TheEXPLORING Future

E xp lor in g T h e Fu t u re
En ergy Needs, Choice s and Po ssibilities - S ce narios to 2050

Scenarios are a tool for helping managers
plan for the future – or rather for different
possible futures. They help us focus on criticaluncertainties. On the things we don't know
about which might transform our business.
And on the things we do know about in which
there might be unexpected discontinuities.
They help us understand the limitations of our‘mental maps’ of the world – to think theunthinkable, anticipate the unknowable andutilise both to make better strategic decisions.

Energy Needs,
Choices andPossibilities
Scenarios to 2050

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Page 1The
ure
EXPLORING FutEnergy Needs,
Choices andPossibilities
Scenarios to 2050

Global Business Environment
Shell International 2001

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Page 2

Foreword

The two scenarios contrast an evolutionary progression from coal, to gas, torenewables (or possibly nuclear) against the potential for a hydrogen economy –The ways in which we provide and use the energy the world depends on are bound tosupported by developments in fuel cells, advanced hydrocarbon technologies andchange greatly over the next 50 years, in response to three fundamental challenges:

carbon dioxide sequestration. They remind us that energy systems are dynamic, able

• giving all people access to the benefits of efficient, commercial energy fromto respond to changing conditions, choices and possibilities. They also suggest thatwhich nearly a fifth of us are still excluded,• meeting the expanding and shifting energy needs of an urbanising world as
economic development raises the living standards of billions of people, andthe rise in human-induced carbon dioxide emissions can be halted within the next 50
years – leading to a stabilising of atmospheric carbon dioxide levels below 550 ppmv
– without jeopardising economic development.

• preventing the pollution which damages health, blights environments andthreatens vital natural systems.

Governments have a key role in establishing the framework within which this cantake place, although the scenarios highlight the impossibility of picking future

In Shell, we use long-term energy scenarios – looking out over 50 years – to help ustechnology winners with any certainty – particularly in what seems likely to be aunderstand how energy systems could change. The work is based on our world-wide

highly innovative period in energy technology.

experience in energy businesses, in serving energy consumers and in developing andapplying technology. But such scenarios are not an exercise in prophecy. Rather they

The scenarios explore uncertainties around the long-term role of gas, but highlightare designed to challenge our thinking so that we can make better businessits key role as a bridging fuel. Expanding the use of gas is perhaps the mostdecisions today – helping us fulfil our commitments to our customers and society. It

important immediate way of responding to the climate threat, as well as ofis in that spirit that we offer them as a contribution to public debate. We also know

improving air quality.

that by engaging with the views of others we improve our own understanding.
The future of our energy systems is vital for us all. We hope you find these scenarios
These scenarios focus on some key questions about how energy systems may

thought-provoking and look forward to hearing your views.

develop, taking forward the broader-brush ‘what if’ questions of their 1995
predecessors. They reflect new knowledge and possibilities.

Philip Watts
Chairman of the Committee of Managing Directors, Royal Dutch/Shell Groupbook 3 a/w

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Page 4

Contents

We welcome yourquestions and views
Global Business Environment (PXG)
Corporate Centre – Planning,
Environment and External Affairs
Shell International Limited

7

Context and key questions

1

Shell Centre
London SE1 7NA

10Present in the future

pxg@si.shell.com

16

The social and economic context

18

Three fundamental drivers

26

Two scenarios

28

Dynamics as Usual

2

42

The Spirit of the Coming Age

3

58

Conclusion

460

Summary quantification

5

www.shell.com© Shell International Limited (SI), 2001. Permission
should be sought from SI before any part of thispublication is reproduced, stored in a retrieval
system, or transmitted by any other means.
Agreement will normally be given, provided thatthe source is acknowledged.

The companies in which Royal Dutch Petroleum
Company and The “Shell” Transport and Trading
Company, p.l.c. directly or indirectly own
investments are separate and distinct entities.
But in this publication the collective expressions“Shell”, “Group” and “Royal Dutch/Shell Groupof Companies” are sometimes used forconvenience in contexts where reference is madeto the companies of the Royal Dutch/Shell Groupin general. Likewise the words “we”, “us” and“our” are used in some places to refer tocompanies of the Royal Dutch/Shell Group in
general, and in others to those who work in thosecompanies. Those expressions are also used where
no useful purpose is served by identifying aparticular company or companies.

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Challenging assumptions with scenarios

Scenarios are a tool for helping

Shell companies pioneered the

managers plan for the future –use of scenarios for strategic

or rather for different possible

planning in the 1970s and havefutures. They help us focus on

used them for a wide range ofcritical uncertainties. On the thingsstudies. Shell planners have also

we don't know about which might

been involved in developing

transform our business. And on

scenarios with such bodies as

the things we do know about in

the World Business Council forwhich there might be unexpectedSustainable Development anddiscontinuities. They help us

the Intergovernmental Panel

understand the limitations of ouron Climate Change (IPCC), as‘mental maps’ of the world – towell as to help build a shared

think the unthinkable, anticipate

vision of the future in divided

the unknowable and utilise bothsocieties, such as South Africa

to make better strategic decisions.

in the early 1990s. Shell firstdeveloped long-term energy

Scenarios are alternative stories

scenarios for the first half ofof how the world may develop.

the 21st century in 1995.

They are not predictions –but credible, relevant and

There is no limit to the stories

challenging alternative stories

we could tell about the future.

that help us explore ‘what if’

Some scenario exercises – suchand ‘how’. Their purpose is notas that recently carried out by

to pinpoint future events – but

the IPCC – create a wide range

to consider the forces which mayof alternative scenarios. Shell

push the future along different

experience is that for developing

paths. They help managers

our strategic thinking, it is more

understand the dynamics of the

productive to focus on just two

business environment, recognisethought-provoking scenarios.

new possibilities, assess
strategic options and takelong-term decisions.

6

Context and key questions

1

Three introductory sections analyse the forces that will affect the
global energy system:• the broad patterns underlying today's system which are likely
to persist,• forces which influence energy patterns but are unlikely to befundamental in shaping long-term change, and• three factors likely to be decisive: resources, technology, andsocial priorities.
The two scenarios Dynamics as Usual and The Spirit of the Coming Age
consider different energy futures depending on the development,
impact and timing of these forces.
Key questions explored in those scenarios include:• when will oil and gas resources cease to meet rising demand,
and what will replace oil in transport,• which technology will win the race to improve theenvironmental standards of vehicles,• how will demand for distributed power shape theenergy system,• who will drive the market growth and cost reduction ofrenewable energy sources, and how will energy storage forintermittent renewables like solar and wind be solved,• how might a hydrogen infrastructure develop,• how will emerging economies like China and India balance
rapidly growing energy needs with rising import dependence
and environmental effects,• where will social and personal priorities lie and how will these
affect energy choices?

7

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Page 8Energy development has always depended on choices: by consumers,
producers, governments and societies. This has brought an energy
system based on those sources seen as most satisfactory in terms ofcost, quality, reliability, security, convenience and social impact.
We appear to be entering a particularly innovative period with a wide
set of possibilities for energy development and more than one path toa sustainable energy system. Advances in biotechnology, materials
technology such as carbon nano-fibres, and information andcommunications technology will support development of bio-fuels,
fuel cells, new energy carriers such as hydrogen, micro-power
networks, and new generations of solar technologies.
The overarching question is ‘what energy needs, choices andpossibilities will shape a global energy system which halts the rise in
human-induced carbon dioxide emissions within the next 50 years –leading to a stabilising of atmospheric carbon levels below 550
ppmv1 – without jeopardising economic development?’

1

1995 Long-Term Energy Scenarios

The 1995 Long-Term Energy

The scenarios explored the

Scenarios recognised that theextremities of two ‘what if’energy system was anything but

questions. What if energy

static. Normal market dynamics

efficiency improved at the

could reduce greenhouse gas

maximum historic rate

emissions in two ways – by

(Dematerialisation)? And what if

advancing energy efficiency orrenewables were able to expand

making renewable energy

supply as fast as oil early in thecompetitive. Converging

20th century (Sustained

technology advances would

Growth)? The latter scenario

enable increasing efficiency, for

explored the upper limit ofexample by developing

potential renewable energy‘supercars’. Renewables would

growth and led to the oft-quoted

start by supplying niche

estimate of 50% of world

markets, reduce costs withprimary energy being met byexperience – like previous

renewables by 2050. This

technologies – and eventuallyestimate is among the highest

compete with conventional fuels,

potential renewables share andas depleting resources raised

lies outside the range of the new

fossil fuel prices. The cost of

IPCC scenarios.

exploiting increasingly remoteresources would make largescale reliance on coal
uneconomic. Nuclear energy
would be hampered by costs
and public acceptability.

8

1 550 ppmv has been chosen as a level that has been often cited as a safe maximum. We do not, of course,know – and probably never will – what is the right level. Decisions will always have to be made under great
uncertainty and adjusted as scientific understanding develops.

9

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Page 10Present in the future

Energy is essential for economic development and rising living standards.
Changes in the energy system mark transitions in the economic and social
development of countries and societies – as they climb the energy ladder.
The first and most important step is substituting commercial for
traditional fuels. Perhaps one billion people worldwide still rely mainly
on biomass fuels and animal wastes. After that there is a strong – but
constantly changing – relationship between income and energy demand.
When per capita GDP (on a purchasing power parity basis) reaches some:• $3,000 – demand explodes as industrialisation and personal mobility
take off,• $10,000 – demand slows as the main spurt of industrialisationis completed,• $15,000 – demand grows more slowly than income as services
dominate economic growth and basic household energy needs are met,
• $25,000 – economic growth requires little additional energy.

Per capita primaryenergy consumption
grows with income
in a similar pattern
across countries
and time. Around$15,000 per capita($1997 PPP) the
relationship shifts asless energy-intensive
services dominate
economic growth.
There are signs ofsaturation beyond$25,000 and
evidence that later
developers requireless energy.

1

Climbing the Energy Ladder
GJ/capita
350
US
300
Australia

250

EU
200
Korea

150

Japan

Brazil

100

Malaysia

China
50

Thailand
India

0
0

5

10

15

20

25

30

35

GDP/capita (000's 1997 $ PPP)
Source: IMF, BPAs basic energy needs are met, consumer priorities shift to other, often
less energy-intensive, goods and services, pointing to eventual saturationof energy needs. For example, in the OECD:• the market for major energy consuming household appliances islargely saturated, with little scope to further mechanise household chores,• car ownership shows signs of stabilising at just over one for every two
people when average income reaches some $30,000,• demand for more living space is constrained by considerations ofaccess to urban amenities and of travel times.
Newly industrialising countries are able to climb the ladder more quickly,
thanks to the proven technologies with lower costs from earlier
development elsewhere. But more efficient technologies mean they also
require less energy at every stage.
1011

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Page 12The importance of technological improvement in shaping energy needs is
illustrated by the striking increases in steam engine efficiency since theearly 18th century – reducing coal needs by a factor of 25.
The latest technology is often more than twice as efficient as the installed
average and a 25% improvement in cost-effective efficiency is typicallyavailable – the natural outcome of continuing advances and long-lived
capital stock. How quickly improvements are introduced depends on theircost relative to the price of energy. But – with energy now accounting forless than 5% of average OECD household expenditures and less than 2%of production costs for most OECD economic activity – accelerated
turnover of equipment is unlikely without government intervention.

Advances in steam
engine technology
since 1750
have reduced coalconsumption
per horsepower
hour 25-fold.

lbs coal per hp-hr% efficiency

40

40
Maximum
thermalefficiency

Newcomen

30

30

Watt, mill
20

10

20

10

Watt, pumpCompoundTurbineCornishConsumers will pay a premium for superior attributes. Oil was twice theprice of coal when its efficiency, convenience and cleanliness – harnessedto the internal combustion engine – drove a transition from coal. The
convenience of natural gas makes it the preferred heating fuel despite
higher costs. Evolving energy supplies have steadily decarbonised. But
this has been a by-product of the pursuit of convenience, quality andcleanliness, not a conscious effort to reduce carbon dioxide emissions.

1

Technology Cuts Energy Needs

0

0
1750

1800

1850

1900

1950

Source: Technology and Change, Grubler, 1998 (from Ayres, 1989)

Environmental concerns shift with wealth. They also compete with – andoften appear to conflict with – other priorities, such as employment. In
wealthy societies the debate is generally about competing priorities not
absolute affordability. But attitudes can shift rapidly if emerging
technologies offer easier solutions. Real or perceived environmental crises
can accelerate technology advances. The ‘killer smog’ of 1952 was thetrigger for banning urban coal emissions in the United Kingdom.

12

Governments have always played an important role in energy markets
because energy has been viewed as a strategic commodity and, more
recently, as an essential public service. But these actions are rarely
fundamental. New fuels or technologies succeed only where they provide
new or superior energy services for consumers.

13

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Shifting consumption patterns typically require expensive and timeconsuming infrastructure development. If there is pressure to change,
history suggests fuels can achieve a maximum of 10-12% a year
compound growth after reaching 2% market share. When capitalintensive incumbents are challenged, prices can remain very low forextended periods. And the faster a new technology grows the more it
pushes up input costs, such as land or silicon. The large number ofcompeting fuels today will make it difficult for new technologies likerenewables to achieve high growth simply on the basis of cost.

Portable, safe
and comparatively
clean energy isavailable on demandin industrialised
countries.

1

Consumers in industrialised countries expect very high quality energy:• available on demand in the intensity required,• safe, clean and portable,• ubiquitous but unobtrusive.
Most of the world’s people have more fundamental needs. One billion
people have not yet reached the bottom rung of the energy ladder, whilemore than three billion are just meeting basic energy requirements.
Rural energy
consumers indeveloping countries
often have to makedo with energy
simply being
portable.

14

15

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Page 16

The social and economic context

Some powerful forces – demographics, incomes, market liberalisationand demand – will shape the socio-economic context for energy, without
being fundamental in energy transitions.
Recent UN population forecasts point to 8.5 billion people by 2050 anda maximum global population of 10 billion by 2075. Populations areageing. Even in developing countries with young populations, age profiles
by 2050 should resemble the OECD today. Over 80% of people arelikely to live in urban environments by 2050. Demographic
uncertainties are unlikely to be fundamental in shaping energy
developments.

Global primary energy demand could ultimately saturate, outside thescenario period, at around 200 GJ per capita – some 15% above present
EU consumption – with any additional demand offset by increased
efficiency. On this basis, the world would be consuming three times asmuch energy as now by 2050. If investing in efficiency – for cost or
environmental reasons – becomes more attractive than increasing
supplies, saturation could occur at around 100 GJ per capita. Efficiency
could more than double simply through widespread diffusion of existing
and anticipated technologies2. Under these conditions energy
consumption would be just over twice what it is now by 2050. The
difference between the potential bounds is significant, but insufficient todetermine the energy path, only its timing.

1

Annual economic growth of 3.5% over the next 50 years – less than in
the past half century – would bring widespread affluence, raising global
average per capita incomes above $20,000 by 2050. The rapid phase ofenergy demand growth would already have occurred in most countries
and the energy system would have been through its severest test.
There are two clear trends in consumer preferences which will influence
future energy supplies – an increasing stress on cleanliness, forenvironmental and health reasons, and the growing value placed on
flexibility, saving time and avoiding disruptions.
As well as driving greater efficiency, liberalised markets are breaking
down boundaries between formerly separate markets such as gas andpower. But more fundamentally, this increases energy possibilities. This
will accelerate long-term trends of rising fuel quality and the dominanceof electricity – driven by consumer demands for cleaner, more flexible
and convenient fuels.

16

2 Various studies suggest that a fourfold, or even greater, improvement in efficiency is possible.

17

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Page 18

Three fundamental drivers

Three factors have the potential to bring about fundamental changes inthe energy system.
The first is energy resource scarcity. This occurs rarely at a global level,
when demand growth cannot be met because resources are limited or thecosts of new production capacity are too high. It would inevitably trigger
discontinuity in the energy system.

The cost of new oil
supply ranges from
$5/bbl for some
Middle East
resources to around$17/bbl for remote
non-OPEC resources.
Unconventional oil
has fallen below$20/bbl. Substitutes
should fall below$20/boe by
2020, constraining
oil prices.

Coal will not become scarce within this timescale, though resources areconcentrated in a few countries and will become increasingly complex
and distant from markets. Costs of exploiting and using them will
eventually affect coal’s competitiveness.
Oil production has long been expected to peak. Some think this is now
imminent. But a scarcity of oil supplies – including unconventionalsources and natural gas liquids – is very unlikely before 2025. This could
be extended to 2040 by adopting known measures to increase vehicle
efficiency and focusing oil demand on this sector. Technology
improvements are likely to outpace rising depletion costs for at least thenext decade, keeping new supplies below $20 per barrel. The costs of
biofuels and gas to liquids should both fall well below $20 per barrel ofoil equivalent over the next two decades, constraining oil prices.
Gas resource uncertainty is significant. Scarcity could occur as early as
2025, or well after 2050. Gas is considered by many to be more scarce thanoil, constraining expansion. But the key issue is whether there can be timely
development of the infrastructure to transport remote gas economically.

1

Falling Costs Constrain Oil Prices
2000 $ per boe
20

15
Conventional
Oil

10

Unconventional
Oil

5
Produced
at1.1.2000

0
0

1000

2000

3000

4000

billion barrels of oil recoverable
Source: Shell 2000, USGS 2000 mean resource

The ultimately
recoverable
conventional gas
resource is highly
uncertain. Estimates
range from 15,000
EJ (mean USGS
estimate) to 20,000
EJ (5% probability
USGS).
Unconventional gas
resources could add
another 13,000 EJ.
The resource could
support 3% annual
growth for atleast 25 years.

Gas Resources are Uncertain
EJ
400+13,000 EJ
unconventional300+5,000 EJ

3% perannum

200

15,000 EJ
100

4% per
annum

0
1950

18

1975

2000

2025

Source: based on USGS mean estimates, 2000 and IPCC 2000 for unconventional

2050

19

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Page 20

Nuclear energy expansion has stalled in OECD countries, not only
because of safety concerns but because new nuclear power is
uncompetitive. Even with emission constraints, the liberalisation of gas
and power markets means this is unlikely to change over the next two
decades. Further ahead, technology advances could make a newgeneration of nuclear supplies competitive.
Renewable energy resources are adequate to meet all potential energy
needs, despite competing with food and leisure for land use. But
widespread use of solar and wind will require new forms of energy storage.
Renewable energy has made few inroads into primary energy supply.
Athough the costs of wind and photovoltaic sources have fallen dramaticallyover the past two decades, this is also true for conventional energy.
The second driving force for discontinuity in energy patterns is newtechnology.

There is potential
useable renewableenergy – primarily
geothermal andsolar – to supply
some 250 GJ
each to 10 billion
people, adequate
for needs if
intermittent sources
can be stored.
Europe and Asia,with perhaps only
100 GJ per capita,
could require imports.

1

Renewables Could Meet Energy Needs
Biomass

Solar

Geothermal

Wind

Hydro

Demand range

N. America
S. America
EuropeFSU
AfricaMiddle East
& N. Africa
Asia
Total
0

200

400

600

800

1000

GJ per capita
Source: adapted from UN 2000, WEC 1994, and ABB 1998.
Figures based on 10 billion people

A technology that offers superior or new qualities, even at higher costs,
can dramatically change lifestyles and related energy use. Widespread
introduction of electricity in the early twentieth century prompted
fundamental changes in production processes, business organisation andpatterns of life. Coal-fired steam engines powered the early stages ofindustrialisation, replacing wood, water and wind. The internal
combustion engine provided vastly superior personal transport, boosting
oil consumption. The combined cycle gas turbine has become thetechnology of choice for power generation – greatly increasing thedemand for gas, already the preferred heating fuel.

20

21

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Two potentially disruptive energy technologies are solar photovoltaics,
which offer abundant direct and widely distributed energy, and hydrogenfuel cells, which offer high performance and clean final energy from avariety of fuels. Both will benefit from manufacturing economies but
both presently have fundamental weaknesses.

Rampant innovation offers new possibilities
Since the beginning of the

Typically it has taken 25 years

Industrial Revolution we haveafter commercial introduction forpassed through two majora primary energy form to obtain

technology waves – and are now

a 1% share of the global market.

in our third. Each is associated

In OECD countries the averagewith preferred energy forms.

car lasts 13 years. The third

Five energy
innovations,starting with thesteam engine in thenineteenth century,
have fundamentallyaffected the energy
system. Superior
services from new
end-use equipment
has been the key
driver, not fuelavailability. Twopotential future
discontinuities are
new solar
photovoltaic andhydrogen fuel cells.

A Succession of Energy Technology Discontinuities

11800
Direct - Wood, Wind, Water, Animals

1850

1900

Steam Engine - Coal
1830 - 1900

Electric Dynamo - Coal
1900 - 1940

Internal Combustion Engine - Oil
1910 - 19701950

wave could surprise everyone,With more engineers andwith new possibilities including

scientists, and new ways

such things as nanotechnologyof analysing information andand alternative energy forms. By

sharing knowledge,

2050 the energy industry will bethis wave promises to bevery different – in ways difficulta strong promoter of innovation.

to comprehend today.

We are entering a design era,

Nuclear 1970 - 1990
2000

CCGT - Gas
1990 - ?

Fuel Cell - Hydrogen?

Direct Electricity - Solar?

supported by computing andcommunication technologies,
with much greater interaction
between previously separate
disciplines. For example,
computing developments
contributed to decoding
the human genome.
We can expect a surfeit of‘disruptive technologies’.

22

23

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Page 24

Fuel cells3 require new fuelling infrastructure, while
photovoltaics need new forms of storage as well as
significant cost reductions. Do they provide
sufficiently superior qualities – beyond environmental
benefits – to induce consumers to pay a premium andtrigger widespread adoption?

Fuel cell research is to
be strongly recommended
as a route to protecting theearth's resources
Professor Wilhelm Ostwald,
first meeting of the Bunsen society, 1897

Picking winners has always been difficult. It is particularly so in a period
of innovation and experimentation. Government efforts to accelerate
adoption of a particular technology or push down a set path may be
counterproductive, as may have happened with nuclear.

Picking winners isdifficult. The early
winners of theautomobile engine
race in 1900 weresteam and electric
power, not internal
combustion.
Henry Ford’s
mass production
introduced adecisive new factor.

The third key influence on the future energy system is social andpersonal priorities.
Energy choices are ultimately social choices. Government and public
attitudes towards energy security or self-sufficiency will, for example,
influence the penetration of natural gas into Asian and European markets. It
could also be the driving force in government support for renewable energy.
Personal choices – related to values, the environment and lifestyles –influence the energy system. Affordability is not the key constraint inOECD countries. And, while carbon abatement will influence the energy
system, it need not determine the path. Many options exist for reducing
greenhouse emissions, often linked to local air quality improvement.
When concerns prompt demands for change, much depends on what
technologies or resources are readily available. Timing can make thedifference between evolutionary or revolutionary solutions to problems
like climate change.

Affordability is
unlikely to be
the decisive issue
affecting fuelchange in OECD
countries. Adding
the estimated costof emission
externalities would
only bring US
residential
electricity prices in2010 back to1980 levels, whenincomes were half
as great.

The “Correct” Choice is Rarely Obvious

1

Automobile Options in 1900
Features

SteamElectric

Internal
Combustion

Technology

familiar

simplenew

Qualityreliable
low-polluting

quiet
non-polluting

noisy
pollutingStarting

acceptableeasy

difficult crank

Fuelhardwarestoresslow
recharge

hardwarestoresRange

high(kerosene)

low

high
(fuel density)

Wild Carddamage toroads
easily stuck

Henry Ford(low cost)
petroleumindustry

Affordability is Not the Issue
2000 $ per GJ
50

40

30

Externalities

20

10

0
1950 1960

24

3 The possibilities of fuel cells have been pursued for over a century – Shell undertook extensive research in the
1960s and 70s – but they are only now becoming viable.

1970

1980

1990

2000 2010

Source: Edison Electric Institute, 1988, US EIA Forecasts to 2010 under Liberalisation, 1999
and Pace University, Environmental Costs of Electricity Externalities, 1990

25

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Page 26

Two scenarios

Demographics, urbanisation, incomes, market liberalisation and energy
demand are all important factors in shaping the energy system but are not
likely to be central to its evolution. By contrast, the availability of energy
resources and, in particular, potential oil scarcity in the second quarter ofthe century, followed by gas some time later, will transform the system.
What will take the place of oil – an orderly transition to bio-fuels in
advanced internal combustion engines or a step-change to newtechnologies and new fuels?

1

Energy Branching Points

Dynamics as Usual

Demographics

En
Ev er
ol gy
ut c
io h ona ic
r y essy - cst itizem ensbook 3 a/w

Urbanisation

Resource
constraints

Will incumbent technologies continue to become more efficient, meetingthe challenge of delivering cleaner and more convenient energy? Or willradical new ones have the superior qualities to gain markets quickly?

Social andpersonal
priorities

Incomes &demandLiberalisation

And how will the competitive drive of incumbent and new suppliers
respond to challenges to improve, innovate and create new energy
possibilities?

Competition
andinnovation

s
er ts
m en
su pm
on lo
-c e
s ev
ce d
oi r ych na
gy tioer lu
En evoR

How will shifting social and personal priorities shape the energy system?
Will it be pushed by governments on behalf of citizens concerned aboutcommon goods such as security and environment? Or will it be pulled byconsumer demands for clean, convenient and flexible energy services?

Technology

The Spirit of theComing Age

Can the long-term challenge of creating an energy system capable ofsupporting increasing affluence without causing serious environmental
damage – particularly to climate systems – be met? There are goodreasons for thinking that it can – although this depends on views about
what constitutes safe atmospheric carbon concentrations. A sustainable,
affordable, minimal emission energy system is feasible. The issue for our
scenarios is what energy needs, choices and possibilities will shape this?

26

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Dynamics
as Usual

Scenario

A world where
social priorities for'clean', 'secure'and, ultimately'sustainable' energy
shape the system

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Dynamics as Usual

Dynamics as Usual is a world where social priorities for ‘clean’, ‘secure’
and, ultimately, ‘sustainable’ energy shape the system. But it is a world ofshifting social priorities, of conflicting interests, intense competition
among suppliers, and a wide range of maturing and emerging
technologies. The transition to a sustainable, but increasingly diverse andcomplex, energy system is far from smooth.
Social priorities

This scenario begins with major developing countries, such as China,
experiencing rapid economic growth with explosive demand fortransport, electricity and related infrastructures. Liberalisation andinformation technologies allow knowledge to be transferred more easily,
enabling emerging economies to climb the energy and technology ladders
more quickly and efficiently. By contrast, little extra energy is needed tosupport OECD economic growth and domestic needs. In all markets,
advances in communications and materials technologies enable
extraordinary productivity gains, reducing material and energy needs.

Since the sharp
reduction in US
demand in theearly 1980s due
to CAFE standards,
per capita
US gasoline
consumption has
risen by only 7%
while per capita
income hasgrown 50%.

2

US Gasoline Demand
Decouples from Income
Index 1950 = 100
350

300
GDP per capita
250

200
Gasoline sales
per capita

150

100
1950

1970

1990

2010

Source: US EIA, 2000

Many intangible factors determine the success of energy sources. In theindustrialised world where consumers take energy supplies for granted,
one factor for ageing populations is the focus on health and theenvironment. Public concerns about local air quality and climate drive
ever tightening environmental standards. Companies look forcompetitive advantage by developing and marketing a range of ‘clean’fuels that reduce emissions. Because energy costs are a relatively small
element in household budgets, paying a premium for such fuels is
widespread in wealthy countries. And in emerging markets the rapidly
growing numbers of ‘middle class’ citizens increasingly demand action to
reduce environmental problems related to low quality fuels andinefficient vehicles.
30

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Incumbent technologies respondConcerns about supply security complement the focus on health and theenvironment in stimulating greater energy efficiency. This prolongs thelife of existing technologies, particularly the internal combustion engine.
Developments bring a range of advanced internal combustion and hybrid
engines, using as little as a third of the fuel to deliver the same quality
ride. In time, they cost less than the alternative conventional vehicles.
Fuel cell vehicles are first introduced in 2005 but fuelling inconvenienceand consumer indifference limit their use to fleets. A similar indifference
meets stationary fuel cell applications.

Advanced internal
combustion enginesand hybrid engine
configurations havethe potential todeliver significant
improvements infuel efficiency –providing the sameride for half to onethird the fuel ofcurrent vehicles.

A New Life for Internal Combustion Engines

2

80 mpgDirect Injection

From 2010 to 2015 the spread of super-efficient vehicles causes turmoil
in oil markets, and keeps prices weak. But markets eventually firm withgrowing demand for transport and heating fuels in developing countries.
Price pressures also spur advances in oil recovery techniques expanding
recoverable reserves. Oil demand grows steadily – although weakly – foranother 25 years.
Dash for gas

Natural gas use expands rapidly early in the century. New power
generation is predominantly gas fuelled – wherever gas is available – andaccounts for three-quarters of incremental OECD capacity up to 2015.
This is because of the low cost, high efficiency and low emissions ofcombined-cycle gas turbines (CCGT) which produce negligible
amounts of sulphur dioxide and half the carbon dioxide of advanced
coal steam plants.

32

As markets are liberalised, fuel subsidies and pollution exemptions forcoal-fired power stations become increasingly untenable. After 2010, thetwo-thirds of US coal plants over 40 years old are replaced, largely by gas.
New nuclear plants have trouble competing in price sensitive deregulated
markets. Most existing nuclear capacity is maintained. But, with little
support for public or private investment in technologies which could
remake it as a premium clean fuel, nuclear steadily loses market share in‘Rumors of mydeath aregreatly exaggerated’Mark Twain
33

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OECD countries. It only expands – cautiously – in some developing
ones. Public protests against new nuclear plants are not confined to richcountries.
China reacts to the rising costs and logistical complexity of everexpanding coal supply from its northern regions by initiating major gas
import projects. Pan-Asian and Latin American gas grids emerge shortly
after 2010. Significant LNG trade increases supply and enhances gas
competitiveness.
Traditional oil exporters such as Iran, Mexico and Indonesia develop gas
exports to reduce budget deficits. Gas is increasingly seen as anothersource of revenue rather than competition for oil. Middle East producers
eventually join in to avoid being shut out of markets.

Natural gas imports
grow significantly
by 2020 – from 7%
to 20% of totalenergy consumption
in the EU, from 9%
to 16% in Japan,
and from 1% to 3%
in North East Asia.

2

Rising Gas Security Concerns
Gas imports as % of total energy consumption
20
Europe

15

Japan
10

5

North East
Asia

0

By 2010 gas has truly overtaken coal and by 2020 it is challenging oil as
the dominant source of primary energy. However, because it is imported
by many users, there is growing unease about supply security. Uncertainty
about the availability of long-term resources and fear of political
disruption in supplying countries start to constrain expansion.
Liberalisation has also reduced buyer interest in long term contracts,
while tough competition has kept gas and power prices low, affecting thedevelopment of major cross-border pipelines.

1970

1980

1990

2000

2010

2020

Boom and bust for renewables

In the first two decades of the century, renewable energy grows rapidly inOECD countries, within the framework of established electricity grids
and strong government support. The costs of wind energy continue to fallas turbines exceed 3 MW. Deregulated markets provide opportunities forbranded ‘green energy’, which gain 10% of demand in some regions. The
commissioning of a 200 MW photovoltaic manufacturing plant in 2007
dramatically cuts the costs of solar energy, sparking consumer interest.
34

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Governments support a spread of renewable technologies to address
public concerns about health, climate and supply security. Renewables
experience more than 10% compound growth – with photovoltaic solar
and wind growing at over 20% a year. By 2020 a wide variety of
renewable sources is supplying a fifth of electricity in many OECDmarkets and nearly a tenth of global primary energy. Then growth stalls.
Rural communities that were willing to support the
installation of a few windmills reject thousands.
Wind farms must move to increasingly remotelocations, driving up costs. Logistics, spaceconstraints and environmental concerns prevent
large-scale development of biomass electricity. It is
increasingly difficult to gain approval for major
renewable energy developments.

The High Moor windproject would be insignificant,unreliable and overwhelmedby pollution from othercountries.

Renewable energy
grows strongly
within establishedpower grids
to 2020, withgovernment support
and niche consumer
interest. It thenstalls with stagnant
OECD electricity
demand, unresolved
intermittent energy
storage andplanning barriers.

2

A Tale of Two Eras
Renewable Growth and Plateau
EJ
75• environment and security concerns• green power niches open
• strong government support

50

25• intermittence
constraints emerge• stagnant OECD demand
and weak power prices

Durham County Council rejection ofwind farm application, 1999

• planning blockages stall expansion
0
2000

2010

2020

2030

Stagnant electricity demand in OECD limits opportunities for
expansion. Although the public supports renewables, most are unwillingto pay premium prices. In spite of significant cost improvements,
photovoltaic power gains only niche markets. And with little progress onenergy storage, concerns about power grid reliability block further growthof wind and solar energy.
Developing countries, stimulated by OECD activities, expand renewablesources from 2010. There is a particular focus on wind power in China
and India. Waste biomass is harnessed to provide rural energy, although
this opportunity diminishes as rural incomes rise. However, renewables
do not fully compete with low-cost conventional resources. Concerns
about pollution stimulate more efficient and competitive coal-fired power
generation. China and India also maintain energy diversity by supportinghydro and nuclear development.

36

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With stagnating demand, renewable equipment prices collapse andseveral companies go bankrupt. New investment stagnates. The boom has
spawned a set of diverse technologies – for wind, solar, biomass andgeothermal – that have benefited little from each other’s advances.
All change from 2025

As renewables stagnate and gas security concerns grow, it is not clear what
will fuel future energy supplies. Governments face a dilemma. Should
they support crash programs to commercialise new nuclear technologies
or hope for breakthroughs in solar energy storage or biofuels? Nuclear
makes a partial comeback, particularly in Asia. Investing in energy
efficiency buys time.

A fundamental choice
is necessary – use
more gas andincrease importdependence, continue
with inadequate
intermittent renewableenergy or push forcommercialisationof new nuclear
technologies.

2

Choices Around 2025

Gas?

Nuclear?

Renewables?

The energy system has become a diverse and complex mix of fuels andtechnologies. No technology/fuel combination is obvious as thedominant source of future supply, while increasingly stringent
environmental standards start to exhaust the capacity of establishedtechnologies to meet them.
The oil transition and renewables renaissanceAs oil becomes scarce, around 2040, advances in biotechnology plus
vastly improved vehicle efficiency bring a relatively smooth transition toliquid biofuels and low cost modification of the existing transport
infrastructure. Biomass plantations, previously developed for power
supply, are converted to transport fuel supply.
Since 2025 when the first wave of renewables began to stagnate,biotechnology, materials advances and sophisticated electric network
controls have enabled a new generation of renewable technologies toemerge. The most important is organic and thin film embedded solar
systems. A range of commercial solutions emerge to store and utilise
distributed solar energy. By 2050 renewables reach a third of world
primary energy and are supplying most incremental energy.
38

2010

Energy supplies
continue to evolvefrom high- to lowcarbon fuels andtowards electricity
as the dominantenergy carrier –from increasingly
distributed sources– driven by demands
for security,
cleanliness andsustainability.

2020

2030

2040

Energy Transitions
Dynamics as Usual
Traditional

Gas

Hydro

Coal

New Renewables

Nuclear

Oil

Biofuels

Primary energy share
80

60

40

20

0
1850

1900

1950

2000

2050
39

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Page 40

Dynamics as Usual highlights the key drivers of resource scarcity,
environment and security concerns, competitive responses by incumbent
technologies and competing societal priorities.
Looking back from 2050 the energy transition looks to be a continuationof past dynamics. Societal demands for cleaner, more convenient energy
drive a gradual shift from high- to low-carbon fuels, and towards
electricity as the energy carrier. The path towards a range of new
renewables is relatively direct – supported by strong gas growth in themedium term – but only after advances in energy storage and thedevelopment of a next generation of renewables around 2025. By 2050
renewables could account for a third of world primary energy and be
supplying all incremental energy. But underlying this transition is aprocess of intense competition, maturing new technologies and shiftingsocial priorities, which makes the transition anything but smooth – thatis to say dynamics as usual.

40

Timeline

2005

Dynamics as Usual2

H2
Hybrid vehicles proliferate with "CARB" pushes

2010"Dash for Gas"; Renewable pump priming

2015

Oil price shock triggers resource expansion

2020

OECD renewables stall at 20% of electricity supply
Gas security concerns emerge

2030

New nuclear stalls
Next generation of renewables emerges

2040

Oil scarcity drives biofuels expansion
41

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Page 42The Spiritof theComing Age

Scenario

A world in which
superior ways ofmeeting energy
needs are developed
to meet consumer
preferences.

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Page 44The Spirit of the Coming Age

In The Spirit of the Coming Age superior ways of meeting energy needs aredeveloped to meet consumer preferences. This is a world ofexperimentation and many failures. It is the story of a solution thattriggers a technology revolution and a reminder that discontinuities canarise from seemingly mundane parts of the energy system.
In the early twentieth century a new engine technology, coupled with aportable and dense fuel, transformed transportation. This revolution
started with fuel in a box, sold in local hardware stores, adequate forlimited travel along the few paved roads. Efficiency considerations drove
development of today’s fuelling infrastructure – now a valuable economic
asset as well as a barrier to change.
A century later, mobility is seen as one of the keys to the freedom,flexibility, convenience and independence that people want, andincreasingly expect. Time is precious. Information and communication
technologies dominate, creating a feeling of continuous movement evenwhen people take advantage of the internet to stay put.

44

In 1908 a newengine using
a highly dense fuelwas appearing onroads already fullof horse drawn
carriages.

3

The new engine
was initiallypowered by fuel ina box, soldin local hardware stores.
A century-longdevelopmentof fuel infrastructure
was triggered.

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Page 46

Breaking paradigms – watch the fringes

3

The Sony Walkman
broke the paradigm
that music had
to come from asource plugged intoa wall. Focus
groups repeatedly
dismissed the idea.
Portability quickly
spread to phones
and computersThose who make automobiles know that fuel cell vehicles fit the mood of
the day because they are cleaner, quieter and offer high performance.
They can also incorporate more electrical services – digitalcommunications, pre-entry heating and cooling, and in-car
entertainment – which consumers want but which require too much
power for many traditional engines.
The constraint is fuel infrastructure. Automotive manufacturers prefermethanol or direct hydrogen for fuel cells, but the fuel industry does notwant to be associated with the potential health risks. From an oil industry
perspective the low return is not worth the costs and commercial risks.

Technology
innovations often
come from nichemarket fringes,
where physicalconstraints force
innovation andconsumers arewilling to pay
a premium.
Incumbent suppliers
often ignore thesesmall markets.

Watch the Fringes
Controls
HydrogenContainer

Fuel Cell

Hub Motor

46

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The auto industry breaks this dependence by developing a new ‘fuel in abox’ for fuel cell vehicles, building off advances emerging from small scale
applications in fuel cell powered bicycles, computers and cell phones. A
six-pack of fuel (12 litres) is sufficient for 400 km. Fuel boxes can be
distributed like soft drinks through multiple distribution channels, evendispensing machines. Consumers can get their fuel anywhere and anytime.
Like the Sony Walkman 20 years before, fuel in a box
breaks distribution paradigms. The fuel itself is made fromoil, natural gas or biomass. Sealing it in a box overcomes
health concerns. Customers do not know what is inside –as far as they are concerned it could be water, which iswhat comes out of the end of the fuel-cell vehicle.

The internal combustion
engine will go the way of thehorse. It will be a curiosity to
my grandchildren

3

New Options for Fuel

What options
would 12 litresof fuel for 400
kilometres create?

Freedom with...
dispenser

Geoffrey Ballard, founder of Ballard Fuel Cells

The boxed fuel is sold through established distribution channels ordelivered directly to consumers. Hypermarkets are happy to sell an
attractive new product commanding a premium. It is particularly
acceptable in developing countries with limited fuel infrastructure andconstraints on urban space.
One size fits all48

When size or
weight thresholds
are crossed, new
distribution options
open up. Fuel could
be repackaged incontainers the sizeof large drink
bottles and soldthrough a range of
new distribution
channels.

Fuel cell sales start with stationary applications to businesses willing to
pay a premium to ensure highly reliable power without voltage
fluctuations or outages. This demand helps drive fuel cell system costs
below $500 per kW, providing a platform for transport uses andstimulating further cost reductions. To meet tough automotive standards,
fuel cell system costs are driven well below the cost of capacity fromconventional power and heat technologies. Suppliers of home appliances
become major manufacturers and distributors of stationary fuel cells tocompensate for saturated OECD markets for their existing products.
Commercial and residential buildings take advantage of these low-cost
fuel cells, and established natural gas grids, to produce and trade surplus
peak-time electricity through internet markets. Hot water is provided bysurplus fuel cell heat.

After extraordinary
cost reductions for
PEM fuel cells overthe past decade,manufacturing scalebrings costs below$500 per kW by2006 and $50 per
kW shortly after
2010, to be directlycompetitive withinternal combustion
engines.

PEM Fuel Cell
System Costs$ per kW
100,000

10,0001,000
Gas Turbine Costs
100

0
1960

1980

2000

2020
49

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Page 50

Fuel cell cars can also be used with ‘docking stations’ toprovide energy to homes and buildings. The US vehicle
fleet, with more installed power capacity than thecurrent global electricity industry, is put to better use.

Web-enabled control
and service systems
make it possible tomonitor and maintainmicrogrids remotely

Fuel cells and boxed fuels are perfect for rural needs inemerging economies, where many consumers can Göran Lindahl, ABB CEO announcing
divestment of its large-scale traditional
only afford small amounts of fuel at one time. They power business.
replace LPG bottles, kerosene and traditional lamps
and cookers. Where power supplies are unreliable,companies prefer low-cost self-generation. In many African countries,
where most industries already have backup generation, trucks are able todouble as power sources.

Boxed fuels are only one of

Gaseous hydrogen is alreadyseveral potential ways ofused for bus fleets and could fueldelivering hydrogen to vehicles.

ultra-efficient cars with

Hydrogen can be produced byredesigned fuel tanks. Hydrogenhydrocarbon reforming, nuclear

could be produced at retail sites

or solar electrolysis and biomass

by natural gas reforming,

conversion. Natural gas steam

supporting parallel

reforming is by far the cheapest

developments in stationary

currently, even if carbon dioxide

markets. There are concerns oversequestration is required. The

filling, convenience, safety andmost efficient and effective way

consumer interest.

On board reforming ofgas infrastructure, producing

hydrocarbon liquids is preferredTechnology convergencehydrogen at retail sites or on-

by automakers because of

By 2025 a quarter of the OECD vehicle fleet already use fuel cells. They
account for half of new OECD vehicles and a quarter of worldwide sales. Less
than a 5% increase in gas production is sufficient to meet fuel demands. The
global automobile industry rapidly consolidates around the new platform.

board vehicles. The critical issue

fuelling and spaceis how to store it.

considerations, despite losing

There are four options:most efficiency benefits over

Chinese leapfrog

By 2025 China – with huge and growing vehicle use – faces anunacceptable dependence on oil imports. Unease about the sustainabilityof regional gas resources and fears about the reliability of external gas
suppliers push towards the use of indigenous coal. But this is becoming

3of distributing the hydrogen isthrough the existing liquids andTechnical advances in transport and power services feed off each other,solving mutual problems. Fuel cells and hydrogen electrolysis are mirror
images of the same technology. All benefit from broader advances inmaterials technology. Carbon nano-tubes are widely used by 2025
because of their superior strength, supporting the development of carbon
nano-fibres as the ultimate hydrogen storage medium. But this storage is
not essential and the eventual transition from liquid fuels to ‘solid’hydrogen is largely unnoticed.

50

Many routes to hydrogen vehicles

advanced internal combustion.

Solid hydrogen, if commercialised,

Methanol is easier to reform

would provide superior

than oil but there are concerns

convenience, safety and –about toxicity and the need topossibly – cost. Breakthroughsbuild new infrastructure for a

could come anytime but mosttransition fuel. Oil is easier toobservers suggest they are at

distribute, but faces performance

least a decade away.

and cost challenges and would
require a cleaner fuel.

Liquid hydrogen has generally
been rejected as impractical andCost is unlikely to be theuneconomic because of concerns

determining factor. The winnerabout boil-off, filling and safety.

will be determined by thestrength of consumer interest infuel cell vehicles, weighedagainst the convenience ofcompeting options.

51

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Page 52

logistically and environmentally problematic. Land scarcity limits biofuel opportunities. India faces similar problems.
Meanwhile the growing global demand for gas and hydrogen is
supported by – and spurs – advances in low cost and unobtrusive in-situ
extraction of methane and hydrogen from coal and oil shales. Carbon
dioxide sequestration is feasible and enhances productivity. Theseadvanced hydrocarbon developments build on establishedinfrastructure and technologies, as well as on the cash flow andresources of existing fuel suppliers. China is able to make use of these,
as well as indigenous technologies, to extract methane and hydrogen
directly from its coal resources, allowing it to move energy by pipeline
rather than thousands of trains.
Once fuel cells take off in OECD countries, China starts to develop atransport and power system around cost effective fuel cells fuelled byindigenous methane and hydrogen.

China is able toexploit commercial
fuel cells andadvanced
technologies toextract methanefrom indigenous
coal resources inorder to develop afuel-cell basedenergy system
supported by amethane/hydrogen
distribution grid.

A Chinese Leapfrog

3

Air quality
concerns
Weak regulatory
control

Supplysecurity concerns- oil, gas,
fertiliser

Largecoal resource
Logistic
constraints

Water
scarcityin theNorth

China
HydrogenEconomyLand
scarcity
limitsbio-fuels

Globalprice
for CO2

CH4 andH2 from coal
Advancedmembranes
Fuel cells

Masstransport
and electric drivefor uneventerrain

Oil is not needed

The advantages offered by the new technology push the transition tohydrogen well before oil becomes scarce. The higher the demand for fuelcells, the less people will pay for oil. As a result, oil is cheap enough to bepreferred for heat and power in some developing countries but thisexpansion does not compensate for the declining transport market.
Renewable energy makes steady but unspectacular progress until 2025.
‘Green energy’ niches reach 5% in some regions but less than 1% in mostothers. Sales of photovoltaics to rural communities in developing
countries initially grow fast. Many rural households are willing to pay alarge premium for the convenience of photovoltaics and to be connectedto the outside world by television. But needs soon exceed what
photovoltaics can offer and there is a switch to fuel cells. As people moveto cities rural energy demand further diminishes.
52

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Government support helps renewables early in the century but priceprevents them from replacing existing sources, particularly in markets like
Europe with excess power capacity. Competition drives down electricity
prices and although renewables continue to increase theircompetitiveness, they cannot close the gap. Renewable energy is also
largely perceived as yesterday’s technology with few obvious advantages
for consumers.
A new infrastructure

After 2025 the growing use of fuel cells as a heat and power source createsa rapidly expanding demand for hydrogen. It is widely produced fromcoal, oil and gas fields, with carbon dioxide extracted and sequesteredcheaply at source. From 0.3 billion tonnes carbon in 2025 sequestration
reaches 2.3 billion tonnes per annum by 2050, a fifth of emissions. Thisis still a small share of the potential sequestration capacity. But shortly
after 2050 carbon dioxide sequestration peaks.

Energy supplies
continue to evolvefrom solids throughliquids to gas (firstmethane thenhydrogen),
supplemented bydirect electricity
from renewables
and nuclear andlong-term sources ofhydrogen gas.

3

Spirit of the Coming Age
Evolving Energy Forms
SolidsGases (CH4 and H2)

Liquids

Direct Electricity(hydro, nuclear, new renewables)

Share of primary energy
100
80

60

40

20

0
1850

1900

1950

2000

2050

Large-scale renewable and nuclear energy schemes to produce hydrogenby electrolysis become attractive by 2030. Renewable energy becomes abulk supply business and starts to expand rapidly.
Hydrogen is transported in gas grids until demand justifies dedicatedhydrogen pipelines. A century-long process of hydrogen infrastructuredevelopment begins.

54

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In The Spirit of the Coming Age the impact of a major discontinuity inenergy technology is highlighted. The driver is a superior end-use
technology pulled by consumers, which remakes the energy system
around it.
The key point is the potential for new technologies to emerge from
unexpected parts of the energy system. An indirect path toward renewableenergy is followed, with advanced hydrocarbon technologies providing abridge to a hydrogen economy in countries like China and India, andeventually creating a large demand for renewables and nuclear. On thesurface this world appears chaotic because of the disruptive newtechnology. The early period is one of wide experimentation, with theeventual winners hard to see. But underneath a new infrastructure logic
is emerging, although this only becomes clear after several decades.

56

Timeline

Spirit of the Coming Age

2005

First stationary and vehicular fuel cells- high consumer interest2010

Gas resource outlook expands
Fuel cell fuel distribution innovations
Renewables limited to niches

2015

Convergence around fuel cells for transport andstationary uses - gas network backbone

2020

Unconventional oil & gas expand in China and India
Fuel cells reach 25% of sales in OECD

2030

Solid H2 Storage transition
Renewables pulled by strong H2 demand2040

H2 infrastructure expansion

3

57

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Page 58

Conclusion

These two scenarios explore different paths to a sustainable energy system.
At some point, beyond 2050, the elements that underlie the two paths
could converge, possibly with hydrogen as the preferred energy carrier andstorage medium. But over the next two to three decades technology,
economics and social and personal choice will determine the direction.

In both scenarios
carbon dioxide
emissions turndown by 2040.

4CO2 Emissions
Billion tonnes carbon
1412

Spirit of theComing Age

10
8The scenarios have five common features:
1) the important role of natural gas as a bridge fuel over at least the next
two decades and the importance of reducing supply security fears,2) the disruptions which oil markets will face as new vehicle
technologies diffuse,3) the shift towards distributed or decentralised heat and power supply
for economic and social reasons,4) the potential for renewables to be the eventual primary source ofenergy and the importance of robust energy storage solutions, and5) the difficulty of identifying winning services or technologies in aperiod of high innovation and experimentation.
The key differences between the two scenarios, and their dominantenergy products, reflect different energy resource potentials, the timing
and nature of technology possibilities and social and personal priorities –in such areas as: health, security, the environment, convenience, aesthetics
and the openness to change.

Dynamics as Usual
6
4
2
0
1975

Atmosphericconcentrations
remain below 550
ppmv until the endof the century andappear on track tostabilise below
this level.

2000

2025

2050

CO2 Atmospheric Concentration
ppmv
550

500

Spirit of theComing Age

450

Dynamics as Usual58

The scenarios have explored possible paths towards an affordable,
sustainable energy system which has found solutions to environmental
concerns, including stabilising atmospheric carbon dioxide
concentrations below 550 ppmv. The scenarios suggest that by 2050 sucha system could be clearly visible and rapidly emerging. The energy system
will also have been through its toughest test – meeting the huge energy
needs of the vast majority of the world’s population as they pass throughindustrialisation and seek to improve the quality of their lives.

400

350

300
1975

2000

2025

2050

2075

2100
59

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Summary quantification (exajoules)*Population (billion)
GDP (trillion 2000 $ PPP)

1975
4
23

2000
6
49

2025
8
108

2050
9
196

1975-2000
1.5%
3.1%

2000-2025
1.0%
3.2%

2025-2050
0.6%
2.4%

Dynamics as UsualPrimary Energy
Oil
Coal
Coal CH4/H2
Natural Gas
Nuclear
Hydro
Biofuels
Other Renewables

1975
256
117
70
0
47
4
17
0
0

2000
407
159
93
0
93
29
30
0
4

2025
640
210
128
4
167
35
41
5
50

2050
852
229
118
16
177
32
39
52
191

1975-2000
1.9%
1.2%
1.1%
2.7%
8.1%
2.4%
8.7%

2000-2025
1.8%
1.1%
1.3%
2.4%
0.8%
1.3%
10.2%
11.2%

2025-2050
1.2%
0.3%
-0.3%
5.8%
0.2%
-0.4%
-0.3%
10.1%
5.5%

Spirit of the Coming Age
Primary Energy
Oil
Coal
Coal CH4/H2
Natural Gas
Nuclear
Hydro
Biofuels
Other Renewables

1975
256
117
70
0
47
4
17
0
0

2000
407
159
93
0
93
29
30
0
4

2025
750
233
150
6
220
46
49
7
38

2050
1121
185
119
97
300
84
64
108
164

1975-2000
1.9%
1.2%
1.1%
2.7%
8.1%
2.4%
8.7%

2000-2025
2.5%
1.6%
1.9%
3.5%
1.9%
2.0%
11.8%
9.9%

2025-2050
1.6%
-0.9%
-0.9%
11.6%
1.3%
2.4%
1.1%
11.8%
6.0%

* Nuclear, hydro, wind, solar and wave expressed as thermal equivalents

Glossary
1 Gigajoule (GJ)

60=

0.17 boe=

0.027 mcm gas=

0.04 mt coal=

0.28 MWh

1 Exajoule (EJ)=

109 GJ

1 tonne (mt)=metric ton

1 barrel oil equivalent (boe)=

5.8 GJ

1 tonne oil equivalent (toe)=42.7 GJ

1 million cubic metres gas

=

37 GJ

1 million tonnes coal

=

25 GJ

1 MWh

=

3.6 GJ

ppmv=

parts per million volume