What is energy security?
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.
Quantifying energy security
Historically, energy security was primarily associated with oil supply. Whilst oil supply remains a key issue, the increasing complexity of energy systems requires systematic and rigorous understanding of a wider range of vulnerabilities. Disruptions can affect other fuel sources, infrastructure or end-use sectors. Thus, analysis of oil supply security alone is no longer sufficient for understanding a country’s energy security situation as a whole.
One of the ways in which the IEA is responding to this challenge is by developing a comprehensive tool to measure energy security. The IEA Model of Short-term Energy Security (MOSES) examines both risks and resilience factors associated with short-term physical disruptions of energy supply that can last for days or weeks. MOSES extends beyond oil to monitor and analyse several important energy sources, as well as the non-energy components (such as infrastructure) that comprise an energy system. Analysis of vulnerability for fossil fuel disruptions, for example, is based on risk factors such as net-import dependence and the political stability of suppliers. Resilience factors include the number of entry points for a country (e.g. ports and pipelines), the level of stocks and the diversity of suppliers.