Energy security: exports and hydropower keep Norway on top of rankings
Norway has retained the top spot in this year’s ranking in the Annual International Index of Energy Security Risk, just published by the U.S. Chamber of Commerce’s Institute for 21st Century Energy. The United States has jumped two spots to be fourth among the world’s top 25 largest energy users. Ukraine, on the other hand, is bottom of the ranking as the “least energy secure nation.”
The findings reflect energy diversification, and a lack of reliance on imports that is essential for energy security, according to these rankings. The U.S. Chamber of Commerce suggests it holds a cautionary tale for U.S. policymakers.
Its 2016 update to its International Energy Security Index offers an interactive tool that ranks and profiles the top 75 energy consuming countries.
Norway retains the top spot in this year’s Index, a position it has held since 2006 which stems from its ability to export coal, oil and natural gas and utilize hydropower, says the report. It is followed by Mexico and New Zealand in the rankings, both nations that don’t have to rely on imports for most of their energy. Mexico’s advantages, however, are shrinking, as oil production declines, says the report.
The Ukraine is ranked last “due to its need to import most of its energy and its geopolitical instability, which leave it reliant on Russia,” it says.
Almost every nation saw a decline in energy security risk in the Index, “which is largely driven by less oil price volatility,” says the U.S. Chamber. The Index utilizes data from 2014—the most recent year available for comparative purposes.
When it comes to the United States, the data clarifies what has been apparent for the last several years, it says – that “U.S. energy security is improving as a result of America’s shale energy revolution.”
“In this era of an increasingly extreme ‘keep it in the ground’ movement, it is important to recognize that the shale revolution has made America almost 25 per cent more secure than it was in 1980, reducing our risks across a variety of metrics,” said Karen Harbert, president and CEO of the U.S. Chamber’s Institute for 21st Century Energy.”
“It’s vitally important” she added, “that we don’t squander our energy advantage through bad policy choices.”
A close look at the metrics contained in the Index reveals that European nations are facing some of the highest electricity prices in the world, thanks to more aggressive regulatory structures, mandates, and subsidies, says the U.S. Chamber. It suggests this provides a “cautionary tale’ for U.S. policymakers.
“Seven of the bottom ten countries among large users in our electricity risk Index metrics are in Western Europe, which is making industries like manufacturing and chemicals an endangered species there,” said Stephen Eule, vice president at the Energy Institute.
“We’re seeing large scale plant closures in Germany, the U.K, and other nations, some of which are resulting in new plants in the U.S., where energy costs are lower. Improved energy security really does lead to improved economic opportunities” he added.
But the U.S Chamber neglects to mention that Europe’s failure to develop its shale resources is not typical of the story worldwide. This was made clear in the long term energy outlook published by BP plc (LON:BP) earlier this year.
It forecasts that U.S. shale gas output will rise over the next two decades to a plateau of about 80m b/d — almost double current levels, and that there will be significant shale development around the world — particularly in Asia. Overall, BP’s projection is that global shale gas production could rise to more than 110bn cubic feet a day or almost a quarter of global gas supply.
As rapid advances in technology open up new areas, they will also change the energy industry, such rankings will also inevitably be affected – something investors will have to take into account.
Dina Medland is an independent writer, editor and commentator with a strong focus on issues around corporate governance, ethics, the workings of the boardroom and sustainable business. She is on the team of contributors to @ForbesEurope and is an ex-Financial Times staff member who has been a regular contributor in recent years. Further details about her background and a portfolio of work – including her commercially sponsored blog ‘Board Talk’ are available on her website http://www.dinamedland.com