2012 International Index of Energy Security Risk

2012 International Index of Energy Security Risk

It is this notion of America’s increasing vulnerabilities and interdependencies in a global energy market that prompted our effort to take the concepts and methodologies shown in the U.S. Index and apply them on a broader international basis. Our purpose in undertaking this International Index is twofold:

First, an enhanced understanding of energy security in other countries can deepen our insight into that of the U.S. Through the development of these metrics, we can observe not only absolute trends of interest, but to also see relative movement among and across countries. In a global marketplace, both matter.

Second, communicating these energy security risks to an international audience helps the United States as well. Many of the benefits of improved technologies, greater energy efficiency, increased production, or democratic reforms anywhere can create energy security benefits everywhere.

We believe that the International Index breaks new ground in its breadth, depth, geographic coverage, and completeness. This effort helps in our mission to unify policymakers, regulators, business leaders, and the American public behind a common sense energy strategy and build support for meaningful energy action at the local, state, national, and international levels.

We also recognize that this effort to develop an International Index is a first step. As with the U.S. Index, we want to engage in a dialogue with users and energy experts to revise and improve the International Index, so that over time its usefulness will grow. We welcome your comments and suggestions.

Quantifying International Energy Security Risks

The International Index was designed using a comparable architecture to the U.S. Index to measure energy security risks across different countries, but with some significant changes. The data used for the International Index are derived largely from EIA—which uses data from a variety of sources—and the International Energy Agency (IEA). More details on how the International Index was developed can be found in Appendix 1.

The United States has an abundance of reliable and timely energy data that enabled a deep look into the geopolitical, economic, reliability, and environmental aspects of energy security risks. Some of this in-depth data, in both quantity and quality, simply could not be developed globally. Because of these data limitations, it is unavoidable that the International Index measures slightly different things and lacks some of the U.S. Index’s rich detail, but every effort was made to align it as closely as possible with the U.S. Index.

Instead of the U.S. Index’s 37 metrics, the International Index uses 28 metrics covering international energy supplies, fossil fuel imports, energy expenditures, energy use, transportation, power generation, and energy-related carbon dioxide emissions. Because different metrics were selected for the International Index, the input weight of each metric was different compared to the U.S. Index, but overall each metric category was assigned a weight comparable to that assigned to its corresponding metric category in the U.S. Index.

Data limitations also compelled a start date of 1980 instead of 1970. Further, because forecast data are not available at the desired level of detail, the series ends in the most recent year for which data are available (for this initial edition, 2010).

The results for the U.S. and all other countries are reported in reference to a common baseline index that represents the average for Organization for Economic Co-operation and Development (OECD) member countries.2 The OECD average index is calibrated to a 1980 base year figure of 1,000, and represents a high-water mark for energy security risk worldwide.3 The score for each individual country is then set in relation to the 1980 OECD average, and all subsequent years move in relation to that number. Hence, a country’s starting 1980 International Index value will be proportionately higher or lower than the 1980 OECD value of 1,000, and its changes over time will reflect both its absolute changes and those relative to the OECD baseline.

Pegging nations to the OECD average permits us to rank the energy security risks of countries against a developed country average, to track absolute and relative changes in risk up and down over time, and to make risk comparisons among different countries. As a result, the scores calculated for the U.S. as part of the International Index will not be identical to the corresponding scores for the United States in the U.S. Index, though the broader trends are similar.

Using the International Index, we can address many different questions: How does the energy security of the United States compare to that of the OECD as a whole, or to Germany or China? And how does Germany’s energy security compare with China’s? Has U.S. energy security been improving relative to other countries over time, or has it been getting worse? What have been the biggest drivers of rising or falling energy security risks in different countries? What appear to be the best strategies for lowering risks in different countries that have very different resource bases, policies, and economies?

2Although OECD membership has changed over its 50-plus year history, the OECD averages over the entire period from 1980 through 2010 were calculated using the current roster of OECD members. OCED membership today includes: Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, South Korea, Spain, Sweden, Switzerland, Turkey, United Kingdom, and United States. Because OECD is used as the baseline against which other countries are compared, the list of OECD countries needed to remain fixed over time.

3Similarly in the U.S. Index, the 1970-2035 period of analysis is measured by benchmarking the index and all metrics to a 1980 value of 100.