Behind the scenes of the Shell scenarios

Shell has been a pioneer in developing scenarios to explore the future and deepen its strategic thinking for nearly 50 years. In the 1990s, the company started sharing scenarios externally to contribute to the public dialogue on the collective challenges and choices faced by business, government and society. Over the years I have written many posts that incorporated thinking from Shell Scenarios, with the 2016 publication ‘A Better Life With A Healthy Planet: Pathways to Net-Zero Emissions’ featuring in numerous recent articles. Now, for those interested in the formulation of the Shell scenarios, a behind the scenes look is available through two new publications and an on-line database.

Underpinning the scenario stories is robust modelling and my colleagues in the Shell Scenarios team have now published details of the methodology, explaining how scenarios are quantified, how energy pathways are modeled and how much energy resource could realistically be available. The new materials help to bring further transparency and understanding in the analysis.

Scenarios

The World Energy Model is a core tool in exploring the evolution of energy demand in different countries and in different sectors, helping the scenario developers to maintain system consistency, under varying assumptions in policy, economy, technology and consumer choices. Shell’s World Energy Model is designed to put numbers to long-term scenario stories of the transformation of the energy system, at a detailed country level in a consistent and holistic framework. It can model energy demand “top down” based on consumers’ energy service needs. The model also uniquely charts energy choices of consumers and producers; and covers other key elements like efficiency and prices, and outcomes such as emissions. There are 75 different specific scenario-based inputs spanning six key drivers including population, economic growth, environmental pressures, technology, resources available and people’s choices. It has a large repository of historical data from 1960 on both energy demand and the drivers. It runs in yearly time-steps, as far as 2100 if required.

WEM Structure 2

WEM Structure

Together with Shell’s Global Supply Model, it is possible to coherently examine the impacts in one part of the world made by changes in another. This latter model is a top-down model which allows the company to form its own view of long-term oil and gas production potential. The data is collated from a range of external data providers combined with Shell internal sources and analyses to build a Shell view of future production potential. This also allows analysis of key uncertainties and enables rapid quantification of different production scenarios for strategic studies and for the wider analysis of the global energy system.

GSM

The Global Energy Resources (GER) database provides a comprehensive overview of all available fossil fuel resource and renewable energy potential per country . You can access data in the GER and read more about the Shell Energy Models by visiting www.shell.com/scenariosenergymodels.

 

Scenarios are part of and ongoing process used in Shell for more than 40 years to challenge executives’ perspectives on the future business environment. They are based on plausible assumptions and quantification and are designed to stretch management thinking and even to consider events that may only be remotely possible.