The world can no longer avoid three hard truths about energy supply and demand: (1) an enormous change in global energy use, (2) supply will struggle to keep pace and (3) environmental stresses are increasing.
Natural innovation and competition could spur improvements in energy efficiency, which would reduce pressure on the demand side. Ordinary rates of supply growth – taking into account technological, geological, competitive, financial and political realities – could naturally boost energy production by about 50%. Despite such a combination of extraordinary demand moderation and extraordinary production acceleration, this still leaves a gap between business-as-usual supply and business-as-usual demand.
Profound change is inevitable, but how will it happen? There are two possible worlds in 2050:
Scramble scenario
Scramble reflects a focus on national energy security. Immediate pressures drive decision makers, especially the need to secure energy supply in the near future for themselves and their allies. Agreements are negotiated bilaterally. Growth in coal and biofuels becomes particularly significant.
Despite increasing rhetoric, action to address climate change and encourage energy efficiency is pushed into the future, leading to largely sequential attention to supply, demand and climate stresses. Demand-side policy is not pursued meaningfully until supply limitations are acute. Likewise, environmental policy is not seriously addressed until major climate events stimulate political responses. Although the rate of growth of atmospheric CO2 has been moderated by the end of the period, the concentration is on a path to a long-term level well above 550 ppm. An increasing fraction of economic activity and innovation is ultimately directed towards preparing for the impact of climate change.
Blueprints scenario
In the Blueprints scenario, action to manage energy use better is driven by a combination of concerns both about the available supply of resources but also environmental interests and the commercial opportunities presented by a transforming energy system.
Alliances to drive better economic and lifestyle prospects are increasingly initiated by coalitions recognising new mutual interests, then adopted at a local level and increasingly mainstreamed across geographies where interests are shared.
This is not driven by global altruism. Initiatives first take root locally as individual cities or regions take the lead. These become progressively linked as national governments are forced to harmonise resulting patchworks of measures and take advantage of the opportunities afforded by these emerging political initiatives. Indeed, even the prospect of a patchwork of different policies drives businesses to lobby for regulatory clarity. The rate of growth of atmospheric CO2 is constrained leading to a more sustainable environmental pathway.
Will national governments simply Scramble to secure their own energy supplies? Or will new Blueprints emerge from coalitions between various levels of societies and government, ranging from the local to the international, that begin to add up to a new energy framework?
Based on current and planned policies, the overall CO2 future is likely to be closer to the Scramble scenario than to Blueprints. The chief question the world must ask itself is: What more can be done now to achieve the faster than Blueprints profile that is so vital to a sustainable energy future?
The policies in place in the next five years shape investment for the next ten years, which largely shape the global energy picture out to 2050. [Source: Shell energy scenarios]
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Video: Shell energy scenarios