Energy demand continues to rise across Shell's energy scenarios
Wood is seen during the presentation of Shell's 2025 Energy Security Scenarios during Energy Asia 2025.
KUALA LUMPUR (June 17): As demand for energy continues to rise steadily ahead, international energy player Shell predicts energy systems will see subtle shifts that will lead to a more substantial transformation by the year 2060.
Shell chief energy advisor, Peter Wood, said this during a special showcase of Shell's 2025 Energy Security Scenarios during Energy Asia 2025 at Kuala Lumpur Convention Centre on Monday.
Shell outlined three AI-driven energy scenarios, all exceeding the 1.5 degrees celsius Paris Agreement limit but projecting progress in decarbonisation and carbon removal.
Shell's latest energy scenarios offer a nuanced look at potential global energy pathways, outlining three distinct futures: Horizon, Surge, and Archipelagos, each providing different frameworks for the possible interplay of economic, social, and technological factors that will shape the world's energy landscape until 2040.
'While the historical trend of rapid energy growth is not expected to continue at the same pace, all three scenarios project steadily more energy demand,' he said.
Horizon demands constrained growth; Archipelagos faces trade-related limitations; and Surge allows for further growth due to economic expansion. He noted that the composition of energy is consistently changing towards more non-fossil sources, with renewables (solar and wind) playing an increasingly significant role.
'The energy system within both the Archipelagos and Surge scenarios, is not significantly different from the energy system observed today in terms of total fossil fuel demand,' Wood said.
'However, a closer examination reveals subtle shifts within this overall demand. Specifically, there will be less coal, broadly the same amount of oil, and slightly more gas.
'It is these underlying changes, combined with new additions to the energy system, that will lead to more substantial transformations by 2060.'
A key observation regarding the energy system, he said, is that people tend to overestimate change in the short run but underestimate it in the long run.
This phenomenon is largely due to the pervasive nature of long-lived capital stock.
'For instance, cars, airplanes and ships – these assets persist for extended periods, though not indefinitely.'
Regarding Shell's outlook on oil demand, Wood noted that there is a projected spread between the Archipelagos and Surge scenarios on the higher end, with Horizon projecting slightly lower demand.
Current global oil demand stands at approximately 100 million barrels per day.
'Shell anticipates a modest amount of further growth for perhaps another five to seven years, influenced by economic conditions and, to a lesser extent, weather patterns. This growth will not be linear, as global demand will fluctuate,' he said.
'However, Shell does not foresee substantial growth in oil demand beyond 2030, nor does it expect a precipitous decline. In a truly net-zero world, oil demand would evidently need to begin a downward trajectory, yet current forecasts do not indicate this is happening.'
Meanwhile, 'hard-to-abate' sectors like aviation, marine, and petrochemicals are particularly challenging to decarbonise through electrification, and their demand could even increase beyond 2050.
The high cost competitiveness of traditional fuels compared to alternatives (biofuels, sustainable aviation fuels) for these sectors presents a significant hurdle.
Meanwhile, the future of natural gas demand shows a greater spread across the scenarios due to varying levels of competition from low-carbon electricity and coal.
'In Surge, natural gas plays a crucial role in complementing renewables, while in Archipelagos, demand is lower due to trade constraints.
'Notably, new gas demand is projected to come primarily from 'gas starters' – lower-middle and upper-middle-income countries whose economies are industrialising.' energy Energy Asia 2025 oil and gas Shell
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