Energy security and climate policy: Assessing interactions

(Paris) — 28 March 2007

Energy security and climate change mitigation are likely to be the determining drivers of the future energy policies of OECD and non-OECD countries alike. Which policies can achieve and maximise the realisation of both of these objectives? The IEA publication Energy Security and Climate Policy: Assessing Interactions offers an unprecedented analytical approach to assess interactions among efforts to address these two vital policy concerns.

Energy security is approached pragmatically, focusing on the elements that matter most for climate policy. Policies designed to address concerns linked to fossil fuel resource concentration are most likely to interact with climate change mitigation efforts. Based on this result, the IEA study developed a quantitative method to assess how the causes of energy insecurity and climate change could evolve and how policies to address either policy objective might interact.

The analysis treats fuel price and physical availability concerns independently, and assesses each through a proxy. The first is based on a measure of concentration in international fossil fuel markets; the second focuses on gas trade, and in particular, on pipeline-based gas imports. This methodology is applied to the energy situation, and possible evolution, of five European countries used as case studies: the Czech Republic, France, Italy, the Netherlands and the United Kingdom.

Results show a worsening trend for both CO2 emissions and energy security in most of the five countries. Following a reference, “business-as-usual” scenario, the change in CO2 emissions levels in 2030 compared with 2004 ranges from a reduction of 27% in the Czech Republic to a rise of up to 38% in France. Changes in the price component of energy security also indicate a deterioration. Changes in the indicator range from an increase of 6% in the Czech Republic to one of 42% in France. Finally, there would be new and growing concerns related to gas imports in the United Kingdom between 2004 and 2010 and between 2020 and 2030 in the Netherlands – both countries being still net exporters at present. The same gas-related measure of physical availability would also grow in other countries, by up to 31% in France.

The analysis then illustrates how specific climate policy mitigation measures in the electricity and transport sectors could affect the energy security outlook of the case study countries. For this purpose, the IEA asks how various measures seeking to reduce CO2 emissions by 5% from baseline in 2030 would affect energy security.

Meeting the target through end-use efficiency improvements and an enhanced reliance on non-fossil fuel technologies (renewables or nuclear) in the electricity sector have positive impacts of similar magnitude on energy security. This reflects the similarity of the changes in fuel mix required to reduce CO2 emissions, essentially a reduction in coal- and gas-based electricity generation. Country specificities, however, imply different effects. The measure of the price component of energy security drops by between 2.4% in the United Kingdom and 4.3% in Italy, while the measure of the physical availability component drops by between 2.3% in the Czech Republic and 38.1% in the Netherlands*.

Switching from coal to gas in power generation to achieve the target has a negative impact on both security indicators. The increase in the price indicator ranges from 0.1% in the United Kingdom to 4.1% in the Czech Republic while the measure of the physical availability component ranges from 4.4% in Italy to 87.2% in the Netherlands.*

Achieving the 5% target through fuel efficiency improvements in road transport has no impact on the physical availability component of energy security – as indeed it does not affect the picture of natural gas markets. However, improved transport energy efficiency leads to important benefits in terms of the price measure, ranging from a reduction of 4.6% in Italy to 8.2% in the Czech Republic.

Switching from oil to biofuels in transport has more complex effects on energy security, due to the energy needed for biofuel production. In the case considered, there is a positive impact on the price measure, reflected by a drop of between 3.5% in Italy and 6.4% in the Czech Republic: biofuel reliance lowers exposure to the market concentration in oil supply. At the same time, increased natural gas use for biofuel production deteriorates the physical availability component of energy security, seen to increase by between 3.5% in the United Kingdom and 44.9% in the Netherlands.

The policy cases investigated underline that policies deemed acceptable either to reduce CO2 emissions or to improve energy security may no longer hold, when considered through the prism of an integrated climate/energy security policy. The quantitative approach proposed in this study identifies the nature of potential policy synergies and conflicts and will assist governments in tailoring adequate policy responses to both climate and energy security challenges.

The IEA urges countries to undertake a systematic review of the energy security implications of their climate policy initiatives. The tools elaborated in Energy Security and Climate Policy should shed an objective light on challenges and opportunities that lie ahead for countries, as they develop sustainable energy policies.

* The high values for the Netherlands is in part due to the comparatively low 2030 value used as reference.

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