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Lloyds List: BIMCO assesses pressure points

Keith Wallis,
Published: Jun 06, 2007

MARITIME executives were given an insight yesterday into three scenarios on how the world might develop over the next 23 years as conflicting social, political and market forces influence global development.

Speaking at the BIMCO bi-annual general meeting, Shell International chief political adviser Dr Cho Kong said the world’s focus is on four key pressure points China, energy security, climate change and the market.

On China, he said one of the key issues is whether the country follows the US in its profligate use of energy, or takes a European or Japanese path where economic growth outstrips energy use.

He said this was important because of its influence on the three other factors, given that by 2020 China would double its GDP.

Dr Cho said the ‘crunch‛ would occur’ during the life of the scenarios.

Turning to energy security, he believed that while more oil discoveries would be made they would be small and, taken together with existing fields, would account for only 27% of total energy resources.

The balance would be made up from tar sands, heavy oil and bitumen, coal bed methane and renewable sources.

But he questioned whether the alternatives were fully exploitable and asked, when consideration was given to exploiting Canada’s tar sand resources, ‘How much of Alberta do you want to dig up?’‛

Dr Cho added that the potential for the world’s renewable energy resources would support a global population of 10bn people, but said the impact would provide a leadership challenge. Wider development of biofuels alone would compete for water use and food production with agricultural crops.

Taking into account these pressure points, Shell has developed three global scenarios that takes into account the major changes that took place in the global psyche following the US September 2001 terrorist attacks and corporate scandals.

Shell said the scenarios explore the trade-offs needed to reconcile the push for greater efficiency, social cohesion and security because these objectives are, at times, incompatible. Using what Shell called a Trilemma Triangle the scenarios pit market incentives with security and increased regulation, market forces with social cohesion and security with social cohesion.

Dr Cho called the first scenario low trust globalisation where security issues take precedence over market forces. This could see China developing a blue water navy capability to protect its access to the Malacca Strait in the face of a build-up by the US to prevent so-called terrorist activity.

Similarly, he added that by 2015 the US could increase its share of oil imports from Africa from 16% to 25%, which ‘would be close to the proportion currently coming from the Middle East’. China, meanwhile, would seek more strategic relationships such as oil pipelines from central Asia to secure its own energy supplies.

The second scenario, where social cohesion is influenced by market forces, and which Dr Cho called open doors, envisages globalisation running unabated and only checked due to social pressure.

On the one hand, this could see emissions from China rising to double that of all other industrialised countries combined over the next 23 years as a result of unbridled economic development. On the other, social pressure could see industry developing a raft of alternative energy resources or drastically reducing its carbon footprint.

Dr Cho said the key to open doors is mutual interdependence and trust: states act through market incentives, global standards and regimes are used; there is consumer demand for green energy and high demand growth spurs innovation.

The final scenario, which Dr Cho said was a nightmare world, envisaged an end of globalisation as protectionist regimes took over, the US turned in on itself and a global culture of distrust took over.

Dr Cho said the scenario was characterised by government-to-government agreements, stronger market regulation, populist nationalist governments and an ‘intensely parochial’ world.

He said that several countries face problems expanding their population. ‘China faces a rapidly ageing population. Japan will lost half its population,’‛ he said, and added that governments would start to encourage a faster birth rate with tax breaks and generous leave allowances.

Dr Cho pointed to China’s target of 50% of oil imports to be carried by Chinese owned ships and that 90% of Japan’s oil is currently carried in Japanese flagged ships as examples of the flags scenario.

Dr Cho gave no predictions on which of the three scenarios could come true by 2025, if any, but said that the maritime industry should be aware of the forces at work and how they could influence and affect the maritime sector. and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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