Shell Energy Paths 2050


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Shell Energy Paths 2050

  1. 1. Evolving sources or revolutionary technology – exploring alternative energy paths to 2050 Ged Davis Vice President, Global Business Environment Shell International Oil & Money Conference, London October 29, 2001
  2. 2. Ged Davis is Vice President, Global Business Environment in Shell International Limited and head of Shell’s Scenarios Team. He has been a scenario practitioner for over 20 years, engaged in the building and use of scenarios at the country, industry and global level. From 1997 to 2000 he was facilita- tor and Lead Author of the Intergovernmental Panel on Cli- mate Change’s Emissions scenarios 2000-2100 and in 1996/97 was Director of the World Business Council for Sustainable Development’s Global Scenarios 2000 - 2050. Prior positions in Shell International include Head, Sce- nario Processes and Applications and Head, Socio-Politics and Technology, with special responsibility for regional sce- narios. From November 1990 to the middle of September 1994 he was Head of Group Investor Relations for the Royal Dutch/Shell Group. From 1986 to 1990 he was Head of En- ergy in Group Planning responsible for world-wide energy analysis, including global energy scenarios. He has postgraduate degrees in economics/engineering from the London School of Economics and Stanford Univer- sity, California and graduated in Mining Engineering at Impe- rial College, London.
  3. 3. Ged Davis – Evolving sources or revolutionary technology The latest Shell long-term energy scenarios explore how the global energy system may change over the first half of this century. They con- sider alternative paths which halt human-induced carbon dioxide emis- sions by 2050. These paths are influenced by population growth, urbani- sation, increasing wealth and market liberalisation. But the critical fac- tors are resource constraints, technology development and changing social and political priorities. Oil and gas resources are unlikely to become scarce before 2025. Renewable energy resources are adequate to meet energy needs but require new forms of energy storage. Solar photo- voltaics and hydrogen fuels cells could transform energy systems. But picking winners is very difficult in a highly innovative period. The two scenarios contrast an evolutionary progression from coal, to gas, to renewables (or possibly nuclear) against the potential for a hydrogen economy – supported by revolutionary developments in fuel cells, advanced hydrocarbon technologies and carbon dioxide sequestration. The world’s energy system was trans- And scenarios have to be challenging. formed in the course of the 20th cen- They are not an end in themselves but tury – from one dominated by coal and tools for encouraging and focusing steam power to a diverse mix of compet- thinking. In our experience that is best ing fuels and technologies (figure 1). It is done by having just two thought- likely to change at least as fundamentally provoking stories. in this century. But how? Today I want to talk about our latest Exploring the possibilities for change long-term energy scenarios – looking out is essential for informing action today – over the first half of the century. In the for business people judging where to time available I can only touch on as- invest, for policy makers framing regula- pects of the material. A booklet explain- tion, for citizens considering what is best ing the work in more details is available. for the future of their families, commu- nities and world. How the energy system Key energy questions develops is fundamental for that future. What questions do the long-term energy Of course it is always exploration scenarios seek to answer? without hope of discovery. We can’t First, there is an overarching question know the future before it arrives. But we about the ability of a dynamic energy Figure 1: can think about it – challenging our as- system to respond to the threat of cli- Evolution of the sumptions, recognising critical uncer- mate change. What will shape a system energy system tainties, reaching for new possibilities, which halts the rise in human-induced 1850-2000 understanding the dynamics. In Shell we have been using scenarios % of Primary Energy to help us think about the future – 80% among ourselves and with others – for traditional over 30 years. Scenarios are credible, relevant and challenging alternative sto- 60% ries about how things might develop. Credibility is essential. We harness our experience in energy businesses and 40% technology development – as well as a oil wide range of outside expertise – to achieve this. 20% coal gas So is relevancy. We can’t explore every aspect of the future. We have to hydro nuclear focus on the questions that matter for 0% new renewables informing our decisions today. 1850 1875 1900 1925 1950 1975 2000 1
  4. 4. Ged Davis – Evolving sources or revolutionary technology carbon dioxide emissions within the next • incomes, and “The 50 years – leading to a stabilising of at- • liberalisation. relationship mospheric carbon levels below 550 Recent UN population forecasts between ppmv – without jeopardising economic point to 8.5 billion people by 2050 – energy development? when over 80% are likely live in cities – demand and We chose this level because it has and a maximum global population of 10 wealth changes often been cited as a safe maximum. billion by 2075. This clearly represents a as incomes rise According to the latest IPCC data it great increase in energy needs. and countries would lead to a 2ºC warming (in the Wealth is rising and spreading. Even range 1.4º to 3.2º) and 30cm sea level economic growth considerably slower climb the rise (in the range 10 to 55cm) by 2100. than in the past half century could bring energy ladder.” But we don’t know the safe level for at- widespread affluence by 2050. But mospheric carbon, and probably never energy consumption would grow less will. We can only recognise the uncer- slowly – as the relationship between tainty under which we have to act, and energy demand and wealth changes as be prepared to adjust as understanding incomes rise and countries climb the develops. ‘energy ladder’. Other key questions explored in But we should remember that many those scenarios include: people haven’t even got on the bottom • When will oil and gas resources be rung. Perhaps two billion are still de- unable to meet rising demand? pendent on traditional forms of energy – And what will replace oil in trans- suffering from the physical burden of port? collecting it, damage to their health from • Which technology will win the using it, and exclusion from amenities race to improve vehicles? others take for granted. Another three • Who will drive the expansion of billion are just meeting basic energy re- renewables necessary for cost re- quirements. Enabling these people to ductions? And how will energy start climbing the energy ladder is a fun- storage for intermittent renew- damental challenge – of development ables like solar and wind be and energy provision. solved? Comparing the growth in energy • How will demand for distributed demand with that of per capita incomes power shape the energy system? shows a common pattern in many coun- • How might a hydrogen infrastruc- tries (figure 2): ture develop? • around $3,000 a head energy • How will China and India balance demand explodes as industrialisa- rapidly growing energy needs with tion and personal mobility take concerns about rising import de- off, pendence and environmental deg- • around $10,000 demand growth radation? slows as the main spurt of indus- • How will the choices of consum- trialisation is completed, “Over the next ers and citizens affect energy • around $15,000 it grows more half century the paths? slowly than income as basic energy system household energy needs are met is likely to Shaping factors and services dominate economic confront its What factors which will shape the future growth, major of energy? Just as with the questions, we • around $25,000 economic growth challenge as need to focus on those which really mat- requires little additional energy as most of the ter – which are likely to determine the energy markets become saturated. world’s people choice of energy path to 2050. Over the next half century the energy pass through Let me start with four important in- system is likely to confront its major the initial stage fluences: challenge as most of the world’s people of rapid • demography pass through the initial stage of rapid in- industrial- • urbanization dustrialisation. isation.” 2
  5. 5. Ged Davis – Evolving sources or revolutionary technology GJ/capita lbs coal per hp-hr % efficiency 350 40 40 Maximum thermal US efficiency 250 30 30 Newcomen Australia EU 150 20 20 Korea Japan Watt, mill Watt, pump 50 10 Malaysia 10 China Thailand Compound Brazil Turbine India Cornish 0 0 0 0 5 10 15 20 25 30 1750 1800 1850 1900 1950 GDP/capita (‘000 1997$ PPP) Source: IMF, BP Source: Grubler 1998 from Ayres 1989 Figure 2: Climbing the energy ladder—a Figure 3: Technology determines energy continuously changing relationship quantity Energy needs are reduced as techno- • changing social and personal pri- logical improvements increase efficiency. orities. The huge increases in steam engine effi- Some people see imminent con- ciency over two centuries gives an idea straints on the ability of fossil fuel of the importance of these improve- resources to continue meeting growth in ments (figure 3). energy demand. The best available technology is typi- We think scarcity of oil supplies – cally 25% more efficient than the including from unconventional sources installed average – although much energy and natural gas liquids – is unlikely using equipment is long-lived and low before 2025, and could be delayed even energy costs discourage investment in ef- longer. This is based on some the USGS ficiency. Access to proved new technolo- estimate of some 3 trillion barrels of ulti- gies enables later developers to climb the mately recoverable conventional oil and energy ladder more quickly and to need over a further trillion in heavy oils and less energy. NGLs (figure 4). Prices should continue Liberalised markets drive greater effi- to be constrained by improvements in ciency and open new energy possibilities. our ability to access new supplies and de- What does all this mean for energy velop substitutes. demand? Assuming no significant new Gas resources are much more uncer- energy use and depending on the drive tain. Scarcity could occur as early as to invest in efficiency, we think global 2025, or well after 2050. The more im- consumption could ultimately saturate at mediate issue is whether we can develop between 100 and 200 GJ per capita. To the infrastructure to deliver remote gas put that in perspective, in Western economically. Europe today we consume on average There is no shortage of coal. How- some 160 GJ per head. ever large resources are concentrated in a By 2050 the world would require few countries and are becoming increas- between two and three times as much ingly costly to exploit and use. “Access to energy as now. The difference is signifi- Renewable resources are adequate to proved new cant but we don’t think it will determine meet needs, despite competing with food technologies the energy path – only its timing. and leisure for land use (figure 5). But enables later widespread use of solar and wind will developers to The critical drivers require new forms of energy storage. climb the What then are the decisive factors? We Technology advances are central to energy ladder see three: energy transitions – the steam engine, more quickly • resource constraints, electric dynamo, internal combustion, and to need • technology development, and nuclear fusion, combined-cycle gas tur- less energy.” 3
  6. 6. Ged Davis – Evolving sources or revolutionary technology mln bbl per day GJ per capita 125 1000 100 2% per annum 800 75 600 7.5% per 400 Hydro 50 annum Wind demand 200 Solar 25 range Geothermal 0 Biomass l a pe a ia a fr st ta U ic ric ic 0 As .A a To ro a FS er er N E ic Af Eu m Am & dle 1950 1975 2000 2025 2050 .A id S. N M Based on USGS mean estimates, June 2000 Adapted from UN 2000, WEC 1994, ABB 1998 Figure 4: The oil mountain Figure 5: Renewables are adequate to meet all energy needs of 10 billion people bines. They succeed by offering superior combustion engine looked an unlikely or new qualities – often transforming choice until Henry Ford transformed its lifestyles as well as energy supplies. manufacturing dynamics. Two potentially transforming energy People’s choices affect energy devel- technologies are waiting in the wings. opments in two ways – through their Solar photovoltaics offers the possibility personal preferences as consumers and of abundant direct and widely distributed their priorities as citizens. Personal energy. Hydrogen fuel cells offers the choices of lifestyle and consumption pat- possibility of high performance and terns drive the energy system. They do clean final energy from a variety of fuels. so within frameworks shaped by social Both are in the early stages of devel- attitudes to such issues as energy secu- opment – in the process from invention rity, air quality and the climate threat. to commercialisation – and face large challenges. Energy storage is the funda- Alternative paths mental problem. But both still have a We offer two alternative paths for the long way to go on costs, although they development of a sustainable energy sys- will benefit from manufacturing econo- tem over the first half of this century mies. (figure 7). We appear to be entering a very inno- Dynamics as Usual focuses on the vative period for energy development. choices of citizens for clean, secure and “Solar More resources than ever before are increasingly sustainable energy which – photovoltaics devoted to scientific research and tech- with growing resource scarcities – drives offers the nological development. Information and the evolution of supplies towards reli- possibility of communications technology offers new ance on renewable sources. However, abundant ways of analysing information and shar- this transition is anything but smooth direct and ing knowledge. and reflects intense competition between widely Advances in biotechnology, materials priorities and between technologies. distributed technology such as carbon nano-fibres It explores the continuation of the energy. and computing will support develop- dynamic which has shaped the evolution Hydrogen fuel ment of bio-fuels, fuel cells, new energy of energy supplies towards lower-carbon cells offers the carriers such as hydrogen, micro-power fuels – with electricity as the carrier – in possibility of networks, and new generations of solar response to demands for cleaner, more high technologies (figure 6). convenient energy. performance Each of these has the potential to Spirit of the Coming Age focuses on the and clean final have major impacts on the energy sys- energy choices made by consumers in energy from a tem. However, it is very difficult to pick response to revolutionary new technolo- variety of winners. Early last century the internal gies – emerging from unexpected areas – fuels.” 4
  7. 7. Ged Davis – Evolving sources or revolutionary technology 1800 1800 Direct - Wood, Wind, Water, Animals Dynamics as Usual demographics Steam engine - Coal 1830-1900 urbanisation 1850 1850 ns itize Electric dynamo - Coal 1900-1940 es- c m hoic te Resource rgy c ary sys Ene tion constraints Evolu Internal combustion engine - Oil 1900 1900 1910-1970 Innovation Technologies and Nuclear 1970-1990 Social & competition Ener gy personal Revo Choices 2000 CCGT - Gas 1990-? lution - 2000 Priorities ary d consume evelo r pmen s MANUFACTURING ADVANTAGE ts incomes & demand Fuel Cell Direct Electricity Hydrogen Solar liberalisation 2050 2050 The Spirit of the Coming Age Figure 6: Energy technology discontinuities Figure 7: Energy branching points which transform the system. Such possi- nologies, particularly the internal com- bilities are less often explored. bustion engine. Advanced internal com- The two scenarios reflect differences bustion and hybrid engines are devel- in energy resources, the timing and oped to deliver the same performance as nature of technology developments and standard vehicles – but using as little as a social and personal priorities. These will third of the fuel. Fuelling inconvenience determine the choice of path over the limits the appeal of fuel cell vehicles. next two or three decades – although the The spread of high-efficiency vehicles underlying elements could eventually disrupts oil markets. Prices are depressed come together in the second half of the until firmed by growing developing century. country demand for transport and heat- However, the scenarios also have im- ing fuels after 2015. Oil consumption portant common features, including: grows steadily – but weakly – for 25 • the vital role of natural gas as a years. bridge fuel over at least the next DASH FOR GAS two decades, Natural gas use expands rapidly early in • the pressures on the oil market as the century – reflecting its economic and new vehicle technologies diffuse, environmental advantages in liberalised • the shift towards distributed heat markets. Where gas is available it fuels and power supply for economic most new power generation and ac- and social reasons, and counts for three-quarters of incremental • the potential for renewables to be OECD capacity up to 2015. Older coal the eventual primary source of plants cannot meet tightening emissions energy if robust energy storage so- standards and are increasingly replaced lutions are found. by gas. The rising costs and logistical com- Scenario: Dynamics as Usual plexity of expanding coal deliveries from Let me focus on some of the main ele- northern mines prompts China to em- ments of Dynamics as Usual: bark on major gas import projects. Pan- “Natural gas • existing technologies respond, Asian and Latin American gas grids use expands • ‘dash for gas’, emerge. Large-scale LNG trade is in- rapidly early in • renewables boom and bust, and creasingly competitive. By 2020 gas is the century – • the oil transition and renewables challenging oil as the dominant source of reflecting its renaissance. primary energy. However, expansion is economic and EXISTING TECHNOLOGIES RESPOND constrained by concerns for supply secu- environmental The demand for clean, secure and sus- rity and low prices. advantages in tainable energy stimulates a drive for New nuclear plants have trouble liberalised energy efficiency within existing tech- competing in deregulated markets. Most markets.” 5
  8. 8. Ged Davis – Evolving sources or revolutionary technology $ per peak watt EJ 75 6 Materials and other BOS 5 balance of System 3 fold reduction inverter • strong government support 4 50 • environment and security other panel • green power niches open 3 materials • intermittence constraints overhead • saturated OECD demand 2 Plant 25 8 fold • planning blockages labour reduction 1 plant 0 0 20 MW Plant 200 MW Plant 2000 2010 2020 2030 1999 Source: KPMG 1999 Figure 8: The benefits of scale—200 MW Figure 9: A tale of two eras—renewables photovoltaic factories growth and plateau existing nuclear capacity is maintained. mal – which benefit little from each But nuclear steadily loses market share in other’s advances. OECD countries. As renewables stagnate and gas secu- RENEWABLES BOOM AND BUST rity concerns grow, it is not clear what Strong government support in OECD will fuel future energy supplies. Nuclear countries enables renewable energy to makes a partial comeback, particularly in grow rapidly for two decades through es- Asia. Investing in energy efficiency buys tablished electricity grids. The costs of time. But established technologies find it wind energy continues to fall as turbines increasingly difficult to meet rising envi- exceed 3 MW. The commissioning of a ronmental standards. 200 MW photovoltaic manufacturing It is a decade of great energy policy plant before 2010 dramatically improves dilemmas. productivity (figure 8). Deregulated mar- THE OIL TRANSITION AND RENEWABLES kets provide opportunities for branded RENAISSANCE ‘green energy’. Around 2040, as oil becomes scarce, ad- By 2020 a wide variety of renewable vances in biotechnology together with sources is supplying a fifth of electricity vastly improved vehicle efficiency allow in many OECD markets and nearly a a relatively smooth transition to liquid tenth of global primary energy. Then biofuels. The existing transport can be growth stalls (figure 9). modified at low cost. Rural communities that accepted a A new generation of renewable tech- few windmills reject thousands. Logistic nologies emerge. The most important is costs, availability of land and environ- organic and thin film embedded solar mental concerns prevent large-scale de- materials, even wallpaper. New ways of velopment of biomass electricity. With storing and utilising distributed solar en- little progress on energy storage, con- ergy are developed. cerns about power grid reliability block By 2050 renewables reach a third of further growth of wind and solar. world primary energy and are supplying Although the public supports renew- most incremental energy (figure 10). ables, limited electricity growth con- “By 2050 strains expansion in OECD countries. In Scenario: Spirit of the Coming Age renewables developing countries, renewables do not The key elements of Spirit of the Coming reach a third of fully compete with low-cost conven- Age are: world primary tional resources. • breaking paradigms, energy and are Investment stagnates. The boom has • the ubiquitous fuel cell, supplying most spawned a set of diverse technologies – • a Chinese leapfrog, incremental for wind, solar, biomass and geother- • a hydrogen economy. energy.” 6
  9. 9. Ged Davis – Evolving sources or revolutionary technology Mb/doe 100 Renewables 50 0 Coal 2000-2020 2020-2040 Oil Gas Nuclear 2040-2060 -50 Figure 10: Incremental energy supply Figure 11: Watch the fringes BREAKING PARADIGMS sufficient for 400 km. They can be sold The Sony Walkman – which was repeat- through a wide range of channels – even edly dismissed by focus groups – port- in dispensing machines like soft drinks – able computers and mobile phones are or delivered directly to consumers. examples of innovations which broke They are also popular in developing existing paradigms. Such developments countries with limited fuel infrastructure often come from niche market fringes – and constraints on urban space – where ignored by incumbent suppliers – where many consumers can only afford small physical constraints force innovation and amounts of fuel at a time. consumers are willing to pay a premium THE UBIQUITOUS FUEL CELL (figure 11). Demand for stationary fuel cells – for Automobiles manufacturers know businesses willing to pay a premium to that hydrogen fuel cell vehicles fit the ensure highly reliable power – helps public mood because they are cleaner, drive fuel cell system costs below $500 quieter and offer high performance. per kW. This provides a platform for They can also support more electrical transport uses, stimulating further cost services – digital communications, pre- reductions – well below conventional entry heating and cooling, and in-car en- power and heat technologies. tertainment – which consumers want but Suppliers of home appliances com- which require too much power for many pensate for saturating OECD markets traditional engines. The constraint is the for their own products by turning to fuel fuel infrastructure and the potential cells. Commercial and residential build- health hazards of alternative fuels. ings install low costs systems – fuelled This is overcome by the development from the established natural gas grid – of a new ‘fuel in a box’ for fuel cell vehi- and trade spare peak-time electricity cles – emerging from small scale applica- through internet markets. Hot water is “Such tions in powered bicycles, computers provided by surplus fuel cell heat (figure developments and mobile phones. Sealed boxes pre- 13). often come vent health hazards. The liquid fuel – Cars no longer need to be idle for from niche from oil, gas or biomass – is reformu- 95% of the time. Using ‘docking sta- market fringes lated into hydrogen in the vehicles. This tions’ they can provide energy to homes where physical reflects the much greater efficiency of and buildings. constraints liquid fuels – in terms of the power de- These developments meet the needs force livered for the space taken up – over gas of emerging economies – replacing LPG, innovation and and batteries (figure 12). kerosene and traditional lamps and cook- consumers are Boxed fuels break the distribution ers. Trucks are able to double as power willing to pay a paradigm. A six-pack of fuel (12 litres) is sources. premium.” 7
  10. 10. Ged Davis – Evolving sources or revolutionary technology kWh/litre PEM Fuel Cell $ per kW 10 100,000 LNG 10,000 CNG Sodium/ LH2 Sulphur Lead Acid 1,000 1 gas turbine Diesel Gasoline Ethanol Hydride LPG 100 Methanol CH4 10 0.1 1 LIQUIDS GASES BATTERIES 1960 1980 2000 2020 2040 2060 Figure 12: The liquid space advantage Figure 13: Fuel cells – one size fits all By 2025 a quarter of the OECD vehi- lished infrastructure and technologies, as cle fleet uses fuel cells. They account for well as on the cash flow and resources of half the new vehicles in OECD coun- existing fuel suppliers. China is able to tries and a quarter of worldwide. The make use of these technologies – as well global automobile industry rapidly con- as indigenous advances – to extract solidates around the new platform. energy from its coal resources and de- Technical advances in transport and liver it by pipeline rather than thousands power services feed off each other, solv- of trains. This enables the development ing mutual problems. Fuel cells also of transport and power systems based on benefit from broader developments in fuel cells. material technology. Carbon nano-tubes A HYDROGEN ECONOMY are widely used by 2025 because of their The advantages of the new technology superior strength, supporting the devel- push the transition to hydrogen well be- opment of carbon nano-fibres as the ul- fore oil becomes scarce. The higher the timate hydrogen storage medium. But demand for fuel cells, the less oil fetches. this storage is not essential and the even- It is cheap enough to be preferred for tual transition from liquid fuels to ‘solid’ heat and power in some developing hydrogen is largely unnoticed. countries but this does not compensate A CHINESE LEAPFROG for the declining transport market. In the second quarter of the century, Renewable energy makes steady but China uses advanced hydrocarbon tech- unspectacular progress until 2025. nologies as a bridge to a hydrogen econ- ‘Green energy’ niches remain small in omy (figure 14). most regions. Sales of photovoltaics to By 2025, China’s huge and growing rural communities in developing coun- vehicle use is creating an unacceptable tries grow fast at first. People are willing dependence on imported oil imports. to pay extra for the convenience and Concerns about the sustainability of re- access to television, but their needs soon gional gas resources and the reliability of exceed what photovoltaics can offer. external suppliers encourage the use of Fuel cells prove a better option. Urbani- indigenous coal. But this is becoming lo- sation reduces rural energy demand. “In the second gistically and environmentally prob- After 2025 the growing use of fuel quarter of the lematic. Land scarcity limits biofuel op- cells for heat and power creates a rapidly century, China portunities. India faces similar problems. expanding demand for hydrogen (figure uses advanced Growing global demand for gas and 15). It is widely produced from coal, oil hydrocarbon hydrogen spurs advances in in-situ ex- and gas fields, with carbon dioxide ex- technologies as traction of methane and hydrogen from tracted and sequestered cheaply at a bridge to a coal and oil shales. These advanced hy- source. By 2050 a fifth of carbon dioxide hydrogen drocarbon developments build on estab- emissions from the production and use economy.” 8
  11. 11. Ged Davis – Evolving sources or revolutionary technology Supply security 102 concerns Air quality concerns - oil, gas, fertiliser hydrogen Ratio of Hydrogen (H) to Carbon (C) and weak Large coal resource non-fossil economy Logistic constraints 101 hydrogen regulatory control 0.90 Methane: H/C = 4 0.80 Oil: H/C = 2 methane 0.67 100 economy H / (H+C) Global price China Hydrogen Land scarcity Coal: H/C = 1 0.50 for CO2 Economy limits bio-fuels 10-1 Wood: H/C = 0.1 0.09 Mass transport & Water scarcity electric drive for in the North t = 300 years (length of process) uneven terrain 10-2 Including traditional biomass CH4 and H2 from coal Advanced membranes Fuel cells 1800 1850 1900 1950 2000 2050 2100 Figure 14: A Chinese leapfrog Figure 15: Emergence of the hydrogen economy % of primary energy % of total 80% 100 traditional Solids 80 60% 60 40% 40 Liquids new Gases (CH4 and H2) renewables oil Direct Electricity 20% 20 (hydro, nuclear, new gas renewables) coal biofuels hydro 0 nuclear 0% 1850 1900 1950 2000 2050 1850 1900 1950 2000 2050 Figure 16: Energy transitions—Dynamics as Figure 17: Spirit of the Coming Age—energy Usual mix of energy are being sequestered. low-carbon fuels and towards electricity Large-scale renewable and nuclear as the dominant energy carrier – from energy schemes to produce hydrogen by increasingly distributed sources – driven electrolysis start to become attractive by demands for security, cleanliness and after 2030. Renewable energy becomes a sustainability (figure 16). bulk supply business and starts to Energy needs more than double by expand rapidly. Hydrogen is transported 2050, with demand for oil and gas con- in gas grids until demand justifies dedi- tinuing to grow throughout the period. cated hydrogen pipelines. However, renewables become increas- A century-long process of hydrogen ingly important in the second quarter of infrastructure development begins. The the century. By 2050 they account for need for sequestration peaks after 2050 27% of primary energy requirements. “By 2050 a fifth although only a small part of the total Biofuels – supplying a growing share of of carbon sequestration capacity has been used. liquid fuels – account for a further 6% of dioxide primary energy. emissions from Towards a sustainable energy system In Spirit of the Coming Age, energy sup- the production The two scenarios explore different plies continue to evolve from solids and use of energy paths. through liquids to gas (first methane energy are Dynamics as Usual highlights the evo- then hydrogen), supplemented by direct being lution of energy supplies from high- to electricity from renewables and nuclear sequestered.” 9
  12. 12. Ged Davis – Evolving sources or revolutionary technology billion tonnes carbon ppmv 550 14 excluding sequestration 12 500 Spirit of the Coming Age 10 Spirit of the Coming Age 450 8 Dynamics as Usual Dynamics as Usual 6 400 4 350 2 0 300 1975 2000 2025 2050 1975 2000 2025 2050 2075 2100 Figure 18: Carbon dioxide emissions Figure 19: Carbon dioxide atmospheric concentrations and as long-term sources of hydrogen they think of energy developments, do gas (figure 17). so in the context of evolving supplies Primary energy needs grow more and traditional competitors. These sce- quickly than in the previous scenario. narios remind us to look elsewhere. It Demand for oil declines in the second could be the distribution chain … or quarter of the century. Gas becomes the somewhere else. I also suspect that most dominant fuel and consumption grows of us in the West think that is where new more than threefold by 2050. Large-scale developments will emerge. We shouldn’t renewables grow rapidly in the second be so sure. quarter of the century. They also remind us that change is In both scenarios carbon dioxide unlikely to be smooth. Just because a emissions turn down by 2040 (figure 18). technology appears to be winning today, Emissions slow earlier in Dynamics as that doesn’t mean it will do so tomor- Usual in response to social pressures but row. Understanding our business envi- then accelerate again after 2025. In Spirit ronment demands a wide perspective of the Coming Age they rise faster initially and long view. but then peak earlier – and sharply – We think the advantages of gas are with the expansion of carbon sequestra- such that it is likely to play an increas- tion. ingly important role whatever the sce- Atmospheric concentration remain nario. Expanding gas use – delivering below 550 ppmv for the remainder of competitive and secure supplies to dis- the century and appear on track to stabi- tant customers – is perhaps the most im- lise below this level (figure 19). portant immediate way of safeguarding How do we think these scenarios – the environment. But we should not un- “… the which are much more detailed than I derestimate security of supply concerns. possibilities for have been able to reveal here – help us We develop these scenarios to help technological take better business decisions today? our own thinking. But engaging with the and They make us question our assump- views of others is an essential part of commercial tions about the way the energy system that. We also hope they can contribute innovation and will develop and the forces that will drive to the public debate on vital issues. the need to it. More specifically they remind us of For governments they illustrate the remain alert for the possibilities for technological and difficulty of identifying and pushing paradigm commercial innovation and of the need technological winners – particularly in a breaking to remain alert for paradigm breaking ad- period of rampant innovation – and the advances vances emerging from unexpected uncertainty of future energy paths. emerging from quarters. They reflect the dichotomy between unexpected I suspect that most oil people, when people’s personal choices and social quarters.” 10
  13. 13. Ged Davis – Evolving sources or revolutionary technology preferences. induced carbon dioxide emissions can be But they also demonstrate that halted within the next 50 years – leading governments have a key role in setting to a stabilising of atmospheric carbon di- the framework in which a dynamic, oxide levels below 550 ppmv – without commercial system can respond to jeopardising the energy system’s ability changing needs, choices and possibilities. to respond to our other needs as citizens They suggest that the rise in human- and consumers. “They suggest that the rise in human-induced carbon dioxide emissions can be halted within the next 50 years – leading to a stabilising of atmospheric carbon dioxide levels below 550 ppmv.” 11
  14. 14. Recent speeches by Group Managing Directors and other senior executives The new chemistry Jeroen van der Veer ● Remarks at the launch of Energy needs, choices and possibilities—scenarios to 2050 Philip Watts ● A new era - of openness and competition Philip Watts ● Thoughts generate energy Jeroen van der Veer ● Evolving Asian opportunities Harry Roels ● Oil market challenges in the Middle East and Asia Paul Skinner ● This publication is one of a range published by Group External Affairs, SI, Shell Centre, London SE1 7NA, England. For further copies, and for details of other titles available in English or as translations, please contact the External Affairs department of your local Shell company. Alternatively, write to the above address or fax +44 (0)20 7934 5555 quoting department reference PXXC, or telephone +44 (0)20 7934 5638. Information about the Royal Dutch/Shell Group of Companies, including downloadable versions of various publications, can be accessed at: © Shell International Limited (SI), 2001. Permission should be sought from SI before any part of this publication is reproduced, stored in a retrieval system, or transmitted by any other means. Agreement will normally be given, provided that the source is acknowledged. The companies in which Royal Dutch Petroleum Company and The “Shell” Transport and Trading Company, p.l.c., directly or indirectly own investments are separate and distinct entities. In this publication the expressions ‘Royal Dutch/Shell Group’ and ‘Group’ are used to refer to the companies of the Royal Dutch/Shell Group as a whole. The words ‘Shell’, ‘we’, ‘us’ and ‘our’ are used in some places to refer to the Group and in others to an individual Shell company or companies where no particular purpose is served by identifying the specific company or companies.