are blinkered corporations fixated on little more than seeking out the last drop of oil.
Shell currently makes two scenarios available to a wider public audience. Entitled Scramble and Blueprints, they present differing ways in which the world may change over the next 40 years or so (see boxes). Scramble, as its name suggests, is a world characterised by knee-jerk behaviour, where radical decisions relating to climate change are put off for political reasons; when it comes to energy security, it’s a case of every man, or country, for themselves. While the alternative scenario, Blueprints, doesn’t offer a vision of Utopia, it is rather more optimistic. In the world of Blueprints, governments, cities and international organisations generally react more promptly to political and environmental events – even anticipate them – and secure greater political support from the public for their around in the geopolitical equivalent of the Large Hadron Collider, Bentham’s argument that Shell’s scenarios are ‘probably as influential as they have ever been’ would seem to have some merit. ‘It’s the kind of era where there’s plenty of risk and uncertainty that people need to address,’ he says.
One suspects that Bentham is used to reaching for the hard hat when confronted with sceptics who question just what business an oil company has – other than for reasons of cynical self-interest – in producing long-term scenarios that may influence international policies and frameworks. ‘We’re focused on the things that affect our business,’ he admits. ‘Scenarios have a proven value – many of our investments are multi-decadal. We use them as an approach to make better business decisions.
‘We recognise that the world is a complex and changing environment,’ he continues. ‘There are some things that are
The scenarios are drawn up by a full-time team of up to 400 in-house and external specialists in economics, energy, politics, urbanisation,
demographics and organisational psychology actions. The result is far lower carbon dioxide emissions than are envisaged under Scramble.
Neither Scramble nor Blueprints represents a best- or worstcase vision, and that’s the point, says, Jeremy Bentham, Shell’s vice president for business environment, who oversees the company’s scenario programme. ‘Scramble and Blueprints aren’t extreme,’ he says. ‘They’re not saying, “What happens if nothing changes, or if everything changes tomorrow?” because that’s just implausible. So we map out the most sluggish boundaries of the pace of change, and the most plausible accelerated pace of change.’
p roven value The scenarios are drawn up by a full-time team of up to 400 in-house and external specialists in economics, energy, politics, urbanisation, demographics and organisational psychology. And at a time when climate change, energy security, renewable energy and economic turbulence seem to be flying predictable, but we’re looking at the way people make choices, and how that can shape different pathways to the future. We are trying to get a sense of the likely future landscape so we can test our choices and strategies against different prospects, and identify new prospects and threats that we may not have been aware of.
‘It helps our top decision-makers be aware of the scale of uncertainties, so that they can be more responsive at a deeper level,’ he says. ‘There’s a human bias in assuming we are more masters of our future than we actually are; it’s easy to think that if you put enough effort into an intention, it will turn into an outcome. Scenarios put a greater humility into leadership.’
Shell has drawn on scenarios for the past 40 years, and they helped the company anticipate the 1970s Middle East oil crises ahead of some of its rivals. But they can also go awry. ‘In the late 1990s, we were faced with a lowoil-price scenario and a high-oil-price scenario,’
32 www.geographical.co.uk february 2011 | climate scenario planning |
Bentham says. ‘By 1998–99, the oil price had collapsed to US$10 a barrel – the company made an error in gravitating towards the low-price scenario and missed the signals that it wasn’t going to stay like that.’
energy i nsecurit y Shell isn’t alone in producing scenarios. The Paris-based International Energy Agency (IEA) republished its own scenarios last November. Its Baseline scenario assumes that the world keeps guzzling fossil fuels at the present rate, with energy-related CO2 emissions almost doubling to 57 gigatonnes by 2050; while its Blue scenario calculates how things might look if atmospheric carbon is restricted to 450 parts per million (ppm), achieved by halving global energy-related CO2 emissions by 2050 compared with 2005 levels. Under the latter scenario, the global demand for oil, gas and coal in 2050 would be lower than today; world oil demand would be 27 per cent lower than in 2007, and oil demand in the
Blueprints n Responses to events are generally prompt, and potential outcomes are anticipated and acted on before they unfold n Broader fears about lifestyle and economic prospects forge new alliances that promote action in developed and developing nations n Initiatives take root locally as individual cities or regions take the lead. Carbon-trading markets become more efficient and CO2 prices strengthen early n Cleaner energy such as wind and solar increasingly exploited n Fear of change is moderated; substantial action, such as taxes and incentives in relation to energy and CO2 emissions, becomes politically possible and is implemented quickly n Progressive cities across the globe share good practices in efficient infrastructure development, congestion management and integrated heat and power supply n By 2050, more than 60 per cent of electricity is generated by non-fossil sources n By 2055, the USA and the EU use an average of a third less energy per capita than today. Chinese energy use has peaked. India’s is still rising n Almost 90 per cent of all coal-fired and gas-fired power stations in the OECD and half in the non-OECD world have been equipped with carbon capture and storage technologies by 2050 n Growth in electric vehicles allows most nations to enter the plateau of oil production without the shocks they would otherwise have experienced
Scramble n A world of bilateral government deals between energy producers and energy consumers. National governments compete with each other for favourable terms of supply. Major resource holders are increasingly the rule makers n Environmental policy isn’t seriously addressed until major climate events stimulate political responses. Curbing energy demand and economic growth is too unpopular for politicians n Global economic development continues unabated up to
2025 – mainly because of coal n First-generation biofuels compete with food production,
driving up world market prices and destroying large areas of rainforest n Governments finally take steps to moderate energy demand,
but because pressures have already built up to a critical level, their actions are often ill-considered, politically driven knee-jerk responses n Debate focuses on maintaining economic growth, especially in emerging economies, leaving the climate change agenda largely disregarded. Alarm fatigue afflicts the general public n High domestic prices and exceptionally demanding standards imposed by governments provoke significant advances in energy efficiency. Biomass represents around 15 per cent of primary energy by 2050 n But the world is 20 years behind where it would have been had it set up a meaningful international approach to energy security and climate change mitigation by 2015 n Restoration of economic growth means that vigorous energy consumption resumes, with a rebound in CO2 emissions n Having avoided difficult choices early on, nations face expensive consequences beyond 2050
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