The 2025 Energy Security Scenarios
In The 2025 Energy Security Scenarios: Energy and artificial intelligence, we reimagine our Archipelagos and Horizon scenarios in the context of a world using AI. We have also added a third scenario, Surge, which explores the prospect of a new wave of economic growth driven by productivity improvements catalysed by AI. In Archipelagos, technology development is hampered by global concerns about resource, border and trade security. Horizon takes a normative approach to investigate what the world would need to do to achieve net-zero emissions by 2050 and global warming limited to 1.5°C by the end of the century.
Note: In The 2025 Energy Security Scenarios, the scenario that illustrates a possible pathway to net-zero CO2 emissions in 2050 has been renamed Horizon.
10 Key messages
1. In a world where artificial intelligence (AI) brings societal change and catalyses economic growth, demand for energy increases and the transition to low-carbon energy accelerates.
1. In a world where artificial intelligence (AI) brings societal change and catalyses economic growth, demand for energy increases and the transition to low-carbon energy accelerates.
Countries are striving to deliver a new era of economic growth driven by technologies like AI while addressing energy security and climate change.
2. Growth in demand for energy is driven by rising populations and prosperity.
2. Growth in demand for energy is driven by rising populations and prosperity.
Over the next 25 years, around a third of the world’s population will embrace higher income lifestyles, such as buying their first cars or taking their first flights. The 2025 Energy Security Scenarios highlight that primary energy demand in 2050 could be nearly 25% higher than in 2024.
3. Technological change moves faster than energy system change.
3. Technological change moves faster than energy system change.
Historically, it has taken new technologies 15‒25 years to establish themselves in the energy system, then another 15‒25 years to reach system-wide adoption. Information technology adoptions are around twice as fast as new adoptions in the energy system. As a result, as technologies like AI begin to impact the energy system, we can expect increased disruptions.
4. Oil and gas remain important fuels for decades to come:
4. Oil and gas remain important fuels for decades to come:
- Oil demand is likely to grow by 3‒5 million barrels per day into the early 2030s, with a long but slow decline after that as petroleum remains an affordable and convenient fuel, particularly in transport, and an important feedstock for the petrochemical industry.
- Natural gas demand could grow by around 500 billion cubic metres per annum (bcma) reaching around 4,640 bcma in 2040, of which 20% is liquefied natural gas (LNG). Gas fuels heat and power generation and has an important role in helping the world move away from coal.
5. Continued oil and gas investment is needed in all scenarios.
5. Continued oil and gas investment is needed in all scenarios.
Upstream investment is currently around $600 billion a year. This will be required for decades to come as the rate of depletion of oil and gas fields is two to three times the potential future annual declines in demand.
6. The energy system is increasingly scaling up through modular technologies.
6. The energy system is increasingly scaling up through modular technologies.
Construction of the energy system is shifting from large bespoke projects built in the field to modular units produced on assembly lines, for example solar photovoltaic modules and grid batteries.
7. Renewable and nuclear power will decarbonise many energy services through electrification:
7. Renewable and nuclear power will decarbonise many energy services through electrification:
- Solar photovoltaic, wind turbines and batteries come to dominate electricity generation.
- Nuclear could grow in the long term, with the help of new technologies.
- Electrification increases in many sectors, for example through the growth of electric vehicles.
8. Biofuels, hydrogen, carbon capture and storage (CCS) and carbon removals are required to lower energy system emissions:
8. Biofuels, hydrogen, carbon capture and storage (CCS) and carbon removals are required to lower energy system emissions:
- Biofuel production could triple by 2050, particularly if advanced conversion technologies progress.
- Hydrogen produced from water using renewable electricity or from natural gas with CCS will also grow, but only for uses where electrification is not an option.
- CCS could be a billion-tonne-a-year industry by 2050.
- Natural and engineered carbon removal will be crucial in the second half of the century.
9. Peak energy system CO₂ emissions is likely within a decade, as illustrated by The 2025 Energy Security Scenarios.
9. Peak energy system CO₂ emissions is likely within a decade, as illustrated by The 2025 Energy Security Scenarios.
Momentum in low-carbon technologies is already slowing growth in emissions. Following current trends, new technologies could halve the carbon intensity (kg CO2 per unit of energy) of the energy system by 2050. However, to reach net-zero CO2 emissions by 2050, progress will have to accelerate considerably.
10. The 2025 Energy Security Scenarios indicate net-zero CO₂ emissions is likely, but timing is uncertain.
10. The 2025 Energy Security Scenarios indicate net-zero CO₂ emissions is likely, but timing is uncertain.
Plausible scenarios indicate a near-term overshoot of the 1.5°C goal, indeed temperature measurements have already confirmed that 2024 is the first individual year to breach 1.5°C. By focusing on carbon removal technologies and practices, the world could achieve less than ~2°C of warming by the end of the century.
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Definitions and Cautionary note
Definitions and Cautionary note
WARNING - UNCERTAINTIES AHEAD: The 2025 Energy Security Scenarios.
Shell’s scenarios are not intended to be projections or forecasts of the future. Shell’s scenarios, including the scenarios contained in this content, are not Shell’s strategy or business plan. They are designed to stretch management to consider even events that may only be remotely possible. Scenarios, therefore, are not intended to be predictions of likely future events or outcomes and investors should not rely on them when making an investment decision with regard to Shell plc securities. When developing Shell’s strategy, our scenarios are one of many variables that we consider. Ultimately, whether society meets its goal to decarbonise is not within Shell’s control, and only governments can create the framework necessary for society to meet the Paris Agreement’s goal. We have developed scenarios that fall into two different categories. Our Surge and Archipelagos scenarios are exploratory scenarios, which means we do not assume a particular outcome within their development, rather we use plausible assumptions based on the data to determine what we believe could occur in the future. Of course, there are multiple possible paths in detail that society could take and our exploratory scenarios are designed to explore a plausible range. The Horizon scenario is a normative scenario, which means we assume that society pursues efforts to limit the temperature increase to 1.5 C above pre-industrial levels, as per Article 2 of the Paris Agreement. With such an assumption in place, we then set out how this may occur. Our detailed energy system assumptions for Horizon are based on what we believe are technically possible as of today and not necessarily plausible. The normative analysis shows that achieving the goal of the Paris Agreement and the future depicted in Horizon while maintaining a growing global economy will be extremely challenging.
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