seem an enormously ambitious task, but, for more than 40 years, Shell has been looking into the future and developing a systematic discipline of scenario planning to help it, and various governments across the world, to make better choices (see Impact Issue 1, 2013).
Covering a vast and complex subject area, the Shell Scenarios attempt to make sense of global trends and to promote wide-ranging discussions about the future.
Bentham says, “The success of these scenarios lies not only in the strategic insights that they provide, but also in the approach they offer to developing and sharing these insights.”
The “New Lens Scenarios” document is subtitled “A Shift in Perspective for a World in Transition”.
Bentham says, “[This] reflects current volatility and multiple transitions in economic, political and social spheres, and a heightened focus on issues around energy and environment.
Given the transitions we are seeing at present, it is unrealistic to propose a single view of tomorrow’s world.
From networks of power and the pace of change to the policy agenda and resource landscape, it is perspective that shapes perception.
“Our scenarios provide a detailed analysis of current trends and how we expect them to develop.
They examine implications for the pace of global economic development, the types of energy we will use to power our lives and the anticipated growth in greenhouse gas emissions. Looking at what might happen over the next 50 years,” he continues, “we have identified two possible scenarios of the future, which we are calling ‘Mountains’ and ‘Oceans’.
These scenarios take into account various paradoxes and pathways that we use as ‘lenses’ through which to view the world.”
The “New Lens Scenarios” identifies three major paradoxes: prosperity, leadership and connectivity.
The prosperity paradox, for example, examines the balance between economic development and the associated environmental, resource, financial, political and social stresses that can undermine some of the benefits of prosperity.
Private gains can flourish while public costs mount, and greater comforts today may lead to greater risks tomorrow.
In pathways, there are two distinct possibilities: “room to manoeuvre”, where financial, social, political or technological capital encourages early action and results in effective change or reform; and “trapped in transition”, where financial, social, political or technological capacity proves inadequate to withstand stresses.
Behavioural responses delay change and cause conditions to worsen until, ultimately, a reset is forced or a collapse occurs.
Shell has drawn these paradoxes and pathways into two separate scenarios.
The Mountains scenario sees a strong role for governments and the introduction of firm and far-reaching policy measures that help to develop more-compact cities and transform the global transport network.
New policies unlock plentiful natural gas resources, thereby making gas the largest global energy source by the 2030s, and accelerate carbon capture and storage technology to support a cleaner energy system.
The Oceans scenario describes a more prosperous and volatile world where energy demand surges in response to strong economic growth.
Power is more widely distributed and governments take longer to reach major decisions.
Market forces rather than policies shape the energy system: oil and coal remain part of the energy mix but renewable energy also grows.
By the 2070s, the world’s largest energy source is solar.
Some of the key factors the “New Lens Scenarios” consider are:
- intensified economic cycles related to the “great moderation” in advanced industrial economies;
- heightened political and social instability stimulated in part by economic volatility;
- tensions in the international order, as multilateral institutions struggle to adjust to shifts in economic power and other arrangements proliferate;
- significant demographic transitions involving ageing populations in some places and youth bulges in others, and relentless urbanisation in both fastemergingand less-developed economies;
- surging energy demands driven by growing populations and prosperity, new energy supplies emerging while others struggle to keep pace, and greenhouse gas emissions increasing, particularly from growth in coal consumption;
- the deployment of technological advances enabling rapid growth in resources plays such as shale gas and liquid-hydrocarbon-rich shale;
- the advancement of technology for utilising renewable resources and a rapidly growing supply from a small, but established, base; and
- better defined and significantly challenged ecological boundaries, including pressures arising from the water–energy–food stress nexus in response to greater supply and demand tightness.
Faced with so many issues, is it really possible to create a useful model of the future? Bentham believes so.
“Given these developments, any plausible outlooks that we come up with will be messy and patchy,” he says.
“Nevertheless, we have found that these new lenses can help us view familiar landscapes from fresh angles, which helps us focus on and clarify possible futures.
As always, drawing on the knowledge and imagination of a network of gifted people, both within and outside Shell, has been vital to the success of our scenario building efforts.”
Despite the complexity of the challenge, Bentham believes the “New Lens Scenarios” stay true to the ethos of Shell’s scenario building pioneers.
“The early scenario developers embraced intuition, uncertainty and engagement,” he says.
“They did not shy away from talking about what could be considered unimaginable.
Today’s scenario builders do the same, although they use much more complex econometric models and sophisticated methodologies.
The process now includes a huge range of short-, medium- and long-term portraits of global energy developments and individual country analyses.
We also factor in the effects of major social trends such as urbanisation.”
Within Shell, scenario building is recognised as a useful and sophisticated tool, but that is only part of the story, “The other part of our challenge is to communicate the findings from our scenarios in a clear and compelling way,” Bentham explains.
“The greatest benefits from the work we have done will only come once we have engaged the decision-making executives, shared what we have found and helped to influence how their decisions shape the future.”
For the full report, visit the Shell Scenarios website.