Energy Security as the Most Important Factor in a Country's Energy Mix - Essay Example

Introduction The global appetite for energy is unappeasable. In fact, authorities on energy are saying that the world’s consumption of energy is almost twice as high as the beginning of the 1970’s, and estimates by the International Energy Agency (2007) (www.iea.org/) have it to increase by another third by the year 2020! While our energy consumption never wanes and, instead, steadily increases, the same energy authorities are indicating that we have already reached the peak of our fossil fuel extraction and production. In Europe, Germany – because of its large size (as energy market [Vattenfall, 2008, pp. 4]) and strategic location -- is among the very few countries that can significantly impact the national and regional policies on energy. On this account, there is necessity for the country to come out with sound energy policies and strong energy market design. In this respect, Germany “has continued to reform its electricity and natural gas markets, set a timetable to phase out coal subsidies, is meeting key climate and environmental targets and is bringing energy, efficiency and environment to the top of the world agenda with its presidencies of both the G8 and the EU” (IEA, 2007). To a certain extent, the aforementioned developments that have been initiated and being sustained by Germany are cause for jubilation. But, to another extent, the same developments are cause for concern. And these seemingly contrasting reactions are captured by trepidation about energy security and energy mix. For – as we shall promote and defend in this paper – energy security and energy mix are complementing matters, with the first as the primary – but definitely not the only – consideration for the latter. Energy Security viz. Energy Mix Traditionally, energy security is equated with security of oil supplies. However, to date, the concept of energy security has become difficult to define. For one, an oil producing country defines it differently from an oil-consuming country. Too, there are current shifts in its definitions including, but not limited to, the inclusion at present of the natural gas and LNG supplies, the determination that energy security is responsibility of both consumers and producers, the resolution of the issue of whether it’s about reasonable price or stable price (that is about energy security’s economic dimension), and the politicization of the concept (that necessarily sees energy security as an empty concept and merely self serving), among others (Alhaiji, 2007). The issue of energy security has been a hot item of discussion on account of several considerations. The depletion of oil is nearing as proofs there are about the world’s already getting into the peak of fossil fuel extraction and production. With many countries relying heavily on foreign sources of energy, there is a very probable possibility of conflicts over energy sources. There is also a consideration of energy needs of poorer countries and, particularly, the growing demands from advancing developing nations such as China and India – which becomes urgent if one considers that the western states are actually forming just a small percentage of the world population but they consume far more (energy resources). Further, debate is continuing to determine whether it is economic efficiency or population growth that really drives resource depletion and energy use. Additionally, with the impact of global warming or climate change already being felt more concretely across the globe, the prism of environmental care urges everyone to consider energy security. And, finally, the continued harnessing of renewable and other alternative energy sources is forcing especially the policy thinkers to reconsider their notions of energy security (Shah, 2007). In Europe, the definition of energy security is varied. It may mean security of supplies from the west, or security of demand for Russia being in a unique position to maintain regional supply with its rich reserves of oil, natural gas and coal (World Energy Council, 2007, pp. 20). Energy mix is the source and proportional relationship of all energy sources in a region at any given time. This refers to the use of the fossil fuels – coal, gas and oil -- and the renewable energy sources such as the solar energy, wind, water, geothermal and biomass in addition to uranium or nuclear power (The Coal Association of Canada). Likewise, energy mix is about diversification of energy sources, uses and technologies to meet optimally economic, security of supply and climate policy objectives (EESC, 2006). Across the globe, for the last thirty (30) years of energy mix, oil has been losing sharing while the share of gas has been growing; except in the last few years when its use has resurged because of demands from China, coal has been dipping low as the use of water and uranium for power has been constant. In general terms, fossil fuels – that is, gas, coal and oil – make up eighty-five per cent (85%) of the world’s energy, and renewable energy sources are still minor contributories (Mather, 2006, pp. 1). Energy Mix in Germany According to German energy industry association, Bundesverband der Energie und Wasserwirtschaft (BDEW) (http://www.bdew,de) in Berlin, the breakdown of the country’s power generation in 2007 to produce around five hundred ninety-seven (597) billion kilowatt hours of electricity is as follows: coal accounted for forty-six per cent (46%), of which twenty-four per cent(24%) was domestic brown coal and twenty-two per cent (22%) was mainly imported hard coal; uranium or nuclear power accounted for twenty-two per cent (22%), which is already a drop from the previous year’s twenty-seven per cent (27%) on account of repair outages at several large units across Germany; gas was twelve per cent (12%) – of which wind accounted for three per cent (3%), water seven per cent (7%), biomass four per cent (4%), photovolataic 0.5%, and others six per cent (6%) (see Anon., 2008, Germany’s energy mix). We would like to note that practically different sources are proffering different figures. The fact sheet of energy mix from European Commission (EC, 2007, pp. 2) explains that the diversification of energy mix of Germany is still being topped by oil that neared the average EU level of 38%. Further, the natural gas’ supply has been on the rise and is gradually taking the place of the solid fuels. The use of the nuclear energy in primary energy supply has seen a slight increase in the recent years – although it is still below the EU average of fourteen per cent (14%). And, worth noting it is that the tapping and use of renewable sources have made an impressive increase of one hundred forty-one per cent (141%). However, it is still below the average energy share level by the EU of six per cent (6%). Concerning domestic energy production, Germany is among the largest producer of coal among the European Commission member-nations (BP Statistical Review of the World Energy, 2008). It is also the second largest producer of nuclear energy within the EU. Germany’s domestic production of natural gas is around eleven per cent (11%), placing it behind UK and the Netherlands among the EU countries; and the country’s share of domestically produced renewable energy is ten per cent (10%) (EU, pp. 1). Despite all the high domestic production level, Germany’s import dependence is higher than EU average. Since 1990, the country’s imported energy has increased by as much as thirty per cent (30%). Crude oil notably from Russia and Norway comprises fifty-six per cent (56%) of imported energy, and natural gas (also from the two countries and the Netherlands) consists for almost a third of Germany’s imports. Hard coal for Germany is being supplied by Poland, South Africa, and Russia – among others (EU, pp. 2). Concerning electricity generation, it is said to be gradually growing in recent years. Coal is still the most important fuel, accounting for nearly half of generated electricity. While already scheduled to be phased out, the share of nuclear energy is also significant (27%). Significantly increasing are the shares of natural gas and renewable energy. Renewable energy generation (including hydro) has almost tripled since 1990. With over 18 GW installed capacity by the end of 2005, Germany has the largest installed wind capacity across the globe (see http://www.ewea.org/). The thermal power plants in Germany have a net efficiency of thirty-nine per cent (39%) -- the highest in Europe (EU). The final energy consumption in Germany is largely by the households. Industry and transport are similarly significant energy consumers, but they are below the average EU share of total consumption. The share of industry and commerce remarkably declined over the period 1990-2004 accounted for by efficiency gains and closure of older plants (after the reunification) (EU). We can hold – as a compendium for this section – that the energy mix of Germany is practically diversified. The country uses oil, coal, uranium, gas, and renewable energies. And, while Germany domestically produces significant chunk of its own energy use, the country is still import dependent from such countries as Russia, Norway, Poland, South Africa, etc. Which factor (of energy mix) is important in Germany? In looking forward to the future of the energy mix in Germany, one needs to understand a good number of domestic and international political developments since the 1980’s. For, without doubt, the evolution of the country’s energy policy have been shaped by the “EU directives mandating aggressive renewable energy deployment, pressure from domestic environmental advocates and legislators, the phase-out of nuclear power, and commitments to international treaties such as the Kyoto Protocol” (Runci, 2005). Seen from this point of view, it becomes more easily understood that over the past two decades, the approach of the Germans towards renewable energy has seen an obvious shift from focus on publicly-financed research and development (R&D) to active promotion of application and implementation of new technologies in the market place (Runci). Subsequently, in Germany, there has been a growth in the use of renewably-generated electricity. By and large, the Germans’ renewable energy policy has focused on wind, solar (both thermal and electric) and biomass (see Williams, 2005 for further elucidation). So far, by any measure, Germany seems to be succeeding to meet its ambitious environmentally-conscious and –inspired energy plans. However, it is still uncertain whether the German government can sustain its energy policies; for, already in 2005, the government has already “reduced compensation rates to renewable energy providers under pressure from the domestic gas and coal industries” (Runci). How could Germany’s energy mix be improved? Coming off from the previous section, improvement of Germany’s energy mix takes the form of working with firm resolve to ultimately change its sources of energy from fossil and nuclear fuels to one hundred per cent (100%) from renewable sources. In fact, the goal -- according to the German government itself -- is technically and economically feasible; and transitions have been in place to prompt the swing. Among the long-term national policies that have been in place is the decision of the German government that nuclear is dead-end and is on the way to be phased-out. In lieu of nuclear power, the country’s policy makers have come to introduce very aggressive support for renewable energy by offering equipment subsidies and long-term loans in addition to their passage of laws that are to the advantage of renewable energy operators. For one, they have the “feed-in law,” passed in 1991, requiring utilities to hook up to and purchase energy from all renewable energy providers in their areas and to pay at least ninety per cent (90%) of the retail price for the electricity purchased from wind and solar power producers (Svet, 2007). In the following year (2000), another law was passed “detailing production in incentive payments for each of the renewable energy technologies, spread the cost burden among all German utilities in proportion to the total electricity sales by each utility, and allowed for payments to the renewable energy developers to continue for twenty (20) years plus the year of commissioning” (Williams). Actually, these legal frameworks have been supported by the concrete achievements so far by the German government on their energy plans. And this improvement in Germany’s energy mix is accounted for vital factors, such as: the current breed of politicians who are to a certain degree exhibiting commendable enlightenment along this area; the leadership being exercise by the federal government; the citizens’ involvement; government policies-backed scientific analysis; government-policies that are energy-efficiency; and the German government’s ethical commitment to the future of the world, among others (Williams). As it would appear, the technological side of the questions of energy security and energy mix are determined principally by the legal and political factors. And understandably this is so. For the pushing for the increased share of renewable energy in the country’s energy mix is constantly challenged – equally significantly -- by numerous factors, which – to name a few – are: “resistance to renewables’ incentives from domestic industry lobbies and community advocacy groups, tensions within the coalition government over subsidies for renewable energy, availability of cheap energy imports with EU energy integration, and the gradual saturation of the German renewable energy market” (Rusci). And this necessarily furthers the work by the German government towards increased promotion and use of renewable energy. Conclusion Simplistically, as regards the energy security and energy mix of Germany, given the initiatives and the commitments that have been made by the German government, there are at least four options to pursue: the first is to reduce the need of power plan capacity through energy savings. The second is the promotion and expansion of the renewable energies. The third is to invest in gas-based power plants, and the fourth is to invest in research and development for clean coal technologies (Anon., 2007, Clean Coal Technologies in Germany). While it is not obviously the unanimously supported option, especially seen from the context of the concern to close the anticipated gap in energy capacity for the next forty (40) to fifty (50) years, the German government has put its stake on pursuing the path of renewable energy as a way to ensure its energy security – which, to an extreme case, is predominantly, if not singly, determining the country’s energy mix. At least, increasing numbers of people in Germany are currently showing us the future as they are living in flaccid abodes that store heat or are plugged to geothermal energy source as a heating source and produce electricity with their own solar panels. References: Alhaiji, A., 2007. What is energy security? Definitions and concepts. Middle East Economic Survey 50 (45). 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