Shell Oil predicts a very low energy future: is LEX ready?

Shell Oil recently updated its 2050 world energy scenarios.  2050 sounds like a long way out, but it really isn’t – it’s less than 40 years.  The scientists and economists at Shell have taken what appears to be a really candid assessment of the situation and rendered this conclusion about energy in the year 2050:   to meet the entire world’s energy needs, we will have to have “extraordinary demand moderation and extraordinary production acceleration.”

This means one thing to me:  the Western world, especially the U.S.,  will have to get by on a lot less energy. As the report’s synopsis explains below, production is getting harder and harder to accelerate.  Fossil fuels will be winding down by then, large scale nuclear will take decades to ramp up and even then, it’s at the mercy of peak oil in terms of construction resources as well as peak uranium, and renewables never will provide anything near the amount of energy we are used to today.

The report also lays out an unsparing appraisal of the condition of the economy and adds:  “All this could limit developments needed to bridge the vast Zone of Uncertainty.” That’s not typical optimism from a corporate giant.  In fact, that tells me that we have really serious problem of even trying to address energy production acceleration today.

This is a warning call to rethink how we plan our cities and what we think constitutes our economy.  In the low energy future, distance will matter a great deal. This has fundamental implications about how we move around our city, how our food and other necessary items get to us, and how our economy must be structured to adapt to this new reality.  In the low energy future, local will be everything.

Lexington is getting ready to update its comprehensive plan.  How – if at all – will scenario planning be used to determine the future directions of our city?  I suspect that most if not all of the established thinking assumes that we are on a linear trajectory to a future that is similar to the world we see around us today.

Regarding climate change, read the last cryptic sentence below.  What does that mean?

——–   

From: Shell energy scenarios out to 2050

“Underlying global demand for energy by 2050 could triple from its 2000 level if emerging economies follow historical patterns of development.  In broad-brush terms, natural innovation and competition could spur improvements in energy efficiency to moderate underlying demand by about 20% over this time. Ordinary rates of supply growth — taking into account technological, geological, competitive, financial and political realities — could naturally boost energy production by about 50%. But this still leaves a gap between business as-usual supply and business-as-usual demand of around 400 EJ/a – the size of the whole industry in 2000.

This gap – this Zone of Uncertainty – will have to be bridged by some combination of extraordinary demand moderation and extraordinary production acceleration. (emphasis mine) So, we must ask: Is this a Zone of Extraordinary Opportunity or Extraordinary Misery?

Smart urban development, sustained policy encouragement and commercial and technological innovation can all result in some demand moderation. But so can price-shocks, knee-jerk policies and frustrated aspirations. Timescales are a key factor. Buildings, infrastructure and power stations last several decades. The stock of vehicles can last twenty years. New energy technologies must be demonstrated at commercial scale and require thirty years of sustained double-digit growth to build industrial capacity and grow sufficiently to feature at even 1-2% of the energy system.

The policies in place in the next five years shape investment for the next ten years, which largely shape the global energy picture out to 2050. Speed and direction are significant. How fast will tensions rise? How fast can we make the right choices? And how quickly can positive developments happen?”

The report also offers a couple of interesting observations regarding the economy:

“Key new factors since the financial crash:

Greater economic volatility and cyclicality. Balance sheets, risk appetites and credit flows are adjusting. We will see global trend growth somewhat less than pre-recession. The good policy, good practices and good luck that underpinned the last two decades of the Great Moderation period are unlikely to continue as before. We will see greater economic volatility and cyclicality, driving political volatility and perceived investment risk. All this could limit developments needed to bridge the vast Zone of Uncertainty.

More uncertainty and risk. Regulatory uncertainty around greenhouse gas emissions have grown since the Copenhagen climate summit. Developing a regionally differentiated and politically feasible patchwork of measures seems the most likely path forward. Tensions are increasing as the majority scientific view becomes increasingly pessimistic and yet public opinion weakens. This divergence is not sustainable indefinitely.”

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