European Energy and Climate Security
Abstract:Energy security is a complex notion, which has been described as “one of the most overused and misunderstood concepts in the energy debate”. The term is usually ill-defined, and is considered an “umbrella term” as it contains multiple definitions, multiple timelines and poor quantification of cost and benefits. The traditional elements of energy security consist of: supply sources; demand centres; geopolitics; and market structures.
The term includes both supply and demand dynamics, which means that both the security of supply for importers and the security of demand for exporters need to be taken into account. Ultimately, both importers and exporters have the same goal, which is to ensure access to, transport of, and a market for energy resources. However, the energy security perspective varies depending upon the position in the value chain of resources held by individuals, governments and organisations.
Energy security policies generally aim at diversifying energy sources by type and origin. Although energy security focuses upon energy vulnerability rather than energy imports, traditionally governments have argued that diversity is best achieved by a mix of fuel sources with a preference for domestic over imported energy supplies. In practice, however, all kinds of policies have been justified in the name of diversity, showing that the way countries perceive the risks to energy supply is context-specific. It appears also that energy security can often be used as a rationale for wider political objectives.
Europe's reliance on its domestic fossil fuels has resulted in the rapid depletion of domestic fossil fuel resources. As such, Europe now finds itself in a position of significant dependence upon imported supplies. In the EU, roughly 80% of energy consumed comes from burning fossil fuels. Collectively, EU member states import half of their energy needs and it is estimated that by 2030 this figure will rise to 65%. Within the same timeframe, the International Energy Agency (IEA) projects that by 2035, world primary energy demand will increase by 36% from 2008 levels. This means that Europeans will need to compete for existing and new energy sources with other buyers, notably China and the United States. While there are disagreements over when global oil production will start to decline, it is important to bear in mind that this will occur and the implications for price volatility will be huge. Fossil fuel prices are set to remain at high levels compared to the past, due to rising energy demand, particularly in the developing world, and concerns over the security and availability of oil and gas supplies. According to the IEA, the average crude oil price will rise from just over US$60 in 2009 to US$113 per barrel (in year-2009 dollars) in 2035. This global price will substantially affect the whole energy sector and, in particular, the transport sector. The knock-on effect on other, replacement energies will also be large. Natural gas, on which the EU is already 50% dependent, is of particular interest as consumption is rising quickly and it is seen as a more environmentally friendly alternative to coal and oil.
Document Type: Research Article
Publication date: January 1, 2011
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