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Security of Energy Considering its Uncertainty, Risk and Economic Implications

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The complexities of energy security

Europe's demand for energy is increasing while its domestic supply is decreasing. EU-funded scientists have been able to offer important policy recommendations based on a framework that they developed for assessing energy insecurity.

Energy

Securing a reliable energy supply to meet the increasing demand of industrialised European economies is becoming a challenging task. At the same time, energy security has gained priority in policy making. Scientists initiated the EU-funded project 'Security of energy considering its uncertainty, risk and economic implications' (SECURE) to develop a framework for measuring the EU's energy security. SECURE partners extended current research and policy studies in the field of energy security in several important ways. Estimates of 'willingness to pay' were used to determine to what degree households and industries are willing to invest to mitigate uncertainties in supply. Risk modelling linked medium-term economic models to indicators of energy security and social welfare. SECURE also linked long-term policy scenarios with energy security simulations. Finally, researchers considered sector-specific issues for all major energy technologies (oil, natural gas, nuclear, renewable sources and electricity) and incorporated scenarios of accidents or terrorist events. Scientists qualitatively and quantitatively studied geopolitical issues, price formation and the design of energy markets inside and outside the EU. Assessment tools that include energy indicators were used to consider costs, benefits and risks of various policy choices. Based on this, they were able to summarise major insights and develop informed policy recommendations. Overall, strong energy policies must address security, sustainability and competitiveness within the context of stable international relations. Climate-related policies for low-carbon energy require better support and regulatory frameworks through incentives and integration with European electricity systems. Given that such coordination may not occur solely based on supply and demand, governments may be called upon to step up to the plate. The most efficient way for the EU to realise cost-effective, low-carbon energy usage is to develop an EU-wide emissions trading policy or carbon tax. In order to foster competition and development, EU regulatory policies should enhance interconnections between the electricity and gas infrastructures. SECURE project members delivered a comprehensive methodological framework including long-term scenarios to assess security of supply. Important policy recommendations developed by SECURE project are expected to be invaluable in designing the EU's strategies for enhanced energy security.

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4 December 2020