Shining a light on the gaps that could leave us in the dark
Energy, the lifeblood of modern society, is under greater threat than before. Governments are scrambling to ensure they have sufficient energy. A volatile global energy market, an unstable supply chain, and proliferating armed conflicts have debunked old assumptions about energy security– “the ability of individuals, organisations, and governments to adapt to supply disruptions in the energy markets.” Fatih Birol, President of the International Energy Agency (IEA), aptly noted, "Energy security is at the heart of today’s geopolitical tensions. Ensuring a stable and affordable energy supply is more crucial than ever."
Firstly, cutting consumption—not importing—improves energy security, but not many nations can afford to do so. Second, thinking about energy externalities is different from thinking about energy security. Politically, energy security tariffs are attractive, but economically, they are more challenging to defend. Lastly, there is a clear divergence in the worries that policymakers and economists have about energy security. Nations collaborate on cross-border infrastructure projects to bolster the resilience of energy systems, such as interconnected grids, pipelines, and transmission networks. These initiatives facilitate the exchange of energy resources, enhance reliability, and strengthen the collective resilience of regional and global energy infrastructure. International collaborations also establish emergency response mechanisms to swiftly address sudden disruptions in energy supply, ensuring effective crisis management and minimising impacts on global energy markets. This was admirably displayed after the 2022 invasion of Ukraine when suddenly Europe found its energy taps running dry.
The Conundrum of Energy Security
Energy security plays a paramount role in the complex fabric of global affairs, influencing economic stability, national security, and environmental sustainability. As the world strives to balance the growing energy demands with geopolitical challenges and effective policymaking, it is crucial to thoroughly examine the interplay between energy security, geopolitics, and policies.
Through bilateral and multilateral partnerships and coordinated responses, nations work towards building a resilient, sustainable, and interconnected international energy framework. As global energy landscapes evolve, cooperation, diplomacy, and shared responsibility are increasingly vital in a secure and sustainable energy future worldwide. The relationship between energy security, geopolitics, and policies is dynamic and interdependent. Just as threads in a tapestry are woven together to create a cohesive image, geopolitical realities shape the landscape of energy security, influencing the creation of national policies, while these policies, in turn, affect dynamics.
"National interests, resource competition, and diplomatic relationships are intricately interwoven in the pursuit of energy security," illustrating these elements' complex and reciprocal nature. Overall, international collaborations and agreements play crucial roles in addressing the multifaceted challenges of energy security.
The threats are not far to seek. Geopolitical tensions can disrupt resource flow, as conflicts in key regions like the Middle East can lead to supply interruptions. Natural disasters damage infrastructure and hinder transport routes. Increasing cyberattacks on critical energy infrastructure further highlight technological susceptibilities.
Dependence on a few suppliers for essential resources like rare earth elements amplifies the risk. The energy supply chain is like a fragile ecosystem, where one weak link can cause ripple effects throughout the system.
Transitioning to renewable energy introduces new challenges, such as the interdependency of wind and solar power and the need for rare materials.
Facing up to Market Power
The primary global sovereignty concern in internationally traded fuels is the dominant actors' market power, which could disrupt prices or supply. Proxy indicators include fuel production share and geographic concentration, particularly in single global markets like oil, coal, and regional gas markets. National sovereignty concerns are primarily related to import dependency on a specific fuel, which makes the energy supply vulnerable to global price volatility, the market power of major exporters, and disruption factors along import routes.
Nations are worried about the security of their energy imports from unfriendly, unstable, or politically unacceptable countries, while others come from trusted partners. Energy security is crucial for countries to ensure the availability of various energy types for final uses in the required quantity and quantity, over short, mid, and long-time horizons. It involves access to commodity sources, transportation, transformation into secondary commodities, and distribution within the country. In countries with low self-sufficiency, such as Italy, geopolitical scenarios and internal transport/distribution security are critical.
Mitigating Strategies
In the interconnected realm of global energy security, nations prioritise collaborative efforts to address shared challenges and mitigate geopolitical risks for a stable and sustainable energy future. Bilateral partnerships typically focus on securing access to strategic energy resources through agreements between energy-importing and resource-rich nations. Last year, QatrEnergy signed a 27-year agreement with China's Sinopec LNG to give Beijing unprecedented control over its energy security.
At the regional level, multilateral partnerships facilitate cooperation among neighbouring countries to tackle common energy challenges. Agreements in regional energy cooperation concentrate on shared infrastructure, regulatory frameworks, and collective strategies to optimise energy resources and bolster security within the region. International energy forums such as the International Energy Agency (IEA) and the Gas Exporting Countries Forum (GECF) provide platforms for dialogue, information-sharing, and collaborative initiatives, promoting a unified approach to global energy security efforts. A good example is how Europe handled its energy crisis after breaking its energy ties with Russia. Massive capacities have been created to convert liquefied natural gas back into gas. Liquefied natural gas terminals are being built on a large scale worldwide, especially in the U.S., so Europe should be able to obtain supplies from "friendly" countries in the future. Therefore, a near-complete decoupling from Russia should be possible in the years to come.
The International Energy Agency anticipates a 23 per cent increasein international demand for energy by 2040, with fossil fuels remaining predominant in transportation and electricity generation. However, the role of carbon-free energy sources is expected to expand significantly. In line with the 2015 Paris Agreement, over 190 countries have committed to reducing emissions. Reflecting this shift, sustainable investment funds saw a remarkable rise in 2020, with US$350 billion invested—double the amount from 2019. Capital is flowing into renewable energy production, research, and technology development.
Despite the surge in renewable investments, fossil fuels still account for 80 per cent of energy production, with renewables and nuclear making up a minor share. The new energy systems necessitate substantial investment and infrastructure development to link renewable production sites with demand centres, reshaping global energy landscapes. "This surge in sustainable investment underscores a global commitment to a cleaner, more resilient energy future," notes Fatih Birol, Executive Director of the International Energy Agency. By 2040, renewables, especially wind and solar, will constitute 47 per cent of the global electricity market. This transition to renewable energy sources carries profound implications.
Energy Corridors & Super Grids
Creating International Energy corridors is essential to bolster energy security in a world fraught with vulnerabilities. These corridors, which facilitate the transportation of energy resources such as oil, gas, and electricity across borders, help diversify supply routes and reduce dependency on single sources or routes. However, establishing these corridors also requires careful consideration of security concerns, as they can become targets for cyber-attacks, terrorism, and political manipulation.
As the International Energy Agency (IEA) emphasised, "International energy corridors must be developed with stringent security measures and collaborative frameworks to ensure uninterrupted and secure energy supply across regions." Just as a well-designed network of highways ensures that traffic can flow even if one route is blocked, robust international energy corridors can ensure the steady flow of energy resources despite disruptions.
In India, Phase 1 of the Green Energy Corridor is already under implementation in Gujarat, Andhra Pradesh, Karnataka, Himachal Pradesh, Maharashtra, Madhya Pradesh, Tamil Nadu, and Rajasthan. It will ensure the grid integration and power evacuation of about 24GW of Renewable Energy.
Super grids, expansive networks that transmit electricity across vast regions and continents, emerge as a promising solution to bolster energy security. In 2015 and 2016, cyber-attacks targeted Ukraine's power infrastructure, aiming to disrupt and turn off control systems, complicating restoration efforts and causing significant disruptions. Connecting diverse energy sources across different regions, Supergrids mitigate localised shortages and ensure a more dependable energy supply. However, they also introduce new vulnerabilities. The complexity and scale of super grids increase susceptibility to cyber threats, infrastructure failures, and geopolitical tensions that could disrupt cross-border electricity flows. Balancing the benefits and risks is necessary for advancing energy security.
Super grids have already become a reality in Europe, exemplified by interconnected systems such as Denmark-Norway, France-Spain, and Sweden-Germany. Inter-connectors like Eleclink, a British company, facilitate the seamless transfer of surplus green energy between France and the UK, demonstrating the potential of super grids to enhance energy reliability and sustainability on a continental scale.
Technological breakthroughs in energy storage solutions, particularly advancements in battery technologies and grid-scale storage, promise to revolutionise the energy landscape. These innovations will mitigate the intermittent nature of renewable sources, enhancing grid stability, reliability, and overall energy system efficiency.
India’s Energy Security Vulnerabilities
India's energy security vulnerabilities stem from its heavy reliance on imported energy sources, with over 80 per cent of its crude oil and about 50 per cent of its natural gas imported. This dependence exposes the country to global supply disruptions and price volatility. Additionally, India's domestic energy infrastructure faces challenges such as ageing power plants, inadequate transmission networks, and inefficiencies in energy distribution.
Despite significant potential, the slow transition to renewable energy further exacerbates these vulnerabilities. Furthermore, geopolitical tensions in key energy-producing regions like the Middle East can threaten supply stability. At the same time, the country's increasing energy demand, driven by rapid economic growth and urbanisation, puts additional pressure on its energy security. Addressing these issues requires comprehensive policy measures, investment in green energy, and advancements in energy efficiency.
Assessment
Mitigating energy security vulnerabilities is akin to building robust bridges that connect energy production centres to consumption hubs, ensuring uninterrupted energy flow despite potential disruptions.
We have reached a juncture where the impact of individual countries on climate change is limited. Therefore, placing our faith in new energy systems, corridors, and super grids is pivotal for humanity's survival.
International collaborative research on energy technologies fosters innovation, accelerates technological advancements, and promotes global energy security through knowledge-sharing and capacity-building initiatives.
