The IEA defines energy security as “the uninterrupted availability of energy sources at an affordable price”. Energy security has many dimensions: long-term energy security mainly deals with timely investments to supply energy in line with economic developments and sustainable environmental needs. Short-term energy security focuses on the ability of the energy system to react promptly to sudden changes within the supply-demand balance. Lack of energy security is thus linked to the negative economic and social impacts of either physical unavailability of energy, or prices that are not competitive or are overly volatile.
In cases such as the international oil market, where prices are allowed to adjust in response to changes in supply and demand, the risk of physical unavailability is limited to extreme events. Supply security concerns are primarily related to the economic damage caused by extreme price spikes. The concern for physical unavailability of supply is more prevalent in energy markets where transmission systems must be kept in constant balance, such as electricity and, to some extent, natural gas. This is particularly the case in instances where there are capacity constraints or where prices are not able to work as an adjustment mechanism to balance supply and demand in the short term. Ensuring energy security has been at the centre of the mission of the IEA since its inception.
The ability to respond collectively in the case of a serious oil supply disruption with short-term emergency response measures remains one of the core activities of the IEA. The long-term aspect of energy security was also included in the Agency’s founding objectives, which called for promoting alternative energy sources in order to reduce oil import dependency. The IEA continues to work to improve energy security over the longer term by promoting energy policies that encourage diversification, both of energy types and supply sources, and that facilitate better functioning and more integrated energy markets.