Forum for the Future produces world scenarios

http://www.forumforthefuture.org/acting-now-positive-2018

Had a quick look at the scenario planning report produced by Forum for the Future and Capgemini. Interesting stuff and well presented.

It's always interesting, when looking at scenarios to see both what has been included and what has been left out. Forum for the Future has no scenario for world depression or economic collapse and there is an assumption that climate change has had no serious impact. All scenario assume no significant resources constraints to overall development, although they may change the path of development. This makes sense in that planning for economic collapse if virtually impossible until you are certain that is what is happening, and by that time there are little resources to do so. If we have significant climate destabilisation, then that is a whole different set of scenarios.

Choices of what to include are equally interesting. The Business as Usual scenario called National Interest looks at where we are headed if we all go with the flow, and it's not comfortable. This is nationalistic world of who knows who, secret deals and lack of standards and openness that we have come to expect.

Global Interest is the optimistic, full steam ahead let's crack this together scenario and reminds us that the challenges of energy and climate change are a big opportunity for business.

Patched up Globalisation sees China fail to rise to world domination as expected due to internal problems and there is an element of clinging to the old order as well as moving with towards energy security while addressing climate change. This will likely be a more comfortable scenario for many than the more progressive Global Interest.

Me and Mine Online is the scenario that really caught my imagination. What would happen if the networked, online, constantly connected early adopters became the norm? What if all the ideas coming down the line like Grid 2.0, Distributed manufacturing, virtual worlds ubiquitous. Governments, companies and countries become less important than online groups. Supply chains are very short for everything from finance to products. Am going to think about this one some more as it has profound implications.

I can find very little to be critical of, so I will nit pick briefly.

A personal gripe here that applies to a number of reports I have read recently. If the report is more than 6 pages long and I am really interested so will want to jot notes on it, I will print it out to read. So please -
no huge chunks of dense color - it uses lots of expensive ink and I can't write on it
no clever formatting - no odd page sizes - this report would not print on an XEROX laser printer, it cut off the right hand side and kept getting stuck.
no really small writing - if I have to read it online, I keep having to zoom in.
thank you!

I encourage you to download the report and have read. It's well presented and only 19 pages long cover to cover.

Share and enjoy.

Enlightened Transition - Introduction

THIS IS A DRAFT - SOME STATISTICS MISSING!


Motto: "I can see clearly now' (the rain has gone!)

The economy bounces back, driven by investment in low energy infrastructure changes, renewables and development and sales of technology to make energy efficiency painless. 50% of the resources of the country are used for the transition to an ultra-low carbon economy, a future similar to that of the UK's rebuilding program after the 2nd World War. (?what proportion were used by the building boom??). The key energy assumption is that overall energy use remains level with rapid gains in efficiency meeting increasing demand. There is a rapid move from oil and gas to electricity and a rapid increasing in renewables both for supply to the grid and for own use. Additional interconnectors allow us to buy and supply to the EU electricity market.

This is an optimistic scenario that explores the idea that the loss of the construction sector could be replaced with long and short-term investment in a move to sustainable energy. This includes not just renewable generation, energy storage and energy efficiency technology but also the mechanisms to encourage a swift switch from fossil fuels to renewables.

To enter this scenario, we believe a short sharp shock is required in order for us to understand our vulnerability and the urgent necessity of securing our energy supply. In this scenario an explosion of the gas pipeline in Poland just before Christmas 2008 is the trigger. This gives focus to those trying to resolve the economic crisis - rather than trying to fix the problem, they put in place structures that will enable a more desirable future.

In this scenario, we recognise that the future for energy in Ireland is electricity. A significant proportion of transport and home heating will come from electricity so while overall energy use declines in the short term as we use it more effectively, the requirement for electricity grows. We focus our attention on our strengths which is wind primarily and potentially wave and tidal. Biofuel production is increased but is a niche market for agriculture and commercial road transport. By building high capacity interconnectors to Europe (and potentially North Africa) we sell wind at times of plenty and purchase electricity from Europe to boost supply at other times.

The government has set a figure of 30% of our electricity from wind by 2020. In 2006 our capacity was 5.5GW and we used 24 billion kilowatts in 2006. As wind is intermittent, to reach 33% of our electricity from renewables, mostly from wind, we will require three times that in capacity or roughly 6GW of wind. If each windmill is 1GW (although larger ones are being built) and we have almost 1GW already installed, that will be 5000 windmills or 417 per year or 8 per week, every week, until then. In this scenario we go all out for wind building both onshore and offshore wind and the first policy to facilitate this is to create a real-time pricing market to encourage use of electricity when it is cheap (windy) and shift loads when it is expensive. In order to encourage support for installations by local people, all planning includes a sinking fund for the decommissioning of the turbines at end of life.

While Ireland cannot act unilaterally, we can seek to be a leader in creating a secure economy with stable energy prices and a plentiful supply of electricity.

Key Characteristics

• Energy is expensive but stable is supply and price.
• Labour is expensive
• Credit is cheap
• Raw materials are increasingly expensive
• Transport is more expensive
• Globalisation of some goods/services no longer beneficial.
• Success measures are long term
• The future is an electron economy
  

Risks

• Worldwide recession stops projects.
  
• Continued shortage of credit prevents rapid investment.
  
• Persistence of Business as Usual view of the future makes change slow and difficult to implement
• High capacity interconnector to EU important for this scenario so timing of supergrid is critical.
• Changes are not rolled out in a coordinated way. eg. if public transport is not an option people must continue to use the car. Until real-time pricing comes into effect, wind cannot be increased.
  

Opportunities

• New businesses emerge to take advantage of new infrastructure.
• energy productivity
• energy production
• energy storage
• energy transportation
• energy arbitrage

Policies

• Security of energy supply more important than best price.
• Investment in renewables is not subsidised but is enabled by:
  
• reduced planning restrictions
• guaranteed connection to the grid
• guaranteed energy market
• Focus on creating an infrastructure suitable for true sustainable development.

Related Links:
UK and Ireland plans for offshore wind - http://www.finfacts.com/irelandbusinessnews/publish/article_1012056.sht
ml
Windpower in Ireland - http://en.wikipedia.org/wiki/Wind_power_in_the_Republic_of_Ireland

We have not been here before

The present economic crisis has two main causes. One is the downturn of an extreme version of the normal business cycle. The other is that a trend - the increasing inadequacy of the world's supply of oil as a result of resource depletion - revealed itself just as that cycle was reaching its peak and both precipitated and accelerated the decline.

There has never been a coincidence of a cycle and a trend in this way before. We are in completely uncharted waters because the cheap, abundant energy supply which has enabled economies to recover from depressions in the past may not be available this time around.

In a normal economic cycle, the easy availability of cheap credit provides the extra purchasing power required for output to grow. According to David Roche, an investment consultant writing in the Financial Times, $4-$5 of new credit is needed for each $1 of GDP growth.

After a time, however, the economy concerned begins to run out of key resources – skilled workers, perhaps, or factory space – and prices begin to rise, pushing up the Consumer Price Index. This, in turn, triggers a response from the central bank, which raises interest rates or puts restrictions on lending to prevent inflation becoming excessive. Borrowing falls, the rate of demand growth slows, and the down phase of the cycle begins.

The cycle that has just entered its down-phase was rather different, however, because the world's central banks failed to step in to keep it within previous bounds. They failed to act because the price rises it generated were not reflected in the consumer price indices they monitored until very recently because supplies of cheap goods, foodstuffs and skilled labour were available from the poorer parts of the world. The price increases which did develop came in ways which did not directly affect consumer prices. They were in asset values: property and share prices increased, but everyone thought that this was a good thing.

These increased asset values provided security for additional loans, and so the up-cycle continued until one critical resource - oil - began to run short on a global scale. Its price soared, taking money out of the oil-consumer-countries' economies and transferring it to the oil producers just at the time that the asset-based borrowing boom was peaking anyway in the US and several other countries. The boom was peaking because borrowers did not have the incomes to take on more debt despite valiant efforts to enable them to do so, such a giving 100% mortgages to be paid off over 40 years at five times (or even seven) times a couple's joint income.

If the current down-turn was like its predecessors, we could expect a period of readjustment (an innocuous term meaning unemployment, repossessions, a few winners and a lot of losers). After a time, house prices would dip down to a point where buyers come back into the market, credit became more freely available and the economy started to pick up.

This time, however, because a super-boom was allowed to develop, the risk is that the bust will be on a similarly super scale and that the capital write-offs will be huge, endangering the banking and money creation systems. Unemployment may reach record levels. The demand for energy is already dropping. The danger is that oil prices will return to a low level, not only destroying the viability of all the renewable energy projects that are now getting under way but also halting oil field development.

If this happens, since very little new capacity will be built, when economies eventually start to recover, supplies of energy and other resource may quickly become inadequate and prices could rise again very rapidly, This could stifle the recovery and make it very costly to move to a more sustainable economic system.

Energy Scenarios Ireland 2.0 explores the present situation and how it might work out.
In Business As Usual we assume that the economists who think that the down-phase of the economic cycle will be short are correct and that growth will resume in the near future. We also assume that significant supplies of oil and gas will be discovered and we can therefore ignore the possibility of energy shortages for the moment. A further assumption is that fossil energy use is not restricted for climate change reasons.

In Enlightened Transition, we assume that action to replace the world's depleting supplies of oil and gas stimulates a global economic recovery so that, as the economy grows, demand for non-renewable energy falls.

In Fair Shares, the economic recovery is slow as Ireland struggles to make its economy more sustainable but with limited resources to do so. In this scenario, falling global energy prices mask
the decreasing supply trend until the economy starts to recover.

In Enforced Localisation no significant action is taken and the country slides into economic collapse. Recovery is long and slow.

Future of Horse Sports in Ireland

I had an opportunities to speak briefly to Joe Walsh, Chairman of Horse Sport Ireland on monday, thanks to a win in an Amateur Show jumping competition. So I quickly put together a review of what I felt were the risks and opportunities for horse sports (excluding racing) in Ireland under an Enlightened Transition scenario.

In summary:

Risks:

Costs of keeping horses, including feed, bedding, grazing, transport and services all increasing.
Costs of competing, particularlly transport, are increasing.
Horse sports have a high carbon footprint.
Risk of losing much of the grass roots of the sport through rising costs at a time when disposable income is decreasing.

Opportunities:

Horses are an economy in themselves, supporting a wide range of products and services, and equestrian sports such as eventing, show jumping, dressage, long distance riding, carraige driving and trotting are undertaken by children and adults of all ages (61 year old Ian Millar was part of silver medal show jumping team at the Olympics) and of all abilities and capabilities.
Ireland could produce horses to international level more cheaply than on the continent due to our climate, population density and small size. We could become a base for training horses up to the top levels of sport.
Equestrian villages could provide lower cost base for horse addicted people to live.
High Tech Equestrian centres and use of Technology to bring competitions and training to the horse rather than travelling horses.
Establish the Irish Horse Brand - the best built horses in the world?

I would hope to have to opportunities to discuss these ideas with others involved in horse sports in Ireland and to explore the other scenarios at a future date.

FULL REPORT: Download pdf here.

Introduction to Energy Scenarios Ireland 2

In looking to help people understand how the future might be different from today, we could have made a prediction about what that future holds. To do this we would first have had to reach a compromise between us about what the future would be like. Then we would have had to adjust that future to within the bounds of what we thought others would find credible, after all there is no point in making a prediction that nobody believes. This would have limited the areas we could explore by not going outside the popular comfort zone. In the end our damped down prediction would have read something like "After a period of readjustment, Ireland will return to a period of strong economic growth...". Just what everyone wants to hear.

Or, we could go ahead and make a prediction. Human nature being what it is, the most common reaction would be to focus on the areas of disagreement. A heated discussion would follow that might change a few opinions, but make little progress towards identifying risks and opportunities for the future and improve long term decision making.

So instead we have chosen to continue to use Scenario Planning to explore a range of possible futures, none of which we expect to reflect what actually happens, but instead explore different aspects of our future. Our experience developing Energy Scenarios Ireland version 1, was that it is much easier to lay aside our inbuilt assumptions and consider a unexpected future if it is not being touted as a prediction. It circumvents the long process of convincing others that we are right and we can go straight to applying our collective imaginations to exploring the risks and opportunities for that scenario. Everyone can then apply what they have learned to their own vision of the future. Looking at the scenarios collectively helps in developing and testing plans - if a plan will only work in one scenario, building in more flexibility should be considered.


We are, in fact, going to explore "After a period of readjustment..." with four scenarios, that are similar but not exactly the same as those in the previous version of Energy Scenarios Ireland.

Read more about the previous version here: http://www.energyscenariosireland.com

Business As Usual - we briefly look at a short period of readjustment followed by a return to strong economic growth. What might have to happen in order for this fairy tale to come true!
Enlightened Transition - considers a longer downturn but an immediate focus on increasing energy productivity and moving to renewable sources of energy. This leads to economic recovery driven by investment in these new areas. Not without pain for those dependent on Business As Usual.
Fair Shares - we wait longer before making a commitment to move away from fossil fuel and therefore have less resources with which to do so. Recovery takes longer to start and improvement is slow.
Enforced Localisation - we continue to be optimistic about the future until there are few options left but to return to a subsistence economy.

Scenarios are not predictions. In order to explore these different scenarios we are making assumptions about the wider world that include:
- no sudden and significant climate change
- no sudden and significant increase in terrorism
- no pandemics in either humans or livestock
- no discover of direct replacement for oil that is cheap and quickly scaleable
- Ireland cannot act unilaterally to any extent, so the rest of the world follows broadly the same scenario