Jump menu

Main content |  back to top

News and Media Releases

Growing Cities, Growing Responsibility

Speech by Upstream Americas Director Marvin Odum at the International Economic Forum of the Americas: Toronto Forum for Global Cities, Toronto, Canada, on October 24, 2011.

By 2050, the world’s population is expected to hit 9 billion people, up from nearly 7 billion today. As the world’s population grows, as wealth increases and more people escape poverty, and as more and more people move into rapidly expanding cities, there will be increased stress on our energy, water and food resources. In this speech, Marvin Odum discusses the world’s energy challenge calls for collaboration between the public and private spheres to turn these challenges into opportunities.

Marvin Odum, Director, Upstream Americas

Marvin Odum, Director, Upstream Americas

The focus of today’s forum is an important one. In North America, conversations about population growth and urbanization don’t get nearly the attention they should. And when they’re had, they’re often more about Asia and the developing world.

It’s rare that we look at our own growth and our own infrastructure challenges and examine how inter-related they really are. At Shell we are fortunate enough to be able to support a global research team to do just that.

They look at trends and data, and they help us identify 

  • what the needs of our customers are going to look like in the future 
  • where the greatest challenges may arise for us; and 
  • how we can use what we do as a business to help meet them.

Something we’ve been talking about for quite awhile is the “zone of uncertainty.”

The zone of uncertainty is simply this: an unsustainable gap between the growing demand for energy and the forecasts about the supply available to meet it.

Now, this zone is “uncertain” because the policy measures and behavior changes necessary to address it have not yet materialized to the extent they should – from neither the demand nor the supply side.  And at the same time, we’re seeing volatile shifts – from the geopolitical to the environmental – that are impacting the world energy landscape as well.

When we start to think about what needs to be done to address this gap – and what’s driving it in the first place – it becomes very clear that the drivers of the world’s energy challenges are the same drivers of our environmental and economic challenges.

There’s population growth: It’s estimated that by 2050 the planet will be home to more than 9 billion people; that’s an increase of more than 2 billion over today’s current population. It’s 800 Toronto’s.

Another driver is the growth of the consumer class: Right now, there are more people emerging from poverty than ever before. This is good. But not enough is being done to ensure their position there isn’t short-lived.

The third major driver is urbanization.   Today 50% of the world’s population lives in cities, and cities are responsible for 80% of all CO2 emissions. As this audience is aware, by 2050 three out of every four people on this earth will live in cities.

It is absolutely essential to create cities that will enable them to live proper lives – to go to work every day, to breathe clean air, to drink clean water, and to rely on effective transit and public works systems.

Right now, we’re nowhere near where we need to be. And business most certainly has a role to play in remedying that problem.

How could we not? One recent study estimated that more than $350 trillion will be spent on global urban infrastructure and usage between now and 2040. 

A clear interest for business…

At Shell, our approach has been to produce more energy, cleaner energy and smarter energy. And that last point is important. “Smarter” energy means things like biofuels, natural gas and more energy efficient fuel products.

Drivers of Energy Use

But it also means understanding the drivers of energy use in the world’s cities and then working collectively to deliver the smart energy that future cities will demand.

This is evident in four areas in particular:

The first is waste – and how to use infrastructure to mitigate it.

Now, waste isn’t really a “driver” of energy use, but instead, a huge contributor to it.  Our scenario planners have highlighted for us that in today’s cities, more than half of primary energy ends up as waste. And the biggest areas of waste are in transport and in power generation.

We’ve seen that addressing waste in transport can be accomplished through smarter freight management and things like CAFÉ standards and lighter, more energy efficient vehicles. Smarter, more efficient fuel products like the ones we’re developing also play a role.

Waste in the transport arena can also be addressed through national public transit strategies – and I know policymakers here in Canada are working on creating this country’s first such strategy.

Some of the best ways to address waste on the power generation side involve energy-efficient generation approaches, such as gas-fired power stations. This is one of the reasons we believe so strongly in our natural gas investments.

The second driver of energy use in cities is population density.

Sprawling cities, like Houston where I live, use a lot more energy than dense, compact cities like those in Asia – precisely because you have to expend energy to move energy to homes and businesses farther and farther out. 

On top of this challenge, many cities have infrastructures that are as old, if not older, than you and I. It’s aging while we’re asking it to do more than it was designed to. And it’s telling us “no.”

The next, related energy driver is growth.

Our scenario planners tell us that more than 80% of the expected growth in cities will come in two forms.

Cities will undergo rapid urbanization – like what we’re seeing in China right now.

Or, already large and established cities, which have in the past been economically undeveloped, like Calcutta, will experience a renewed surge of economic growth, putting them on the pathway to late-stage development.

In the latter scenario, energy use on a per-capita basis is higher because cities are locked into their old and inadequate infrastructures.

A fourth energy driver involves understanding the water-food-energy nexus – and how these inter-related and essential commodities all depend on healthy infrastructure. When you think about it, the connections here are obvious: moving and treating water requires energy; water is needed for almost all forms of energy production; and producing food demands energy and water.

Cities are going to need more of all of these things. Our research teams have found that smart and sustainable urban design is one of the biggest influencers of the water-food-energy nexus.

Clearly, a more sustainable energy future requires that we consider all three of these systems and how they relate to one another.

Challenges for cities

Of course Canada’s cities are not immune to the challenges I’ve described.  Since 2001, almost 90% of the total population growth here has occurred in metropolitan areas.

Like the U.S. and many countries in Europe, Canada’s infrastructure is also aging rapidly.

The Canadian Imperial Bank of Commerce has identified an infrastructure deficit of more than $300 billion, and it says the only way to get new projects off the ground will be through innovative public-private partnerships.

We know electricity prices have been rising in Canada. In 2011 alone, Ontario’s retail electricity rates have increased by 15-20%, while Alberta’s rates are up by about 30%. The city-owned utility in Calgary increased home electricity rates in Calgary by 30% from January to August this year.

I bring all this up, not to depress, but to impress the urgency with which we must confront these issues.  And they’re issues that all cities will soon face – if they aren’t already.

It’s incumbent upon all stakeholders to address them, and to do so quickly and in collaboration with one another.

Toronto is one example of a city that is taking steps in the right direction. From an energy perspective, it has lowered its greenhouse gas emissions by more than 40% since 1990. They did this by focusing on innovative urban design and by creating a supportive policy environment.

Toronto’s Deep Lake water cooling system is one example of innovative urban planning in action. The system draws upon the naturally low water temperature at the bottom of Lake Ontario to provide air conditioning to downtown Toronto.

It saves enough power to supply nearly 7,000 homes each year. It saves 700 million liters of water per year. And when it comes to greenhouse gas emissions, the system’s impact is like taking 15,800 cars off the road. This is an example of what’s being done right.

But whether we’re talking about an increase in energy prices, or a greater demand for infrastructure investment or extreme weather events… these are big issues. They require a big effort.

This is why it’s essential to have the collaboration of the public and private spheres to turn these challenges into opportunities. And I believe we can.  It starts with understanding the challenges, and then committing to their solution.

This is why conferences like this one are so important; and I look forward to the forthcoming discussions today.

Thank you very much.

Page Tools

Related Links

Speech given by Marvin Odum, President of Shell Oil Company and Upstream Americas Director, Royal Dutch Shell plc, at the U.S. Chamber of Commerce National Chamber Foundation CEO Leadership Series, July 28, 2011.