The concept of energy security was born out of the oil crisis of the 1970s which not only precipitated an awareness of the idea of energy security but also spurred the creation of the International Energy Agency (IEA) whose sole purpose is to promote the stability of the global energy supply. The definition of energy security has evolved over time but has generally come to encompass the basic idea of a relatively cheap and stable supply of energy for the foreseeable future. A more complex definition is provided by the Intergovernmental Panel of Climate Change (IPCC):
Essentially a society should be able to carry on despite short term shocks to the supply of energy. To ensure this stability and energy security there are some fundamental issues that need to be addressed:
These fundamentals need to be addressed to ensure the long-term stability of energy markets and supply but also in order to cope with short-term shocks such as terrorist attacks, grid failures, extreme weather conditions and other such events.
Diversification is essential to energy security, the most common energy sources such as crude oil, coal and natural gas are all commodities and are therefore subject to market forces which can result in interruptions to supply or exorbitant price rises. In addition, commodities such as oil are more susceptible to short term shocks resulting from geopolitical events such as conflicts and terrorist attacks. Diversification allows for a society to absorb a shock in one energy input such as coal by increasing the use of another such as nuclear or solar for example. The energy mix of a state is made up of the various sources which supply the state with its energy needs and so a diverse energy mix leads to a more energy secure state.
Daniel Yergin maintains that diversification has to be coupled with "resilience" to mitigate the effects of shocks. Resilience means supply from a number of sources and a depth from those sources, for example a strategic reserve or multiple gas pipelines as opposed to relying on a single pipeline into a region.
Investment is essential to keep a steady supply of energy flowing. This relates to the infrastructure that the energy supply relies on, pipelines, transmission lines, hydroelectric dams, ports etc. But it is also important with regards to the development of existing resources such as fossil fuels which continually need to be discovered and extracted to keep the supply stable and prices low.
Investment also plays a key role in the development of new technologies which can make the production of energy more efficient, this can be new extraction techniques such as hydraulic fracturing or "fracking", advanced nuclear reactor technology, more efficient and cheaper photovoltaic cells and other technologies.
Investment in new research and into the development of new technologies has a net social benefit and can improve the energy security of society. New technologies can lower the cost of energy sources of all kinds, and minimize the impact of market fluctuations especially with regards to commodity driven energy sources such as fossil fuels. New technologies can also reduce the impact that the development of energy sources has on the environment such as better air scrubbers which help to prevent and reduce air pollution.
The flow and dissemination of information is also important; perfect information can lead to better decision making and in the context of global energy markets and geopolitical crisis, information is crucial to prevent the deepening of a shock to the market. There is a long list of entities in the realm of energy security; consumers, providers, agencies, regulatory bodies, governments, international non-governmental organizations (INGO's) and others. The flow of information and interdependence between these entities is crucial to ensure the global supply of energy is stable. Information also helps when trying to prevent and correct externalities which can damage the efficiency of the market and cause a market failure.
Various entities can improve the flow of information through the dissemination of statistical reports, future plans for projects and goals and making regulation clear and easy to understand.
Energy security is a very board field of study and is only expanding as the forces of development and globalization progress, for more information here are some sources: