When are people are going to wake up and realize that business-as-usual is no longer an option? Even Royal Dutch Shell is starting to sound the alarms about our inability to keep up with the growing demand for energy and how this is contributing to profound uncertainty around the world. Shell released today a report titled “Signals and Signposts” and it doesn’t paint a feel-good image of the world over the coming decades. Some highlights of the report, based on Shell’s own summary:
- Emerging nations like China and India are going through materially intensive development and a tighter market will continue to put pressure on prices and generate volatility.
- Developing nations, including population giants China and India, are entering their most energy-intensive phase of economic growth as they industrialise, urbanize, build infrastructure, and increase their use of transportation. Demand pressures will stimulate alternative supply and more efficiency in energy use but these alone may not be enough to offset growing demand tensions completely.
- 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.
- By the end of the coming decade, growth in the production of easily accessible oil and gas will not match the projected rate of demand growth.
- 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.
- Future generations may see 2008 as the turning point. The world faces a period of uncertain global politics. Strategic fault lines are emerging. Rising powers are increasingly and confidently asserting what they see as their national interests. This is undermining global mechanisms for ensuring collective security.
- Even with the moderation of fossil fuel use and effective CO2 management, the path forward is still highly challenging. Remaining within desirable levels of CO2 concentration in the atmosphere will become increasingly difficult.
It’s incredible that an oil company can come out with this kind of information yet continue to contribute to the very problems it identifies. Clearly our destiny is on autopilot.