The world’s third largest oil and gas company has been getting creative with its models – with some interesting results. Shell’s latest report imagines an energy sector built on shale gas where large-scale renewables hardly feature, carbon capture and storage is available almost immediately, and carbon neutrality is achieved by 2100. But whatever happens the company projects significant emissions – and global temperature – rise.
Shell launched its New Lens Scenarios yesterday. Unlike similar reports focussing on recent energy trends and what they might mean the for next couple of decades, Shell’s modellers envisage a world that is radically different politically, economically and socially, stretching all the way to 2100. It lays out two scenarios rather esoterically called ‘mountains’ and ‘oceans’.
Shell says the scenarios “aim to be thought provoking yet plausible” accounts of what could happen in the future, with a view to guiding business and policy decisions.
Missing two degrees
The mountains scenario predicts declining social mobility, with moderate economic growth limiting energy demand over the rest of the century. The oceans scenario predicts larger economic growth leading to an energy squeeze as demand starts to outstrip supply.
In both cases, the world’s emissions would be far too high to keep the global temperature from rising less than two degrees above pre-industrial levels – the level some scientists say is the minimum requirement for avoiding the worst effects of climate change.
This graph shows quite how big Shell expects the gap to be between the world’s predicted emissions pathways and what is needed to keep warming to two degrees:
But Shell’s emissions predictions aren’t particularly different to scenarios other organisations have produced. The International Energy Agency (IEA) projects emissions being far higher in the next 20 years than would be necessary to keep warming to less than two degrees – even in its lowest emitting scenario.
In some ways Shell’s projections are surprisingly ambitious – for instance, all the scenarios eventually lead to carbon neutrality in the energy sector by 2100. But by that point the extra emissions accumulated over the intervening decades would take the world a long way past the point of being able to keep warming below two degrees.
So Shell anticipates the world missing the two degrees target by a large margin – but it has come up with some unconventional ways this might happen.
No large scale renewables
Neither of Shell’s scenarios predict significant growth in any large-scale renewables projects in the coming decades – such as big windfarms or new hydropower plants. This is in stark contrast with the IEA’s report, that puts them front and centre of future renewables expansion.
Strangely, perhaps, given it’s currently more expensive than large scale renewables, Shell projects a boom in solar micro-generation. In it’s large economic growth scenario, solar would become the fourth largest primary energy source by 2040, and the largest by 2070.
Astonishingly, that means by 2060 close to 40 per cent of global electricity would be generated from solar.
Share of primary energy by resource type, in Shell’s ‘Oceans’ scenario
Shell tells us this is based on an assumption that “as income levels rise in the emerging economies, hundreds of millions of people install solar panels to generate their own electricity. incentivized by high energy prices”.
This is in stark contrast to other projections. The IEA projects almost half of the world’s renewable electricity will come from hydropower by 2035, with almost a quarter from wind and only 7.5 per cent from solar.
Shell tells us it ruled out growth in large-scale renewables because in the volatile political situation outlined in the large economic growth scenario, “renewable energy sources requiring popular consent struggle to make headway. For example, securing public support for covering vast tracts of land with wind turbines proves extremely difficult”.
For Shell’s prediction to come true there would have to be a massive rush of households buying solar panels all over the world in the coming decades. And it looks as though the switch to lots of solar micro-generation wouldn’t do much for emissions – the large economic growth scenario projects 25 per cent more emissions up to 2100 than the moderate economic growth scenario.
This is mainly because governments would have less ability implement far-reaching energy reforms in the large economic growth scenario – meaning coal and oil continue to play a significant role for longer.
Shale gas emissions savings
Of course the exercise of predicting what the public will and won’t like is tricky. We won’t like renewable infrastructure, Shell says, but apparently we’re not going to have any problem with shale gas drilling. Shale gas would be a big winner in the moderate economic growth scenario – reducing emissions significantly in the coming decades. Shell projects there would be a “gas backbone” to the global energy sector by 2100 as large shale gas reserves are discovered and quickly extracted.
Shell tells us this is because “governments [would] implement firm, proactive and co-ordinated energy policies” allowing companies to unlock new energy resources – in other words they would pave the way for fracking, even if there was public opposition.
It predicts the current North American shale gas revolution would become “a truly global phenomenon” – significantly increasing the size of the dark green segments of this graph:
Primary energy by source in Shell’s ‘mountains’ scenario
While BP also predicts shale gas growth beyond North America – particularly in China – it doesn’t expect it to the same extent. This talking up of shale gas is perhaps unsurprising given Shell has “bet the most heavily of all the top oil firms on a big future for natural gas”, according to Reuters – with 48 per cent of its production currently being natural gas.
This means emissions would start to reduce much quicker in this scenario, as gas displaces coal – emitting only a fraction of the carbon dioxide.
But carbon neutrality can’t be achieved by switching to gas alone – it would also need a significant amount of carbon capture and storage (CCS) to be added.
Carbon capture and storage
Both of Shell’s scenarios rely on carbon capture and storage technology becoming a reality pretty soon for the energy sector to become carbon neutral by 2100.
The IEA says the pace of development of CCS technology “remains highly uncertain” and as such it “is only deployed on a very limited scale” in its projections. But in Shell’s mountain scenario, CCS would capture over 30 per cent of emissions by 2050 and 75 per cent by 2075.
Shell tells us this is due to an assumption that “public funding ensures the success of today’s demonstration projects, and propels the technology into commercial deployment” at an early stage.
And Shell projects that by 2040, there could be negative emissions from CCS – soaking up and locking away more carbon dioxide than is emitted during the power generation process – as the technology is fitted to biomass plants.
The light blue section of the graph below shows just how important CCS from electricity generation is to Shell’s predictions:
Emissions in Shell’s ‘mountain’ scenario
So Shell’s projections are based on rapid technological development beyond the level that others say is realistic in the coming decades.
Predicting the future
“There are both positive and troubling features captured in both scenarios – with the distinction depending often on our own point of view. The more clearly we see the dynamics of tomorrow’s world, the better we might navigate a path through the turbulence to calmer waters and higher peaks, making wiser choices on the journey”.
But Shell’s future worlds have some very unusual features. Behind the scenarios and the graphics, Shell’s preferred option seems to be the fast exploitation of shale gas reserves with CCS becoming a reality sooner rather than later. Alternatively, millions of people could decide to fit solar panels to their roofs instead of backing large-scale renewables.
How realistic either of those scenarios are is questionable. Either way, the world seems destined to miss the two degrees target, according to Shell’s vision – albeit for some unusual reasons.