Energy is a major driving force of global economic progress, and directly affects the prosperity of billions of people. There are many aspects to energy security, but it has not yet acquired a clear definition. This is a task for the future. The disparity between energy producers and consumers is becoming more evident because they have a different understanding of energy security. Considering the urgency of this problem, Russia made it a priority subject for its G8 presidency this year. Up to this day, many have understood energy security as national energy self-sufficiency. This approach is increasing competition for natural resources, and resulting in numerous conflicts. Meanwhile, many threats to energy security have long become global, and should have compelled the sides to elaborate a concept of world energy security.
In recent years, the global demand for energy resources has been growing faster than their supply. Most estimates predict that the former will continue going up due to booming economies of the developing nations, and the requirements of industrialized countries, which are also increasing, but at a much slower pace. The International Energy Agency (IEA) predicts that by the year 2030 the world's aggregate demand for energy resources will grow by more than 50%. In the same estimates, by 2025 the world's demand for oil may increase to 35 million barrels per day (or by 42%), and of gas, to 1.7 trillion cubic meters a year (or by 60%).
In the meantime, the supply of energy is going down. This is due to substantial industrial growth, and the use of more sophisticated and expensive technologies for the production of more difficult-of-access energy resources.
In the last few years this supply-and-demand disparity has been generating skyrocketing prices on hydrocarbons. These unstable prices pose a threat to the global economy in general, and to each individual country in particular.
In the last two decades of the past century scientific and technical achievements in exploration and drilling made up for the deteriorating mining, geological, regional, and other conditions; a fast growth in oil production ensured a steady decline in prices. But in the 21st century the growing general and per capita demand for motor fuels has not been accompanied by adequate progress in oil production. This factor and political tensions in major oil-producing areas are making it impossible to secure the demand at the prices matching the costs of production.
Rapidly growing oil prices are threatening to slow down the development rates of industrialized economies, and trigger off financial upheavals in oil-dependent developing economies.
Lack of certainty and a big gap in forecasts of future oil prices are making the situation worse, because a long-term forecast of oil prices is a major element in decision-making on investment in numerous energy projects with a lengthy implementation cycle and a very slow capital turnover.
In addition, regional energy disproportions are increasing. More and more countries and major regions are becoming energy insufficient. In 1990s they produced 87% of the world GDP, whereas in the beginning of this century, the relevant figure has risen to 90%. The fastest developing countries (China and India, among others) are becoming more and more dependent on energy imports. For the time being, they are unable to guarantee the latter's stability. At the same time, the production of hydrocarbons, the number one energy component, is being increasingly concentrated in the regions of the highest social and political instability.
Energy poverty is also exacerbating. In the OPEC estimate, at present it affects about two billion people, and is becoming a most urgent problem. Moreover, ecological problems, terrorism, climate changes, and dwindling resources are making energy security even more fragile.
It is becoming obvious that it is necessary to create a global energy system, which would reduce to the minimum the growth of these threats. The goal of ensuring global energy security calls for a well-orchestrated effort of the entire international community. It should elaborate and consistently carry out a common strategy in energy policy in order to repel these threats.
Thrifty and ecologically safe use of energy may become one of the directions of such strategy. The adopted measures on rationalizing energy consumption brought about a 14% decline in the OECD net oil imports, and the amount of oil required for the production of a GDP dollar decreased by half over 30 years (from 1973 to 2002).
It is also necessary to step up the supply of commercially effective energy resources. The world has enough fuel and energy resources for the foreseeable future. Their shortage is not the biggest problem. The number one task is to jointly create the conditions for making use of this potential.
It is vital to increase investment in energy supply. In the IEA estimate, an effective and stable system of global energy supply may require $17 billion in global investment in 2004-2030.
Investment should be channeled into the effort to expand the range of hydrocarbon resources; into their production; the construction of new, and modernization of existing infrastructure for their transportation and storage; the development of effective technologies, and broader use of renewable and alternative energy carriers; the development of safe nuclear energy generation, to name but a few. In order to enhance the stability of the energy supply system, defuse tension in energy supply, and counter the growth of regional energy disproportions, it is necessary to diversify types of energy. This strategy could have several directions:
1. Expansion of natural gas production. Ecological factors and technological progress have already reduced the costs involved in the construction of gas pipelines, and have led to the birth of liquefied gas, thereby enhancing the share of natural gas. Further expansion of this market depends primarily on improvements in the production and transportation of natural gas, and the development of regional and (or) bilateral cooperation, which will make it possible to reduce uncertainty and risks involved in the implementation of long-term capital-intensive projects.
2. Support for environmentally safe coal-burning technologies, which may play a major role in ensuring a clean environment in the future. Up to this day such technologies cannot compete with those applied to other types of fuel.
3. Accelerated development of renewable energy sources and distributed energy. Development of hydropower industry opens up enormous opportunities for diversification. Apart from environmental benefits, hydropower industry offers a very flexible method of energy generation, which provides for timely response to changes in stress load and demand. At the same time, renewable energy generation sources, such as the wind and the sun, or mini hydropower stations can sometimes be the cheapest way of providing electricity for rural communities.
4. Full-scale development of safe nuclear power industry. It is crucial for long-term and environmentally acceptable diversification of energy supply. Apart from consolidating national energy supply systems, it will substantially increase energy supply to the world market, and will make its structure more flexible. The experience of some European Union countries, Japan and Korea bears out that nuclear power stations reduce dependence on natural resources.
5. Replacement of oil motor fuels with other energy carriers.
6. In the long term, the development of effective hydrogen and thermonuclear production technologies can increase energy supply considerably, make it more stable, and safer environmentally.
Striving to achieve global energy security, the world community should develop the infrastructure of the global energy market. Formation of the global energy space with uniform rules should be the main goal of energy market development.
A tangible proportion of energy resources is already supplied via international borders. Its share is expected to increase. Development of global energy infrastructure implies stage-by-stage formation of country-to-country, continental, and transcontinental associations, which rely on uniform technological standards and rules of management. Countries should continuously support the development of international trade in energy resources, and encourage investment in the energy sector by creating favorable technical, ecological, political, and legal environment for international delivery of energy resources to consumers.
Concern over energy security should result in the elaboration of well-balanced common approaches to the drafting of a global program. This difficult process calls for dialogue and mutual transparency. But the global character of threats to energy security is making ineffective the attempts to remove them by national effort. At present, Russia occupies the leading positions in the world energy production, as it has one of the world's greatest fuel-and-energy potentials. This allows it to assume certain commitments in ensuring global energy security. As G8 president, Russia interprets energy security as not simply consumer guarantees, but a package of interrelated interests, which ensures stable cooperation between the producers and the consumers.
Russian President Vladimir Putin said that Russia advocates resolution of energy problems by a concerted effort of the entire world community. These problems include the need to overcome the supply-and-demand imbalance, assume common commitments on sharing profits and risks in the energy sector, and build a global energy structure, which would rule out the emergence of conflicts. Global energy security should rest on the principles of long-term, reliable, environmentally safe supply of energy at reasonable prices, Putin believes.
The President said that at their July summit in St. Petersburg, the G8 countries adopted a common approach to ensuring global energy security. "Our common strategy is based on the shared understanding that mankind has a common energy future, a future for which we all bear collective responsibility," he emphasized.
