Peak Oil and Energy Security

Custom Student Mr. Teacher ENG 1001-04 26 October 2016

Peak Oil and Energy Security

Energy security means having access to the requisite volumes of energy at affordable prices in association with national security and the availability of natural resources for energy consumption. From the perspective of a government concerned and the management of strategic interests, energy security implies energy policies and standby measures that can be implemented in the event of a supply disruption—and at a cost that its citizens consider reasonable. Such measures include energy supply diversification and a certain volume of energy stock. Definitions of Energy Security:

The International Energy Agency (IEA) definitions of energy security have focused on the “adequate supply of energy at a reasonable cost”, and have referred to energy security to be just “another way of avoiding market distortions” (IEA, 1995). The underlying belief of these definitions is that “smoothly functioning international energy markets” will deliver “a secure – adequate, affordable and reliable – supply of energy” (IEA, 2002). IEA has claimed that energy security always consists of both a physical unavailability component and a price component, although their relative importance depends on the market structure (IEA, 2007). The European Commission’s Green Paper (EC 2000) states that energy security also entails respecting environmental concerns and working towards sustainable development. They clarify that the security of supply does not seek to maximize energy self-sufficiency or to minimize dependence, but aims to reduce the risks linked to such dependence.

Energy plays an important role in the national security of any given country as a fuel to power the economic engine. Access to cheap energy has become essential to the functioning of modern economies. The modern world relies on a vast energy supply to fuel everything from transportation to communication, to security and health delivery systems. Some sectors rely on energy more heavily than others; for example, the Department of Defense relies on petroleum for approximately 77% of its energy needs. The growing uncertainties about stability and security that exist in the global energy market have fuelled the need for nations to have a comprehensive energy security strategy. Energy security is also essential for the economic growth and development of countries as energy in-security can hamper the productive activities in the economy as well as undermine consumer welfare.

Rapid urbanization and rising middle-class incomes around the world have led to explosive growth in electricity demand. Thus, to the growing urban communities, energy security simply means keeping the lights on. Chester (2010) lists five fundamental aspects that characterize ‘energy security’. Firstly, energy security is about the management of risk – the risk of uninterrupted, unavailable energy supplies; the risk of insufficient capacity to meet demand; the risk of unaffordable energy prices; the risk of reliance on unsustainable sources of energy. These risks may be caused due to energy market instabilities, technical failures or physical security threats. Secondly, the definition of energy security may be framed to reflect a country’s energy mix, the abundance of local resources and import dependence.

Thirdly, the term energy security reflects a concept of strategic intent, implying that energy security is not a policy in itself, but that specific policies have to be adopted by governments to achieve the objectives of energy security. Fourthly, energy security has temporal dimensions – the risks and threats to physical supply differ across short, medium and long-term horizons. Short-term risks include terrorism attacks and technical failures. Long-term risks, on the other hand, concern the adequacy of supply to meet demand and adequacy of infrastructure to deliver supply to markets. Fifthly, the term energy security has to be applied keeping in mind the significant differences between the oil, gas, nuclear and other energy markets and infrastructure.

As energy is essential for the economic growth and development of a country, it has come to be recognized as a ‘strategic commodity’. This is because any uncertainty in its supply can threaten the effective functioning of an economy (Sahir and Qureshi, 2007). It therefore becomes an imperative for a country to ensure secure energy supplies at affordable rates. This crudely defines the idea of ‘energy security’. Threats to energy security include 1. The political instability (tensions in Northern Iraq, Southern Sudan, the Niger Delta and the East Mediterranean as examples of how competition for energy resources can cause instability) of several energy producing countries. “Energy should be a motor for development and cooperation, not a source of conflict,” said Mr. Terje Roed-Larsen.

2. The manipulation of energy supplies,
3. The competition over energy sources,
4. Attacks on supply infrastructure and,
5. Dominant countries reliance to the foreign oil supply.
6. Increased world competition for energy resources due to the increased pace of industrialization.

Renewable energy

Renewable energy resources and significant opportunities for energy efficiency exist over wide geographical areas, in contrast to other energy sources, which are concentrated in a limited number of countries. Rapid deployment of renewable energy and energy efficiency, and technological diversification of energy sources, would result in significant energy security and economic benefits. The deployment of renewable technologies usually increases the diversity of electricity sources and, through local generation, contributes to the flexibility of the system and its resistance to central shocks.

For those countries where growing dependence on imported gas is a significant energy security issue, renewable technologies can provide alternative sources of electric power as well as displacing electricity demand through direct heat production. Renewable bio-fuels for transport represent a key source of diversification from petroleum products. Long term measures to increase energy security center on reducing dependence on any one source of imported energy, increasing the number of suppliers, exploiting native fossil fuel or renewable energy resources, and reducing overall demand through energy conservation measures.

Facts and Figures:

1. Oil expert Mike Ruppert has claimed that for every calorie of food produced in the industrial world, ten calories of oil and gas energy are invested in the forms of fertilizer, pesticide, packaging, transportation, and running farm equipment. 2. The impact of the 1973 oil crisis and the emergence of the OPEC cartel was a particular milestone that prompted some countries to increase their energy security. 3. Japan, almost totally dependent on imported oil, steadily introduced the use of natural gas, nuclear power, high-speed mass transit systems, and implemented energy conservation measures. It has become one of the world leaders in the use of renewable energy. 4. India is carrying out a major hunt for domestic oil to decrease its dependency on OPEC, while Iceland is well advanced in its plans to become energy-independent by 2050 through deploying 100% renewable energy. 5. Amount of sun that hits the world in an hour is enough to power the world for one year. With the addition of solar panels all around the world a little less pressure is taken off the need to produce more oil.

6. Geothermal can potentially lead to other sources of fuel, if heat would be taken from the inner core of the earth to heat up water sources, we could essentially use the steam creating from the heated water to power machines, this option is one of the cleanest and efficient options. 7. Hydro-electric which has been incorporated into many of the dams around the world produces a lot of energy, as the dams control the water that is allowed through seams which power turbines located inside of the dam. 8. Bio-fuels have been researched using many different sources including ethanol and algae, these options are substantially cleaner than the consumption of petroleum. “Most LCA results for perennial and ligno-cellulosic crops conclude that bio-fuels can supplement anthropogenic energy demands and mitigate Green House Gas emissions to the atmosphere. 9. Juliet Alohan writes on the crucial need for its prioritization in Nigeria.

It is estimated that by the year 2022, about two million unemployed Nigerians would be gainfully employed if renewable energy is introduced to complement regular electricity supply. 10. Dr. Sultan Ahmed Al Jaber, UAE special envoy for energy and climate change, and CEO of Masdar, said: “With energy demand predicted to grow nearly 50% over the next 20 years, competition for resources will increase. Energy is therefore becoming a key piece of the global security puzzle. Any significant move to solve the energy crisis is also a step toward creating peace and stability among the nations of the world.” 11. The Renewable Energy Global Status report showed that by the end of 2011, total renewable power capacity worldwide exceeded 1,360 Giga Watt (GW), up to 8 per cent over what it was in 2010. The report added that renewable energy supply constituted more than 25 per cent of total global power-generating capacity, which is estimated at 5,360GW in 2011.

Case Study: Energy Security Context in India

Sudarshan and Noronha (2009) lay out five important factors that have contributed to increasing energy demand in India. First, the real income of India has grown at a rate of 6-7% per annum over the past two decades, and the Planning Commission of India has a future targeted growth rate of 8-10% per annum for the next decade. TERI (2006) estimates that India will require 2023 MTOE (Million Tonnes of Oil Equivalent) of energy by the year 2031 to feed such economic growth rates. Second, a structural shift has been taking place in India, which has accelerated since the 1991 economic reforms. This shift is from agriculture towards the services sector, which is relatively energy intensive. Next, an annual population increase of about 1.9% p.a. has been observed over the past two decades. Importantly, the urban population in India was 25.5% in 1990 and is expected to rise to 40% by 2030. Given per capita energy demand in rural areas is low, this will further feed into India’s gross energy demand. Fourth, there is a growing transport sector. Fifth, an energy transformation is taking place, with a shift from biomass to electricity in rural India. Further, as of 2005, only 55% of rural Indian households had electricity access.

Electricity demand is expected to rise, even as the government has significant plans to meet the demand (Planning Commission, 2008). Increasing import dependence of India on fossil fuel-rich countries has hence forced the government to rethink the way India engages with these countries. Given the factors influencing the demand and consumption of energy in India, the Planning Commission of India defined energy security by modifying the definition of energy security given by The World Energy Assessment (UNDP 1999) to suit the Indian context better. This definition is accepted by the Indian government, and it is as follows: “We are energy secure when we can supply lifeline energy to all our citizens irrespective of their ability to pay for it as well as meet their effective demand for safe and convenient energy to satisfy their various needs at competitive prices at all times and with a prescribed confidence level considering shocks and disruptions that can be reasonably expected” (Planning Commission, 2006) This definition includes the key aspects of energy security, including those related to poverty and economic growth.

The idea that the provision of energy ought to be “irrespective of their ability to pay” is a slight departure from the definitions of energy security accepted by several nations, which tend to be market oriented. By factoring in poverty and the inability of India’s citizens to pay for energy, it only stops short of according energy the status of a ‘right’. The income distribution angle is hence incorporated in the definition. Additionally, this definition accounts for India’s import dependency of energy and the possibility of disruptions in the supply. There is also a veiled reference to what would be considered an appropriate level of risk, although this has not been quantified due to the uncertainties involved. In the context of India’s energy security needs, Verma (2007) lays out a two principles to maintain energy security.

He states that firstly, India must diversify the supply of energy, both by location and source. Secondly, he states that the resilience of energy systems must be maintained, which is a reference to “security margins” that act as buffers against shocks and provide facilities for recovery after disruptions. Resilience can come through spare capacity, strategic reserves, backup supplies of equipment, adequate storage capacity along supply change and the stocking of critical components of electricity generation. Any policy measures taken by the government need to thus needs to incorporate these conceptual frameworks. Understanding these concepts is necessary in order to pursue rational policy making in the energy domain. Of course, policy implementation would ultimately revolve around day-to-day governance issues, and fiscal, administrative and political bottlenecks.


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  • University/College: University of California

  • Type of paper: Thesis/Dissertation Chapter

  • Date: 26 October 2016

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