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David FrowdGlobal Business Environment
Royal Dutch/Shell Group
David FrowdGlobal Business Environment
Royal Dutch/Shell Group
Energy Needs, Choices and Possibilities
Scenarios to 2050
Energy Needs, Choices and Possibilities
Scenarios to 2050
Shell International Ltd.
Scenarios: challenging assumptions and benchmarking vision
Scenario B
Scenario APlan
Projects
Challenge
Vision
Shell International Ltd.
What Are Scenarios?
• Relevant to business
• NOT projections, predictions or preferences
• Alternative futures
• Challenge assumptions for better strategy
Shell International Ltd.
Energy Paths
What needs, possibilities and choices will shape an
energy system staying below 550 ppmv CO2?
We believe we are entering a particularly innovative
period for the energy system and that
“there is more than one path to a sustainable energy
system”
Shell International Ltd.
What Shapes Long Term Energy?
The contributors
By 2050 • demography: 8-10 billion people
• incomes: average $15-25k/capita
• urbanisation: 80% living in cities
• liberalisation: markets increase possibilities
Shell International Ltd.
Korea
Thailand
BrazilMexico
India
China
Climbing The Energy Ladder A Continuously Changing Relationship
Source: IMF, BP
GJ/capita
GDP/capita (‘000 1997$ PPP)
Japan
EU
Australia
US
0
50
100
150
200
250
300
350
0 5 10 15 20 25 30 35
• +$25k/capita:little extra energy needed.
• +$15k/capita:services start to dominate growth.• +$10k/capita:industrialisation near complete.• +$5k/capita:industrialisation and mobility take off.
Shell International Ltd.
The contributors
• demography• incomes• urbanisation• liberalisation
What Shapes Long Term Energy?
The critical
• resource constraints• technology• social and personal priorities
Shell International Ltd. billion barrels of oil equivalent
2000 $ per boe
Source:Shell, 2000
Oil and Substitute Costs
Unconventional Oil
35000
5
10
15
20
0 500 1000 1500 2000 2500 3000
Producedat
1.1.2000
Biofuels competition
Gas to Liquids competition
4000
Shell International Ltd.
million bbls per day
3,000 bln bbls
+ 350 bln bbls of NGLs
+ 850 bln bbls heavy oil and bitumen
excluding shales
Ultimate Recoverable Resource
Source: based on USGS mean estimates, June, 2000
0
25
50
75
100
125
1950 1975 2000 2025 2050
2% per annum
7.5% per annum
The Oil Mountain
Shell International Ltd. Source: based on USGS mean estimates, June 2000 and IPCC 2000 for unconventional
3% per annum
15,000 EJ(2,600 bln boe)
+ 5,000 EJ(1000 bln boe)
+ 13,000 EJ (2200 bln boe)unconventional
EJ
4% per annum
The Uncertain Gas Mountain
0
100
200
300
400
1950 1975 2000 2025 2050
Shell International Ltd. Source: SIG 1998, EUNG 1978-1994
bcm
1998
1994
1993
1990
1987
1985
1978
Forecast date
0
100
200
300
1970 1980 1990 2000 2010
actualactual
European Gas Production Forecasts
Shell International Ltd. Source:adapted from UN 2000, WEC 1994, and ABB 1998. Figures based on 10 billion people.
GJ per capita
DemandRange
Solar
Wind
Biomass
Hydro
Geothermal
0
200
400
600
800
1000
N. A
mer
ica
S. A
mer
ica
Eur
ope
FSU
Africa
Mid
dle
East
& N
.Africa Asi
a
Tot
al
Renewable Resources are Adequate to Meet all Energy Needs
Shell International Ltd.
20,000
1,000
500
100
5,000
10,000
10 1,000 100,000
2000 $ per peak kW
Cumulative MW installedSource: adapted from IIASA--WEC, 1995
2008 Wind Assoc.
1981
1998
Photovoltaic systems20%
1982
1987
Windmills
20%
1963
1980Gas turbines
20%
10%
199815%
2020 US PV Assoc.
On-going Renewable Cost Improvements
Shell International Ltd.
Fuel Cell Hydrogen
Direct ElectricitySolar
Direct - Wood, Wind, Water, Animals
Steam engine - Coal 1830-1900
Internal combustion engine - Oil 1910-1970
CCGT - Gas 1990-?
Nuclear 1970-1990
MANUFACTURING ADVANTAGE
Electric dynamo - Coal 1900-1940
Energy Technology Discontinuities
18001800
18501850
19001900
20002000
20502050
Shell International Ltd.
demographics
urbanisation
incomes & demand
liberalisation
The Spirit of the Coming Age
Energy Choices - Consumers
Revolutionary developments
Dynamics as Usual
Energy choices- Citizens
Evolutionary system
Energy Branching Points
Resourceconstraints
Technologies
Social & personalpriorities
Innovationand
competition
Shell International Ltd.
Societal pressures for “secure”, “clean” and “sustainable”
energy push a direct path to renewables, supported by gas in
the medium term.
But only after advances in energy storage and a next
generation of renewables around 2025.
Vehicle efficiency advances prolong the oil transition.
Dynamics as Usual
Shell International Ltd. Source: US EIA, 1999
Index 1950=100
100
150
200
250
350
1950 1970 1990 2010
US Petrol Demand Decoupling from Income
GDPper capita
Gasoline salesper capita
300
Shell International Ltd.
Health and Security Concernsin Ageing OECD Societies
2000$/bbl
40
0
20
20102000
Sporadic OPEC cohesionUncertain demand and
policies
1990
Shell International Ltd.
0
20
40
60
80
100
2000 2010 2020
% of new cars
Diesel (inc GTL and Biomass F-T Fuels)
Gasoline (inc Ethanol)
Hydrogen
Fuel cell
Spark ignition
Compressionignition engines
LPG/CNG
Hybrid
Naphtha/Methanol
Changing Automotive Fuels and Technologies
Combined combustion systems
Shell International Ltd.
GTLa bridge to renewable transportation fuels
Now
Renewables Futures
Gas-to-Liquids (GTL) based on low temperature Fischer-Tropsch (F-T) cobalt-based synthesis
CI = Compression ignition
Standard CI Drive Train
F-T GTL Blends
Advanced
CI/Hybrid
Drive Train
Biomass
F-T Fuels
Hydrocarbon
powered fuel cellF-T GTL 100%
Advanced CI/Hybrid
Drive Train
F-T GTL 100%
Hydrogen
Fuel CellBiomass Hydrogen Solar Hydrogen
Shell International Ltd.
Million bbls per day
Volatile Oil Demand and the Long Oil Game
0
25
50
75
100
125
1970 1990 2010 2030 2050
$/bbl
0
10
20
30
40
1970 1990 2010 2030
Shell International Ltd. Source: US DOE, Vision 21, 2001
2015 coal power
objectives:
- competitive prices
- multi-fuel
- multi-product
liquids
- 60% efficiency
- pollution free
- full CO2
sequestration
The Next Generation of Coal Power
Shell International Ltd.
“Dash for Gas”
Middle Eastbudget pressures &
export diversification
Global Dash For Gas
China, Saudi Arabia, Russia, Iran join WTO
LNG spot market
High efficiency CCGT
Gas and powerliberalisation
CO2 gas substitution
Local air quality concerns in Asia
CIShard currency needs
Nuclear and coal decommissioning
Shell International Ltd.
pipelines
major demand
Natuna Malampaya
TarimSichuan
Ordos
major supply
Turkmenistan
Yakutsk Sakhalin
West Baikal
Iran
LNG flows
Asian Gas Grid 2020
Oman
Shell International Ltd.
Gas Imports as % of Energy Consumption
Japan
North East Asia
W. Europe
0
10
15
20
25
1970 2000 2030
Gas Security Concerns
5
Shell International Ltd.
Liberalisation Disruptions: EU Gas Prices
$2000/mmbtu
0
1
2
3
4
5
1990 1995 2000 2005 2010 2015 2020
Shell International Ltd.
A Tale of Two Eras for Renewables Growth and Plateau
• strong government support
• environment and security
• green power niches open
• intermittence constraints
• saturated OECD demand
• planning blockages
EJ
0
25
50
75
2000 2010 2020 2030
Shell International Ltd.
2010 2020 2030
Gas?
Nuclear?
Renewables?
Branching Point 2025
Shell International Ltd.
The Benefits of Scale 300 MW PV Factories
Source: from KPMG, 1999 500 MW Plant
$ per peak watt
0
1
2
3
4
5
6
1999 20 MW Plant
300 MW Plant
Plant8 fold reduction
Materials and Balance of System3 fold reduction
Shell International Ltd.
% of Primary Energy
Energy Transitions Dynamics as Usual
Coal
Nuclear
Oil
GasNewRenewables
BiofuelsHydro
Traditional
0
20
40
60
80
1850 1900 1950 2000 2050
Shell International Ltd.
demographics
urbanisation
incomes & demand
liberalisation
The Spirit of the Coming Age
Energy Choices - Consumers
Revolutionary developments
Dynamics as Usual
Energy choices- Citizens
Evolutionary system
Energy Branching Points
Resourceconstraints
Technologies
Social & personalpriorities
Innovationand
competition
Shell International Ltd.
Consumer demands for more convenience, flexibility, and
independence, supported by advanced hydrocarbon
technologies, provide an infrastructure bridge to a
hydrogen economy.
Longer term this creates a large demand pull for
sustainable hydrogen and renewables.
Spirit of the Coming Age
Shell International Ltd. Source: IIASA, Grubler & Nakicenovic, 1991
Percentage of maximum US network size
Airways1835
1891
1946
Roads
Oil PipelinesRailways Tele-
graphs
Canals
Internet
Infrastructure - The Critical Enabler
100
0
40
20
80
60
1800 20001900 19501850
Shell International Ltd.
Vehicles
• utilised 50% of time, not 5%
Dwellings
• heat & power from fuel cells
• power from idle vehicles
Rural Households & Industry
• small fuel cell CHPSource: Powering the Future, Koppel, 1999
One Size Fits All
PEM Fuel Cell $ per kW
10
100
1,000
10,000
100,000
1960 1980 2000 2020
Gas turbine
Shell International Ltd. Source: derived from Investment Strategies for China’s Coal and Electricity Delivery Systems, 1995 IBRD
Trains per day from Shanxi, Henan & Nei Mongol
2500 tonnes and 70 wagons per train
0
500
1000
1500
2000
2500
1970 1980 1990 2000 2010 2020
Rising Coal Logistic Costs in China
Shell International Ltd.
China Hydrogen Economy
Land scarcity limits bio-fuels
Mass transport &electric drive for uneven terrain
Large coal resourceLogistic constraints
Air quality concernsand weak
regulatory control
Global price for CO2
Water scarcityin the north
CH4 and H2 from coal Advanced membranes
Fuel cells
Supply securityconcerns
- oil, gas, fertiliser
China Leapfrog 2020
Shell International Ltd.
The Great Game of GasOil and Gas Demand
Million bbls per day
0
50
100
150
1970 2000 2030
Gas
Oil
Shell International Ltd.
Primary Energy
EJ
HydroNuclear
Gas
Oil
CoalTraditional
New Renewables
Coal CH4 & H2
0
250
500
750
1000
1250
1970 1990 2010 2030 2050
Shell International Ltd.
CO2 Emissions and Atmospheric Concentration
ppmv
300
350
400
450
500
550
1975 2000 2025 2050 2075 2100
Spirit of the Coming Age
Dynamics as Usual
billion tonnes carbon
0
2
4
6
8
10
12
14
1975 2000 2025 2050
Spirit of the Coming Age
Dynamics as Usual
Shell International Ltd.
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. Gas provides backbone
Renewables ‘boom then bust’ until Indirect path to sustainable energy new generation and storage Large scale renewables pulled solutions emerge around 2030. by H2 demand post 2030.
Towards a renewables dominant Towards a fuel cell dominant electricity and liquid fuels world hydrogen economy
Long Term Energy Scenarios
Shell International Ltd.
Primary Energy Comparison
EJ
HydroNuclear
Gas
Oil
CoalTraditional
New Renewables
Coal CH4/H2
0
250
500
750
1000
1250
1970 1990 2010 2030 2050
EJ
0
250
500
750
1000
1970 1990 2010 2030 2050
Shell International Ltd.
• Natural gas as a bridge fuel over the next two decades and
the importance of mitigating supply security fears.
• Strong pressures which oil markets will face as new vehicle
technologies diffuse.
• Gradual shift towards distributed heat and power for
economic and social reasons.
• Potential for renewables, particularly solar and biofuels, to
dominate primary energy supply in the longer term.
Scenarios - Common Features
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