Energy Needs Choices and Possibilities Scenarios to 2050
Energy Needs, Choices and Possibilities Scenarios to 2050 Peter Snowdon Senior Energy Consultant Royal Dutch/Shell Group © Shell International Ltd.
Introduction World faces fundamental energy challenge. Complex interplay between: -Social, political and market developments. -Scientific and technical advances. Energy companies vital role in delivering sustainable solutions – part of solution! Shell’s Long Term Energy Scenarios put forward two possibilities for energy mix over the next half century. © Shell International Ltd.
"Towards a European strategy for the security of energy supply" "EU's long-term strategy for energy supply security must be geared to ensuring, for the well being of its citizens and the proper functioning of the economy, the uninterrupted physical availability of energy products on the market, at a price which is affordable for all consumers, while respecting environmental concerns and looking towards sustainable development". © Shell International Ltd.
Shell’s Long Term Energy Scenarios What energy needs, choices and possibilities will shape a global energy system which halts the rise in human-induced carbon dioxide emissions within the next 50 years – leading to a stabilising of atmospheric carbon levels below 550 ppmv – without jeopardising economic development? © Shell International Ltd.
The first step These scenarios map a journey to 2050. The journey starts now. Decisions made today influence future. Scenarios inform on the future context. Scenarios inform today’s choices. © Shell International Ltd.
Challenging Assumptions with Scenarios - Alternative stories of future. - Not predictions/forecasts. - Credible stories ask “what if”, “how”. - Forces pushing along different paths? - Common language/framework/context. - Help managers plan for different futures: - Dynamics of business environment - Critical uncertainties - New possibilities - Strategic options - decisions © Shell International Ltd.
Scenarios and Business Strategy Focus of LTES Scenarios To 2050: “Explore” To 2020: “Grow” Emerging growth engines Short Term: “Execute” Future technology & business options; climate change implications Core Business © Shell International Ltd.
What Shapes Long Term Energy? The contributors by 2050 • demography: 8 -10 billion people © Shell International Ltd.
What Shapes Long Term Energy? The contributors by 2050 • demography: 8 -10 billion people • urbanisation: 80% living in cities © Shell International Ltd.
What Shapes Long Term Energy? The contributors by 2050 • demography: 8 -10 billion people • urbanisation: 80% living in cities • incomes: average $15 -25 k/capita © Shell International Ltd.
The First Rung of the Energy Ladder • Two billion people are cooking with traditional fuels. • Three billion people are just meeting basic energy requirements Source: UNDP © Shell International Ltd.
Climbing The Energy Ladder A Continuously Changing Relationship GJ/capita • +$25 k/capita: little extra energy needed. 350 US 300 Australia 250 200 EU 150 Korea 100 China 0 Japan • +$5 k/capita: industrialisation and mobility take off. Mexico Brazil India 50 Source: IMF, BP • +$15 k/capita: services start to dominate growth. • +$10 k/capita: industrialisation near complete. Thailand 0 5 10 15 20 GDP/capita (‘ 000 1997$ PPP) 25 30 35 © Shell International Ltd.
What Shapes Long Term Energy? The contributors by 2050 • demography: 8 -10 billion people • urbanisation: 80% living in cities • incomes: average $15 -25 k/capita © Shell International Ltd.
What Shapes Long Term Energy? The contributors by 2050 • demography: 8 -10 billion people • urbanisation: 80% living in cities • incomes: average $15 -25 k/capita • liberalisation: market possibilities © Shell International Ltd.
What Shapes Long Term Energy? The contributors by 2050 • demography: 8 -10 billion people • urbanisation: 80% living in cities • incomes: average $15 -25 k/capita • liberalisation: market possibilities • demand (2 -3 times increase) © Shell International Ltd.
Energy Demand Boundaries Average GJ per capita 200 Year 2050 100 50 Year 2000 0 0 On-going competition between new fuel supply and efficiency investment bounds energy demand prices 10 20 30 GDP per capita (‘ 000 1997 $ PPP) 40
What Shapes Long Term Energy? The contributors • • demography incomes urbanisation liberalisation The critical • Resource constraints • Technology • Social and personal priorities © Shell International Ltd.
Resource: The Oil Mountain million bbls per day 125 100 Ultimate Recoverable Resource 2% per annum 75 50 3, 000 bln bbls + 350 bln bbls of NGLs 7. 5% per annum + 850 bln bbls heavy oil and bitumen 25 excluding shales 0 1950 Source: based on USGS mean estimates, June, 2000 1975 2000 2025 2050
Resource: The Gas Mountain EJ 400 + 13, 000 EJ (2200 bln boe) unconventional 300 + 5, 000 EJ (1000 bln boe) 3% per annum 200 4% per annum 100 0 1950 1975 Source: based on USGS mean estimates, June 2000 and IPCC 2000 for unconventional 15, 000 EJ (2, 600 bln boe) 2000 2025 2050
Resource: Where it is Security through: Norway • storage • long term contracts Russia • inter-country agreements • fuel-switching • LNG Algeria CIS/ME
Resource: Renewables GJ per capita 1000 800 600 Hydro 400 Wind Demand Range Solar Geothermal 200 Biomass tal As To Afr i Mi ca & ddle N. A Ea fric st a Source: adapted from UN 2000, WEC 1994, and ABB 1998. Figures based on 10 billion people. FS rop Eu ca eri Am S. N. Am eri ca e U ia 0
Resource: Europe Renewables Estimates GJ per capita 125 Hydro 100 Wind 75 Solar 50 Geothermal 25 Biomass 0 Shell Source: adapted from UN WEA 2000, WEC 1994, and ABB 1998. Figures based on 0. 6 billion people. ABB WEC UN WEA
Resource: Europe Leads Wind Power Expansion Cumulative GW 1995 (5 GW) 80 2000 (18 GW) 60 2005 (58 GW) 40 2010 (145 GW) 20 0 Europe Source: BTM Consult Ap. S - March 2001 North America Asia Rest of World © Shell International Ltd.
What Shapes Long Term Energy? The critical • Resource constraints • Technology • Social and personal priorities © Shell International Ltd.
Technology: Discontinuities 1800 1850 Direct - Wood, Wind, Water, Animals Steam engine - Coal 1830 -1900 Electric dynamo - Coal 1900 -1940 Internal combustion engine - Oil 1910 -1970 1900 Nuclear 1970 -1990 CCGT - Gas 1990 -? 2000 MANUFACTURING ADVANTAGE 2050 Fuel Cell Hydrogen Direct Electricity Solar © Shell International Ltd.
Technology: The Benefits of Scale $ per peak watt 6 Materials and balance of System 3 fold reduction 5 4 Other BOS Inverter Other Panel 3 Materials 2 Plant 8 fold reduction 1 Overhead Labour Plant 0 Source: KPMG, 1999 20 MW Plant 1999 200 MW Plant
Technology: Efficiency Aluminium Prodn. Paper Pulp Prodn. Washing Machines Domestic Lighting “Best Demonstrated“ lighting requires 1/3 current consumption Refrigerators 0 20 40 60 Best Demonstrated as a % of Current Consumption Source: OECD, Global Warming, Economic Dimensions and Policy Responses, 1996 80 100
What Shapes Long Term Energy? The critical • Resource constraints • Technology • Social and personal priorities © Shell International Ltd.
Social and Personal Priorities: Choice “Renewable energy should add to energy security and economic and social cohesion” Loyola de Palacio EU VP Transport and Energy, Jan 2000 “I don’t want 7 plugs and 5 batteries -- I want a simple, hidden energy source that goes with me everywhere” Wired Magazine, 1999 © Shell International Ltd.
Energy Branching Points demographics Dynamics as Usual urbanisation ens z i t i C oices m h c y g r Ene nary syste o Evoluti Resource constraints Technologies Social & personal priorities Innovation and competition Energy C h Revoluti oices - Consum onary de e velopme rs nts incomes & demand liberalisation The Spirit of the Coming Age © Shell International Ltd.
Dynamics as Usual - Timeline - Need for clean, secure, sustainable energy push a path to Renewables. - Supported by gas in the medium term. - Vehicle efficiency advances prolongs oil use. 2005 Hybrid vehicles proliferate 2006 2007 2010 “Dash for Gas” 2008 2009 2015 Oil price decline triggers resource expansion 2010 2020 OECD renewables stall at 20% of electricity supply Gas security concerns emerge 2030 New nuclear stalls Next generation of renewables emerges 2040 Oil scarcity drives biofuels expansion © Shell International Ltd.
US Petrol Demand Decoupling from Income Index 1950=100 350 300 GDP per capita 250 200 150 Gasoline sales per capita 100 1950 Source: US EIA, 1999 1970 1990 2010
Rising Health Concerns of Ageing OECD Populations % of UK popn. indicating most important events 50 Family events 40 Health 30 20 10 Employment 0 16 -24 Source: UK Public Opinion Survey, 1994 25 -39 40 -54 55 -64 65+
“Rumors of my death are greatly exaggerated” Mark Twain 80 mpg Direct Injection A New Life for Internal Combustion Engines 60 mpg Hybrid © Shell International Ltd.
Dynamics as Usual: Oil Price 2000 $ per barrel 40 30 20 10 Dynamics as Usual 0 1970 1980 1990 2000 2010 2020 2030 © Shell International Ltd.
“Dash for Gas” Local air quality concerns in Asia Gas and power liberalisation High efficiency CCGT LNG spot market Global Dash For Gas CO 2 gas substitution Nuclear and coal decommissioning
Asian Gas Grid 2020 Sakhalin Yakutsk major demand major supply LNG flows Turkmenistan West Baikal pipelines Ordos Iran Tarim Sichuan a Oman a n Natu ay p m a Mal
Gas Security Concerns Gas Imports as % of Energy Consumption 25 W. Europe 20 Japan 15 10 North East Asia 5 0 1970 2000 2030 © Shell International Ltd.
A Tale of Two Eras Renewables Growth and Plateau 75 EJ • strong government support • environment and security 50 • green power niches open • intermittence constraints 25 • saturated OECD demand • planning blockages 0 2000 2010 2020 2030
Branching Point 2025 Gas? Nuclear? Rene wable 2010 2020 2030 s?
Ubiquitous Solar 2030 Diverse Storage Thermal Pumped hydro Compressed air Chemical Source: NREL, 2000
The Orderly Oil Transition 2040
Primary Energy: Global
Primary Energy: Europe
Energy Transitions: Global % of Primary Energy 80 Traditional Coal 60 Oil 40 Gas Renewables 20 Hydro 0 1850 1900 1950 Biofuels Nuclear 2000 2050
Energy Transitions: Europe Oil Coal Gas Renewables Hydro Nuclear Biofuels © Shell International Ltd.
Dynamics as Usual - Timeline - Need for clean, secure, sustainable energy push a path to Renewables. - Supported by gas in the medium term. - Vehicle efficiency advances prolongs oil use. 2005 Hybrid vehicles proliferate 2006 2007 2010 “Dash for Gas” 2008 2009 2015 Oil price decline triggers resource expansion 2010 2020 OECD renewables stall at 20% of electricity supply Gas security concerns emerge 2030 New nuclear stalls Next generation of renewables emerges 2040 Oil scarcity drives biofuels expansion © Shell International Ltd.
Energy Branching Points demographics Dynamics as Usual urbanisation zens i t i C s choice m y g r e n E yste s y r a n o Evoluti Resource constraints Technologies Social & personal priorities Innovation and competition Energy C h Revolutio oices - Consum er nary dev elopmen s ts incomes & demand liberalisation The Spirit of the Coming Age © Shell International Ltd.
Spirit of the Coming Age - Timeline - Consumer demands convenience, independence. - Supported by advanced hydrocarbon technologies. - Infrastructure bridge to a hydrogen economy. 2005 First stationary and vehicular fuel cells 2010 Gas expands Fuel cell innovations Renewables limited to niches 2015 Convergence around fuel cells for transport and stationary uses -- gas network backbone 2020 Unconventional oil & gas expand in China/India Fuel cells reach 25% of sales in OECD 2030 Solid H 2 storage transition Renewables pulled by strong H 2 demand 2040 H 2 infrastructure expansion © Shell International Ltd.
1908 Personal Transport
Breaking Paradigms Mobile music Mobile and Personal computing
Thresholds Crossed What options would 12 litres of fuel for 400 kilometres create?
Fuel Convenience Freedom with
Conventional ICE and Fuel Cell Vehicles What makes a FC vehicle attractive: • high on-board power generation • unlimited and remote heating & cooling • noiseless operation • low maintenance • zero emission © Shell International Ltd.
One Size Fits All PEM Fuel Cell $ per k. W 100, 000 Vehicles • utilised 50% of time, not 5% 10, 000 Dwellings • heat & power from fuel cells 1, 000 • power from idle vehicles Gas turbine Rural Households & Industry 100 10 • small fuel cell CHP 1960 Source: Powering the Future, Koppel, 1999 1980 2000 2020
Fuel Cell Vehicle Share of Sales % of total 100 Global • clean, quiet 80 • low maintenance 60 • high performance OECD • mobile information 40 % of global natural gas sales 20 0 2000 2010 2020 2030 2040 2050 and entertainment • ICE cannot compete
China Leapfrog 2020 Air quality concerns and weak regulatory control Water scarcity in the north Supply security concerns - oil, gas, fertiliser China Hydrogen Economy Large coal resource Logistic constraints Land scarcity limits bio-fuels Mass transport & electric drive for uneven terrain Global price for CO 2 CH 4 and H 2 from coal Advanced membranes Fuel cells
Oil is Not Needed Million bbls per day 125 100 75 50 25 0 1975 2000 2025 2050 © Shell International Ltd.
The Great Game of Gas Oil and Gas Demand Million bbls per day 150 100 Oil 50 Gas 0 1970 2000 2030 © Shell International Ltd.
Oil Price Comparison 2000 $ per barrel 40 Spirit of the Coming Age 30 20 10 0 1970 1980 1990 2000 2010 2020 2030 © Shell International Ltd.
Primary Energy: Global © Shell International Ltd.
Primary Energy: Europe © Shell International Ltd.
Energy Transitions: Global Oil Coal Gas Renewables Hydro Nuclear Biofuels © Shell International Ltd.
Energy Transitions: Europe Oil Coal Gas Renewables Hydro Nuclear Biofuels © Shell International Ltd.
Emergence of the Hydrogen Economy Ratio of Hydrogen (H) to Carbon (C) H / (H+C) 102 101 100 Hydrogen Economy Methane: H/C = 4 Oil: H/C = 2 Methane Economy Coal: H/C = 1 Wood: H/C = 0. 1 10 -1 Including traditional biomass 1800 Source: IIASA, Nakicenovic 1900 0. 05 0. 09 t = 300 years (length of process) 10 -2 0. 90 0. 80 0. 67 2000 2100 Non-Fossil Hydrogen
Spirit of the Coming Age - Timeline - Consumer demands convenience, independence. - Supported by advanced hydrocarbon technologies. - Infrastructure bridge to a hydrogen economy. 2005 First stationary and vehicular fuel cells 2010 Gas expands Fuel cell innovations Renewables limited to niches 2015 Convergence around fuel cells for transport and stationary uses -- gas network backbone 2020 Unconventional oil & gas expand in China/India Fuel cells reach 25% of sales in OECD 2030 Solid H 2 storage transition Renewables pulled by strong H 2 demand 2040 H 2 infrastructure expansion © Shell International Ltd.
Shell’s Long Term Energy Scenarios What energy needs, choices and possibilities will shape a global energy system which halts the rise in human-induced carbon dioxide emissions within the next 50 years – leading to a stabilising of atmospheric carbon levels below 550 ppmv – without jeopardising economic development? © Shell International Ltd.
CO 2 Emissions and Atmospheric Concentration billion tonnes carbon ppmv 14 550 Spirit of the Coming Age 12 Spirit of the Coming Age 500 10 450 8 Dynamics as Usual 6 400 Dynamics as Usual 4 350 2 0 300 1975 2000 2025 2050 2075 2100 © Shell International Ltd.
Long Term Energy Scenarios Dynamics as Usual Spirit of the Coming Age “Health and Security” “Convenient and Unobtrusive” Incumbent technologies respond. Revolutionary new technologies. Renewables promoted. Convergence around fuel cells. Gas favoured but security concerns. Abundant gas provides backbone Renewables ‘boom then bust’ until new generation and storage solutions emerge around 2025. Large scale Renewables pulled by H 2 demand post 2030. Towards a renewables dominant electricity and liquid fuels world Towards a fuel cell dominant hydrogen economy © Shell International Ltd.
Energy Scenarios – Key Points • Energy systems are dynamic – responding to changing conditions, choices and possibilities. • Rise in human-induced CO 2 emissions could be halted within the next 50 years – leading to stabilisation of atmospheric concentrations below 550 parts-per-million. • Gas will move to centre stage as the bridging fuel. • Renewable energy sources have the potential to meet long term energy needs. © Shell International Ltd.
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