Accounting for hidden energy dependency: The impact of

energy embodied in traded goods on cross-country energy

security assessments.

CRISTIAN ESGUERRA TORRES

MAYERLIS MOMEZ CORREA.
SERGIO HERRERA CALDERN
ERICK ZABALETA
 Introduction
Energy security ranks high on the policy agenda of
many countries. Governments use the notion of
energy security as a rationale for justifying massive
intervention into energy markets.
Accordingly, to provide policy guidance, a large and
growing body of literature proposes metrics to
measure security of (primary)energy supply.
They measure either dependency levels on primary
energy imports, primary energy carriers and
suppliers or levels of vulnerability, i.e. how much
the economy is exposed to events of supply
disruptions essentially from an economic
perspective.
Methods:
Multi-regional inputeoutput model:
Metodos.

1) Multi-regional inputeoutput model

2)Energy security indicators
= energy intensity

= net import dependency

= primary energy carrier dependency

3) Production-oriented versus
consumption-oriented energy accounting
EI_Eer = energy intensity of GDP

NID_EEr = net-import dependency

PECD_Eer = primary energy carrier dependency

 Data
The analysis is based on data taken from the WIOD (World Input-Output
Database). It consists of time series of detailed national and world input-
output tables as well as of socio-economic and environmental accounts for
35 production sectors in 41 countries for the years 1995e2009, whereby
the environmental accounts include data on gross energy use by sector
and 26 energy commodities. Considering regional aggregation, the data set
contains each of the EU27 countries as separate regions.
 Results and discussion
HETEROGENEITY BETWEEN COUNTRIES
Changes in
energy
intensity
(ratio_EIr) due
to inclusion of
primary energy
embodied in
traded goods.
 Results and discussion
HETEROGENEITY BETWEEN COUNTRIES
Changes in
net-import
dependency
(ratio_NIDr)
due to
inclusion of
primary
energy
embodied in
traded goods.
 Results and discussion
HETEROGENEITY BETWEEN COUNTRIES
Changes in
primary energy
carrier
dependency
(ratio_PECDr)
due to
inclusion of
primary energy
embodied in
traded goods.
Country-specific changes in the values of EI (energy intensity), NID (net-
import dependency) and PECD (primary energy carrier dependency) for
each year. Key: 1 e negative changes for all years considered; 2 e negative
changes for at least half of the years considered; 3 e negative changes for
less than half of the years considered; 4 e positive changes for all years
considered.
 Results and discussion
Summary of 2009 energy consumption for Germany, the Netherlands, and
France.
 Results and discussion
Production-oriented versus consumption-oriented country rankings
Differences
between
production-
oriented and
consumption
oriented country
rankings for
energy intensity,
net-import
dependency and
primary energy
carrier
dependency.
 Results and discussion

Production- and consumption-oriented values for energy intensity, net-

import dependency and primary energy carrier dependency for the years
1995 and 2009.
 Discussion
In particular, the switchover in energy
accounting conducted in this paper is a
complete switchover which is based on the
implicit assumption that direct and indirect
energy consumption are equally important for
energy security e i.e. that disruption costs are
completely passed through along the supply
chain of goods and services. However, while
ignoring indirect energy consumption would be
a mistake, equating it with direct energy
consumption would be equally wrong.
 Conclusions and policy implications
This paper argues that perceptions on regional
energy security performance coming out of these
energy security assessments might be inaccurate
because indirect primary energy consumption e i.e.
primary energy embodied in traded goods e is
generally neglected. Since Europe is amajor trading
center in terms of embodied energy, this is of
particular relevance for the member countries of
the European Union.
Accordingly, this paper has illustrated the
implications of including indirect energy
consumption into commonly conducted energy
security assessments.
This is also of particular relevance for the design of
policies addressing energy security inasmuch as it
casts doubts on whether policies that are
commonly considered for improving energy
security, e.g. increasing the use of renewables or
increasing energy efficiency, are equally effective if
indirect energy consumption istaken into account.