04 October 2010 17:27 [Source: ICIS news]
By Nigel Davis
The European Petrochemical Association (EPCA) meeting in Budapest, Hungary, is focused on the future: a world with a human population approaching 9bn.
The challenges presented by that number of souls appears at time to be unimaginable. But buried in the threats are areas of huge opportunity.
Materials suppliers to the world should relish future demand. Growth patterns will shift and change but there can be no denying that demand for chemicals, whether derived from petroleum and natural gas or not, will be essential to economic and material growth.
It is how companies react to this changing environment that is so important.
There are those that delve into the future and others that are happy to go along with the ride. Shell on Monday presented some of the bare bones of its energy scenarios work.
Shell makes projections of alternative futures, which the energy giant calls “scramble” and “blueprint”.
World demand for energy is about to surge, according to Jeremy Bentham, Shells’ scenarios specialist and executive vice president for the global business environment.
We are set for a period of “revolutionary change”, he said.
An excepted surge in the demand for energy cannot be met from conventional sources and that, in Shell’s eyes, presents a “zone” of extraordinary opportunity, or misery, depending on which way you want to look at it.
In energy terms, the threats and opportunities are immense; but in materials terms, the outlook is arguably more benign.
Chemical producers have some difficult decisions to make. The environment in which they operate is likely to change radically.
But there can be little doubt that demand for their products will increase as consumers around the world gain the ability to buy more goods and services and seek to adopt a developed-world lifestyle.
The pace of change is hugely important in Shell's scenarios.
If governments do not act effectively, and if technological advances stall, then the “scramble” scenario looks more likely.
Under this scenario, there is a surge in energy availability through coal, after which globally we have to pay the consequences.
Under the “blueprint” scenario, there is innovation in the system that effectively allows us to manage the pace of change and deal with the consequences of significantly increased global energy demand and the impact on climate change.
These big-picture views translate into materials and systems demand in the zone of opportunity.
If people are innovative – at the corporate, government and international level – than those opportunities will mushroom. In Bentham’s words, there will be “new coalitions of interest”.
“Technology plays a major role,” he told an audience at the EPCA meeting, “but there are no single silver bullets. The next five years are critical.”
Tacked to the energy picture are the possible futures for chemicals. But the warning from Shell’s work is that the next ten years promise economic volatility and cyclicality.
Navigating a successful course through these uncertainties will demand a certain degree of skill, but it is the sort of technological and asset management expertise that some companies should have in great store. Without a doubt, a challenging period lies ahead.
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