U.S. CHAMBER OF COMMERCE

2012 International Index of Energy Security Risk

2012 International Index of Energy Security Risk

China has displayed the widest range of scores relative to the OECD average, from 1,497 in 1980 to just 712 in 1999, a level just below the OECD average, a tremendous improvement. However, over the last decade—a period of tremendous economic growth—a large portion of these gains was erased, and by 2010, the country’s overall energy security risk score was 1,100. China’s domestic energy production has not been able to keep pace with demand, and it imports a growing portion of the fuels it uses. The push for greater energy efficiency and stable and diverse energy supplies have taken on strategic importance, and the country is investing in energy projects and pursuing strategic alliances with energy companies overseas.

In 2010, Denmark was the fifth most energy secure country in the large energy user group. Its score of 942 was 5% below the OECD average. This is the first time Denmark has bested the OECD average. Denmark is a net exporter of oil and natural gas, but must import all of its coal. The country is one of the most energy efficient in the world, and its energy intensity in 2010 was the best among the group. It energy costs, however, are comparatively high.

France’s energy security score for 2010 was somewhat (4%) higher than the OECD average. This represents a big improvement: In 1980, France’s score was 24% higher than the OECD average. France displays a relatively high degree of energy efficiency that helps moderate a variety of risks, and its strategic decision to make nuclear power a substantial part of its energy mix has helped France lower its fossil fuel imports.

In the decade following reunification, Germany’s energy security risk scores were roughly 10% higher than the OECD. Since about 2000, however, its scores, while worsening overall, have tended to tracked fairly closely with the OECD as a whole. The German economy is among the most efficient in the group. Energy costs are relatively very high, and Germany’s electricity prices have grown at a much faster rate than the OECD average.

India’s energy security risks, though rising, were better than the OECD average from 1980 to the mid-1990s, but since then its risks have grown both absolutely and relative to the OECD. India is the world’s fourth largest energy consumer, and it relies on imports to meet much of its demand. Hundreds of millions of Indians lack access to electricity. Coal is the dominant fuel in the electricity sector, and since 1980, India has added about 90 gigawatts of thermal generating capacity, most of which was coal-fired. Like many emerging economies, India’s economy is relatively inefficient in its energy use.

Indonesia had for many years enjoyed energy security risk scores much lower than the OECD average, but since the mid-2000s, its scores have begun to edge higher than the OECD. In 2010, its risk score exceeded its 1980 score by roughly 40%, a level of increase matched by only two other countries in the large energy user group—Thailand and Turkey. The country was for many years a large exporter of oil, but because of a combination of increasing demand and declining production, in 2004 it became a net importer. Moreover, the amount of energy used to produce a unit of GDP in Indonesia is higher now than it was in 1980.

Italy’s overall energy security risk has consistently been quite a bit higher than the OECD average, ranging from 31% to 17% above. At more than 1,100, its average risk score is one of the highest among developed countries. Like many Western European countries, Italy relies largely on imports to fuel its economy. Overall, Italy’s import risks have not grown relative to the OECD baseline. Italy uses energy more efficiently than is the norm for the OECD countries.

Japan has one of the highest energy security risk scores of any of the developed countries in the large energy users group, averaging about a third higher than the OECD average over the last 30 years. It has the second largest average risk score over the 1980 to 2010 period. With no domestic energy resources of any consequence, Japan imports virtually all of its fuels. Despite its many challenges, Japan has managed to close the gap with the OECD average over the years. While its score was 39% higher in 1980s, Japan’s energy security risk score was just 13% above the OECD baseline in 2010. The policy response to move away from nuclear power after the incident at the Fukushima Daiichi nuclear station, however, will pose significant energy security challenges going forward.