Optimised energy governance is a juggling act between three key dimensions — security, sustainability and equity. This “trilemma” helps inform the way we think about the world’s energy mix, with the relative importance of each dependent on the lens an individual — or government — is looking through.
In particular, how we look at and evaluate energy security — the uninterrupted access to affordable energy — is changing rapidly. Historically, it has been tied to the geopolitics of any given region, in addition to the supply of oil and gas. Today however, a broader and more complex spectrum of elements are converging to both stabilise and threaten energy security.
The availability of energy sources, when considering both fossil fuels and renewables, is increasing. Today, there are more sources of energy in more countries. Shale oil is now available in abundance in the US, and an increase in production over the past decade has contributed to market fluctuations and instability.
Conversely, we have seen the growing availability of renewables in countries that can draw on large supplies of wind and solar energy, like Morocco and Costa Rica. Today, this strong growth in renewables is providing governments with avenues to diversify the energy mix, improving energy security by reducing the physical reliance on and price exposure to only a few sources and countries.
For traditionally resource-rich countries that have relied heavily on energy exports, the reduction in revenue — and profit — is creating significant challenges. While fossil fuel subsidies can be reduced or eliminated — something we have already seen here in the UAE — falling revenue from oil and gas sales is significantly reducing investments in the wider economy in many of these markets, impacting both the social system and the sustainability of the economy itself.
This shift has significant structural impacts on both the workforce and industrial infrastructure; pivoting for the future is a vital part of energy security.
Some countries have already started to do so. The UAE, to use just one example, is developing and deploying renewable (the Mohammad Bin Rashid Al Maktoum Solar Park) and nuclear (the Barakah power plant) energy programmes are at a breakneck pace, diversifying energy sources, reducing greenhouse gas emissions, and improving system resilience in the process. It is a bold action that should pay off in the long run.
Other vulnerabilities in the energy security equation also remain quite pervasive, centred chiefly around the transmission and distribution of energy. For instance, the threats of terrorism — both physical and cyber — are present across the whole energy value chain.
Governments are also grappling with the issue of demand management — a concept that has significantly changed in the past 20 years, thanks to the digital connectivity that can help reduce peak demand and balance the grid when there are shifts in demand or supply.
But perhaps most critically, responsible short-term energy provision and longer term planning requires a careful balancing act between the three key dimensions of the trilemma. They can be competing or complementary.
In uncertain times — where the news is dominated by political instability, protectionism, tariffs, trade bloc changes and conflict — it is hard not to unconsciously place energy security before sustainability and equity. It is important not to do so.
The successful balancing of these three dimensions requires realistic long term goals-based collaboration between the whole energy ecosystem — policymakers, investors, producers, the market — and a faith that the technologies of tomorrow will provide questions that cannot be answered today. If they could — everyone would be doing it the same way.
Which is why, in September 2019, the world’s energy leadership will gather in Abu Dhabi for the 24th World Energy Congress, to discuss a clear framework for optimised energy governance, and solutions for these complex issues.
Matar Al Neyadi is Undersecretary at the UAE Ministry of Energy and Industry and Chairman of the UAE Organising Committee for the 24th World Energy Congress.