9 billion people
2.5 billion more than today’s 6.5 billion people. World population in 1907 was less than 1.7 billion
4–5 times richer
than today, with most of the extra wealth coming from rapidly industrialising developing countries
Double the energy
Using twice as much energy as now, and nearly 25 times more than when Shell was formed in 1907
Twice as efficient
Using half the energy as now to produce each dollar of wealth
6–10 times more energy
from renewable sources like wind, solar, hydro and biofuels, than today
More energy for development
Firstly, increasing supplies of modern energy are needed for economic and social development. The last century showed that societies need much more modern energy to make the transition out of poverty. When populations and living standards rise, demand for modern energy can be expected to grow. Global wealth is now more than 30 times bigger than in 1907 when Shell was formed and in that time, the world’s population has quadrupled. As a result, global energy demand has grown more than ten-fold. This trend will likely continue. According to our scenarios and the International Energy Agency (IEA), energy consumption could more than double by 2050, as global population increases by half again, and China and India continue to industrialise.
Energy security
Secondly, energy is strategic and governments will act to secure supplies. From the first nationalisation of the oil industry, in Mexico in 1938, to the oil embargoes of the 1970s, politics have regularly intervened in energy markets. Energy security in the last century depended on consuming countries securing a range of energy supply options to avoid over-dependence on any one region or source.
The strategic importance of energy is unlikely to diminish with so much extra needed and the world’s remaining “easy” oil increasingly concentrated in a few countries.
Cleaner energy
Thirdly, energy gets progressively cleaner. Societies’ expectations rise as they get richer. New environmental challenges emerge. Governments respond with new policies and innovative energy companies develop new technologies and better ways of working. Last century, the automobile (the “horseless carriage”) solved the manure problem in congested cities. Electricity eliminated smokey and dangerous candles and gas lamps. In the 1970s and 1980s clean air legislation prompted technical solutions to acid rain and smog. Cleaner coal technologies, cleaner transport fuels and engines, and, later, the rapid spread of natural gas use, brought dramatic improvements in air quality in the developed world. New vehicles today emit over 90% less local pollution than they did 30 years ago. It is likely that today’s polluted cities of the developing world will become much cleaner as these societies get wealthier and can afford modern factories, vehicles and fuels.
Climate change is the latest challenge and the biggest yet. It will require action on many fronts, from improvements in energy efficiency and increased use of renewable energy, to large-scale CO2 capture and storage from fossil fuels, and a slowing of deforestation. Change will likely again come from the combination of government policies and new technology, developed and rolled out by companies.
Fossil fuels and alternatives
Finally, the last century showed that only energy sources that combine high quality, convenience and affordability will spread. Fossil fuels’ high energy density and large-scale availability have made them hard to beat. They still meet about 80% of total energy needs, a share largely unchanged for most of the last century. Hydro and nuclear provide most of the rest. To date, affordability has been the main problem for renewable sources like biofuels, wind and solar, which currently meet less than 1% of energy needs.
As demand for energy and environmental concerns continue to rise, Shell’s scenarios and the IEA both expect renewable sources to grow quickly from today’s low base. Their share of the total energy mix should also increase. However, fossil fuel use will also need to increase because so much extra energy will be needed. We expect fossil fuels to continue to provide most of the world’s energy for many decades to come.
There are more than 100 years of coal reserves. We believe that there is still enough oil and gas to be developed, though new supplies are in increasingly remote and difficult locations. Last century’s experience suggests that technology advances and investment will continue to make it economic to develop these resources, and to make more production possible from unconventional sources, like oil sands.
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