The Shell Scenario Team released The Energy Security Scenarios about a month ago and I’ve been out talking with stakeholders about them in the meantime.
The two new scenarios (see Note below), Sky 2050 and Archipelagos, describe the tension that is playing out between the promises made by world leaders found themselves in at COP26 in November 2021 when there was a collective agreement to limit global warming to 1.5°C above pre-industrial levels and the energy security situation they were confronted with three months later when Russia invaded Ukraine.
In Archipelagos, the security mindset that is dominant today becomes entrenched worldwide. Global sentiment shifts away from managing emissions and towards energy security. Despite this shift, the drive for energy security still includes the greater use of low-carbon technologies but not emission management technologies such as carbon capture and storage. These dynamics translate into global emissions peaking in the 2020s and falling from the mid-2030s but net-zero emissions remains a long way off.
In Sky 2050, long-term climate security is the primary anchor, with specific targets to reach net zero by 2050 and ultimately bring the global average surface temperature rise to 1.5°C by 2100. The war in Ukraine translates into gradual progress in the early 2020s, but that progress gains momentum towards the 2030s. This happens as the need to deliver low-carbon energy infrastructure takes on an urgency of its own, driven largely by security and price concerns. While progress is initially difficult to see, emissions start to fall from 2025 and, by 2040, the goal of net-zero emissions is clearly in sight. The energy system rapidly transforms.
Underpinning both scenarios is a framework of archetype behaviours by countries in response to energy concerns. The EU falls largely into an archetype called Green Dream, where the focus is on shifting rapidly away from fossil fuels and even reducing energy demand. Government takes a strong role in crafting the direction of travel. By contrast, North America sits with other major resource holders in a group known as Innovation Wins, where long term incentive structures unlock a stream of innovation to allow the energy system to find a different way forward. Technologies such as carbon capture and storage flourish.
Both the EU and North America head towards net-zero emissions, but it is the Americans who get there first in Sky 2050. Perhaps more importantly, of the two it is the Innovation Wins countries which deliver a much bigger share of the global need for negative emissions after 2050, because they develop and embrace geological storage and technologies such as direct air capture (in Sky 2050). Negative emissions are the key to managing overall warming by 2100 and open up the possibility for climate restoration in the 22nd century.
By 2050 in the Sky 2050 scenario, for a similar population, North America has deployed twice the CCS capacity of the EU and has seven times as much direct air capture in operation. By 2100 the EU only has as much direct air capture as North America does in 2050, whereas North America is heading towards 1 Gt of capture capacity.
Within the EU, the pathway is more problematic in the Archipelagos scenario. Nuclear starts to decline quickly in the 2030s and 2040s and isn’t replaced and solar doesn’t multiply to the extent that it does in Sky 2050, although it still becomes very big within the energy mix. Fossil fuels decline, but the net-zero emissions goal for 2050 isn’t met, although emissions are more than 60% below 2019 levels by mid-century. However, the EU does modestly outpace North America in terms of energy efficiency in both scenarios.
In Sky 2050 both the Green Dream and Innovation Wins archetypes get to net-zero emissions around 2050, despite very different approaches to the energy transition. But in the Innovation Wins countries there is a broader range of energy possibilities and greater ability to manage atmospheric carbon dioxide simply because they fully embrace the opportunities available through carbon capture and geological storage.
Within the context of the global stories it is possible to do a deep dive into a particular region at a particular point on the scenario timeline and the team has provided a wealth of data in spreadsheet form for those who wish to embark on such a journey.
Note: Shell Scenarios are not predictions or expectations of what will happen, or what will probably happen. They are not expressions of Shell’s strategy, and they are not Shell’s business plan; they are one of the many inputs used by Shell to stretch thinking whilst making decisions. Read more in the Definitions and Cautionary note. Scenarios are informed by data, constructed using models and contain insights from leading experts in the relevant fields. Ultimately, for all readers, scenarios are intended as an aid to making better decisions. They stretch minds, broaden horizons and explore assumptions.