SeekerBlog

I just subscribed to an email-alert from Shell Oil for bulletins on their energy scenario planning:

In 2008 Shell will present its new Energy Scenarios to 2050, Scramble and Blueprints. These scenarios are built on predetermined factors of three hard truths about energy:

1. There is step change in demand for energy driven by growing population and increasing prosperity
2. Easy oil and gas will not be able to match this pace of growth. In fact all energy sources together will struggle to match demand, which will have to be met partly by new energy efficiency technology. The world is going to need all the energy it can get.
3. Environmental stresses, both local pollution and climate change are increasing.

They will explore two plausible and possible futures of the world energy system as it reacts to these truths and evolves under the influence of regulatory and technological change. More information will be made available here in April 2008.

Shell CEO Jeroen van der Veer sent a memo on this topic to all employees — the memo is now public on the Shell site. I think the Shell public information effort is timed to their presentation at the World Economic Forum in Davos. The Shell CEO also gave a short interview to the NY Times — his comments echo the memo:

Q. What are the main findings of Shell’s two scenarios?

A. Scramble is where key actors, like governments, make it their primary focus to do a good job for their own country. So they look after their self-interest and try to optimize within their own boundaries what they try to do. Blueprints is basically all the international initiatives, like Kyoto, like Bali, or like a future Copenhagen. They start very slowly but before not too long they become relatively successful. This is a model of international cooperation.

Q. Your first scenario looks very similar to today’s world, with energy nationalism, competition for resources and little attention to consumption.

A. It depends where you live. I realize there are different opinions about Kyoto in the world. But if you think about Bali, Bali is a good outcome if people can agree how to have useful discussion in the coming two years and the United States, China and India are on board. The Blueprints world is maybe a world that starts slowly and is not that easily feasible, but you see some early indicators that it is a realistic possibility.

Q. The world seems to be at some form of inflection point with a big shift in demand.

A. The basic drivers are pretty easy and they are twofold. You go from six billion people to nine billion people basically in 2050. This combination of many more people climbing the energy ladder, which is basically welfare for a lot of people who live in poverty, creates that enormous demand for energy.

…Q. More energy means more carbon emissions. How do you deal with that?

A. That is absolutely the crux of the matter. The principal way we see is that in the very short term, man-made carbon emissions will increase. But over time people will figure out ways — and we work very hard on that — that while using fossil fuels you try to find carbon dioxide solutions. For instance, carbon sequestration. The problem is that many of the renewables, if you take the subsidies out, are still too expensive. That is the dilemma we face now.

Q. Fossil fuels are still going to represent the lion’s share of the energy mix in the next century?

A. First, there is no lack in itself of oil or gas, or coal for that matter. But the problem is that the easy-to-produce oil or easy-to-produce gas will be depleted or with difficult access. But if you look at difficult oil or difficult gas, which we in the industry call the unconventionals, such as oil sands or shales, they may be exploitable. But per barrel, you need a lot more technology and a lot more investments, and per barrel you need a lot more brain to produce it. It’s much more expensive.

Q. What kind of alternatives can compete?

A. The competition is partly true competition — markets, inventions — and part of it is governments. I think if you can price carbon dioxide, probably you can stimulate carbon capture and sequestration. If you tax a certain form of energy, over time it gets more expensive and you may use less of it.