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Royal Dutch Shell's New Lens Scenarios

13/5/2013

3 Comments

 
Shell’s New Lens Scenarios mark the company’s 40th year of working with scenarios that anticipate the future.  Their newest set of scenarios seek to consider what the world may look like in the year 2100. In honor of their 40th year of crafting scenarios, it would be worthwhile to review just what Shell anticipates for the future.

According to Shell, “The world in the future will be defined by how people and governments meet the challenges posed by institutions, inequality, and insecurity in relation to the paradoxes of prosperity, leadership, and connectivity.”  Keeping this statement in mind, New Lens uses two very different scenarios to explore the future: Mountains, and Oceans.

In “Mountains”, Shell sees a world where those in power seek to maintain and promote the status quo. Economic development is moderate, while environmental and energy policy transforms our global transportation network to create cities that are more compact. Shell sees natural gas as the foundation for the world’s energy, with demand in oil peaking around the year 2035. Towards the end of the century hydrogen and electricity will be the energy source of choice to run automobiles.

Shell sees the world not achieving the goal of limiting global warming by 2°C, despite a decline in green house gas emissions beginning after 2030.

In “Oceans”, influence and power are more diffused. The world is more prosperous, but also more volatile. Market forces and society shape the world’s energy system, much more than government policy. Both oil and coal continue to play a major role, while natural gas and nuclear power, hampered by public resistance, slow technology adoption, and policy inertia, experiences limited growth. High energy prices and demand cause oil resources to be developed in hard to reach places, but demand plateaus around 2040. In the 2060s, solar becomes the largest primary source of energy, spurred on by the high prices which helped to encourage increased efficiency.

Shell’s glimpses into the future are intriguing, and Shell certainly puts much rigor into New Lens. Their outlook on the balance of power is very interesting, though there are a few things left that need resolution. Both shifts to alternative energy sources take place after peaks in demand. In making the transition to the next energy source in both scenarios, one can wonder how that transition will play out in the energy markets. Another observation is that presenting only two visions of the future, over a very long time horizon and with a very broad remit, seem a little limiting. The future may turn out to be more pluralistic than two scenarios on their own suggest.

In the end, 40 years of exploring the future is very admirable. Shell has set an example for other companies to follow in their ongoing efforts of studying the future. While there are some minor issues with the New Lens scenarios, both Mountains and Oceans present interesting views of the future and equally interesting implications. As a Futurist, but more importantly as a human being, I wonder which of these two futures we shall actually enjoy?

Jason Swanson
© The European Futures Observatory 2013

Resources:

The scenarios can be accessed at: http://www.shell.com/global/future-energy/scenarios/new-lens-scenarios.html

3 Comments

Have We Seen The End Of Peak Oil?

22/11/2012

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Are we entering an Age of Scarcity? For a number of years, our stock answer to this question is that we are. This answer was formed, in part, by the view that Peak Oil - the point at which 50% of the oil resources of the planet were out of the ground - had been passed. A recent report by the International Energy Association suggests that this assumption could be mistaken. According to the IEA, the production of oil in the United States is growing at a pace that will make it the worlds largest oil producer by 2020, and which will leave the US self-sufficient in energy by 2035. The IEA report also suggests that American production of oil will outstrip that of the current oil producers, such as Saudi Arabia, by 2020. This forecast is shown in the graph, which originates from The Economist, using IEA data.

There is a bit more to the story than just the changing patterns of energy production. There is also an appreciation of the impact of water resources upon energy production. This is a point made in a piece in the Daily Telegraph, that modern energy production tends to be rather water intensive. It highlights that our future potential energy abundance could be curtailed by water shortages. A different approach was taken in the New York Times, which highlighted some of the assumptions made by the IEA about energy usage in the US. It would appear that the forecast relies heavily on the introduction and widespread use of energy saving technologies in the US, to place something of a cap upon the consumption of oil derived products.

Where does that leave the scarcity agenda? In one respect, we could take the view that the whole issue of Peak Oil has been something of an alarmist position, and that the worst aspects of Peak Oil were never going to happen. There is an element of truth in this view. The concept of Peak Oil, as used by futurists, served as something of a warning of an unpleasant future for which there was time to avoid. We could take the view that this is happening.

In many respects, this reinforces the scarcity agenda. One could argue that, in the face of an impending shortage of oil, the price mechanism has worked to ensure that technologies have been developed to secure a new supply of oil, and are currently working to improve a more efficient use of the oil which we do have. This was always going to be the path out of scarcity, in which case, we could say, the whole scarcity agenda has had an effect.

We are caught between the two positions. The development of new production methods for extracting oil are not cost free. They tend to have a large environmental footprint, the externalities of which are nowhere near being covered in the current market price of oil. It is almost a position where we can continue to drive our cars, but at the costs of the environment. There is also a case to say that we are moving a key scarcity from one area (oil) to another (water). In doing so, we are fudging the problem rather than solving it.

There is a case to say that we have seen the end of Peak Oil - for the moment - but that does not mean that we have grounds to rejoice. We have yet to see the full bill for this development.

Stephen Aguilar-Millan
© The European Futures Observatory 2012

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    Stephen Aguilar-Millan

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