Resource stresses require action

REUTERS

A Shell logo is seen at a petrol station in London.

We need to work together to stave off an energy and resource crisis. Firm and far-reaching policies can address the world’s resource and environmental stresses, but the window of opportunity is shrinking. This is what emerges from a major – and timely – new report by Shell’s scenarios team.

This group of economic, political and energy experts explores different views of how the future might unfold to improve our understanding of global developments and our energy system.

As the chairman of Shell South Africa, I especially welcome their latest analysis, given today’s uncertain business environment.

The global financial crisis has ushered in an era of macroeconomic volatility, and accelerated the shift in influence from the West to the East. Hundreds of millions of people are emerging from poverty as wealth levels rise. And the global population is growing by more than 200 000 people every day.

The New Lens Scenarios assess how these economic, political and social forces might play out over the 21st century, and their consequences for the global energy system and environment. One projection involves the equivalent of one new city of almost 1.5 million people every week for the next 40 years.

Above all, the scenarios reinforce the urgency of addressing our resource and environmental stresses. Over the next seven years alone, the world could generate new energy demand, on top of what we use today, equivalent in size to China’s entire energy system.

The opening up of vast new shale gas and oil resources in North America should ease some of this pressure, especially if China and other countries like South Africa develop their own resources.

Meanwhile, greenhouse gas emissions are rising fast. On existing trends, the world will far exceed the average temperature rise of 2ºC regarded as the limit for avoiding the worst effects of climate change.

If that were to happen, the pressure on water, energy and food resources would only intensify. These resources form a tightly woven network: almost all forms of energy production require water; energy is needed to move and treat water; while producing food requires both energy and water.

The magnitude of these challenges means that we will need to address them intelligently and in unison. That calls for new and deeper forms of partnership between business, governments, academia and civil society. Energy companies may possess advanced technical knowledge, but government has greater expertise in regulating new technologies. I’m optimistic there are several areas where integrated action now could reap major benefits in the decades ahead.

In one of our scenarios, intelligent urban planning in the world’s rapidly growing cities could trigger the transformation of the entire global transport system over the next 50 years, by providing the infrastructure for a car fleet powered mainly by electricity, hydrogen and natural gas.

Cleaner fossil fuels will also be critical in meeting the world’s energy needs. But the sheer scale of energy demand means fossil fuel consumption will continue to grow.

While one of our outlooks suggests that solar could become the largest energy source by the 2060s, in this analysis coal use will continue to rise for decades too, despite being the biggest cause of carbon dioxide (CO2) emissions in the energy sector today. So displacing coal-fired power with natural gas, the cleanest burning fossil fuel, could make the most substantial contribution to reducing CO2 emissions over the next 30 years. When used to generate power, gas produces around half the emissions of coal.

Gas can also support growth in renewable energy. According to the scenarios, the world’s supply of renewable electricity could expand three-fold over the next two decades.

But solar power and wind need back-up because they cannot operate all the time. With energy storage technologies in their infancy, gas-fired power is well placed to do this because it can be switched on and off quickly.

By bringing our uncertain future into sharper focus, the New Lens Scenarios (www.shell.com/scenarios) show how decisions today could prove decisive in tackling resource and environmental stresses. Policy drift and unbalanced regulation will mean higher greenhouse gas emissions, and more pressing resource scarcity tomorrow.

The time for action is upon us, if that window of opportunity is not to close for good.

Bonang Mohale is the chairman and country general manager: commercial at Shell South Africa.