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Earth. Sky.
Scenario planning recognizes that people make choices; political choices, individual
choices, consumer choices. And those actually can help shape different futures. And
so it gives us a broader range of appreciation of the potential future landscape
around which we can think through our decisions.
You are listening to Jeremy Bentham, vice president Global Business Environment
for Royal Dutch Shell. And this is EarthSkys Clear Voices for Science, with a special
programme in partnership with Shell. Scenario building is a way of looking to the
future. Corporations like Shell and increasingly the public and private sectors use
scenario building for decision-making. Shell was a pioneer in this field. Its early
efforts at scenario planning let it anticipate the rise and subsequent fall of oil prices in
the 1970s.
Jeremy Bentham leads scenario building for Shell. He told us how scenario planning
has caused Shell to believe that collaboration between civil society and the public
and private sectors is vital to addressing economic, energy and environmental
challenges in the years ahead. Bentham spoke about Shell scenarios and about
what they call a zone of uncertainty, related to energy supply and demand between
now and 2050, with EarthSkys Jorge Salazar.
Mr Bentham, welcome to EarthSkys Clear Voices for Science.
Its wonderful to be able to have this opportunity to speak with you.
What is the scenario planning and why is this important to Shell?
Scenario planning is one of the approaches that we use to help give our most senior
decision makers a richer appreciation of the fundamental drivers and the
fundamental uncertainties around our business. And that involves thinking very
deeply about the world energy system, the environmental system, political and
economic systems as well.

And I think there is probably five contributions it can make. First of all, it helps make
that richer appreciation of better decisions. Secondly, it really helps test the
robustness of our strategies. I think thirdly, it identifies potential threats for our
business, but also opportunities. Things that we may not have noticed unless we had
that richer exploration. Over time of course, it helps our senior leaders be more
flexible and more responsive to uncertainty, because we build up a broader
appreciation of the uncertainties, potential discontinuities in our business. And I think
finally, because we look at the world really quite deeply through a variety of different
perspectives and about the way that different choices that people make can help
shape different understanding, different developments in the world and the global
systems, it helps us look into the background and bring into the foreground of our
thinking elements that we might not have appreciated so quickly if we hadnt done
that.
You first published your energy scenarios to 2050 three years ago. What did the
outlook look like back then?
I think the outlook was being driven by what we called three hard truths. First of all,
the growth in population and prosperity, which was bringing hundreds of millions of
people out of dire material poverty -which is a good thing- naturally had
accompaniment of various stresses and pressures. So that included pressure on all
commodities including energy, so a surge in energy demand, and also then; how
quickly could supply also respond to that demand, given natural geological,
geographical and political constraints? And also what impact would this have on the
environmental system? So our scenarios from three years ago explored that ground
and recognized that the two major patterns of choice determined how quickly or
sluggishly we changed the fundamental underpinning of the regulatory system and
the technological deployments that underpin the energy system.
Tell us more about these two major patterns of choice that you mentioned.
So when we looked at the possibilities -what was shaping the energy system- we
recognized two patterns of choice that we called Scramble and Blueprints. These
were actually fairly important archetypes of response to stresses and to change. In

the Scramble environment it recognizes that these are very complex pressures and
that people naturally look towards institutions to try and manage them on their behalf.
The natural institutions being national governments. And they have different policy
levers that they can pull. The easiest ones to pull are around supply, around
encouraging local supplies, whether thats coal or whether thats a biomass if there is
a biomass resource, or if it is gas and its a gas resource.
It is much more difficult politically to respond to demand pressures and pull levers of
policy on demand. And the environmental levers are still being invented. So you get a
sequential set of responses to pressures, which leads to periods of discontinuities
and actually relatively slow change in the environmental and other responses to the
pressures of what we called those three hard truths.
The Blueprints pattern of behaviours recognizes that other actors also play a role and
has a more emphasis on those other actors alongside the national governments. So
you see emerging coalitions, for example between entrepreneurs, environmental
groups. Also then as a patchwork of developments begins to occur, you get an other
dynamic which is that policymakers and industrialists recognize that patchworks
inhibit trade, inhibit investment, and you get a harmonisation of developments which
actually -once it reaches critical mass- drives forward more quickly developments in
the regulatory system and in that technological deployment of technological
capabilities.
Based on this latest piece of energy analysis work, called Signals and Signposts,
what major changes do you see?
Yes, our latest piece of work are not new energy scenarios. They just recognize that
in the three years since those Scramble and Blueprints scenarios were produced, a
lot has happened. We have had a financial crisis, we have had an economic slump,
and weve also had the emergence of some new developments. These dont change
the fundamental drivers and uncertainties, explored in the energy scenarios. But they
bring new things to the fore.
And probably -if I was just to summarise quickly- four new things that are really to the
fore. First of all, we believe that weve moved from a situation of relative economic
moderation in the period from the 1980s through to the mid-2000s, into a future
which has much more structural economic volatility. Secondly, we see greater

regulatory uncertainty. For example; in environmental fields we see a political

divergence between the majority scientific community, who are more pessimistic
about the impact of emissions on climate and the environment and yet a public
sentiment which has largely drifted away from that being at the top of their priorities.
And that political divergence cant continue indefinitely, and that brings regulatory
uncertainty. And also of course the ripples from the tragedy in the Gulf of Mexico
bring regulatory uncertainty as well. I think thirdly, we have to highlight the
spectacular breakthroughs in the development of shale gas and tight gas reserves in
North America. Which have ripples well beyond North America as they make more
gas available elsewhere in the world and also encouraged the development of similar
resources elsewhere in the world. And finally, although it is not perhaps such a big an
impact as the gas revolution, I would highlight the opening up of the Iraq oil industry
and the impact that that might have. Both in terms of bringing new resources forward
more quickly, but also clearly the uncertainties that creates within an organisation
such as OPEC as how to best manage the OPEC interests with this new production
being made available.
These supply and demand pressures are behind something you call the zone of
uncertainty.
Yes, I would like to say a little bit more about what we call the zone of uncertainty.
And this is really capturing something about the tensions in supply and demand
developments for energy, looking forward, but also relates to that environmental
space as well. If we were to take the energy system and the supply/demand balance
in 2000, and look forward to 2050, and just assume that you have a historical pattern
of development according to economic development that is anticipated in that time,
youd be using about three times as much energy as today.
At the same time, if you actually look at the supply-side of the equation, natural
resources are being used and utilised, depleting, it means you have to run fast just to
stand still. And if it was just a question of ordinary supply developments you might
actually get a growth of little bit more than 50% by 2050. Now, demand wont grow to
three times as much. Natural competition and innovation will reduce that pace of
demand growth. But we anticipate still between ordinarily accelerated production
growth and ordinarily moderated demand growth there is a zone of uncertainty, which

is actually about the same size of the whole energy industry in 2000, which still
needs to be bridged by a combination of extraordinarily accelerated production
growth and extraordinarily moderated demand moderation. And these are very, very
significant -the choices that are made- about whether that will be a zone of
opportunity or a zone of misery.
Looking at the zone of uncertainty and considering the developments on the supply
side, one of the developments that has been really, really helpful in the last few years
has been the spectacular breakthrough in the production of natural gas from socalled tight gas and shale gas and -in parts of the world- coal bed methane. Which is
very, very helpful, not only in terms of being a bigger resource that is available than
we thought just a few years ago. But also because it is a relatively low carbon
resource, that can be very, very advantageously applied at scale quickly, which is
very important for reducing cumulative greenhouse gas emissions looking forward.
And so I think that is an important development. And one of the biggest, fastest
things that can be done to alleviate some of the environmental stresses would be a
deeper acceleration in the use of natural gas, supplanting what would otherwise be
the continuing acceleration of the use of coal in power generation.

You have been listening to Jeremy Bentham, vice president Global Business
Environment for Shell, talking about Shells work in building scenarios of alternate
possible futures as they relate to global energy. Our thanks today to Shell,
encouraging dialogue on the energy challenge. For this and other free science
interview pod casts, visit the subscribe page at earthsky.org.
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