Energy security -a critical approach

Andres MäeEstonian Foreign Policy Institute

Vilnius, 16.11.2012

Definition (well known) Energy security – the availability of sufficient

and stable supplies at affordable prices ‘availability’ – sources (existence, location, access),

production & transport (infrastructure) ‘reasonable price’ or affordability – markets (existence,

regulations), consumption (effectiveness), environment ‘stable supplies’ or reliability – security of supply

‘Energy security needs to be extended to the safety of the whole supply-chain.’ Daniel Yergin

Critical approach Ubiquity and totality of energy

myriad of risks usual in everyday business Totality of security

defending of what? welfare? interests? How to measure energy security?

energy intensity import dependence diversity

Political economy of energy security Theory of new security threats (Buzan, Wæver)

security – lack of threat to health and sovereignty

Interdependence theory (Keohane, Nye) sensitivity – costs of adaptation vulnerability – cost of alternatives

Conclusion risks – only existential politics – adaptation or alternation

Vulnerability instead of security Energy vulnerability – exogenous harmful

events threatening lives or sovereignty via country’s energy system (Christie)

How to measure? expected shortfall cost of alternatives

Measurement unit – costs or affordability

Baltic States’energy relations (1) Fossil fuels

100% import dependence (ex. oil shale) coal, oil – open market, multiple suppliers natural gas – open market, single supplier

considerable share in heat and electricity generation

Local fuels biomass – multiple suppliers natural gas competes with other fuels

Baltic States’ energy relations (2) Electrical energy

security of supply via open market, multiple suppliers

Heat energy district heating has substantial share in production number of producers cannot alternate fuels

vulnerability in case of disruption of supplies reserve fuels, diversity of supply increase costs

Natural gas import, 3B

826 887 743 847 966 996 1009 1003 962653 701 632

1385 1350 14251750

21701790 1910

16451368

1743

1125

1755

2582 2682 27112944 2929 3116 3100

3719

31252737

31063407

4793 4919 4879

5541

6065 5902 60196367

54555139

49325337

0

1000

2000

3000

4000

5000

6000

7000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

mill

ion

cu

bic

met

ers

Estonia Latvia Lithuania Total

Sources: Statistics Estonia, Latvian Central Statistical Bureau and Lithuanian Department of Statistics, 2012

Conclusion Uncertainty in energy policy measures

economy vs politics political clout of energy companies/importers

market vs state intervention market promotes effectiveness

Limited options for energy policy alternatives are expensive political pressure against open market

Thank You!Andres Mäe

Estonian Foreign Policy InstituteVilnius, 16.11.2012