Energy Security

Energy security is the reliable availability of energy at an affordable price. A country is energy secure when its homes, farms and factories can count on getting the fuel and electricity they need, without sudden shortages or crippling price spikes. Because modern economies depend so heavily on energy, threats to energy security are treated as threats to the whole economy, and often to national security too.

Where the risks come from

The most discussed risk is import dependence, relying on other countries for a large share of your energy. India, for example, imports the large majority of the crude oil it uses, which leaves it exposed to changes in world prices and to events far beyond its borders. Supply can be disrupted by wars, sanctions, political disputes, accidents or natural disasters. Energy also has to travel along narrow routes. A chokepoint is a narrow shipping lane that a large share of the world’s energy passes through. The Strait of Hormuz, between Iran and Oman, is the most important: estimates suggest around a fifth of the world’s oil consumption passes through it.

Energy security is not only about imports. Domestic risks include ageing power plants, underinvestment in the grid, extreme weather and cyber attacks on energy systems. A country can produce plenty of energy and still suffer blackouts if its grid cannot deliver power where it is needed.

Tools for staying secure

The most basic tool is diversification: buying energy from many different countries, using many different fuels and relying on many different routes, so that no single disruption can cause a crisis. A country that buys oil from ten suppliers is far less exposed than one that buys from two.

A second tool is a strategic reserve, a stockpile of oil held for emergencies. After the oil shocks of the 1970s, wealthy oil-importing countries created the International Energy Agency, and its members agreed to hold oil stocks equal to at least 90 days of their net imports. India has built underground strategic petroleum reserves in underground rock caverns in southern India to cushion against supply shocks.

Other tools include using energy more efficiently, so each unit of economic output needs less fuel, and building up domestic sources such as solar, wind, hydropower and nuclear power.

New security questions in a changing energy system

As countries shift towards electricity from wind, solar and batteries, the shape of energy security changes. Sunlight and wind cannot be blockaded, which reduces some risks. But solar panels, batteries and electric motors depend on minerals such as lithium, cobalt, nickel and rare earth elements, and the mining and especially the processing of several of these is concentrated in a small number of countries, with China playing a leading role. Many governments now treat these critical minerals as a new energy security concern.