As we approached 2020, the mnemonic COVID-19 didn’t even exist. There were great expectations for a decade of rapid change in the energy system, countries submitting ambitious nationally determined contributions at COP26 and ultimately a pathway forged towards meeting the goals of the Paris agreement. Then everything changed, and we are left wondering how the 2020s might really unfold. Will we be blighted by the coronavirus for years to come? Or will the 2020s follow the pattern of the post-war, post-pandemic 1920s, which saw an economic boom and technological revolution, only to end in tears with the Great Depression?
These are the types of questions that scenario analysis is made for and this year, which also marks our 50th anniversary as scenario practitioners, the Shell Scenario team has taken up the challenge of answering them. As the pandemic gathered pace in March, and lockdowns became the only viable immediate solution to the problem, it also became apparent that the depth of the disruption would have a very significant lasting impact. Although the economy springs to mind as the principal issue, it may not be the main driver of change. Society has had to adapt its social structure, both in how we behave with others but also in how we do things, such as work, travel and enjoy leisure time. The political fabric of society has also changed, in some cases extending existing powers and in others finding that assumed powers held little sway when it came to using them.
So in April the scenario team started to think through what all this might mean and how the pandemic might ultimately impact the energy system. We are very pleased to present the first output from this work, with more to come in the months ahead. The stories are presented under the banner heading, Rethinking the 2020s. The foundation underpinning the stories is the enhanced tension in society between wealth, or wanting to recover quickly from the economic slump; health, or wanting to ensure citizens are cared for as the pandemic unfolds; and security, or wanting to assure the future of the country and its position in the world. While no one story may play out globally to its fullest extent, the elements are clear to see at a more local level. There is also the possibility that they aggregate and a clear global direction emerges.
The three pathways do have one common element; they are preceded by a period of uncertainty and experimentation as governments struggle with the initial outbreak of the virus. This persists well into 2021 before lasting trends emerge.
The climate issue and energy transition begin to play out very differently in the three pathways. Although the transition continues irrespective, the depth and breadth of change varies significantly. But it is only when societies prioritise health that the world finds itself on a pathway towards the goals of the Paris Agreement.
Health is a story in which governments act cautiously with regards to reopening, with social distancing practices lingering through to 2025. Touchless technology prevails, and new ways of working, socialising and living become embedded in society out of necessity. This brings about further change, with cities having to transform and energy systems with them. The adaptation required by the pandemic is the much needed catalyst for a transformation, with the fuel for change coming from targeted stimulus money needed to revitalise struggling economies. By the end of the decade carbon dioxide emissions are falling year on year.
In the Wealth story, the recovery is more rapid, but with an eye only on economic recovery and not on the problems that society was already attempting to manage as the 2020s opened. These problems, such as climate change, remain to be dealt with and emerge again in the late 2020s, becoming even more pressing and urgent to address. Emissions increase again to 2019 levels and continue rising.
The Security scenario poses a sombre future as governments and peoples look inwards. International cooperation falters badly, yet it is a prerequisite to dealing with the virus. As such, economies falter, too, as the virus comes and goes, and a solid recovery doesn’t emerge in the 2020s. The energy transition also suffers. While some countries do continue to deliver on their nationally determined contributions and build out their renewable energy capacity, others return to fuels such as coal because of its abundant domestic availability. The 2020s become something of a lost decade in many respects. Emissions don’t rise much, but not because of a transition. The slump in economic activity is the driver, also bringing with it considerable societal austerity. For me, this story has something of a dystopian edge to it.
It has been a fascinating few months working on these scenarios and thinking through the implications of the pandemic. For me, the silver lining in all this is that I can see a real pathway towards Paris emerging, where there was an element of wishful thinking previously. But that pathway will require solid international cooperation – I hope governments are learning valuable lessons about cooperation from dealing with the pandemic itself.
Enjoy your tour of Rethinking the 2020s.