Four trends set to shape Europe’s industrial energy future
In July 2031, an explorer spacecraft from Earth will finally reach Jupiter.1 After eight years of silent flight, it will begin to search three of the gas giant's largest moons for signs of life.1 For a mission like this to succeed, scientists back home had to plan a decade into the future, playing out scenarios and preparing for possible challenges.
In many ways, business leaders across every sector – from manufacturers to data centre operators – are navigating a similarly complex set of future scenarios in relation to energy. They face pressures to improve performance (boosting efficiency while reducing costs), strengthen the resilience of their supply chains, and decarbonise their operations. They must do all this while managing rising energy demands and an uncertain geopolitical landscape.
Also, like space exploration, energy security will have an impact on our future. So, how can business leaders in Europe begin to plan for tomorrow’s energy landscape with so many unknowns? This is where Shell’s 2025 Energy Security Scenarios: Energy and artificial intelligence can help.
Exploring the scenarios that could shape the future of energy security
For over 50 years, Shell has used scenarios to explore how the energy system might evolve. The 2025 Energy Security Scenarios are developed using rigorous modelling and expert insight, factoring in shifts in technology, geopolitics and economics. While they are not forecasts, nor are they expressions of Shell’s strategy or business plan, they are designed to help business leaders and policymakers explore and plan.
In ‘The 2025 Energy Security Scenarios: Energy and artificial intelligence' report, Shell considers three possible future scenarios:
Surge
A scenario driven by rapid productivity growth, enabled by new technologies including artificial intelligence (AI), and economic expansion, where energy demand rises significantly and modular, tech-driven systems play a central role.
Archipelagos
A fragmented world shaped by heightened geopolitical tensions and national self-reliance, with slower, uneven energy transitions and an emphasis on supply security.
Horizon
A scenario that models what it would take to reach net-zero emissions by 2050 and limit global warming to 1.5°C by the end of the century compared to pre-industrial levels, requiring global cooperation and policy ambition.
But what does this mean for business leaders in the industrial sectors across Europe? Here, we present four key energy trends from Shell’s 2025 Energy Security Scenarios report that can help leaders in European industrials to consider possible scenarios and think differently about preparing for a more resilient energy future.
Get future ready: Four energy trends for industrial customers in Europe
Gas will continue to be pivotal
While the energy system continues to embrace renewables, natural gas, liquefied natural gas (LNG) and biomethane are expected to continue to play an important role in meeting energy demand, especially for energy-intensive industries like industrials. Unlike coal, natural gas can be turned on and off quickly which assists with grid balancing. Such factors help make these lower-carbon alternatives a pragmatic stepping stone on the journey to helping customers to meet their decarbonisation ambitions, offering flexible energy at scale.
In all three Shell scenarios, demand for LNG is likely to grow significantly in the near term, reaching 550 million tonnes per year (mtpa) by the end of the decade. In the Surge scenario, LNG supply could reach 700 mtpa by the 2040s.2
According to The 2025 Energy Security Scenarios, biofuels use, too, is expected to grow. Currently, they make up around 4% of the global liquid fuel market, but that share could triple by 2050, especially if advancements in conversion technologies continue – as Shell’s scenarios suggest.2 Similarly, research from the International Energy Agency (IEA) suggests demand will increase to 38 billion litres between 2023 and 2028, up nearly 30% from the last two five-year periods.3
Over the long term, gas is well positioned to play a vital and complementary role in the energy mix, supporting the integration of intermittent renewables like wind and solar, while bolstering energy resilience. According to the IEA, natural gas was the fastest-growing fossil fuel in 2024, with demand rising by 2.7% to reach a new all-time high4, up from 0.5% growth in 20235. Its flexibility and reliability make it a valuable asset for maintaining grid stability and ensuring supply continuity throughout the energy transition.
Distributed systems and modular electrification could drive increased efficiency
As AI and digital technologies mature, they are likely to accelerate the shift away from traditional, centralised energy systems. In the Surge scenario, for example, a modular energy infrastructure begins to displace large-scale, fossil-powered energy systems, unlocking new levels of efficiency, decentralisation and decarbonisation. Electricity systems are expected to increasingly favour renewable sources backed by grid-scale battery storage, creating more resilient and adaptive energy networks.
All three Shell scenarios also feature a boost in the role of electrification driven by the 2050 goal of achieving net-zero emissions. In Archipelagos, electricity demand grows at more than five percentage points of final energy market share every 10 years while in Surge and Horizon, the increase is 10 percentage points.2 This is a significant increase from the historical trend of closer to two percentage points per decade.
Meanwhile, the rise of small modular nuclear reactors (SMRs) over the mid-term (2040s) could provide a key energy solution for high-demand users such as data centres and even, in time, marine vessels. Likewise, large solar projects could be adopted at a national or regional level, with governments favouring locally sourced modular technologies to reduce their exposure to volatile global markets.
“More of our customers are looking for reliability and power from renewable sources,” says Massimilliano Mannino, General Manager Shell Energy Business to Business (B2B) Europe. “They are also asking for ways to track and certify their renewable usage to help meet decarbonisation goals, which is driving real momentum in how we structure and deliver energy solutions.”
Regardless of the scenario, the move towards modularity will be driven by AI – whether that is in the form of enhanced manufacturing processes or the optimisation of interlinked, decentralised energy systems spread across different regions and geographies.
AI and digitalisation are likely to be critical in helping to control energy costs
Shell’s analysis suggests that by 2050, global energy demand could be 25% higher than in 2024, while CO2 emissions are expected to peak within a decade.2 Then there are new technologies like AI, which may drive further demand – but are also expected to play a key role in cutting emissions.
The adoption of AI and smart automation emerges in all three Shell scenarios as a potential lever for industrial leaders looking to reduce energy costs and improve operational efficiency. AI is expected to optimise manufacturing lines, forecast energy demand with greater precision and automate load shifting - improving overall system flexibility, increasing efficiencies and reducing waste.
In the Surge scenario, these capabilities go a step further. AI doesn't just optimise processes – it restructures how power is dispatched across industrial systems, making sure energy-intensive facilities are run as cost-effectively and efficiently as possible. Meanwhile, in the Horizon scenario, where carbon pricing and emissions targets are more stringent, efficiency becomes especially valuable. This, in turn, prompts some industrial players to consider retrofitting operations and investing in low-energy systems to stay competitive and compliant.
This change has already started. For example, Horizon Europe, a European Commission funding programme for research and innovation in support of the UN’s Sustainable Development Goals, created an investment framework worth €95 billion, which is already advancing digital innovation in energy6.
Similarly, organisations like the European Network of Transmission System Operators for Electricity (ENTSO-E) suggest AI-driven grid optimisation could cut transmission losses by up to 15%.7 Such improvements could make a material contribution to Europe’s broader goals around energy efficiency and carbon emissions.
Battery storage and on-site renewables may offer resilience and cost savings
The energy system could be at a turning point for renewables. Across all three scenarios, renewable energy plays a pivotal role, with the accelerated production of renewable energy modules making on-site generation more accessible and cost-effective for businesses.
Investing in on-site renewables, especially when paired with battery storage, may give businesses more autonomy over their energy supply. This not only could help support greater resilience to fluctuations in supply and pricing – a valuable benefit in the more geopolitically complex Archipelagos scenario – but can also help businesses to align with evolving regulatory expectations and net-zero goals. Under the Shell Horizon scenario, continued investment in solutions such as hydrogen and battery storage may be on the rise not just for compliance with future regulation, but for maintaining competitiveness in a carbon-focused global economy.
According to the European Investment Bank, this trend is shaping the energy system in Europe, where countries invested nearly €11 billion in renewable energy generation in 2023 alone.8 As Rupen Tanna, General Manager for Power Trading at Shell Energy, explains, markets are shifting – and investors are responding.
Rupen Tanna, General Manager for Power Trading, Shell Energy“We’ve seen growing customer interest in battery storage solutions,” he says. “This has led us to invest in strategic capabilities like Next Kraftwerke, one of Europe’s largest virtual power plant operators, and EGO Srl, a specialist in battery storage optimisation. We’ve also restructured our trading desk to better support the optimisation and integration of flexible assets across European markets.”
Long-term energy planning: The key to unlocking a more sustainable energy future
Across all three of The 2025 Energy Security Scenarios (PDF, 29 MB), one theme, one theme is clear: the energy landscape of tomorrow is likely to look different from the one we know today. Whether dominated by the rapid integration of AI, geopolitical fragmentation or regulatory reform, these futures each represent a set of opportunities and challenges for business leaders across sectors in Europe and the world.
Exploring what the Surge, Archipelagos and Horizon scenarios could mean for businesses in the industrials sector in Europe may be a helpful way to consider options and build the future energy system.
Europe’s business leaders might not be searching for life on distant moons, but they are exploring the systems that will power life on Earth for decades to come. Just as the European Space Agency has done with its Jupiter Icy Moons Explorer (Juice) mission, decision makers across the region may benefit from recognising the value of long-term thinking in shaping an energy scenario in which they continue to succeed.
The 2025 Energy Security Scenarios
As society strives to deliver a new era of economic growth, ensure energy security and address climate change, artificial intelligence (AI) has matured to a point that it is making a broad impact in the world and on human life. But how might the energy system change as AI catalyses change across society?
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