Shell CEO Presents Two Scenarios For the Future of Energy

The chief executive of Shell has posted this article on Shell's new energy scenarios. I was made aware of it by The Oil Drum, who first posted it at http://www.theoildrum.com/node/3548 and I thought it was worth repeating for your comments. They had a large number, 153, of mostly very insightful comments at the time of this posting. 

The article supports the peak oil theory, as I envision it. They defined it as the time that easy accessible oil will no longer be able to keep up with demand, their estimate being 2015.  I interpret that as meaning that heavy oil, as in the tar sands of Canada and the heavy oil in Venezuela, and oil shale are not significant sources of oil by 2015 and that their addition will cause significant increases in the price of oil which will have an effect on demand. The exact date is not that important, but it is meaningful that they predict a relatively near date, within the next 10 years.

They also predict that A growing number of cars are powered by electricity and hydrogen.  I think they underemphasize this important factor in reducing our consumption of oil, and believe that hydrogen will not play that important a role. I think a very aggressive development of PHEVs, EVs and biofuels combined with North Americas' (USA, Mexico and Canada) remaining reserves of oil should be able to supply all our needs to power our vehicles and have some expensive oil left over to export to other countries before 2100, hopefully by 2050.

The statements that more nuclear power will be required and that carbon capture and sequesteration (CCS) must be required on coal powered power plants in all developed countries are right in line with my thinking.  In the interim period, until renewable power can replace all aging nuclear and coal powered plants, these power sources will be required, no matter how much power is saved by increased efficiency in the home and in industry. From the economic point of view nuclear power has the clear advantage over coal when CCS is required on coal plants. However there is opposition to nuclear in some quarters and will be as long as the threats of proliferation and problems with waste disposal remain issues.  To me the ideal situation would be thorium fueled plants with fuel recycling.  However it will be a very long time before there is any consensus on that.

The complete text of the article, as appears on the Shell website, is given below. The bold facing is mine.

Two Energy Futures

* By Jeroen van der Veer

By 2100, the world’s energy system will be radically different from today’s. Renewable energy like solar, wind, hydroelectricity, and biofuels will make up a large share of the energy mix, and nuclear energy, too, will have a place. Humans will have found ways of dealing with air pollution and greenhouse gas emissions. New technologies will have reduced the amount of energy needed to power buildings and vehicles.

Indeed, the distant future looks bright, but much depends on how we get there. There are two possible routes. Let’s call the first scenario Scramble. Like an off-road rally through a mountainous desert, it promises excitement and fierce competition. However, the unintended consequence of “more haste” will often be “less speed,” and many will crash along the way.

The alternative scenario can be called Blueprints, which resembles a cautious ride, with some false starts, on a road that is still under construction. Whether we arrive safely at our destination depends on the discipline of the drivers and the ingenuity of all those involved in the construction effort. Technological innovation provides the excitement.

Regardless of which route we choose, the world’s current predicament limits our room to maneuver. We are experiencing a step-change in the growth rate of energy demand due to rising population and economic development. After 2015, easily accessible supplies of oil and gas probably will no longer keep up with demand.

As a result, we will have no choice but to add other sources of energy – renewables, yes, but also more nuclear power and unconventional fossil fuels such as oil sands. Using more energy inevitably means emitting more CO2 at a time when climate change has become a critical global issue.

In the Scramble scenario, nations rush to secure energy resources for themselves, fearing that energy security is a zero-sum game, with clear winners and losers. The use of local coal and homegrown biofuels increases fast. Taking the path of least resistance, policymakers pay little attention to curbing energy consumption – until supplies run short. Likewise, despite much rhetoric, greenhouse gas emissions are not seriously addressed until major shocks trigger political reactions. Since these responses are overdue, they are severe and lead to energy price spikes and volatility.

The Blueprints scenario is less painful, even if the start is more disorderly. Numerous coalitions emerge to take on the challenges of economic development, energy security, and environmental pollution through cross-border cooperation. Much innovation occurs at the local level, as major cities develop links with industry to reduce local emissions. National governments introduce efficiency standards, taxes, and other policy instruments to improve the environmental performance of buildings, vehicles, and transport fuels.

Moreover, as calls for harmonization increase, policies converge across the globe. Cap-and-trade mechanisms that put a price on industrial CO2 emissions gain international acceptance. Rising CO2 prices in turn accelerate innovation, spawning breakthroughs. A growing number of cars are powered by electricity and hydrogen, while industrial facilities are fitted with technology to capture CO2 and store it underground.

Against the backdrop of these two equally plausible scenarios, we will know only in a few years whether December’s Bali declaration on climate change was just rhetoric or the start of a global effort to counter it. Much will depend on how attitudes evolve in China, the European Union, India, and the United States.

Shell traditionally uses its scenarios to prepare for the future without expressing a preference for one over another. But, faced with the need to manage climate risk for our investors and our descendants, we believe the Blueprints outcomes provide the best balance between economy, energy, and environment. For a second opinion, we appealed to climate change calculations made at the Massachusetts Institute of Technology. These calculations indicate that a Blueprints world with CO2 capture and storage results in the least amount of climate change, provided emissions of other major manmade greenhouse gases are similarly reduced.

But the Blueprints scenario will be realized only if policymakers agree on a global approach to emissions trading and actively promote energy efficiency and new technology in four sectors: heat and power generation, industry, transport, and buildings.

This will require hard work, and time is short. For example, Blueprints assumes CO2 is captured at 90% of all coal- and gas-fired power plants in developed countries by 2050, plus at least 50% of those in non-OECD countries. Today, none capture CO2. Because CO2 capture and storage adds costs and yields no revenues, government support is needed to make it happen quickly on a scale large enough to affect global emissions. At the least, companies should earn carbon credits for the CO2 they capture and store.

Blueprints will not be easy. But it offers the world the best chance of reaching a sustainable energy future unscathed, so we should explore this route with the same ingenuity and persistence that put humans on the moon and created the digital age.

The world faces a long voyage before it reaches a low-carbon energy system. Companies can suggest possible routes to get there, but governments are in the driver’s seat. And governments will determine whether we should prepare for bitter competition or a true team effort.

This article was distributed in cooperation with Project Syndicate (http://www.project-syndicate.org)

* Jeroen van der Veer, Chief Executive of Royal Dutch Shell plc, is Energy Community leader of the World Economic Forum energy industry partnership in 2007-2008 and chaired this year’s Energy Summit in Davos. He also chairs the Energy and Climate Change working group of the European Round Table of Industrialists.

Comments

[Al Fin]

Mostly par for the course. What is interesting is how the peak oil sites are reacting to these scenarios. They mostly see it all crashing down, without the sunny outlook of renewables and/or nuclear coming along to save the day.

I applaud the optimistic outlook of this blog, Jim. That is truly the only way to solve problems, by assuming they are solvable. Otherwise, all the doomseeking becomes self-fulfilling.

[Steven Carew]

Unfortunately this man is correct, with variables. No one knows what technology will come to lite in the next few years. I seriously question the time frame of 2050. It is my belief that we do not have that long. As more and more articles claim that sceintists are shocked by the fact that their projections are falling far short of the actuallity, and yet still keep the 2050 time frame, I am lead to believe that a more acurate time frome will be 2025.
Non of this has to happen. there are technologies out there including my own which could impact global warming as slowly or as fast as we wish. The problem is we are considered as the nuts of the world and dismissed,no matter how good our technologies are. Why? Because we do not fall into the capitalise scheme of things. Remember we as humans are prone to pick the worst part rather than the best. Think I am wrong then you answer why it has taken the guy from Texas some twenty plus years to get a patent on a machine, no matter how ungainly, that actually works to produce energy from very little input. It is so easy to discredit others, if you are an organization that has other interests and by the public is considered to credibility. MY next e-mail is going to the CEO whom wrote this aricle. Does anybody want to bet on wheather I get a reply?
Steve Carew

[Jason]

Ok Steve - I'll bite. What ya got that's so great?

[Danzig]

Jason,
You can discover what Steven Carew "has got" by visiting the website for Rhino Hydro. There are a few "update" items there, dated 2004.

But, the essence of Steve's invention is described under the "technical" menu selection, as follows:

"This electro generating plant employs magnets and springs to help create a perpetual motion which drives a generator. Thus giving you the electricity you need."

Get the picture, Jason? Hard to imagine Steve can't get funding . . .

[BornInZion]

Scramble = free market solution
Blueprints = Big Government solution

Isn't the ethanol monster a product of Blueprints?

[Lad]

Keep the motivation of this plan in mind. It's about what's best for Shell, not what's best for Humanity. Oil companies have always been about control of the oil market and maximzing profits. They now are about control of the whole energy market. That's why they now call themselves Energy Companies.

The answer to clean abundant energy for the whole world is not nuclear, wind, waves, coal, gas, or oil; these form of generation are but experiments and at the best interim solutions. The answer is devices that absorb solar light and heat energy and turn it into storable forms of energy. These energy devices disturb the environment, including the atmosphere, the least.

See the following: http://www.motherearthnews.com/uploadedFiles/articles/issues/2007-12-01/RenewableEnergy.pdf

and/or the following:

greyfalcon.net/greenenergy.png
greyfalcon.net/fossilenergy

[JohnBo]

Aren't we luckly there are good companies run by decent people that provide us with fine products and services, including energy. If companies were turned over to some of the kooks on this blog, they would soon crash along with our good quality of life...haha. JohnBo

[Gregor]

If Rhino Hydro was so great, these devices would be selling like hotcakes. In there Updates section, there last update was 2004. If you try to submit a request or get on the mailing list, the webpage fails.

If you were a wealthy man and this company needed funding, and based on the idea, wouldn't you invest in it. You would be the next Bill Gates.

This thing probably rates up there with the Ron Newman invention/scam. Newman is a complete fake and scam artist from what I've read about him.

[GreyFlcn]

I should be interesting to note.

The DOE just yanked their support out of their "FutureGen" carbon sequestration project.

gristmill.grist.org/story/2008/1/29/164910/497

With good reason too.
greyfalcon.net/costlycoal2

[Rex]

The statement should serve as a wake-up call to all of us about the state of our energy future. The National Hydrogen Association, of which Shell is a member, has witnessed great progress as the company invests heavily in alternatives energy solutions, including hydrogen. As the world seeks alternatives to oil and petroleum, Shell, along with other energy companies, is working with governments, companies and researchers around the world to create a global hydrogen infrastructure. Shell recently opened hydrogen filling stations in New York and Florida, and has others in various development stages, in order to help support the activities from automotive industry such as General Motors’ Project Driveway and Honda’s launch of the FCX Clarity in Southern California.

Our energy future demands continued leadership from industry and government as they continue to invest in hydrogen infrastructure activities today for the mutual benefit of having a global hydrogen economy tomorrow.

[Steven]

In response to all you naysayers. You would have been right up there proclaiming the world is flat. I know this seems too good to be true, I know it could sound like a scam. If it is a scam then why have I taken no money from the people whom are interested in buying? As far as selling like hot cakes how does 2500 purchasers in a four month unadvertised web site sound. The site was set up to guage real monitary interest. Speaking of which, if you put up the last amount of money to build a proper production prototype I would be happy to show you the technology used in this device which by the way is about 2000 years old.
Steve Carew