Visions of a better world?
What kind of world do you think we’ll inhabit in 2050? A planet where we’ve ironed out most of the problems related to climate change, energy and access to food and water? Or perhaps you subscribe to a darker vision, where society will rapidly be unravelling towards a landscape ruled by some sort of Mad Max figure.
The business of trying to gauge how energy, social and geopolitical developments will unfold over the coming decades is known as future scenarios planning, and it’s fair to say that it obsesses – even haunts – governments, international agencies, multinationals, the secret services, the military and energy companies. The scenarios being produced by these groups are substantially more than informed crystal-ball gazing; they provide plausible interpretations of the future that are vital for guiding long-term planning and investment. And while they steer clear of conjuring up a science-fiction world drawn from 1950s comic strips, you wouldn’t describe their conclusions as low-key, and they can make for unsettling reading.
Contrasting visions
Many such scenarios exist, but among the most influential are those published by Shell, which may come as a surprise to those who hold to the popular perception that oil companies 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 actions. The result is far lower carbon dioxide emissions than are envisaged under Scramble.
Neither Scramble nor Blueprints represents a best- or worst-case 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.’
Proven 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 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 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 low-oil-price scenario and a high-oil-price scenario,’ 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 insecurity
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 USA and Europe would drop by more than 60 per cent and 50 per cent respectively.
Following the failure to secure a climate agreement at Copenhagen, the IEA issued a third scenario, called New Policies, which anticipates future actions by governments to meet the commitments they’ve made to tackle climate change and growing energy insecurity. ‘We introduced the new scenario based on governments changing their policies,’ says Fatih Birol, chief economist at the IEA. ‘In the wake of the major disappointment of Copenhagen, meeting the 450ppm scenario is far more challenging.’
The IEA’s action raises the suspicion that experts can produce all the scenarios they wish, but politicians will simply ignore them if they don’t coincide with short-term electoral expediency. Acknowledging the point, Birol says: ‘Industries and governments, energy users and academia need frameworks within which they can make their decisions. They can make a lot of good decisions and they can make bad decisions. I don’t think they’ll be so illogical as to follow our Baseline scenario – that would have very dramatic consequences for everybody.’
While personally endorsing Blue, the most radical of the IEA’s scenarios, Birol admits he steers clear of advocacy. ‘We just put the facts and numbers there and then it’s up to people to look at them. Personally, I would like to see the 450ppm scenario unfold, but I can’t say that it’s likely.’
Scenario scepticism
So does anyone actually pay attention to these scenarios, and are they as influential as Shell suggests? There’s a risk that scenarios will simply tell the audience what they want to hear, suggests Antony Froggatt, a senior research fellow at Chatham House. ‘All too often, scenarios reinforce existing behaviour rather than change it,’ he says. ‘There are quite a lot of scenarios out there, and everybody likes to do their own scenarios. They create a framework that people want to work to, and they tend to use them to justify their actions. It depends what you put into it. People who commission scenarios will discuss the framework and how they want to build the model. These are political decisions that inform the model.
‘None of Shell’s scenarios meets the 2°C target [that is, a 2°C rise in global temperatures from the Industrial Revolution to the end of the 21st century]. Is that because they don’t believe it’s possible, or is it a political decision? Do they think it’s just too costly for them to reach? Was it driven by other parameters – someone saying, “You can’t go into this issue?”’
Shell’s scenarios are necessarily drawn up from the company’s perspective, but Bentham insists that he has a remit to speak the truth and be candid with his bosses. Integrity and objectivity are fundamental to their credibility, he argues. ‘I’m completely comfortable that some people will remain sceptical about this activity,’ he says. ‘Senior leadership recognises the need for challenges and external perspectives, and that this can occasionally be uncomfortable. From the CEO down, I have been told that at times, my role is to be tolerated, but not embraced, which feels like the right kind of balance.’
Opening up
Support for the principle of Shell’s scenarios comes from an apparently unlikely source: David Holmgren, the Australian co-founder of the international permaculture movement, whose own published scenario of how the world will shift away from fossil fuels helped to galvanise interest in sustainable land use.
‘I think Shell is a little more open than cynics suggest,’ he says. ‘It’s acknowledging that the world could change radically, and that oil companies could find themselves doing very different things from what they do now. I think it has gone beyond saying that it wants to protect its ability to dig out the last oil. It can see that that’s a diminishing world. The interest in scenario planning as a field has exploded because the idea that the future will look after itself is a shaky one.’
But Shell’s scenarios, like most such projections, have a major flaw, Holmgren argues, which is that all too often, they’re retrospective. ‘A lot of organisations are talking about the depletion of oil as a future scenario, not as a past event – that’s an enormous failure of scenarios and future planning,’ he says. ‘A lot of scenario planning is about how to frame things for people to get used to stuff that has already happened.’
Another problem, Froggatt points out, is the paucity of medium-term scenarios – covering the years 2020 to 2035. ‘You can see the logic of long-term vision to 2050, and meeting immediate targets to 2020, but it’s important to look at that point up to 2035,’ he says. ‘We have really quite radical needs for emissions reduction and it’s important to lay these out and ensure that the pace is kept up.’
Yet it’s the long-term scenarios that draw observers to gather around the crystal ball. In a move designed to clear some of the fog, Shell recently took the unusual step of publicly advocating its Blueprints scenario. ‘We’ve broken a 40-year tradition of neutrality,’ says Bentham. ‘We say quite clearly that we are a commercial organisation. We aim to be successful in serving our customers, whatever the scenarios, but clearly the outcome of a Blueprints-type scenario is better for society than the outcome of a Scramble-type scenario.’
Blueprints
Scramble
The business of trying to gauge how energy, social and geopolitical developments will unfold over the coming decades is known as future scenarios planning, and it’s fair to say that it obsesses – even haunts – governments, international agencies, multinationals, the secret services, the military and energy companies. The scenarios being produced by these groups are substantially more than informed crystal-ball gazing; they provide plausible interpretations of the future that are vital for guiding long-term planning and investment. And while they steer clear of conjuring up a science-fiction world drawn from 1950s comic strips, you wouldn’t describe their conclusions as low-key, and they can make for unsettling reading.
Contrasting visions
Many such scenarios exist, but among the most influential are those published by Shell, which may come as a surprise to those who hold to the popular perception that oil companies 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 actions. The result is far lower carbon dioxide emissions than are envisaged under Scramble.
Neither Scramble nor Blueprints represents a best- or worst-case 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.’
Proven 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 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 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 low-oil-price scenario and a high-oil-price scenario,’ 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 insecurity
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 USA and Europe would drop by more than 60 per cent and 50 per cent respectively.
Following the failure to secure a climate agreement at Copenhagen, the IEA issued a third scenario, called New Policies, which anticipates future actions by governments to meet the commitments they’ve made to tackle climate change and growing energy insecurity. ‘We introduced the new scenario based on governments changing their policies,’ says Fatih Birol, chief economist at the IEA. ‘In the wake of the major disappointment of Copenhagen, meeting the 450ppm scenario is far more challenging.’
The IEA’s action raises the suspicion that experts can produce all the scenarios they wish, but politicians will simply ignore them if they don’t coincide with short-term electoral expediency. Acknowledging the point, Birol says: ‘Industries and governments, energy users and academia need frameworks within which they can make their decisions. They can make a lot of good decisions and they can make bad decisions. I don’t think they’ll be so illogical as to follow our Baseline scenario – that would have very dramatic consequences for everybody.’
While personally endorsing Blue, the most radical of the IEA’s scenarios, Birol admits he steers clear of advocacy. ‘We just put the facts and numbers there and then it’s up to people to look at them. Personally, I would like to see the 450ppm scenario unfold, but I can’t say that it’s likely.’
Scenario scepticism
So does anyone actually pay attention to these scenarios, and are they as influential as Shell suggests? There’s a risk that scenarios will simply tell the audience what they want to hear, suggests Antony Froggatt, a senior research fellow at Chatham House. ‘All too often, scenarios reinforce existing behaviour rather than change it,’ he says. ‘There are quite a lot of scenarios out there, and everybody likes to do their own scenarios. They create a framework that people want to work to, and they tend to use them to justify their actions. It depends what you put into it. People who commission scenarios will discuss the framework and how they want to build the model. These are political decisions that inform the model.
‘None of Shell’s scenarios meets the 2°C target [that is, a 2°C rise in global temperatures from the Industrial Revolution to the end of the 21st century]. Is that because they don’t believe it’s possible, or is it a political decision? Do they think it’s just too costly for them to reach? Was it driven by other parameters – someone saying, “You can’t go into this issue?”’
Shell’s scenarios are necessarily drawn up from the company’s perspective, but Bentham insists that he has a remit to speak the truth and be candid with his bosses. Integrity and objectivity are fundamental to their credibility, he argues. ‘I’m completely comfortable that some people will remain sceptical about this activity,’ he says. ‘Senior leadership recognises the need for challenges and external perspectives, and that this can occasionally be uncomfortable. From the CEO down, I have been told that at times, my role is to be tolerated, but not embraced, which feels like the right kind of balance.’
Opening up
Support for the principle of Shell’s scenarios comes from an apparently unlikely source: David Holmgren, the Australian co-founder of the international permaculture movement, whose own published scenario of how the world will shift away from fossil fuels helped to galvanise interest in sustainable land use.
‘I think Shell is a little more open than cynics suggest,’ he says. ‘It’s acknowledging that the world could change radically, and that oil companies could find themselves doing very different things from what they do now. I think it has gone beyond saying that it wants to protect its ability to dig out the last oil. It can see that that’s a diminishing world. The interest in scenario planning as a field has exploded because the idea that the future will look after itself is a shaky one.’
But Shell’s scenarios, like most such projections, have a major flaw, Holmgren argues, which is that all too often, they’re retrospective. ‘A lot of organisations are talking about the depletion of oil as a future scenario, not as a past event – that’s an enormous failure of scenarios and future planning,’ he says. ‘A lot of scenario planning is about how to frame things for people to get used to stuff that has already happened.’
Another problem, Froggatt points out, is the paucity of medium-term scenarios – covering the years 2020 to 2035. ‘You can see the logic of long-term vision to 2050, and meeting immediate targets to 2020, but it’s important to look at that point up to 2035,’ he says. ‘We have really quite radical needs for emissions reduction and it’s important to lay these out and ensure that the pace is kept up.’
Yet it’s the long-term scenarios that draw observers to gather around the crystal ball. In a move designed to clear some of the fog, Shell recently took the unusual step of publicly advocating its Blueprints scenario. ‘We’ve broken a 40-year tradition of neutrality,’ says Bentham. ‘We say quite clearly that we are a commercial organisation. We aim to be successful in serving our customers, whatever the scenarios, but clearly the outcome of a Blueprints-type scenario is better for society than the outcome of a Scramble-type scenario.’
Blueprints
- Responses to events are generally prompt, and potential outcomes are anticipated and acted on before they unfold
- Broader fears about lifestyle and economic prospects forge new alliances that promote action in developed and developing nations
- Initiatives take root locally as individual cities or regions take the lead. Carbon-trading markets become more efficient and CO2 prices strengthen early
- Cleaner energy such as wind and solar increasingly exploited
- 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
- Progressive cities across the globe share good practices in efficient infrastructure development, congestion management and integrated heat and power supply
- By 2050, more than 60 per cent of electricity is generated by non-fossil sources
- 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
- 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
- Growth in electric vehicles allows most nations to enter the plateau of oil production without the shocks they would otherwise have experienced
Scramble
- 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
- Environmental policy isn’t seriously addressed until major climate events stimulate political responses. Curbing energy demand and economic growth is too unpopular for politicians
- Global economic development continues unabated up to 2025 – mainly because of coal
- First-generation biofuels compete with food production, driving up world market prices and destroying large areas of rainforest
- 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
- Debate focuses on maintaining economic growth, especially in emerging economies, leaving the climate change agenda largely disregarded. Alarm fatigue afflicts the general public
- 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
- 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
- Restoration of economic growth means that vigorous energy consumption resumes, with a rebound in CO2 emissions
- Having avoided difficult choices early on, nations face expensive consequences beyond 2050
|
FIND OUT WHAT WE'RE TALKING ABOUT ON TWITTER:
| |
 |
