Shell is one of the world’s oldest and most-recognisable oil companies.
It was also one of the earliest companies to use a business technique called Scenario Planning:
What might happen? How likely is it? What would be the impacts if it did happen? And what should we be doing now to prepare for that?
In the following video, Jeremy Bentham, Shell’s Vice-President of Business Environment and Head of their Scenarios Team, talks about their just-published “Energy Scenarios to 2050“.
As he explains, Shell’s oil fields are assets with a long lifetime. So Shell needs to understand what the business environment is likely to be like, over the duration of that lifetime.
His conclusions on the outlook [with translations] are:
- “We are entering an era of volatile transitions and intensified economic cycles.”
[Translation: For “volatile transitions” read ‘sudden shocks’. For “intensified economic cycles” read “boom and bust”.]
- “We have entered a huge zone of uncertainty.”
[Translation: If energy giant Shell is facing a ‘huge’ zone of uncertainty, what are things going to be like for the rest of us?]
- There will either be “extraordinary production acceleration or extraordinary demand moderation”
[Translation: Either we are going to find a way by 2050 to produce three times as much energy as we did in 2000, or people are going to have to get used to using less.]
- “There are no silver bullets.”
[Translation: There are no easy fixes.]
- “The geopolitical shift from the west to the east is bringing local political and economic stresses as well.”
[Translation: The momentum behind global changes will be felt as political and economic ‘stress’ by you and me. Change is upon us, whether we want it or not.]
- “The pace of changes in policy and technology is slower than we said was needed in the Blueprints scenario.”
[Translation: The world is not moving as fast as it needs to.]
- “The choices that we and society make in the next five years have profound consequences over the next decades.”
[Translation: the choices that you make over the next five years will affect you and the people you care about for decades to come.]
- “Signals and Signposts is a contribution to that debate and (to) framing those choices.”
[Translation: Watch the two videos below. Then download the report and read it. ]
Page nine contains a chart that shows an upcoming “zone of extraordinary opportunity, or misery.”
Businesses do not use that kind of language except under extraordinary circumstances.
Here is the video of Jeremy’s introduction to the recent report from Shell:
And here is a background video from 2008, which explains the previous scenarios he mentions:
Notice this 2008 video expects energy usage to double by 2050. The latest video talks about tripling year-2000 consumption by 2050.
Summary points of this second video:
- A world of “revolutionary” transitions
- “Three hard truths” are driving the transitions:
- a “surge” in energy usage
- traditional energy sources are “struggling” to keep up with demand
- “greenhouse gases are affecting levels of climate stress”
- These truths force people to consider choices
- In the ‘Scramble’ scenario events move faster than actions.
“The focus is on dealing with today’s problem. By the 2020s life has become volatile and uncertain.” By 2050 there is still much to do.
- The world of ‘Blueprints’ shows what can happen when actions outpace events.
“Local actions spread and join up” and by 2050 the corner has been turned.
- The two scenarios are different, but both agree that
- that the status quo will not continue
- there will be an era of revolutionary transitions in energy
- the world’s people will keep pursuing the higher living standards made possible by higher energy consumption
- the choices people make today will have significant ongoing consequences
- And for the first time ever, Shell states that it prefers one of the possible scenarios: Blueprints
The problem is that three years later, the world is not moving as fast as the Blueprints scenario needs us to. And that means you and me.