Shell energy scenarios


Shell recently published its energy scenarios, looking ahead to 2050. They provide two storylines of how the future energy system could look like (amidst many other possibilities of course), called Scrambles and Blueprints. In the former, governments act mostly unilateral and follow protectionist policies. Fear is the main advisor, fear to harm the national economy. Political tensions rise. In the Blueprints scenario, coalitions and international agreements gain traction, and besides the challenge, opportunities are seen. Not surprisingly, Blueprints is put forward as the preferred option of these two.


Three hard truths

Both scenarios are built on three main assumptions, called “the three hard truths”:

1)       A surge in energy demand

2)       Supply will struggle to keep pace

3)       Environmental stresses (from climate change) are increasing

Actually, only the first of these is really an assumption on which the scenarios are based. Probable as it is, it does pave the way towards downplaying the role that energy conservation and increased efficiency may play. The second and third points are evident (for most), and provide more of a backdrop against which to view these types of scenarios.


Energy use

Not surprisingly, the energy use in Blueprints will be lower than in Scrambles. But in both scenarios the energy use increases sharply, having doubled by 2050 (compared to 2000) or not too long thereafter. The majority of this energy still comes from fossil fuels in both scenarios. In Blueprints, a strong contribution of carbon capture and storage (CCS) is foreseen, which results in a significant difference in CO2 emissions between both scenarios. But even then, in both scenarios the CO2 concentration will surpass 450 ppm, the level above which dangerous effects are deemed very likely. That means we’d have to learn to live with a global warming of at least 2 degrees C (and more if CO2 continues to rise, which in these scenarios is unavoidable); no easy task if you’re a polar bear or if you live in Holland.


Scrambles has a relatively heavier reliance on coal (without CCS, so it’s basically a recipe for disaster). The reason why in Scrambles the use of biomass and renewables (solar and wind) is higher than in Blueprints is not entirely clear to me. A funny detail, pointed out to me by a colleague, is that in Blueprints the use of oil and gas (Shell’s core business) is slightly larger than in Scrambles. It probably has to do with the increased self reliance in the Scramble scenario, and therefore less reliance on oil and gas. Coal is much more widespread and abundant than the other fossil fuels. Another notable difference is that in Scramble, transportation will be fueled more and more by biomass, whereas in Blueprints transport will be increasingly electric (which is the most energy efficient).


Figure: energy-sources-in-both-shell-scenarios



I was rather surprised to hear the Shell spokesperson, in a presentation that I attended, so positive about the important role (to be) played by the grassroots environmental movement in the Blueprints scenario. He credited local activism with achieving meaningful change in the long run, calling it a bottom-up process of change. I misunderstood this as meaning that consumers had an important role to play. They clearly have in mind that the politics have to step up to the plate (and citizens in their political activism and voting behavior). Although that is of course very true, it sounded very much like he reduced the responsibilities of business corporations to follow and react to the (inter)national policies: Governments have to reduce investment uncertainty before business can be expected to step up to the plate. That doesn’t sound like entrepreneurship pur sang to me, but then again, I’m not an economist.


As an aside: The former director of Shell Solar in the Netherlands, Gosse Boxhoorn, said that “Shell could have been the biggest player in solar energy by now”. Instead, Shell decided to downsize their solar activities, and Boxhoorn went on to found his own solar cell manufacturing company, Solland Solar. (See an interview with Boxhoorn in Dutch here.)


I would like to give business, and especially multinationals, a bit more credit and a bit more responsibility than Shell seems to do. There are huge differences between companies in the extent to which they contribute to the problem or to the solution. That means that they apparently do have quite some choice in their investment policies and in their way of doing business.

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