These podcasts are part of a special series on scenario planning, made possible in part by Shell.
Scenarios are projections based on scientific and economic data that seek to answer questions about how the world energy picture will change between now and 2050. Corporations and other groups use them to understand how today’s choices can be expected to play out in coming decades. Scenario analysis suggests that the choices people make today will make a big difference in what the future of energy use will look like. To learn more, LISTEN, WATCH, or READ: audio podcasts above, video and text below.
Adam Newton is business environment manager in the Energy Scenarios Team at Shell. He spoke with EarthSky’s Jorge Salazar about what goes into the way people make energy choices.
How can governments and businesses encourage consumers to reduce energy consumption?
When you think about energy consumption, it raises a number of issues, some of which are very challenging for business and to politicians. It’s not always popular to make decisions about how you tell people they should manage their energy consumption. Certainly in our own analysis of possible future energy outlooks, one of the scenarios points to a picture in which very little is done actually to manage energy efficiency, to have people change the way they consume or even think very deeply about the impact of what they consume and where. And so I think we start in a position where managing demand-side pressures is potentially something quite unpopular. It could even cost votes from a political point of view.
On the other hand, if you think about businesses, a lot of our businesses are about putting together propositions for customers, asking them to buy something or to subscribe to a service. In doing that, we’re understanding that persuading them involves persuading them to change their behavior, or a taste, or a pattern of consumption which they’ve had for a period of time. So in some ways, I’m very confident that business actually has the means, the experience at its disposal to start to address a change in behavior. The question is how you link that together with a government who, like us, can see a future in which business-as-usual, unrestrained consumption of energy simply can’t go on.
How has the global recession changed people’s energy habits?
To some degree, a recession, by definition, means that all of the things that are bought, sold, and consumed are typically restrained to some extent. This recession, while we refer to it as a global recession, has seen a scaling back on consumption of energy in some of the more developed markets or those markets that have been hit hardest by that recession.
But, of course, we live at a point where the rapid and emerging growth of the economies of countries like China, India, Indonesia, and other countries are still continuing to grow, and with that increasing their consumption of energy and other goods and services at a pretty significant rate.
I think in looking back at the past 20 or so years, we see a period of relatively smooth growth, be that in terms of economic development or in growth in consumption of energy. I think looking forward, we see a picture which is much less predictable, much more volatile. And that applies to the macro economic environment as it does to geopolitics, to decision-making in politics. I think we’ll see that reflected increasingly in the way consumers behave or are asked to behave by government.
The way we live is changing – in the longer term we’re seeing a big shift to more urban living. Does this create new sustainability challenges?
I think 2008 was a really important year not just because it signaled the start of the financial recession, but it was also the point at which, for the first time, more than 50 percent of the world’s population lived in cities. If we look at the statistics and the data for the next 40 years or so, we see a picture of that only intensifying. Some estimates suggest that three out of four people, 75 percent of people on this planet will live in cities by 2050.
In terms of the costs associated with the development of that, the investment in cities alone is absolutely enormous. It is estimated to be in the region of 300 trillion dollars, which is seven times the world’s current gross domestic product in the year 2010.
But, of course, in terms of the shift of behavior associated with city living: yes, people will live much closer together increasingly because of the constraints imposed around resource use. They may not be given the choice to drive their own vehicle if they live in a city in the way that many of us in the Western world completely take for granted now.
That will have an impact in terms of how government and consumers make decisions. I think it’ll mean that we see a shift, in terms of how governance and political decision making is made, much more emphasis being on local, directly-elected politicians. More and more cities now are getting mayors, in the old sense, as the person responsible ultimately for the decisions that are made in a city.
And that alone is something which I think is very interesting: National policy makers recognizing that the central parliaments will cease to have the level of control that they may have previously enjoyed over cities and over their populations. Cities will change the rule book on the planet in the years to come.
What other changes do you see, energy-wise, as humanity shifts from rural to city life?
In contemplating the balance between energy supply and energy demand in 2050, it’s important to consider that by that stage something like three-quarters of the world’s population, a population which would have risen to 9 billion people, will live in city environments. That creates significant stresses, not just in terms of resource provision, but also in the types of policies and the types of decisions that you make around how to build those cities.
We know that if in an ideal world you started with an empty piece of ground and wanted to build a city from scratch, that you could integrate different systems to make it far more energy efficient than the types of cities which typically evolve with economic development.
When we look at where energy comes from and how we use it and how much of it we waste, we start to see a really interesting challenge, and perhaps a challenge best expressed in an opportunity in the city environment. Approximately half of all energy which we input into the energy system is lost through heat – an absolutely phenomenal level of wasted energy. And the major areas in which that energy heat loss is in are power generation – the heat which is lost during the process of generating power, and heat which is lost as we use fuels to power vehicles. In power generation and in transportation, significant quantities of total energy are lost through wasted heat.
Now if you think in the context of cities, particularly in cities which are much more densely packed, the opportunity to reuse that waste heat by combining heat and power projects in much more innovative ways in turn provides a significant opportunity for new cities – if you can get the technology right, and if that technology is underpinned by the types of policy decisions, the incentives for governments, for consumers, for business, to work together to make that happen.
The real risk if we continue to lose this heat is that all these cities that are going to develop will simply add to a problem which we already know exists – more CO2, more greenhouse gases and more of a drain on resources. So I think that’s the real challenge, and actually put in terms of an opportunity, potentially quite an exciting one. But it means addressing the major and complex challenges that the world faces in a slightly different way.
It takes companies like Shell, who understand the building of energy infrastructure, to think more about collaboration with the types of organizations that understand complicated information technology or who understand the logistics around the supply of goods into and out of city environments. And to work with consumers who want to, at the end of the day, live in cities that are pleasant places to live.
If you live in a city, we don’t necessarily think in terms of those individual things. We judge the place we live on a livability scale. Do I like living here? Do I have access to the people I like? Do I feel safe? Are the services and amenities there for me? So I think that’s the major challenge.
And it reinforces, again this point, the complexity underpinning in the way that cities develop. The range and diversity of different inputs that go into making a city are very, very complicated. But we believe there may be an opportunity, if it’s done smartly, to manage city developments in a way that really starts to tackle and drive down energy consumption.
What’s the most important thing you want people today to know about responding to future changes in how energy is used?
I think the most important thing that people need to know and understand and recognize is that it takes time for a change in decision making, a change in direction, to actually have an effect. If you think about a new Mercedes bought somewhere in Europe or any other part of the world today and driven out onto the streets for the first time, there’s a pretty fair chance that that same Mercedes will be on the road somewhere in the world in at least 20 years time, possibly even longer.
We apply the same logic and the same thinking to the infrastructure for generating electricity, where we know that countries like China and India are expanding coal-fired power generation with no means of abating the carbon emitted by those power stations. We know that those coal-fired power stations with no means of abating CO2 or other greenhouse gases will still continue to be emitting in ten, twenty, thirty, even forty years time. So the decisions we make today will be locked in to our energy system for a long period to come.
What does that mean in terms of changing the world? It means we’ve got to make the right decisions now. We have to push for things like a price on CO2. We have to push for market-based solutions to handling levels of emissions in the atmosphere, CO2, greenhouse gases and all of these things. We’ve got to look at the technologies that are really going to deliver lower carbon solutions in the years and decades to come, because the decisions we make today will be reflected for a long, long period of time.
Our thanks today to Shell – encouraging dialogue on the energy challenge. EarthSky is a clear voice for science.