20
1 Energy Security and Sustainability: An Overview
Current global scenario for access to affordable and assured energy supplies will
revolve around the following issues:
1. International security: Geopolitical experiences (Fig. 1.11a, b) indicate that
wars, terrorism, internal conflicts, cyberattacks, embargoes, and so on adversely
impact the production and transportation of resources. Therefore, stability of
supplier nation/s is of utmost significance. In addition, stability of the region is
crucial as well since almost two-thirds of oil supply are done through maritime
routes, especially Strait of Hormuz and Strait of Malacca.
3 Any disruption in
Middle East or maritime routes due to conflicts and embargo will severely
impact both supplier and recipient. Not only oil but the supply of gas through
pipelines is highly vulnerable. Russia supplies more than 25% requirement
of gas to Europe via pipeline, most of it passing through Ukraine. In 2009,
discord between Ukraine and Russia shut down gas supplies to Europe for
two weeks (The Economist Weekly, April 5, 2014). Similarly, the threats of
cyberattacks to the grid systems in the event of terrorist attack or full-scale
war causing massive disruptions cannot be ruled out. Besides, advancement of
digital transformation poses a challenge to the stakeholders and governments. In
2003, for example, a US blackout caused by a software bug cut energy supply
to 50 million people. In 2010, a virus damaged centrifuges at Iran’s Natanz
nuclear fuel enrichment plant. A virus attack on Saudi Aramco’s network in 2012
disabled 30,000 computers, erased hard drives, and replaced critical company
data. In 2014, a nuclear plant operator’s computer system was hacked in South
Korea (Reference-Energy Security 2016).
2. Diversification and self-sufficiency: The country should have a basket of
resources/supplier groups to choose from so that there is no over dependence
on one resource. In the event of single or limited alternatives, one should at least
have diversity of suppliers to import energy from.
3. Infrastructure resilience and technology upgradation: Coal, oil, and nuclear
resources have been in use for more than a century and may remain in use for
another 50 years if not more. Infrastructures built in the past need constant maintenance and upgradation for primarily two purposes. One is to avoid accidents
and shutdown, and second is efficiency. Producer nation must ensure that the
infrastructure is resilient and mining/extraction technology is upgraded from
time to time. Users must ensure that newer technology for power generation,
pollution control, and waste disposal is adopted as soon as possible to avoid
criticism and supply disruption.
4. Price volatility: Resources especially oil have seen sharp fluctuations in price.
There have been three major oil price crashes starting 1985–1986 when OPEC
decided to increase supply. In 2008–2009 the oil prices went down suddenly
after global financial catastrophe, went up again till 2015, and then fell sharply
between June 2014 (USD 115 per barrel) and November 2015 (USD 45 per
3 A third route, the Artic, is now opening up as ice has melted faster than predicted due to global
warming impacts.
1 Energy Security and Sustainability: An Overview
Current global scenario for access to affordable and assured energy supplies will
revolve around the following issues:
1. International security: Geopolitical experiences (Fig. 1.11a, b) indicate that
wars, terrorism, internal conflicts, cyberattacks, embargoes, and so on adversely
impact the production and transportation of resources. Therefore, stability of
supplier nation/s is of utmost significance. In addition, stability of the region is
crucial as well since almost two-thirds of oil supply are done through maritime
routes, especially Strait of Hormuz and Strait of Malacca.
3 Any disruption in
Middle East or maritime routes due to conflicts and embargo will severely
impact both supplier and recipient. Not only oil but the supply of gas through
pipelines is highly vulnerable. Russia supplies more than 25% requirement
of gas to Europe via pipeline, most of it passing through Ukraine. In 2009,
discord between Ukraine and Russia shut down gas supplies to Europe for
two weeks (The Economist Weekly, April 5, 2014). Similarly, the threats of
cyberattacks to the grid systems in the event of terrorist attack or full-scale
war causing massive disruptions cannot be ruled out. Besides, advancement of
digital transformation poses a challenge to the stakeholders and governments. In
2003, for example, a US blackout caused by a software bug cut energy supply
to 50 million people. In 2010, a virus damaged centrifuges at Iran’s Natanz
nuclear fuel enrichment plant. A virus attack on Saudi Aramco’s network in 2012
disabled 30,000 computers, erased hard drives, and replaced critical company
data. In 2014, a nuclear plant operator’s computer system was hacked in South
Korea (Reference-Energy Security 2016).
2. Diversification and self-sufficiency: The country should have a basket of
resources/supplier groups to choose from so that there is no over dependence
on one resource. In the event of single or limited alternatives, one should at least
have diversity of suppliers to import energy from.
3. Infrastructure resilience and technology upgradation: Coal, oil, and nuclear
resources have been in use for more than a century and may remain in use for
another 50 years if not more. Infrastructures built in the past need constant maintenance and upgradation for primarily two purposes. One is to avoid accidents
and shutdown, and second is efficiency. Producer nation must ensure that the
infrastructure is resilient and mining/extraction technology is upgraded from
time to time. Users must ensure that newer technology for power generation,
pollution control, and waste disposal is adopted as soon as possible to avoid
criticism and supply disruption.
4. Price volatility: Resources especially oil have seen sharp fluctuations in price.
There have been three major oil price crashes starting 1985–1986 when OPEC
decided to increase supply. In 2008–2009 the oil prices went down suddenly
after global financial catastrophe, went up again till 2015, and then fell sharply
between June 2014 (USD 115 per barrel) and November 2015 (USD 45 per
3 A third route, the Artic, is now opening up as ice has melted faster than predicted due to global
warming impacts.