About a year ago the Shell Scenario Team released the Energy Transformation Scenarios, which looked in detail at possible pathways the world might take in this century as society responds to climate change and other pressures. The scenarios were built on earlier work that focused on the more immediate changes that society could see in the 2020s as a result of the pandemic. But the global story is just the tip of the iceberg; there is a wealth of national and regional detail below the surface of the Energy Transformation Scenarios thanks to the team’s energy modelling capacity.
One region that is of particular importance to the energy system is Asia and within the region Singapore is a key oil products supply and distribution hub. Given its unique geographical location and history as a major trading port, Singapore supplies some 20% of global marine bunkers, 3% of aviation fuel and exports a sizeable portion of the oil products used throughout the region.
But as the energy system shifts and oil products are replaced with electricity and fuels such as hydrogen, how might Singapore adapt to the transformation and what might this mean for its role as an oil products supply and distribution hub? To help people think about these key questions for Singapore, Shell has released a new Scenario Sketch, Singapore: A 21st Century Energy Hub. The Sketch makes extensive use of the regional and country data within the Energy Transformation Scenarios, setting out three possible scenarios for the region.
These scenarios are not forecasts, predictions or plans, but possible pathways that could emerge if certain trends take hold. Only one scenario meets the goals of the Paris Agreement, which implies that very deliberate steps will need to be taken to ensure the goals are met. Scenarios can help craft our thinking about the future and catalyse the actions required to shape a particular outcome.
The three scenarios are known as Waves, Islands and Sky 1.5 and they reflect the underlying trends that can be seen across society as a result of the pandemic.
- Waves: A focus on wealth and economic recovery, but this results in a late start to the rapid transition required to reach net-zero emissions around the middle of the century. Rather, the energy required to support growth in the 2020s comes from conventional sources. The transition is rapid from the 2030s, with a clear focus on ending fossil fuel use rather than directly managing emissions. Net-zero emission is reached around the end of the century.
- Islands: National sentiment shifts inwards and security issues prevail. The transition slows along with economic growth. Although the transition eventually takes hold, net-zero emissions is not reached until well into the 22nd century.
- Sky 1.5: The pandemic leads to structural change across society, significant green investment and a realisation that the broader health and well-being of society is fundamental. In this scenario the goals of the Paris Agreement are met.
All three scenarios see the role of electricity expanding, for example in transport, the further emergence of biofuels and the introduction of hydrogen as an energy carrier for certain applications. But the time lines are very different. However, these shifts in the energy system all challenge the supply and distribution model that Singapore has established for oil products and tend to favour local production. This is certainly the case for electricity, but may also be true for biofuels where feedstocks are available on a local level and hydrogen should electrolysers become the preferred mode of production. However, hydrogen supply may also lend itself to a distribution model if significant renewable electricity is available in a particular area, although this is not currently the case for Singapore.
The more immediate change for Singapore comes in the aviation and marine sectors, where airlines and shipping companies are beginning to plan and implement strategies to make use of sustainable fuels and develop possible roadmaps for hydrogen as a future energy carrier. Although progress is slow in Islands, both Waves and Sky 1.5 see early developments. This opens up the prospect of Singapore leading the way in supplying such fuels, maintaining its role as a supply hub.
In Sky 1.5 another opportunity emerges for Singapore through Article 6 of the Paris Agreement. A feature of Sky 1.5 is significant activity to develop carbon removals, both through reforestation and carbon capture and storage technologies. The use of removals to balance continued use of fossil fuels in some sectors is an important part of the global strategy for limiting warming to below 1.5°C in 2100, but catalysing the investment required for removals and directing the benefit to emitters requires a carbon trading market to emerge. With it’s strong history as a commercial and financial centre, Singapore could lead the way here, particularly as the region holds significant opportunity for removals and Singapore itself is a centre for the two sectors that may make greatest use of them, namely aviation and marine.
A feature that does emerge across the stories is just how long Singapore may find itself as an important regional distributer of oil products, even as the transition gather pace. The Asian region is still developing rapidly, with some 2 billion people (ASEAN and China) moving from modest to middle income and making use of a broader range of energy services in the process. Immediate growth in the region will draw heavily on existing energy sources and services, given their availability and scalability. Only in the fastest of transitions is this trend overcome with new energy sources scaling quickly enough to match new demand.
Where Singapore stands as an energy hub in 2050 and beyond has yet to be established. But now is the time for the bold decisions necessary to create the best possible future. Scenario analysis is a useful tool for understanding new trends and directions. We hope this publication helps inform readers about an otherwise uncertain future and positions them for the journey ahead.
Also check out the scenario infographic here.
Shell’s scenarios, including this Singapore Sketch, are not intended to be projections or forecasts of the future and they are not Shell’s strategy or business plan. When developing Shell’s strategy, our scenarios are one of many variables that we consider. Ultimately, whether society meets its goals to decarbonise is not within Shell’s control. This Singapore Sketch is based entirely on the data and findings of the Shell Energy Transformation Scenarios, released in February 2021. Please read the full cautionary note at: http://www.shell.com/investor and http://www.sec.gov