Category: Energy technology

When might fossil fuel phase out happen?

dchone November 27, 2023

In the run-up to COP28 and at the conference itself, a key call by some nations and many observers is to include language in the COP decisions to signal the phase out of fossil fuels. While there is no question that the carbon dioxide emissions from the use of fossil fuels and any leakage of natural gas (primarily methane) to the atmosphere is the main cause of the rising global average surface temperature, is it premature for such a call and should phase-out be the all-consuming drive at this stage of the transition? It is of course the obvious answer to the problem of limiting carbon dioxide emissions to a finite amount, but obvious answers aren’t always the right ones.

Given time, there is little doubt that society will move on from thermal combustion as a source of energy, even though it has been the only large-scale source of energy for millennia. Once that happens there will be little need for fossil fuels. We are in an era of rapid technological change and exciting developments in multiple fields of science, with energy production now tending to move into the quantum realm, as information technology has been doing over the past 70 years. Come back in a century or so and the energy world will likely be very different. But that doesn’t help the immediate problem of emissions mitigation.

To better understand the challenge today, Shell uses scenarios to look at nearer term trends and The Energy Security Scenarios released earlier in 2023 are the perfect tool to shed light on the question of fossil fuel phase out. But first, it is important to look at the reality of where we are today. We still live in a society that is utterly dependent on fossil fuels for the delivery of most energy services, such as lighting, heat, mobility, information transfer and powering rotational equipment (pumps, compressors etc.). The production of most goods either includes fossil carbon directly (e.g. plastics, bitumen, cosmetics, medicines etc.) or requires fossil fuels in the production chain. The transition is under way, but the percentage of fossil fuels in the global energy mix has remained at around 80%, even after a quarter century of sustained effort to shift that dependency. However, the pace of change is accelerating. The current global emissions picture for a world powered mainly by fossil fuels is illustrated below.

Phasing out fossil fuels means finding a substitute for the delivery of every single energy service or manufactured item that exists today. Therein lies the problem – the substitutes don’t exist yet, at least not at a scale that matches the delivery potential of fossil fuels. This starts with very humble items, such as the pencil, which I discussed in a recent blog post but extends through to the entire electricity grid. Solar and wind are here to stay, but the complete set of technologies required to power cities with them all the time, overcoming the inherent intermittency of these energy sources, are still in the early stages of development. Similarly, the technologies to make green hydrogen, green ammonia, sustainable aviation fuels, synthetic hydrocarbons using atmospheric carbon dioxide and green hydrogen all exist but operate on a small or in some cases even pilot scale, whereas global oil production alone fills two 330-metre-long super-tankers every hour.

At a recent refinery technology conference I attended, there was real interest in processes to make sustainable aviation fuels, from relatively straightforward hydrotreating of waste oil to complete synthesis of jet fuel from carbon dioxide and hydrogen. Refiners want to do this, and aviation companies are starting to look for these fuels, but the industry is at the beginning of a long-haul development process to completely replace fossil-based aviation fuel. And if our thoughts then turn to electric or even hydrogen powered planes, these are still on the drawing board. Development and widespread deployment of new energy technologies on a global scale is measured in decades, not in years.

When the Shell scenario team developed The Energy Security Scenarios we thought hard about these timelines for change and considerable research went into understanding when technologies might emerge at scale. Two transition scenarios are presented, Sky 2050 which is largely devoid of headwinds and builds on global mutual interest, and Archipelagos which sees national self interest prevail and act as a drag on the energy transition when compared to Sky 2050. In Sky 2050 which achieves net-zero emissions globally by 2050, fossil fuel use is still commonplace in that year, albeit reduced by nearly two-thirds when compared to today. Substitutes are being found and alternative services delivered, but not fast enough to phase out fossil fuels on a timeline that matches the need for net-zero emissions.

The short answer is that net-zero emissions should take precedence over fossil fuel phase out because it can be achieved more readily and in a shorter time frame. But even net-zero emissions in the shorter term, such as by 2050, will require not just considerable fossil fuel substitution effort but also considerable use of every available carbon removal mechanism. In the Sky 2050 illustration below, remaining emissions (fossil energy and cement) of 8.4 Gt per year in 2050, even after the direct use of carbon capture and storage (CCS), is balanced by carbon removals delivered mainly through land use change, some direct air capture with geological storage (DACCS) and bioenergy production linked with geological storage (BECCS). But as noted, there has been considerable substitution away from fossil fuels as an energy source when compared to now.

A strategy that builds on the notion that all fossil fuel use can be ended by 2050 is likely to fail, whereas one that focuses on net-zero and embraces the seeming ambiguity and apparent messiness of such a solution can succeed. But it is just an interim step towards a world where fossil fuel use has largely ended. By late in the century in Sky 2050, fossil fuel use is a tiny fraction of today and most of that remaining use is as a ready source of carbon for making things, like plastic products. The fossil fuel use for combustion processes is in limited legacy applications where facilities that were built years earlier with CCS are still operating. But direct use of CCS has declined considerably compared to 2050 as industrial concerns use hydrogen, bioenergy and electricity to power their facilities.

Fossil fuel phase-out is a handy catch phrase that attracts interest and seemingly presents a solution to rising global temperatures, but it may not be the best immediate solution. A focus on net-zero and the development of policy instruments to encourage a balance between remaining emissions and various sink technologies and land use practices is where we need to be, but such a framework is proving hard to realize. Nevertheless, the USA is doing it now with a pioneering incentive scheme aimed at both new energy technologies and carbon emissions management; perhaps a trillion US dollars will flow into this full range of transition technologies. And in Australia a carbon farming initiative (CFI) has been running for some years which incentivizes farmers to maximize land carbon stock as an important output from their agricultural activities, such as growing wheat and raising cattle.

As COP28 gets underway, the fossil fuel phase out discussion may get very heated, and while it is an important discussion to be had, it should not become a distraction to the shorter-term goal of net-zero emissions, which will require a major emphasis on the development of carbon removal practices and technologies.

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.

Green Dream or Innovation Wins?

dchone November 15, 2023

I recently attended an emission trading conference in Paris and like many such events in the EU now, one of the first items on the agenda (and in this case it was the first) was a presentation and discussion on the US Inflation Reduction Act (IRA). The fact that the IRA isn’t an emissions trading system didn’t matter. The IRA has upended the climate discussion in the EU in that projects are happening in the US, and change is underway, while a key green technology sector like the EU wind industry is facing headwinds.

After years of attempting to implement carbon pricing but finding it to be politically impossible to do so, the USA has taken a very different track to the EU where the flagship policy is the EU Emissions Trading System (EU ETS) and its carbon price, currently around €80 per tonne CO₂. The IRA offers tax credits across a range of technologies, from electric vehicles to direct air capture (DAC), with the benefits for the latter of up to $180 per tonne CO₂ when geological storage is involved (DACCS). Earlier this year Goldman Sachs estimated that the IRA could deliver as much as $1.2 trillion of incentives by 2032 and spur $2.9 trillion of cumulative investment opportunity across sectors for the re-invention of U.S. energy system. Little wonder the IRA features at the top of a climate change conference agenda in the EU.

Meanwhile, presentations about the EU ETS at the same conference pointed to a system with growing ideological constraints. Top of the list is the near absence of a carbon removals framework such that this key set of technologies can start featuring in EU ETS driven investment decisions. Rather, it almost felt as if the EU is just expecting emissions to fall to zero by the early 2040s, thus avoiding any major need for removals. It isn’t clear how this might happen in practice and certainly none of the scenario work done in Shell points to anything even close to such an outcome. Even in our most ambitious scenario, Sky 2050, the global energy system will remain bound to fossil fuel use right through the middle of the century and beyond, albeit sharply decreasing, with the end of the fossil fuel era not even in sight until the 2080s. As such, carbon removal technologies like direct air capture with storage (DACCS) need momentum today, which is happening in the US under the IRA, but the equivalent investment in Europe is essentially zero.

The different approaches in the EU and USA are highlighted in our Energy Security Scenarios, released a few months ago, through the use of behavioural archetypes. The EU is a Green Dream region, meaning that they are ideologically attached to removing fossil fuels from the energy system as fast as possible. By contrast, the USA, along with other major resource countries, are characterised by the tagline Innovation Wins, which means that they will tackle the issues in the energy system through innovation, but with pragmatism prevailing. If that means using fossil fuels in some applications and developing DACCS to manage emissions, then so be it. No ideology, just money and science.

One of the strengths of the World Energy Model (WEM) that sits behind our scenarios is the ability to drill down into single countries, technologies in countries or sectors in countries. And I have done just that for the USA with the WEM to illustrate the pathways for our two new scenarios, Sky 2050 and Archipelagos. These are stories that are full of technology and innovation, with rapid change resulting.

Firstly, just a reminder of the two scenarios:

Archipelagos depicts a global narrative of shifting political winds driving the transition away from fossil fuels. Despite encountering challenges, the pace of the transition accelerates due to heightened security concerns and competition. This scenario envisions a world where energy security takes precedence over emission management.
Sky 2050 explores a world in which long-term climate security is the primary anchor. Society rapidly moves towards net-zero emissions but doing so requires major interventions from policymakers in the energy system.

The scenario timeline for the USA through to 2060 is shown below, built by extracting multiple different views of the US energy system from the WEM database.

A defining feature is that even in the slower transition, Archipelagos, the USA is closing in on net-zero emissions by 2060, years before other countries. This is linked in part to the IRA today, which establishes momentum behind both transformative energy technologies and CCS, although in the case of the latter not on the scale seen in Sky 2050. One key difference between the scenarios is the complete disappearance of the DAC industry in Archipelagos, whereas it booms in Sky 2050 once high initial costs come down. The emergence of DAC in Sky 2050 also gives rise to a synthetic fuel industry in the USA, which tempers hydrogen use for aviation later in the century compared to Archipelagos.

In Sky 2050 net-zero emissions is reached in the late 2040s in the USA, before the current 2050 goal.

But both scenarios for the USA see an all-electric passenger car market, hydrogen road freight, electric airplanes, expanding biofuel production, hydrogen jet travel (not shown above for Archipelagos but from 2050), solar and wind expansion and of course falling emissions.

In the USA, at least, innovation does win!

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.

The pencil problem

dchone October 9, 2023

Many years ago the well know economist Milton Friedman made a short film about pencils that continues to resonate today. While the film can be interpreted as simply a defence for capitalism, which Friedman was famous for defending, it nevertheless does make a good point about the complexity of the world we live in. The manufacture of an item as simple as a pencil requires such a wide range of resources, skills, machines and knowledge that no one person could easily craft a pencil as refined as the product we can buy for not very much money in a local shop or online.

The steps to make a pencil are many, but at least the basics are outlined in this short video.

What is missing however, from both Friedman’s and the manufacturing video, is any reference to the energy (and hydrocarbon materials) required and where that energy (and hydrocarbons) might come from. There’s almost an underlying assumption that the energy is just there, available in abundance. But the complexity of the system to deliver the pencil relies entirely on a complex energy system that we are collectively now trying to change. Unfortunately a rhetoric has emerged that this change will be both simple and quick, yet neither are true. The energy system that delivered the pencil took over 150 years to evolve, and it continues to do so even without the more recent changes related to renewable energy. But the pencil that emerges has CO₂ emissions related both directly and indirectly to its manufacture, largely because of the energy system used to power the manufacturing steps, which of course is why that energy system needs to change. However, that energy system is only there because we need pencils, and other manufactured goods and energy services.

Within the pencil the most visible material is wood, which is often cedar as noted in the above video. While this is entirely natural, sourcing it requires considerable amounts of energy to fell trees, transport the logs, cut and shape the wood, then move the final wood pieces to the pencil manufacturing plant. While some of this energy is electricity, there is considerable use of diesel for transport.

The pencil lead is noted as being a mixture of graphite and clay, baked at over 800°C in a furnace. The world’s largest graphite producers are China, Madagascar, Mozambique and Brazil, so there will almost always be considerable transport involved, probably by sea using marine fuel oil or marine diesel. As well as the energy used in the mining and refining process, baking the graphite with clay will likely require natural gas. But there is also synthetic graphite as an alternative. Synthetic graphite is produced through a complex process of baking petroleum coke at very high temperatures. Synthetic graphite can have a purity of over 99% carbon, and it is used in manufactured products where extremely pure material is required, which includes pencils.

Then there is the glue. Modern wood glues are largely synthetic, made from petroleum-derived plastics like polyvinyl acetate (PVA). Almost all vinyl acetate monomer is now produced via the vapor-phase reaction of ethylene and acetic acid over a noble-metal catalyst, usually palladium. The reaction is typically carried out at 175–200 ºC and 5–9 bar pressure. The ethylene might come from an ethane cracker, such as the Shell facility in Pennsylvania which uses the ethane in natural gas to produce ethylene for the further manufacture of chemicals and plastics (like polyethylene). But along the way considerable energy is required for the synthesis process, also coming from fuels such as natural gas, but some electricity as well which could be sourced renewably.

The ferrule at the end of the pencil is made of aluminium, which is also an energy intensive mining, refining, electrolysis based process with multiple transport steps. Much of this requires liquid fuels and natural gas, although the electrolysis step often uses renewable electricity in places of abundance, like Iceland. However, the electrolysis currently requires graphite in the anode and cathode, with the anode being consumed during the electrolysis process (producing CO₂) and needing constant replacement.

Finally there is the pencil eraser, which may be made from natural rubber sourced from a country such as Malaysia and transported on ships using marine fuels. But much of the global rubber industry is now based on synthetic rubber, which derives from yet another complex chemical process. Synthetic rubber production begins with the refining of oil or other hydrocarbons. During the refining process, naphtha is produced. The naphtha is then used to produce monomers such as styrene and isoprene, which are necessary for the production of synthetic rubber. The most common synthetic rubber is styrene-butadiene rubber (SBR) derived from the copolymerization of styrene and 1,3-butadiene.

The paint used to decorate the pencil may also have various components in it derived from crude oil and the manufacturing process will require energy as well.

So far I have only discussed the pencil itself, but there is an enormous dependency on milling machines, cutting devices, refineries, pipes, ships, trucks, tanks, storage depots, roads, trains and various other pieces of infrastructure, many of which are made of steel and therefore require iron ore mining and coal fired smelting for production. And all the roads used for transport, including the final delivery of the pencil to a shop or to a home to fulfil an online order, are largely made of bitumen, derived from crude oil.

While the pencil itself is a relatively simple implement, as Milton Friedman points out it requires the cooperation of thousands of people to produce. But it also requires the operation of hundreds of different mining, chemical and energy production facilities, not to mention factories making machines, trucks, ships and other pieces of equipment. All of these run on energy and most will use coal, oil or natural gas to do so. Only a fraction have been fully converted to renewable power, although many more may use some renewable energy as part of the electricity the facility uses or the final delivery may be in an electric van. Some of the processes required to ultimately make a pencil may not yet have an alternative that doesn’t use oil or natural gas as a feedstock for the carbon in the final product.

The job ahead is to convert all of these, or rebuild them, to facilities that don’t use coal, oil products or natural gas for energy. In our recently released Sky 2050 scenario, the near 80 years between now and the end of the century sees a world largely achieve this, but at a pace of change that is unprecedented. In the Sky 2050 scenario, in the year 2100, fossil fuels make up less than 5% of primary energy demand, with a good portion of that going into products like pencils rather than being used for energy. But this is not the case at all in 2050, when fossil fuels are still about a third of primary energy and therefore emissions from their use must be managed through land use mechanisms and geological storage of CO₂. This is what net zero is all about, since zero use of fossil energy is much more a 22^nd century possibility than it is a 21^st century reality.

Developing countries hold the key to reaching Net Zero Emissions

dchone September 1, 2023

A guest post by my scenario team colleagues Thomas Akkerhuis and Georgios Bonias

In a few days, leaders from the world’s largest economies will gather in India for the 2023 G20 summit. The G20 Presidency has included Green Development as one of the main themes of the summit with a specific mention on ‘ensuring just energy transitions for developing countries’. At the same time, given the volatility and uncertainty in energy markets, many countries are looking to secure their own energy sources, with fossil fuel extraction as part of plan. Looking forwards, how might the emerging and least developed parts of the global economy respond to the call for green development, net-zero emissions and much lower use of fossil fuels? Looking back, it’s important not to forget that today’s developed economies largely sprang to life on the back of coal, then oil, and later naturl gas, with no CO₂ emission constraints to consider.

A few months ago, Shell published The Energy Security Scenarios, which explore two different pathways for the energy transition, driven by the global shift towards a security mindset.

Sky 2050 – a very rapid transition where global climate security overcomes shorter-term national concerns.
Archipelagos – where national security concerns create ongoing headwinds in an otherwise rapid transition.

To help explore how different countries might navigate through the transition, four different archetypes were identified, with nations behaving in similar ways when they share similar vulnerabilities to energy supply disruption and energy price volatility. In both scenarios, the security mindset leads to aggressively competitive, rather than co-operative, decarbonisation.

The archetypes are:

Green Dream – which can be observed in the European Union. The EU’s wealth enables it to deal with energy price volatility, but its advanced economies and depleted oil and gas resources make it highly vulnerable to energy supply failures. These countries seek security by driving hard to end the use of fossil fuels.
Innovation Wins – which can be seen in countries like the USA and major energy resource holders like the United Arab Emirates. These countries are often self-sufficient in energy so are not vulnerable to supply failures, but their political systems are exposed to swings in the energy price. These countries do not feel so threatened in the short term, but invest heavily in innovation and infrastructure as longer-term solutions to their energy needs and the needs of their energy customers.
Great Wall of Change – which is mainly relevant to China. China is insulated from both supply and price concerns by several factors: the size of its economy, its large coal reserves, and the scale of the investments it is making in its own energy supply and infrastructure. China takes a cautious approach, aware of the need to move away from coal – by far the most emissions-intensive fossil fuel – and carefully monitoring global energy market developments. It looks to use its manufacturing strength to grow its position as a global low-carbon energy powerhouse.
Surfers – which subdivides into Emergent Surfers, like India and Brazil, and Rising Surfers being the world’s least developed economies. The latter includes most countries from the African continent, and they are more focused on establishing the basic foundations for development, such as infrastructure. Surfers countries do not produce significant amounts of energy and so they are vulnerable to both energy supply disruption and price swings. Emergent Surfers quickly adopt new technologies while Rising Surfers focus more on access to energy. Surfers seek out partnerships and try to ride the waves of opportunity created by other archetype groups.

We have used the archetypes to explore how people, wealth and energy are distributed. The Green Dream and Innovation Wins archetypes currently account for 23% of the global population but almost 60% of global energy demand and 63% of the global GDP. On the other hand, Surfers countries make up more than half of the world population but only about a third of the global energy demand and GDP.

The skewness of GDP distribution, favouring Innovation Wins and Green Dream, comes at a cost, being the large contribution to global anthropogenic CO₂ emissions that these countries have made. Based on our analysis of data from 1850 onwards, the cumulative CO₂ emissions for countries in these archetypes are more than 600 tonnes per current inhabitant, while for the Great Wall of Change archetype they are about 140 tonnes. For Emergent Surfers countries the number is just above 100 tonnes of CO₂ and for Rising Surfers around 30 tonnes.

The share of the different archetypes in annual CO₂ emissions has been going through significant changes in recent decades, reflecting the changing dynamics in the global economy. In practice, CO₂ shares are even more skewed. For example, China’s emissions are partially due to product demand in Innovation Wins and Green Dream. The same is true for land use change emissions, where Brazilian deforestation is partially a result of global food demand.

Given that countries in the Great Wall of Change and particularly in the Surfers archetypes are expected to have strong economic growth in the coming years and decades, we looked at the CO₂ profiles that these countries will need to have, according to the Sky 2050 scenario, in order for the world to be at NZE by 2050. Historical data for all archetypes are shown in grey lines and the possible future pathways, based on the Sky 2050 scenario analysis, are shown in colour.

The key message coming from this analysis is that developing countries will need to achieve their projected economic growth following pathways of much lower CO₂ emissions than today’s developed countries did over the last 100 years. If countries in the Great Wall of Change and Surfers archetypes were to follow similar CO₂ emissions pathways as the Green Dream and Innovation Wins countries when reaching similar levels of GDP/capita, then global CO₂ emissions at 2050 would be close to 80 Gt per year, which is double of today’s levels, instead of NZE as is required to stop global warming. Much lower CO₂ pathways can be achieved in three ways:

Use fewer energy services compared to developed economies at a similar level of income.
Use energy services that consume less energy (higher efficiency).
Use energy services that make use of cleaner energy (lower fossil fuel share)

The first is not a viable option and therefore we do not make use of it. However, some economies may appear to follow this pathway, but in reality a modal shift is taking place. For example, shared ownership of vehicles has never been established at scale in the USA or EU, but it could emerge in parts of Africa. However, this doesn’t mean that people travel less. Clean electricity will address both the second and third points: electrified energy services are often much more energy efficient, and when the electricity is clean, that brings the additional benefit of emissions reduction. For the non-electrified parts of the energy system, low life-cycle emission hydrocarbons (such as biofuels) and hydrogen can still address the third point.

So what happens in the two scenarios?

Sky 2050 must, by necessity, embrace an energy system leapfrog for developing counties simply to reach net-zero globally by 2050. But despite national security interests prevailing in Archipelagos, broadly the same trend is followed. For the Rising Surfers group in Archipelagos, per capita fossil fuel use never gets to the levels seen in any of the other archetypes due to the growing availability and falling cost of alternative energy technologies. For example, as Rising Surfers develop in Archipelagos:

Coal never dominates the electricity sector as it has in most other developed regions. This is further supported by the high potential for solar energy production that many countries in the Rising Surfers group have.

The use of hydrocarbon fuels for mobility in Rising Surfers will peak far below the Green Dream / Innovation Wins levels.

The buildings sector in Rising Surfers will switch directly from traditional biomass to clean electricity – skipping phases of coal-fired power and gas-fired boilers.

In theory, the transition is possible given the progress in technology and the lower carbon energy options which are becoming available nowadays. Rising Surfers are well positioned in some important ways. For example, Africa, having less than 30% of the global land area, has an estimated 58% of the global resource potential for solar energy. This is a useful contrast with Innovations Wins and Green Dream who have built their wealth on traditional sources of energy. In Sky 2050, by 2100, almost 30% of global direct air capture capacity is located in these countries, potentially generating huge revenue through removals trade under Article 6 of the Paris Agreement. From an energy demand perspective, their climate will eliminate an important portion of heating demand in buildings sectors which is often provided by direct combustion of natural gas. By contrast, air cooling is already an electricity based energy service. Efficiency will grow due to urbanization trends, with over 80% of the Rising Surfers’ population living in cities in the second half of the century (vs. less than half today).

But here will also be barriers. Although some green technologies are cheaper than their fossil fuel counterparts, many are not, or require significant upfront investment. Building an electricity grid that can handle increasing electrification and the intermittency of solar will be a challenge. It will be critical and fair to have mechanisms through which developing countries can be supported in this alternative pathway and the new energy technologies made widely available as quickly as possible. This will be one of the many challenges faced by the G20 when they meet in India. The world’s ambition to reach net zero emissions by 2050 will depend on it.

Reflecting on the IPCC Synthesis Report through new Shell scenarios

dchone March 23, 2023

After a year of work, with a few hints along the way offered via this blog, the Shell scenarios team launched The Energy Security Scenarios this week. This is the team I am proud to be a member of and our new scenarios offer a very different perspective on the world in a time of challenging circumstances. With an almost identical release date, the IPCC 6^th Assessment Synthesis Report also landed this week. The scenarios also offer a new lens through which to view the IPCC findings.

The Energy Security Scenarios are built on the foundation of a world in which a security mindset is becoming pervasive, be it national security based on military threats, energy security following a year of supply disruption and price volatility, economic security as we watch the banking system being challenged by some defaults or climate security as the global average surface temperature continues to rise and impacts are becoming more visible. How countries respond to energy price volatility and supply disruption is highly variable, but nevertheless a pattern has emerged that ties together disparate responses such as India buying Russian crude oil and the USA pumping billions of dollars into direct air capture. These behaviours form part of an archetype framework that underpins our new scenarios. This foundation also offers some colour to the energy story we tell, with our archetypes classified as Innovation Wins, Green Dream, Surfers and Great Wall of Change.

Two key drivers shape the stories that we explore, notably the call at COP26 in Glasgow to deliver net-zero emissions globally by 2050 and deep cuts in emissions by 2030 and the response to the Russian invasion of Ukraine which has stressed the global energy system over the past twelve months. As a result, two new scenarios emerge which embrace both drivers, but prioritise them differently as the world moves forwards. We look out not just to 2030 or 2050, but all the way to 2100 and even draw one surprising conclusion about what the 22^nd century has to offer. These are stories that describe a world locked in an energy transition not only driven by cooperative change as called for by many, but instead trending towards a world of more intense competition as countries seek to shore up their energy system for the 21^st century. The scenarios are Sky 2050 and Archipelagos. Both scenarios see the energy transition accelerating, but at different paces. In Sky 2050 climate security is the priority, whereas in Archipelagos there is more attention to ongoing energy security.

Highlighting the increasing pace of the transition is the recognition of an inflection point in this decade as fossil fuels begin to lose market share in primary energy, finally shifting away from the 80% role they have played for many decades. The pace in Sky 2050 is about twice that of Archipelagos, but both represent a trend break.

Meanwhile, the IPCC is very focussed on the diminishing carbon budget and the rapidly narrowing opportunities for limiting warming to 1.5°C. In the Synthesis Report they broadly conclude that action will be insufficient to contain warming below 1.5°C in the near term, which points to an overshoot outcome and therefore the need to recover the situation later in the century. This is similar to the pathway visible in Sky 2050, which does see global emissions start to fall in the 2020s and net-zero emissions reached in 2050, but nevertheless the surface temperature rises above 1.5°C in the mid-2030s. However, a burgeoning new direct air capture industry, borne out of initiatives such as the Inflation Reduction Act in the USA, appears in Sky 2050. It grows to such an extent than in combination with extensive change in land management practices, from forestry to farming, as much carbon dioxide is removed from the atmosphere between 2050 and 2100 as has been added from now to 2050. The result is that by 2100 surface temperature warming in Sky 2050 has returned to today’s levels, with the potential for climate restoration during the 22^nd century.

The IPCC make the case that only a drastic reduction in near term emissions can avoid passing 1.5°C, with CO2 emissions needing to fall by 48% by 2030 relative to 2019 levels. These numbers will become higher with each passing day that emissions do not reduce. The table below comes from the Synthesis Report released on Monday and outlines what must happen in the seven years to 2030, then to 2035, 2040 and 2050.

Source: IPCC 6th Assessment Report – Synthesis

In The Energy Security Scenarios we do not see the scope for such large near term action reductions, with Sky 2050 achieving a reduction of around 12% by 2030. In Archipelagos emissions are higher in 2030 than in 2019. Although the Synthesis Report calls for immediate reductions, the IPCC note that of their modelled scenarios, only a small number of the most ambitious global modelled pathways limit global warming to 1.5°C by 2100 without exceeding this level temporarily. The IPCC state the following:

Global warming will continue to increase in the near term (2021-2040) mainly due to increased cumulative CO2 emissions in nearly all considered scenarios and modelled pathways. In the near term, global warming is more likely than not to reach 1.5°C even under the very low GHG emission scenario (SSP1-1.9) and likely or very likely to exceed 1.5°C under higher emissions scenarios. In the considered scenarios and modelled pathways, the best estimates of the time when the level of global warming of 1.5°C is reached lie in the near term.

In the case of overshoot, i.e. temporarily exceeding 1.5°C, they also note that the application of large scale carbon dioxide removal (CDR) technologies and practices is required to progressively reverse the overshoot situation. However, they also note that any overshoot brings with it the added risk of long term irreversible changes in the global ecosystem.

In short, the Synthesis Report paints a concerning picture of the world exceeding 1.5°C and taking on the associated climate risks. While the report makes every attempt to say that the possibility of not doing so still exists, there is little solid content to argue that this is achievable, a finding backed up by the analysis presented in The Energy Security Scenarios. The temperature outcomes for Sky 2050 and Archipelagos are presented below. The assessments were made by the MIT Joint Program using their climate model and also reported with the release of the Shell scenarios. You can also explore the scenario data here.

The Energy Security Scenarios complement the IPCC Synthesis Report well in that Sky 2050 sets out a very clear and unambiguous pathway to 2100, that both recognises the near term prospect of overshoot and the steps to take to more than redress the situation. By contrast, Archipelagos sets out a plausible pathway forward based on current tensions, but also shows that even under trying circumstances the world may find that 2.2°C is now the upper maximum for warming. While 2.2° is not considered safe territory by IPCC, the Archipelagos outcome is well positioned at the lower end of the range of outcomes that IPCC consider, which exceed 4°C in the worst case. Archipelagos is a story of global political headwinds buffeting the transition, but not to the extent that it slows in comparison with today. Quite the opposite – the pace increases as security concerns and competition drive the system away from fossil fuels.

You can find more on The Energy Security Scenarios here, which I would encourage readers to explore. But if you don’t have the time right now, this short video introduction may be of interest.

Pathways to 1.5°C

dchone June 11, 2021

In 2018 when the IPCC released their Special Report on 1.5°C, they presented four archetype scenarios to help readers understand that there were fundamentally different approaches to limit long term warming to 1.5°C or below. The scenario pathways are shown below and vary significantly in their approach, time horizon and use of sinks.

All four scenarios (P1, P2, P3, P4) are based around the same carbon budget, or total cumulative emissions of 420 Gt from 1.1.2018 consistent with providing a 66% chance of limiting warming to 1.5°C. Whether the carbon budget is aligned with 420 Gt (67^th percentile) or 580 Gt (50^th percentile), it represents a very limited amount given that annual CO₂ emissions are in excess of 40 Gt, so these represent 10-15 years of emissions at current levels. Since this IPCC publication, a further 160 Gt will have been emitted by society by the end of 2021, meaning that the budget is reduced to 260 – 420 Gt.

In attempting to align with a very limited carbon budget, the P1 scenario imagines a world of falling overall energy use and a very rapid shift away from fossil fuels. There is no use of geological storage of CO₂ and a modest reliance on natural sinks, although in doing so the world must shift away from net-deforestation by the 2040s. By contrast, the P4 scenario sees increasing demand for energy and as a consequence, a much more difficult decarbonisation journey that involves considerable use of sinks in the second half of the century. Notably, the P4 scenario exceeds the carbon budget by quite some amount with peak emissions to the atmosphere of 900 Gt, before reining in the amount to 200 Gt by 2100. This results in P4 being a so-called overshoot scenario, in that the world exceeds 1.5°C during the century before returning to 1.5°C and below by the end of the century.

All the above might seem a bit academic, but it became very real recently when the IEA released their 1.5°C scenario and some commentators began comparing it to one of the very few other 1.5°C scenarios, notably Sky 1.5 from Shell.

In fact, the two scenarios are at near opposite ends of the P1 to P4 spectrum.

The IEA 1.5°C scenario looks at the period from 2020 to 2050 and presents a proposal for the problem of containing emissions to a 500 Gt carbon budget (the 580 Gt IPCC number less 80 Gt for the years 2018 and 2019). Apart from recognising that the land based system is likely to reduce this budget by a further 40 Gt over the period (i.e. reducing it to 460 Gt), the analysis limits itself to the energy system and the changes that would be required to meet a 460 Gt cumulative emissions constraint within a 30 year time frame. As is the case in similar scenarios, including Sky 1.5, their analysis assumes rapid electrification of final energy (e.g. electric cars instead of gasoline) and makes use of renewables and nuclear power generation to produce the electricity. They introduce hydrogen as an energy carrier, make use of bioenergy and include carbon capture and storage (CCS) where fossil fuel remains in use. For the latter, the IEA deploy CCS directly on facilities that use fossil fuels and indirectly through direct air capture for fossil fuel use in applications such as aviation.

All the above steps are well understood, but even given rapid and stretching deployment rates of all technologies, these steps are unlikely to contain emissions to less than 500 Gt in under thirty years. This is because of the expected increase in overall energy use, a consequence of economic growth, the general rise in population and the shift of billions of people from very low energy use lifestyles to at least modest energy use, a simple outcome of development and the provision of basic services like lighting, clean water, food refrigeration and some mobility.

As such, energy modelers looking at a very constrained time frame of 30 years must make the assumption that energy growth can be contained or even fall, as in the IPCC P1 scenario. This is exactly what the IEA have done to meet the carbon constraint. In the 1.5°C Scenario primary energy demand falls from 612 EJ in 2019 to 543 EJ in 2050, a drop of over 10%. Efficiency will certainly help deliver such an outcome and the use of renewable electricity gives the story a big boost as the thermal losses in power stations vanish, although new losses emerge through the use of transmission and storage. But the big story is the widespread assumption of behavioural change across society to reduce energy demand. The chosen measures include steps such as;

Ride-sharing in all urban car trips
Reducing motorway / freeway speeds to below 100 kph / 60 mph.
Increasing temperatures in air conditioned vehicles and buildings.
Lowering temperatures in heated buildings.
Replacing short flights with high speed rail.
Limiting long haul air travel to 2019 levels.

With low energy demand and high deployment rates of new energy technologies it then becomes possible to resolve the carbon budget within a 30 year time frame.

At the other end of the spectrum is the Sky 1.5 scenario, which tackles the problem of a limited carbon budget in a very different way. Sky 1.5 looks at the period from 2020 to 2100, an 80 year time frame, and starts with an expectation of rising global energy demand, even assuming significant energy efficiency improvements across society. The growth in population and the demand for energy services, including significant new demand from developing countries for basic services, cannot be contained and energy demand rises. This immediately poses a challenge in that rising demand more quickly consumes the available carbon budget at the front end, when alternative energy technologies and sinks have not been deployed.

Sky 1.5 also recognises that for many energy technologies, the 2020s still remain a period of development and limited deployment and even for more mature technologies such as solar and wind, a period of early growth where change on a global scale will remain limited.

The solution to this approach is to accept that, at least in the short term, the carbon budget may be consumed and the temperature it is linked to (1.5°C in this case) potentially surpassed for a period of time. The subsequent rapid deployment of sink capacity, both manmade in the form of air capture with geological storage and natural as reforestation, then offers the possibility of a period of net-negative emissions later in the century, to redress the imbalance and reduce cumulative carbon dioxide emissions and therefore temperature. This is the approach that Sky 1.5 takes, as do the IPCC P3 and P4 scenarios. Sky 1.5 takes this approach out of necessity, in that the scenario reaches a limit on energy technology deployment and does not foresee a fall in energy demand.

The end carbon budget for both the IEA 1.5°C scenario and Sky 1.5 are similar, but the IEA restricts itself to a thirty year time-frame, whereas Sky 1.5 operates over an eighty year time-frame. Sky 1.5 is also remodeled by MIT within their integrated assessment model to give a temperature outcome, rather than simply using the IPCC central estimate for a carbon budget. The two scenarios are attempting to answer the same question, but take very different approaches to doing so. There is no right or wrong here, just different ways of solving a tough problem.

Note: Scenarios don’t describe what will happen, or what should happen, rather they explore what could happen. Scenarios are not predictions, strategies or business plans. Please read the full Disclaimer here.

Exploring the energy future

dchone February 10, 2021

Three scenarios, Waves, Islands and Sky 1.5 explore the energy landscape out to 2100 and reveal very different possible pathways forward. All three are transformational in nature, with net-zero emissions now within sight, albeit on quite different timescales.

Rethinking the 2020s

dchone September 9, 2020

How might the 2020s unfold? Will we be blighted by COVID-19 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? Read our new scenarios for some thoughts on this pandemic era.

Can renewable deployment be exponential?

dchone June 22, 2020

In recent months we have all had to learn quickly about exponential rates of change as COVID-19 spread throughout the world, but as has been seen with the virus itself, exponential patterns typically stop and some other pattern of change emerges. Some mechanism intervenes in the process, typically starving the exponential process of its means for reproduction.

With the urgency around rising levels of carbon dioxide in the atmosphere, there is a desire by many to see renewable energy grow exponentially and quickly back out fossil fuels. Four years ago Fortune magazine reported that American futurist Ray Kurzweil forecast the dominance of solar PV in a little over a decade. Fortune noted the following;

Kurzweil’s basic point, reported by Solar Power World, was that while solar is still tiny, it has begun to reliably double its market share every 2 years — today’s 2% share is up from 0.5% in 2012. Many analysts extend growth linearly from that sort of pattern, concluding we’ll see 0.5% annual growth in solar in the future, reaching 12% solar share in 20 years. But linear analysis ignores what Kurzweil calls the law of accelerating returns — that as new technologies get smaller and cheaper, their growth becomes exponential. So instead of looking at year over year growth in percentage terms, Kurzweil says we should look at the rate of growth — the fact that solar market share is doubling every 2 years. If the current 2% share doubles every two years, solar should have a 100% share of the market in 12 years.

There is no doubt that solar PV has been doubling on a near two year basis. In 2015 global deployment was 230 GW installed capacity and this year it should be approaching 800 GW, which isn’t quite doubling every two years, but is close. But can this rate of change persist? It would imply 10 TW installed capacity by 2030 and 120 TW by 2040, from which enough energy could be generated to about meet all global requirements (~900 EJ in 2040), assuming it could be stored and channeled to the necessary services at the right time and place.

A related issue emerged on Twitter recently when well-known climate and energy expert Glen Peters (@Peters_Glen) took issue with a paper written by two colleagues in the Shell scenario team and published in Nature over a decade ago. In a twelve-tweet discussion Glen challenged the findings;

Will energy technologies grow exponentially until they reach “materiality” & then have linear growth? A common perception, but what does history say? Short answer: Old technologies are growing exponentially (not nuclear), just slower due to crowding out effects! . . . . . The ability for renewables to *displace* fossil fuels (not add to existing supply) will dictate whether renewables can grow exponential beyond “materiality”. If fossil fuels are taken out of the energy system, there is more space for renewables to grow exponentially. There is probably no physical reason why we can’t have 100% renewables, just like we once had 100% bioenergy, 50%-50% bioenergy-coal, etc The only limit is the one in our heads . . . .

There are a number of points here, but the question of exponential growth keeps returning. This isn’t about the level in the energy mix that renewables finally reach, but about the time it might take to get there. Exponential growth, such as that proposed by Ray Kurzweil, ought to be able to deliver a 100% renewable energy system by 2040.

The original paper that Glen Peters refers to was written by Martin Haigh and Gert Jan Kramer, so I took the question to Martin for further discussion. He noted that much of the background work to their Nature paper concerned the supply industry constraints related to production of materials required for deployment, but they had only limited space in their article to go into the necessary detail with graphs and charts.

So in practice, ongoing exponential deployment of solar is unlikely to happen because of stranded solar PV production facilities. Let me explain using two simple scenarios. In both cases the goal is to supply global energy demand with solar PV (putting aside the technical issues related to actually doing this) and global demand is rising from the current level of about 600 EJ by 1% per annum. The basic model I have developed also assumes that a field installation lasts for 35 years and that newer cells have improved efficiency over older models.

In an exponential scenario, solar PV rises at the rate described above, but this must be supported by investment in manufacturing facilities. By the time global demand is met in 2040, the world would have PV manufacturing capacity of 18,000 GW per annum, doubling from 9000 GW per annum just three years earlier. Even building the production facilities at this rate is questionable. But most of this capacity would then become stranded assets as demand for new solar PV would collapse. There would be residual demand for the newest most efficient modules replacing older modules, but this wouldn’t keep the industry going. In reality, this scenario wouldn’t happen as investors would see the coming over capacity problem and back away, therefore starving the exponential process of its means of reproduction.

In an investment scenario, solar PV rises exponentially in the early years, but then starts to shift away from the exponential case as investment in PV cell manufacture tapers. The result is a much slower rise towards meeting demand, but the investors in manufacturing don’t end up with stranded assets. In this example, manufacturing levels out at around 3000 GW per annum, one sixth of the above. Once solar PV generation meets global demand, the industry remains roughly balanced as it caters for both growth in energy demand and replacement of older installation. For much of the deployment period, growth is linear, not exponential.

Charts shown are for illustration purpose only

In the latter part of the century, some additional cell manufacturing capacity would be warranted, rising to around 4000 GW per annum due to the increasing replacement requirement. This would close the energy supply gap that is starting to appear after 2080.

But the outcome of the investment scenario is a 30 year delay in meeting the goal of 100% of global energy demand supplied by solar PV. This then challenges the other goal behind the requirement for very rapid deployment of new energy infrastructure; the need to limit warming to 1.5°C.

Aviation futures

dchone February 18, 2020

The aviation industry accounts for nearly one billion tonnes of carbon dioxide emissions annually against a global total in excess of 40 billion tonnes, which means it is around 2.5% of total emissions. However it is a high growth sector without obvious alternative energy carriers, implying that as other emissions fall and aviation continues to rise, its fraction of the total increases rapidly. Should global emissions fall by 50% in the same time that aviation doubles, then that fraction becomes ten percent.

Perhaps for the reasons given above, there is a particular focus on aviation emissions, far more so than a sector such as steel where emissions are currently much higher and will likely continue to be for many years. Additionally and unlike sectors such as steel and cement which are seen as essential elements for the provision of basic services such as homes and clean water, some people view aviation as a luxury which isn’t entirely necessary for modern society, hence the calls for limiting air travel as a means of limiting emissions from the sector. I don’t see rationing as a realistic pathway forward; the ability to traverse the globe in under a day has become too valuable.

The aviation sector will need to find another way forward. The current focus is on sustainable aviation fuels, such as those made from waste and sustainably harvested biomass, or perhaps even synthetic hydrocarbon fuels derived from processes that chemically combine hydrogen (from electrolysis of water using renewable energy) and carbon dioxide (from direct air capture). This latter route is currently very costly given the state of the variety of technologies required and large scale use of biomass always raises questions around its origin, the overlap with agriculture for food and the emissions that might arise from land use to create the biomass. Nevertheless, both these routes are worth pursuing.

But what other options might exist for the industry in the decades ahead?

Apart from balancing the emissions from aviation with some form of atmospheric carbon dioxide removal (from growing trees to direct air capture and geological storage), other routes would have to involve a shift away from hydrocarbon based fuels.

One possibility that is currently gaining favour is the development of electric propulsion, with the plane using battery storage for the electricity. This is also problematic due to the very low energy density of batteries when compared to hydrocarbons, a subject I discussed in an earlier posting. Battery electric planes might emerge for very short haul flights (e.g. London City Airport to Rotterdam, a flight I take quite a few times each year), but it is improbable for longer haul travel due to weight constraints. Today, 80% of the aviation industry’s emissions come from passenger flights longer than 1,500km, which means that a long-haul alternative technology needs to emerge.

One possibility is to use hydrogen directly as a fuel, either in a fuel cell configuration which essentially means an electric plane, or in a jet turbine engine in the same way planes use fuel today. The latter route means that planes could still attain the speeds and altitude of current jets. Hydrogen is well suited to a gas turbine engine.

Hydrogen isn’t weight constrained as an energy carrier, but volume considerations may prove challenging. A new airframe shape would likely emerge as a result.

	Jet A-1	Current Li-Ion Battery	Emerging Li-Metal Batteries	Liquid Hydrogen
Energy MJ/kg	42.8	~0.7	~2	120
Energy MJ/litre	37.4	~2	~4	8

Today, the development of hydrogen for aviation appears limited, with the BBC reporting a decade ago that there was no future for the fuel, despite proof of concept. Cost seemed to be the major issue, but today the cost of renewable electricity has fallen sharply and electrolysis to produce hydrogen is seeing a resurgence of interest.

A trawl through various online resources reveals that hydrogen jet turbines have been demonstrated for over 60 years. The first such flight was a modified B-57 Canberra Bomber, with one jet engine powered by liquid hydrogen from a cryogenic wing suspended tank (shown below)

diagram-of-a-hydrogen-fuel-system-on-nacas-martin-b-57b-canberra-ce9f7f

Source: NASA

In the 1980s Tupolev modified a Tu-155 to act as a test vehicle for a variety of alternate fuels, which included liquid hydrogen. The Tu-155 first flew on 15 April 1988. It used hydrogen fuel and later liquified natural gas (LNG). It flew until the fall of the Soviet Union and is currently stored at Ramenskoye Airport near Zhukovskiy. The cryogenic tank was stored in the main fuselage of the plane, in part due to the volume constraint noted above.

TU-155-Liquid-Hydrogen-Aircraft-Design-Tupolev-2009

Source: Tupolev

In the mid to late 1950s Lockheed proposed a concept reconnaissance aircraft that operated on liquid hydrogen and a design was also proposed for a Lockheed L-1011 passenger plane some years later. This was in response to the oil shocks of the 1970s.

Source: Lockheed

Despite over sixty years of on-off development of hydrogen powered flight, hydrocarbon fuels remain the only energy carrier for commercial aviation. Today, the industry faces a long term challenge that may require it to revisit shelved technologies, applying new concepts and materials to the variety of issues that couldn’t be fully solved in the decades past. In the Sky Scenario, we imagine that the first hydrogen intercontinental flight takes place in the mid to late 2040s, with a new generation of planes entering service from about 2050. Even then, it takes decades more for this to become a mainstay within aviation, but then could well be the only technology of the 22^nd century. In the interim in Sky, biofuels and removal technologies (bioenergy with CCS in Sky or BECCS) are used to deliver a net-zero emissions aviation system.