by Ruth Cairnie, EVP Strategy and Planning, Royal Dutch Shell
Last year, Shell released Signals and Signposts, which analyzed long-term energy scenarios and concluded that we are in an era of volatile transitions at the economic, political and social levels. The stresses building in our global systems, such as water, food and energy production, will make industrial and social transformations inevitable. We must acknowledge the links between these stresses and “connect the dots,” before it is too late.
According to the United Nations, by 2050 our planet will be home to nine billion people, and three in four people will live in urban centers. Asia’s new and fast-growing cities will absorb much of that growth. With this level of urban growth, basic needs for water, food and energy will need to be met - in a planet that already shows signs of stress meeting the resource needs for seven billion. So how do you start addressing such huge challenges and connect them to find solutions?
We will see a shortfall with the world’s freshwater supply if we continue to consume freshwater in the same way as today. According to a McKinsey study, there will be a 40% gap between supply and demand by 2030, impacting agriculture (which accounts for 70% of all water consumption), industry (20%) and domestic use (10%).
It is also predicted that the world’s increasing population will drive a 50% increase in the world’s food needs. An increase in food demand could see food prices double by the year 2030 and as the shift to meat increases, so will the water and energy resources needed to keep up with demand. A kilogram of beef requires approximately 1500 liters of water to produce and every calorie of food we consume uses approximately 5 calories of fossil fuel energy in the supply chain.
These issues are close to home for us at Shell and it’s clear that unconstrained growth in demand would challenge sources of energy supply to the limit – both conventional and new. Our own analysis for Signals & Signposts suggested ‘business as usual’ out to 2050 would result in an energy supply and demand balance of about three times the levels in 2000. Even by stretching assumptions for demand moderation and supply growth, the gap between supply and demand is significant. We will need all sources of energy and must find ways to mitigate CO2 emissions and the risk of climate change, while meeting this surge in energy demand.
We believe one part of the solution to cut down on water resources in energy production could be more use of natural gas in power generation: the water consumption intensity of gas in power generation is significantly lower than other fossil fuels and nuclear energy. We have developed water recycling and treatment facilities in Dawson Creek, Canada, Geelong, Australia and at Raízen in Brazil. We’ve worked with academics to build a deeper understanding of the stresses on our resources and developed a consistent water accounting framework for assessing and monitoring the water impact of different projects in different environments. We have developed formal partnerships with select environmental NGOs, such as IUCN, Wetlands International, Earthwatch and The Nature Conservancy, to improve how we develop our energy projects and in 2011, we worked on more than 35 projects with these organizations.
It is clear there is a lot of work left to do – we are still working to understand the link between energy, water and food. Addressing the Nexus means addressing complex challenges that cross boundaries between countries, industries and the public and private sectors. Solving them will require a broad, holistic approach, an open mind and an understanding beyond our own areas of expertise. Together, we can shift the needle in finding more efficient, affordable and sustainable ways at securing our world’s resources.