Wim Thomas is the Chief Energy Advisor for Shell Global; where he is heading the Energy Analysis Team in Shell's Global Scenario Group. He and his team come up with world-wide energy analyses and long-term global energy scenarios to advise Shell companies on issues like global supply and demand, regulations, energy policy, markets, pricing and industry structure. During his over three decades with Shell, Wim has had diverse experience in areas like drilling operations, subsurface reservoir management and commercial and regulatory affairs in gas. He is the UK's member to the World Petroleum Council and is a former chairman of the British Institute of Energy Economics. He holds a postgraduate degree in Maritime Technology from Delft University, the Netherlands.
BR Research sat down with Wim on sidelines of the World Cities Summit 2014 in Singapore earlier this month. In the excerpts below, Wim Thomas shares some intriguing findings from scenario analysis done by his team on the opportunity and challenges of rapid urbanisation in coming decades.
Cities: with growth come predicaments
Why does urbanisation matter? Wim Thomas responds by noting that well-designed and managed cities can act as powerful engines for economic development and prosperity--and help to nurture innovation and collaboration.
But proper planning has to be done to avoid the pitfalls of rapid urbanizations. "Cities that develop poorly tend to affect quality of life, have negative environmental impacts including high greenhouse gas emissions, and can be the source of social and political strife. Crucially, bad urban planning also puts pressure on essential resources like energy, water and food. According to analysis by the United Nations and Shell, demand for all three is already expected to rise by between 40 percent and 50 percent by 2030," he explained.
He narrated the findings of the UN that in 50 years' time, 75 percent of world population of 9.5 billion people by then would be living in cities. This implies that every week 1.4 million inhabitants are adding into urban centers around the globe as overall cities' population will grow from 3.6 billion now to 6.3 billion in 2050. Half of this growth will emanate from Asian cities with China and India's share in global urbanisation growth going up to 31 percent. In the process, hundreds of millions will come out of poverty; hence with better living standards energy use rises.
Informed by his team's analyses, Wim Thomas seems critically aware of the energy challenges that come with the pressure growing cities will exert on the resource pie. He observed that energy usage will increase more than the population growth as urban dwellers, on average, consume more energy than a rural inhabitant.
"For instance, 66 percent of today's energy needs emanate from cities, and this will grow up to 79 percent in 2040. Shell's scenario analyses reveal that energy demand would soar by 80 percent over the next 50-60 years," he highlighted.
Go green: no way around it
Cities' growth and associated high energy consumption will then naturally lead to a worsening climate change situation overall. Wim noted that carbon emission must be quarter of what today's mix is to avoid serious climate challenges--that seems like a difficult feat to achieve. "The vehicles on the road will be around 2 billion by that time from existing 800 million. Challenges are humongous and concentrated effort is required to have sustainable living by then," he argued.
So, what is Shell doing on that front? "Clean and green is the recipe to be serine is what Shell believes and it's advocating on the usage of less carbon emission fuel option and alternate use of energy resources," he said.
Upon inquiring on the plans to cook that recipe, Wim spelled out: "Our strategy and focus is to look for more green energy avenues. Yes, today most of world's need is met by high carbon emitting fossil fuels but it may be a different mix five years down the road and balance will keep on changing. And to achieve that, Shell is spending fortunes on the Research and Development; and there are signs if right policies are formed, green components would enhance in global energy mix."
Wim recognised that conventional gas supply is depleting and coal usage is more prevalent in power generation and other avenues. However, the efficiency of coal is not the same everywhere and it may not necessarily be cheaper to gas. World Bank and other lending institutions are not providing financing on high carbon emitting projects. Then the technology of shale gas and tight gas may spillover to rest of the world to converge the global gas prices.
Focus on urban density
The optimum solution is to enhance the urban density to have efficient use of energy per capita, Wim advocated. Shell's research study "New lenses on future cities" exhibits that energy consumption is inversely proportional to urban density.
"Compact, more densely-populated cities like Hong Kong uses significantly less energy per person than sprawling cities like Los Angeles. Why? For example, because people live closer to where they shop, work and play, therefore, they use less energy to get around. When those compact cities are served by reliable, cleaner transport networks, energy use is reduced even further," he explained.
"The L-curve demonstrates that energy consumption per person in Honk Kong (world's most densely-populated city) is one-eighth of that in Houston while the density of latter is one-twelfth of former. There are a few exceptions, such as London, Paris and Amsterdam which have relatively low density but have highly efficient use of energy resources. There are lessons for others to learn from these mega cities. Another significant benefit of highly dense cities is low carbon dioxide (CO2) emission which is estimated by Shell to be one-third in high dense cities than to those of low density," he elaborated.
Managing the cities
Wim also emphasised that there should be a co-ordinated planning around the globe to counter these challenges. He mentioned five factors which enable room to maneuver. These include flexible planning that has the space to accommodate the rest of the world. There has to have strong investment commitments by big countries. Then they should also have implementation capacity. All these would not be possible without trust and collaboration with each other, he cautioned.
The longtime Shell strategist proposes a top-down approach to city solutions where public-private partnership takes center stage as government and large companies co-ordinate massive investments in large infrastructure projects and mass public transport systems. To have clean and environmentally sustainable cities, natural gas shall be the backbone of it, he urged.
BR Research also highlighted the imperative of developing small urban centers having population less than 5 million. The idea is to somewhat ease the burden on Pakistan's large cities like Karachi, which has nearly 20 million inhabitants but still keeps absorbing more in-migrants, partly because rest of the country does not have the amenities and opportunities or capacity to absorb this influx. Wim Thomas's prompt reply was to build new cities on the lines of compact and investment- and tourist-friendly Singapore, which is a classic case with a 5.4 million population that is served by spatial chains of intercity mass transit system.
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