On February 12th, Shell released a report detailing three visions for how the future of energy security could proceed. The report included the new scenario, “Surge,” and re-published two modified scenarios, “Archipelagos” and “Horizon,” describing the future of the energy economy. Each scenario describes a vision for the energy economy based upon a narrative foundation of the world. 

One scenario shows the pathway of greatest economic opportunity and provides insights into the policy and technological levers that could most effectively expand our energy base and increase the share of clean energy on the grid.  But there are less prosperous and more stagnant policy paths of any-cost climate action and of geopolitical isolation and conflict. 

Archipelagos is a narrative of national independence and sufficiency, where geopolitical concerns and the pursuit of energy security and stability take precedence over achieving climate goals. Shell describes Horizon as a “normative approach”—as a moral standard for action—for achieving net-zero emissions by 2050 and limiting global warming through 2100 to 1.5˚C, compared to the pre-industrial average, through a rapid energy transition driven by extensive government intervention. Indeed, Horizon is the only scenario which keeps warming at 1.5˚C by 2100, 

Surge is the most economically optimistic scenario, despite sharing similarly pessimistic assumptions about geopolitics with the Archipelagos scenario. The assumed productivity gains from the rapid adoption of new technologies lead to much higher economic growth (larger than Horizon and Archipelagos by nearly 45 trillion USD, 2016 PPP, which is approximately the current combined GDP of the US and the EU). 

While the Surge scenario falls short of the Paris Climate Agreement goals, there are substantial gains in climate metrics. Emissions in Surge peak in the late 2020s and net-zero is achieved in 2050. This growth, along with simultaneous improvements in climate metrics, occur despite the pessimistic assumptions about political conditions over the next 25+ years, and assumes minimal government focus on climate action for its own sake. Under Surge, the adoption of new technologies and the increase in global economic activity will drive increased energy demand, which is going to be heavily supplied by natural gas in the near term. Still, the introduction of new generation sources will overwhelmingly favor renewables and other clean energy sources such as solar, wind, and grid-scale battery storage. 

One notable observation is that there will be a relatively slow uptake of nuclear power under both the Surge and Archipelagos scenarios, and only under Horizon’s assumption of mandated climate interventions is there a significant buildout of nuclear power prior to 2050.

But that does not have to be the case. Both governments and industry can take action to drive a more rapid nuclear renaissance by reducing regulatory barriers to investment and deployment. For the West to take advantage of any nuclear renaissance will require an even greater industry commitment and rapid policy support. Since 2017, of the 31 reactors that have begun construction, 27 are of Russian or Chinese design. To sustainably innovate into a cleaner, nuclear future, the West, particularly the United States and the United Kingdom, will have to invest in and support a culture of nuclear innovation and deployment. 

Under all three scenarios, geothermal and fusion technologies receive little attention. In the data underlying the Shell report, they include geothermal in the list of power sources and fusion as a possible inclusion under nuclear, but neither technology is given treatment in the write-up of the report. There are reasons to doubt the major contribution of fusion energy to the grid within the next decades, with only a handful of commercial pilot programs being developed in the world, and none having demonstrated significant energy production. 

Geothermal, on the other hand, has shown tremendous potential to be a renewable energy source for the grid. In 2019, the US Department of Energy estimated that geothermal energy could supply up to 120 GW of power by 2050. For the Shell scenarios to not take seriously the advent of geothermal energy, which Google is already using to power some of their operations, represents a serious oversight. The absence of serious consideration of these nascent but extremely promising technologies suggests that the scenarios may be even more pessimistic than they expect.

The scenarios represent future economic situations very differently. While inequality between countries in 2050 is greater under the Surge scenario, this is due to the greater growth in higher-income countries, which are better positioned to capture the benefits of new technologies. Notably, countries in the global South still see greater GDP gains under the Surge scenario than the Archipelagos or Horizon scenarios. A noteworthy exception is that under the Surge scenario, India is well positioned to leverage its educational and democratic institutions and innovation-friendly ecosystem to capture some of the economic benefits of new technology, which lead to increased prosperity and an increased standard of living and a concomitant increase in energy use. 

In Shell’s report, the Surge scenario represents a compelling vision for a world that makes good (and probably can do even better) progress on climate targets but not at the expense of economic growth, particularly for less developed countries. This is a vision for a future in which energy is unleashed, and many different technologies can thrive. But the prosperity and climate progress of Surge can be accelerated by decoupling economic growth from emissions, reforming regulatory and permitting structures  to decrease the burden on innovative technologies globally and supporting the vital research and development which will underlie the next generation of economically and environmentally prosperous discoveries.

But there are two notable assumptions in this scenario that set it apart: that markets remain largely open and integrated despite rising geopolitical tensions, and that technology companies deliver on the promises of the AI productivity boom. This scenario offers a normative picture of the potential economic growth difference between an innovation-friendly world and one where climate metrics crowd out all other concerns. That difference, Shell estimates, is approximately the size of the combined US and EU economies. That is a big difference. 

Let’s set ourselves on the track to realize those benefits, make even more rapid gains on climate metrics, and establish dominance in technological competitiveness by taking steps to make it easier to build and unleash our energy and innovation capacity. 

The views and opinions expressed are those of the author’s and do not necessarily reflect the official policy or position of C3.