The maximum sustainable ecological footprint for a person on earth is often talked about. If we want to know how many people the earth can feed without commercial energy sources, we have to look back to 1750, the eve of the industrial revolution.
At that time, the world's population was about 800 million and famines provided the balance between the food supply and the size of the population.
According to the Anglican parson and economist Malthus, this would never change. But not so. The population of 800million is now 6.6billion and this growth was made possible by mechanisation, artificial fertilisers, industrialisation and transport - and the key to all this is energy.
At Shell we talk about 'hard truths':
- The world population is growing, as is average prosperity. Together this means a further growth in the demand for energy - a doubling in demand by 2050 is possibly even a low estimate.
- Easy oil and gas - reserves that are readily recoverable at relatively low cost - will not be able to keep pace with this growing demand for energy. The solution is to take more unconventional oil and gas reserves into production. More coal and alternative energy sources will have to be used too.
- However, alternative energy sources will not be able to provide a significant share of the energy supply in the short term. Technological breakthroughs are needed for this and they require time. It would be a tremendous achievement if alternative energy were to have a 30 per cent market share by 2050, with half coming from biomass.
Taken together, points two and three will also mean that carbon dioxide (CO2) production would continue to grow so that quick and large-scale CO2 solutions would be needed.
A great deal of money, commitment and brainpower will be required if we are to achieve 30 per cent alternative energy by 2050. And even if we succeed, in 2050 fossil fuels will still play - and will have to play - a large role because no alternative energy technology that offers solutions to every problem is looming on the horizon.
Energy transition is not a question of this or that but rather of this and that and that and that... the list becomes long: fossil fuel sources, conventional and unconventional, and a lot of coal too. Plus sustainable sources like wind and the sun and increasingly more modern biofuels. Shell is participating worldwide in a series of technology developments aimed at converting non-food biomaterials into engine fuels - even including the cultivating of algae.
Certainly up until 2050 the world will have to make do with the growth in the energy sources known today and with technologies that are currently being developed. In addition, a serious policy is needed to improve the capture and storage of CO2 along the entire line.
Nuclear power will also have a role to play in the energy mix ahead, but for the time being its role will be small. Although new nuclear power plants are being built, in the 50 years ahead the majority of the current plants will come to the end of their service life. Nuclear power will thus have to run very fast just to move a small distance forward.
Hydro energy will grow only slightly, due to social resistance to large-scale violations of natural landscapes and the forced relocation of people.
Seen as a whole, the entire picture leaves the possibility open that in 2050 fossil fuels will still be fulfilling some 60 per cent of the demand for energy. This would mean that oil, gas and especially coal would together account for 275 million oil-equivalent barrels, considerably more than the 190 million of today.
More fossil fuels mean more CO2. More unconventional oil and gas mean even more CO2. That is why hard work must be done on the only technology that offers the possibility of neutralising large amounts of greenhouse gases in the short term, namely CCS: carbon capture and storage.
Every year, many billions of tonnes of CO2 have to be captured and stored. If we desire to make inroads together into the CO2 problem, then the governments involved have to put suitable laws, regulations and conditions into place quickly.
A transparent financing system is also needed; in Shell's vision, preferably by making European Trading System (ETS) emission certificates available for stored tonnes of CO2. After all, a permanently stored tonne of CO2 is just as important as a tonne of prevented CO2 production.
Shell scenarios
Shell has published new energy scenarios earlier this year. They are looking ahead to 2050. Two possible developments are described.
The first is referred to as Scramble. In Scramble energy nationalism dominates; each country tries to gain access to as many energy sources as it can for its sole use. Despite much rhetoric, little is done in terms of collective CO2 reduction.
Scramble is mainly a scenario of 'everyone for themselves' with little thought for energy saving. This creates a collision between demand and supply to which governments respond with draconian measures, for example, dramatic restrictions on individual mobility.
The other scenario is called Blueprints. In Blueprints, all kinds of initially unstructured activities and actions ultimately result in a coordinated approach towards assured supplies, fuel stocks and protection of the environment and climate. Here and there coalitions of groups are formed - countries and companies - that are willing to take the lead in this.
CCS technology receives a great deal of attention, as does the development of electrical cars. This attention to technology results in the de-linking of economic growth and CO2 emissions.
Shell has a 30-year history in drawing up long-term scenarios. However, the company has never before voiced a preference for a particular scenario. But this time we are doing just that; at every presentation, chief executive Jeroen van der Veer emphasises that the Blueprints model is preferable despite the larger role that governments would have to play in determining policy.
Various media reports have already pointed out the apparent contradiction of a multinational asking for more government influence. But we believe that oil companies cannot realise the necessary changes on their own. As Mr Van der Veer commented: "The energy problem cannot be left to pure capitalism; governments and companies will have to work together."
Blueprints is a world in which increasingly more consumers and investors realise that change does not have to be painful and, yes, it can even offer appealing opportunities.
In this way, more substantial and repeated actions in the fields of energy transition and CO2 reduction become feasible for governments.
In, utilities that rely on coal and natural gas will be required to implement strict CO2 abatement technologies, not just in America but in other key countries as well. By 2050, almost 90 per cent of all coal-fired and gas-fired power stations in the OECD countries will be equipped with technologies to capture CO2 and store it in underground aquifers or depleted oil and gas fields. In developing countries, CO2 capture will take place at 50 per cent of power stations.
If we succeed in deploying CO2 capture and storage technology at this level, by 2050 overall CO2 emissions will be 30 per cent lower than in a world without CO2 capture and storage. Today this applies to not a single power plant - if we exclude some R&D facilities. It's currently too expensive and the necessary legislation and regulations are still absent.
The final balance of Blueprints is a world in 2050 in which the greatest possible contribution is made to energy saving, energy transition and CO2 management against the lowest possible cost.
Revolution ahead
The energy transition will not become a velvet revolution, it's too big for that, too complex and the positions of all the stakeholders are too varied. But if we think things through together rationally, the change process will be manageable.
Energy companies will have an important role to play in this transition and Shell is working on many fronts, including:
- Converting any carbon-containing substance into liquid oil products, such as gas to liquids, coal to liquids and biomass to liquids.
- Capturing and storing CO2.
- Developing sustainable energy sources including second-generation biofuels;
- Better chain efficiency in the various industrial refining and chemical processes; and
- Participating in systems aimed at dealing as efficiently as possible with reducing CO2 emissions, including a dedicated cap and trade system.
In the downstream sector too we are facing challenges, each of significant technological substance. The further improvement of the energy efficiency of our refineries and chemical complexes is important. Improved chain efficiency, so that the by-products of one process provide the starting materials for another, will deliver a clear return on investment - the cradle-to-cradle principle.
The energy system of the world as we know it today will surely disappear: in the age of fossil fuels, humanity has asked more of the planet than it could bear - now the time has come for us to shoulder more of the burden.
E-ECE