As the complexity of the issues facing business and government mounts, scenario planning has become an increasingly popular technique. It is rare to find a policy or economic report these days which does not claim to incorporate some form of scenario analysis. The technique, properly used, is powerful, but sadly the term has become somewhat devalued and much of the work that purports to be scenario analysis represents little more than sensitivities around some conventional strategic plan. Certainly that is the case with climate change policy.
Scenario planning had its genesis in the early days of the Cold War when futurist Herman Kahn and colleagues at the Rand Corporation developed the technique to “Think the Unthinkable” in regard to possible outcomes of nuclear deterrence. It was subsequently adopted by business, particularly by Royal Dutch Shell, to sensitise and broaden mindsets to critical global developments, especially the unexpected, and to adjust corporate strategy accordingly. One of the early successes was the anticipation by Shell of the first oil shock in 1969, when most others in the industry were dismissive of that prospect. The technique does not seek to predict the future; rather it is story-telling – painting pictures of alternative worlds which might emerge which are credible in the light of both known and lesser known factors. Strategy is then assessed against each possible future. Some elements of a strategy will be common under all scenarios, but others will differ markedly; the final strategic choice being made in the light of the organization’s preferences, but with a better understanding of the possible risks the future might hold whichever world actually eventuates. Contingency plans can then be developed to manage those risks.
One of the key tasks in initiating a scenario planning exercise is to identify the “Official Future” – the future as it is supposed to be, and on which prevailing strategy is based. Inevitably there is a large amount of “political’ capital tied up in that view, often a result of group-think generated by one or two dominant individuals which nobody is prepared to contest; or by business or political models which have stood the test of time, but which may be ill-equipped for the future as it might unfold particularly where major paradigm change is involved. A great advantage of the technique, given that it is setting out to explore but not predict the future, is that, if done properly in a non-threatening manner, it allows for constructive discussion on alternatives taking into account the full range of credible evidence. In particular, there must be a preparedness to “Think the Unthinkable”, beyond conventional wisdom. Once those perspectives are available and understood by the key players, a re-assessment of the “Official Future” is often inevitable and undertaken proactively.
And so it is with climate change policy. Views have become incredibly polarized, based primarily on the dominance of short-term thinking in business, and by political expediency. The science is largely ignored and key advice sidelined. The analysis that is done reflects a desire to stay within our comfort zone, so emission reductions of 5% by 2020 and maybe 60% by 2050, are seen to be a “challenging” task. “Unthinkable” futures, for example that to avoid dangerous climate change, those targets might have to be 50% by 2020 and 100% by 2050, as the latest science suggests, cannot be entertained. Far more credence is given to the denialist view that climate change is a non-problem and if anything is done at all, it should be to wait and adapt.
The “Official Future” globally is changing rapidly. Increasing numbers of organizations such as the International Energy Agency, the World Economic Forum, Royal Dutch Shell in their latest scenarios, the World Bank, Academies of Science and the UN are emphasising the risks ever more strongly, and the probability that under current reform processes, we will be hard pressed to avoid dangerous climate change. The implication is that radically different steps must be taken if the world is to seriously address the issue.
It is high time that Australia, nationally, undertook some serious scenario planning, and developed contingencies for the likelihood that our “Official Future” of continued high-carbon, export-led growth might be about to fall apart. We have innumerable attractive options if only we can move away from the current group-think.
First published in Chemistry in Australia here.