Oil Security Short- and Long-Term Policies

Increasing oil security represents one of the most important policy actions, especially within IEA countries. Short and long term mechanisms could help such goal. On the short term side, revision of IEA emergency response oil stock system has been discussed. The attention is mainly focused on three issues: the high costs of stock management for private industries, the possible use of strategic reserves to smooth price when no high supply disruption has taken, the extension of IEA emergency system to non-OECD countries. The main actions specifically proposed by the European Commission are: an harmonisation of national storage systems, with the institution of public and private agency, a wider co-ordinated use of security stocks, and an increase in the physical amount of oil stocks. Long term measures for enhancing oil supply security can be seen on the demand-side and the supply-side. Main demand-side policies could be the following: energy saving and efficiency, investments in research and technology, and reduction of oil price inelasticity especially for transport sector. Main supply-side policies can be summarized into co-operation and institutional promotion for supply diversification of suppliers/routes. Main factors that could affect described policies could be the liberalization of international trade even in the energy sector and the increasing role of oil demand from developing countries.Oil, Security, Energy

Social Costs of Energy Disruptions

The costs of energy supply disruptions for industrialised economies go well beyond the economic measures of national accounts. According to different kinds of risks, physical shortages or price shocks, there are several categories of negative effects. Oil disruptions have both a direct and an indirect impact, (at global and local levels) and have a short- and a medium-term horizon. The economic effects of electricity shortages are also direct and indirect, but the temporal lag is shorter than for oil disruptions. In this paper, we summarise the different ways an economy is affected by an oil shock or a power black-out. Oil crises in the past produced high inflation rates, trade and payments imbalances, high unemployment, and weak business and consumer confidence. The social costs of electricity shortages have immediate negative results, and relatively small, indirect effects – depending on the extension of the disruption, the duration, the availability of advance warning and information. A specific assessment of the social costs of an electricity shortage remains a research task for the future.Social costs, Energy disruption

Security of Energy Supply: Comparing Scenarios From a European Perspective

This paper compares different results from a set of energy scenarios produced by international energy experts, in order to analyze projections on increasing European external energy dependence and vulnerability. Comparison among different scenarios constitutes the basis of a critical review of existing energy security policies, suggesting alternative or complementary future actions. According to the analysis, the main risks and negative impacts in the long term could be the increasing risk of collusion among exporters due to growing dependence of industrialized countries and insufficient diversification; and a risk of demand/supply imbalance, with consequent instability for exporting regions due to insufficient demand, and lack of infrastructures due to insufficient supply. Cooperation with exporting countries enhancing investments in production capacity, and with developing countries in order to reinforce negotiation capacity of energy importing countries seem to be the most effective policies at international level.Energy security, Energy scenarios, Oil and natural gas markets

Can We Rely on Open-Source Energy System Optimization Models? The TEMOA-Italy Case Study

Energy system models have become crucial to assess the effectiveness of possible energy policies in pursuing the declared environmental objectives. Among bottom-up models, the tools most widely used by researchers and institutions to perform scenario analyses and policy evaluations rely on commercial software and closed databases, limiting the transparency of the studies. The purpose of this work is to demonstrate that open-source tools, relying on open databases, can be used as a valid alternative to commercial tools, getting equivalent results not only for simple case studies as done so far, but also for complex (national, regional, or multi-regional) reference energy systems. Working on the already available open TEMOA optimization framework, a bottom-up technology-rich model is developed here for the Italian reference energy system on an extended TEMOA version, comparable in detail and complexity to the equivalent TIMES framework. The accuracy of the novel TEMOA-Italy model in a business-as-usual scenario is assessed, showing that the average relative differences with respect to the consolidated TIMES-Italy results are in the order of few percent. The open-source model, available on Github, is now ready for the test and implementation of new optimization paradigms, which was not possible in the TIMES framework

Projection of Post-Pandemic Italian Industrial Production through Vector AutoRegressive Models

Energy system models for the analysis of future scenarios are mainly driven by the set of energy service demands that define the broad outlines of socio-economic development throughout the model time horizon. Here, the long-term effects of the COVID-19 pandemic on the drivers of the industrial production in six energy-intensive subsectors are addressed using Vector AutoRegressive models. The model results are computed either considering or not considering the effects of the pandemic. The comparison to established pre-pandemic trends allows for validating the robustness of the selected model. The anticipated effect of the pandemic to 2040 shows a long-term reduction by 3% to 10%, according to the different subsector, in the industrial energy service demand. When the computed service demands are used as input to the TIMES-Italy model, which shows good capability to reproduce the energy consumption of the industrial sectors in the period 2006–2020, the impact of the pandemic on energy consumption forecasts can be assessed in a business-as-usual scenario. The results show how the long-term effects of the shock caused by the pandemic could lead, by 2040, to a total industrial energy consumption 5% lower than what was foreseen before the pandemic, while the energy mix remains almost unchanged

Market-based Options for Security of Energy Supply

Energy market liberalization and international economic interdependence have affected governments’ ability to react to security of supply challenges. On the other side, whereas in the past security of supply was largely seen as a national responsibility, the frame of reference has increasingly become the EU in which liberation increases security of supply mainly by increasing the number of markets participants and improving the flexibility of energy systems. In this logic, security of supply becomes a risk management strategy with a strong inclination towards cost effectiveness, involving both the supply and the demand side. Security of supply has two major components that interrelate: cost and risk. This paper focus the attention on costs in the attempt to develop a market compatible approach geared towards security of supply.Energy supply, Market-based options

Best Practices and Methodological Guidelines for Conducting Gas Risk Assessments

The EC Regulation concerning measures to safeguard security of gas supply (EC/994/2010) requires member states to make a full assessment of the risks affecting the security of gas supply. According to Article 9, this risk assessment must: (a) use the infrastructure and supply standards (articles 6 and 8); (b) take into account all relevant national and regional circumstances; (c) run various disruption scenarios; (d) identify the interaction and correlation of risks with other Member States. (e) take into account the maximal interconnection capacity of each border entry and exit point. The objective of this report is to provide guidance and advice for performing risk assessments. It will do so by first providing a literature review, and then by proposing a basic structure for undertaking a gas security risk assessment, in accordance with best practices and standard procedures found in risk management.JRC.F.3-Energy securit

Unconventional gas: potential energy market impacts in the European Union

In the interest of effective policymaking, this report seeks to clarify certain controversies and identify key gaps in the evidence-base relating to unconventional gas. The scope of this report is restricted to the economic impact of unconventional gas on energy markets. As such, it principally addresses such issues as the energy mix, energy prices, supplies, consumption, and trade flows. Whilst this study touches on coal bed methane and tight gas, its predominant focus is on shale gas, which the evidence at this time suggests will be the form of unconventional gas with the most growth potential in the short- to medium-term. This report considers the prospects for the indigenous production of shale gas within the EU-27 Member States. It evaluates the available evidence on resource size, extractive technology, resource access and market access. This report also considers the implications for the EU of large-scale unconventional gas production in other parts of the world. This acknowledges the fact that many changes in the dynamics of energy supply can only be understood in the broader global context. It also acknowledges that the EU is a major importer of energy, and that it is therefore heavily affected by developments in global energy markets that are largely out of its control.JRC.F.3-Energy securit