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BL Oil & Gas History, Economics and Geopolitics OENA8433

Lecture 6.3: Future trends

Dr. Karin Oerlemans

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Unit Overview
ƒ Topic 1: Introduction – The Founders
ƒ Topic 2: The Global Struggle
ƒ Topic 3: War and Strategy
ƒ Topic 4: Oil and Gas Economics
ƒ Topic 5: Oil and Gas Technology in context
ƒ Topic 6: The Energy Industry Today
ƒ Lecture 1: Hydrocarbon Man
ƒ Lecture 2: The Global Predicament
ƒ Lecture 3: Future Trends
ƒ Final Lecture: Course Review

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Lecture Outcomes
Upon successful completion of this lecture you should be able to:

ƒ Understand the use of scenarios in future planning

ƒ Become aware of policy scenarios in the industry from several
different sources
ƒ Compare and contrast different policy scenarios
ƒ Consider future trends in the light of policy scenarios

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Recommended Reading
ƒ OPEC (2008). World oil outlook 2008. Vienna: OPEC.
ƒ WEC (2007). Deciding the Future: Energy Policy Scenarios to
2050. London: World Energy Council. www.worldenergy.org
ƒ Shell
Sh ll energy scenarios
i tot 2050.
2050 (2008) Sh
Shell
ll International
I t ti l BV
BV.
www.shell.com

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In this lecture
ƒ OPEC Scenarios to 2030
ƒ WEC Scenarios to 2050
ƒ Shell Scenarios to 2050
ƒ Future Trends

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OPEC Reference Case
ƒ Main Assumptions
ƒ Oil price
ƒ Economic growth
ƒ Demographics
D hi
ƒ Productivity
ƒ Energy policy and technology

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OPEC Reference Case

ƒ World primary energy supply
ƒ Oil demand
ƒ Oil supply
ƒ Upstream investment
ƒ CO2 emissions

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OPEC Energy Scenarios
ƒ Policy impacts on reference case
ƒ US ESIA law enacted December 2007
ƒ US New Renewable Fuels Standard

ƒ Improvements to EU GHG allowance trading system

ƒ 20% GHG reduction by 2020 compared to 1990 levels
ƒ 20% target for renewable energy by 2020, including 10% biofuels
target in road transportation
ƒ Proposal for CCS directive

ƒ Targets as basis for alternative scenarios to reference case

outlook

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OPEC Energy Scenarios

ƒ Combined impacts of US and EU energy policies
ƒ Range of call on OPEC crude in the policy scenarios

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WEC Study
ƒ Issues:
ƒ Emergence of massive new energy demand in China and India
ƒ Market power of fewer and fewer large suppliers of oil and natural
gas
ƒ Shift to generally higher energy prices worldwide
ƒ Role of government policy and regulation in determining energy mix
and value of carbon
ƒ Regionalisation of energy markets which require harmonised
standards and regulations

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WEC Study
ƒ Energy per capita as a function of cumulative population. Area
between dashed line and data points is 500 EJ/year and represents
everyone below Poland today achieving this same energy usage of
100 EJ per capita
capita.

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WEC Study
ƒ Two Axes
ƒ Government
Engagement
ƒ Cooperation/
Integration

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WEC policy scenarios

ƒ Elephant: energy supplies more
secure and diverse, slight cut in
emissions
ƒ High Government Engagement
– Low
L Cooperation
C ti andd
Integration
ƒ Social animal with good memory
that relies mostly on its own well
structured family unit with little
cooperation between families,
characterizes government deeply
engaged in policymaking, but with
little cooperation between nations
or integration of the public and
private spheres
ƒ Lion: strong global economy,
global pacts on emissions, and on
dealing with energy poverty
ƒ High Government Engagement
– High
Hi h Cooperation
C ti and
d
Integration
ƒ Highly skilled, social animal that
launches its forays after careful
planning and in a highly
cooperative effort, exercising great
control and discipline, represents
strong government engagement,
together with close cooperation
and deep integration of the public
and private sectors, domestically
and internationally

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WEC policy scenarios
ƒ Leopard: slower economic
growth, higher emissions, greater
uncertainty
ƒ Low Government Engagement –
L
Low Cooperation
C ti andd
Integration
ƒ Solitary creature who is swift to
act in isolation, and represents
energy responses with little
government involvement and little
cooperation and integration of the
public and private sectors
ƒ Giraffe: freer markets lift global
GDP, population growth eases
ƒ Low Government Engagement –
High Cooperation and
I t
Integration
ti
ƒ Highly adaptable and independent
creature that thrives in an
unstructured environment and
sees opportunity at great
distances, describes market-
driven actions made with minimal
government involvement but a
high degree of cooperation and
integration of the public and
private domains, domestically and
cross borders

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WEC Targets
ƒ Achieving sustainable energy future: doubling of supplies to be
achieved by 2050 with cleaner and more efficient technologies –
underpinning low carbon economy

ƒ Targets:
ƒ 2020 significantly slow rate of energy-related emissions growth
ƒ 2035
ƒ Stabilize CO2 emissions from energy use
ƒ Reduce by half number of people without access to minimum
level modern energy services to one billion from two billion
(500kWh/person p.a.)
ƒ Develop 99% reliable commercial and physical energy systems
in Europe, North America, Asia

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WEC Targets
ƒ 2050
ƒ Develop 99% reliable commercial and physical energy
systems, in Asia, Africa, Latin America
ƒ Reduce anthropogenic emissions to current levels or below
ƒ Decouple emissions from economic growth
ƒ Halve number of people without access to energy to five
hundred million from one billion

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WEC Policy Recommendations

ƒ Promote energy efficiency
ƒ Raise public awareness
ƒ Set a global price for carbon
ƒ Closer integration of energy markets
ƒ Create a new international framework for technology transfer
ƒ Global dialogue on security of supply and demand
ƒ Taxation, legal and commercial frameworks

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Shell Scenarios
ƒ Challenging outlook for energy and the planet: “more energy,
less carbon dioxide” with the right combination of policy,
technology and commitment from governments, industry and society
globally

ƒ Scramble – policymakers pay little attention to more efficient energy

use until supplies are tight. Likewise, greenhouse gas emissions are
not seriously addressed until there are major climate shocks

ƒ Blueprints – growing local actions begin to address the challenges

of economic development, energy security and environmental
pollution A price is applied to a critical mass of emissions giving a
pollution.
huge stimulus to the development of clean energy technologies,
such as carbon dioxide capture and storage, and energy efficiency
measures. The result is far lower carbon dioxide emissions

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Shell Scramble
ƒ Fear and security
ƒ Flight into coal
ƒ The next green revolution
ƒ Solutions are rarely without drawbacks
ƒ The bumpy road to climate change
ƒ Necessity – the mother of invention

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Shell Blueprints
ƒ Starting at the grassroots
ƒ Paths to alignment
ƒ Developments benefit the energy poor
ƒ Both disaggregation and integration
ƒ Blueprints for climate change responses

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Shell Scenarios
ƒ 1990s TINA – There Is No Alternative
ƒ 2008 TANIA – There Are No Ideal Answers

ƒ There is a great deal of inertia in the modern energy system, given

its vast complexity and scale
ƒ Scenarios
ƒ describe an era of transformation
ƒ Challenging
ƒ Neither are ideal worlds, yet both are feasible

ƒ How will the transitions emerge over the next few decades?

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Shell Scenarios
ƒ 3 hard truths about energy supply and demand
ƒ 1: Step-change in energy use
ƒ 2: Supply will struggle to keep pace
ƒ 3: Environmental stresses are increasing

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Shell Scenarios Comparison

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Future Trends – WEC

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Future Trends – OPEC

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Future Trends
ƒ Common themes:

ƒ Concern over growing demand

ƒ Emergence of massive new energy demand in China and India
ƒ Deal with emissions
ƒ Provide energy for all countries at minimum levels
ƒ Development of technology
ƒ Global dialogues are needed

ƒ TANIA – There
Th A
Are N
No Id
Ideall Answers
A

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In Summary
ƒ “The significant problems we face today cannot be solved at the
same level of thinking as when they were created."
ƒ Albert Einstein

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Lecture Conclusion
ƒ This is the end of Lecture 3, Topic 6
ƒ You may now continue to the Final Lecture, the course review

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