The future of energy according to Shell... not very reassuring...

No doubt big oil companies hold the key to how we will deal with energy after ‘Peak Oil’, and thus how we deal with sustainability overall. Given the stakes, they are likely to keep drilling for every drop of oil this world still contains, but surely they must prepare themselves for what’s coming after the last drop has been used, no?

This question made me particularly interested in the video oil giant Shell posted on Youtube, picturing the world in 2050, or at least how energy will relate to the world in 2050:

For those who don’t have 45 minutes to spend on the video, here’s a short account:

Overall the video is about how to change the current dependency on oil. The first part tells about alternatives for fossil oil. The ‘first generation’ alternative basically relates to ethanol extracted from sugar cane (mostly in Brazil) or corn (mostly in the US). The video points out a problem here: while ethanol from sugar cane is relatively efficient (producing 7 times more energy than it costs to produce), corn is absolutely not (energy produced more or less equals the amount of energy it costs to produce). Brazil can rely on its own production of sugar cane for its own energy needs, but cannot produce ethanol for the whole world, at least not without destroying vast amounts of rain forests and starving their own population (a second problem with ethanol production: it claims vast amounts of farmable land).

Up comes the second generation of alternatives, where ethanol, or any form of liquid fuel, is extracted from weeds, produced through photosynthesis or even synthetically (believe it or not, using methodologies used to produce anti-malaria drugs, if I understood it correctly). No doubt Shell is investing heavily in this, otherwise they would not have dwelled on this subject in their video (which, after all, serves to promote their business in some way). But the fact that no mention is made of when we could expect mainstream energy production from this source makes me think they are quite far from it… or, if you want to be cynical, perhaps they wait until the last drop of oil is extracted before revealing their capacity to generate energy at large scale from this source.

The second part is about reducing our energy consumption –or rather: make us use energy more smartly. Fair enough: it is brave of Shell to focus on this subject, since ultimately it reduces the need for their own products. On the other hand, according to their own projections (see the chart that one Shell employee draws in the video): demand for oil will likely grow to levels that  surpass supply by a number of times. According to any economic logic this will increase the price of oil, so regardless of the smarter use of energy in the future, Shell still looks into years of profitable business…

The video zooms in on a smarter use of our roads (through  self driving cars, with some appealing example of research done by Scania trucks) and ‘smart cities’ (with a compelling example of Masdar City in the UAE), as ways to reduce our energy dependence.

So did these examples reassure me with regard of the pending energy crises we are facing in the coming decades? Not for a millimeter. Did it reassure me in the way big oil companies are searching solutions for it? Not an inch.

Basically, the message of this video is this: we’ll think along a bit in how to reduce energy dependency, we’ll even do some research in alternatives for oil, but for the next three decades or so we’ll make sure to protect our profits.

What the story totally misses out on, in my humble opinion, is the grander scale of changes that are currently occurring, and might expand dramatically in next three decades. Evolutions such as 3D printing, the sharing economy, collaborative working tools and peer-to-peer development are, while relatively small still, trends that indicate that the very texture of our economic model is radically shifting. The very problems expressed in the video, while offering no compelling sign of how to solve them, will make these developments even more pressing. To name just one example: if every house or community somewhere in the future would own a sizeable 3D printer, what would the effect be on the global supply chain, global transport –and, hence, on oil consumption?

Shell’s message in the video forms a nice example of how to think within the confinement of one’s own paradigm, but it’s not this kind of thinking that will solve the energy problem overall.

Why national borders are not set in stone...

If you think European national borders were fixed in stone, think again... here's a hallucinating trip of thousands years of nation building in Europe, just makes me wonder how this video will look like a thousand years from now !

Will (and should) governments be run like businesses in the future?

It is a question that has been puzzling me for a while now: how will ‘governments’ evolve in the future. The question might sound bizarre. Haven’t governments always been around? Most probably, but not necessarily in the form we experience them now. Even government can morph into different shapes and functions, and indeed have done so in the past. Furthermore, the current crisis, the impact of climate change if (or: when) the worst scenario’s materialize, and specific trends such as disintermediation, might impact governments as we know them quite fundamentally.

I have recently been sent a video which gave me further food for thought. It’s about why governments should not be run like corporations:

Created by OnlineMBA.com

All solid arguments as far as I’m concerned, even if you omit the ideological beliefs some might have about the subject. But my question is whether these arguments still stand in current circumstances.

Let’s look at the first argument: governments do not exist to make profit, but have to spend each Dollar of income to improve the common good. Sounds great. However, if like me you live in a (democratic) country that sits on a burden of over 100% of debt vs GDP, and a yearly budget deficit of 3% (and, no, I’m not Greek or Italian), you might wonder if governments shouldn’t be forced to make profits for the years to come, if you want to avoid jeopardizing the future of our children and grandchildren (after all, someone will have to pay the bill). Sure, the money governments collects should (and mostly does) serve the common good. But the sad fact is that they have ever fewer money available to serve this purpose. Some even start divesting in certain public responsibilities, at least in states where public finance have come under strain. In case you wonder: no, this trend is not limited to the ‘failed states’.

The second argument is that citizens are not shareholders. Small shareholders have no means to weigh on corporate decisions, but in a perfectly working democratic process, citizens should weigh on decisions that affect them. But how big is my vote as a citizen, really? My vote only counts when it is shared by a majority of voters, just like it would if I was a shareholder of a company, no?  At any rate, even if it is shared by a majority, I would have no guarantee my ideas would be effectively implemented, probably much less so in a democratic government election compared to a shareholder meeting (where the CEO mostly has to act upon decisions taken by shareholders).  In a way, I know of no democracy that genuinely implements the opinions and choices of the majority of its citizens.

The third argument is about customers vs constituents. Surely, governments should not treat us as mere customers, choosing to opt out on us when we’re too hard to handle or to serve? Makes sense, even if I hear lots of my fellow citizens wishing their government would look at them as clients rather than voting cattle. But there’s something else going on, made inevitable by the crisis we are in and the poor public finances in most Western countries: the rise of public-private partnerships. For an increasing number of tasks, the help of private companies is the only way to ensure things ‘get done’. And have no doubt that the ‘private’ piece of the equation is aiming at maximize profit, closing down any activity that is not profitable, even if it serves the common good.

The ideas in the video are certainly valid, and I have no hesitation in underwriting them. My fear, however, is that we are already in a maelstrom that will turn governments into businesses, whether we like it or not. With Naomie Klein’s ‘The shock doctrine’ in mind: we’re in a perfect storm to make this happen. Just read the ‘recommendations’ of the IMF or the European Commission to have clearer sight on the hidden agenda. While their arguments are valid, their solutions are not necessarily.

On the other hand, one has to wonder whether this will not lead to a situation where the government simply becomes irrelevant. If crises (both financial and climatic) worsen in decades to come, and governments increasingly fail at fulfilling their basic mission, will private initiatives not simply take over? Is the outbreak of young social entrepreneurs (and even social innovation within existing corporations) not an early sign of this?

Guesswork, of course… but not that idle I believe…