Dr BK Mukhopadhyay
A noted management economist and an international commentator on business and economic affairs. He may be reached at email@example.com
Recent trends are showing and indicating the ever growing need for recognizing the energy sector as one of the turners for an economy – big or small. The International Energy Agency [I E A] opines that global energy demand growth increased last year by 2.1 percent from 2016. Renewable forms of fuel, meanwhile, met about 25 percent of global energy demand growth. For electricity-generation, renewable increased 6.3 percent from 2016, the fastest rate for any type of fuel.
Keeping these in view let us examine the current goings.
The Global View
The IEA defines energy security as “the uninterrupted availability of energy sources at an affordable price”. Energy security has many dimensions: while 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.
It is well known a fact now that previously energy security was mainly associated with oil supply. But while oil supply remains a key issue, the increasing complexity of energy systems calls for a systematic and rigorous understanding of a wider range of vulnerabilities in as much as 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.
Actually, if we look at the global picture we could definitely locate that no country is energy – independent. Even Saudi Arabia – the world’s largest oil exporter –imports refined petroleum products like gasoline. Gasoline is imported by UAF. Norway and also Nigeria, whereas natural gas is still imported by Russia and UAF and electricity and coal by Russia and Norway, Thus, the regions with abundant raw resources also rely on import of some form of energy.
A good step indeed – the French government has just launched a plan to renovate some 500,000 homes every year to make them energy efficient, and cut heat loss, power consumption and carbon emissions. The government will disburse 200 million euros ($244 million) which will help accelerate the plan by training building professionals on new energy efficiency standards and providing aid to families who need to do home renovations.
The government also plans to set aside some 4.8 billion euros to renovate public-sector buildings, including schools and hospitals, to make them energy efficient. The building sector accounts for 45 percent of energy consumption and 27 percent of greenhouse gas emissions, adding that some 7 million homes were not adequately insulated.
The Netherland’s recent unearthing of fresh natural gas potentialities is one of the indicators as to how the energy sector can go on contributing to economic growth over time. It is pertinent to mention here that The Dutch energy industry is responsible for a good 6 percent of GDP or 36 billion Euros per year employing 100,000 people per year. The Netherlands is among the largest importers and exporters of oil and oil products in the world, and has a highly developed gas industry. A gradual transition to green energy enables Dutch energy companies and institutions to become a top economic sector.
In fact not only the Netherlands, Myanmar, U S, Canada or Cambodia, globally and nationally, the “architecture of energy systems” is undergoing significant change. Governments, industry and other stakeholders seek new solutions to ensure energy systems underpin 21st century requirements of economic growth, sustainability and energy security.
China accounted for about 80 percent of the growth in natural gas consumption as its economy shifts to cleaner-burning fuels. The rest of Asia contributed to a 1 percent gain in coal demand, an about-face from declines seen over the last two years. In the United States, coal production is on pace to decline 5 percent this year, but increase 1 percent next year. U.S. coal exports, meanwhile, increased 61 percent last year, but should decline over the next two years.
Many countries struggle to upgrade their energy systems to fully support current and future requirements of energy security and access, sustainability and economic growth – looking into pathways to creating a more effective transition towards new energy architecture.
Energy Security: Things are Changing
On this score it is better to accept that fossil fuels are necessary even as major economies shift toward cleaner options. Still, the long-term future for coal shows clear and significant declines in usage. The International Energy Agency said coal consumption declined by about 2 percent from 2016 and down 4.2 percent over the last two years or so. While use is in the midst of a decade-long period of decline, demand by 2022 will be about the same as the current five-year average.
There’s no certain long-term future for coal as a power source given the shift toward low-carbon options, but that’s not the case near-term. Coal accounts for about 30 percent of total energy used globally and about 40 percent of total electricity generation. Among fossil fuels, natural gas is a cleaner option when compared to oil or coal.
It is a Global Challenge
In fact time is ripe for turning to be too tough on energy security front in as much as energy security is the reliable, stable and sustainable supply of energy at affordable prices and social cost. It has been the fact that for many years governments have struggled to provide energy security through a mix of policies that have tempered demand and increased supply, but there is growing evidence that these policies are falling far short of the effort needed. What is more: energy exporters and importers are interdependent and increasingly anxious about the reliability of energy supplies. Additionally, a number of interlinked issues and challenges have appeared in recent years.
Obvious enough: renewable energy should be the vital part of such a plan, but at the moment it is still relatively expensive even in big economies like the Netherlands. The Governments have to, therefore, pursue an innovation policy to drive down the cost of renewable energy and encourage large-scale application of renewable in the long term. The transition to a low carbon economy depends largely on increases in the efficiency of energy use – in buildings, transport, and industry – and on the efficiency of energy generation.
It is crystal clear that in the absence of global cooperation progress cannot be expected. Russia, China, Brazil, countries around the Arabian Gulf and the Caspian Sea and the USA – Canada [more so after their strong emergence in the LNG market] are big players in the energy market. Intensification of energy relations is a must. Active energy cooperation could improve the security of supply; while at the same time bolster international trade – more access to foreign markets by the developed and the developing zone.