New challenges for energy security in a world of transition

Under the auspices of the Munich Security Conference (MSC) and the Norwegian ONS Foundation and as part of the MSC energy security series, around 70 key leaders from the energy industry, politics and the security community gathered in Stavanger, Norway, for a lively debate on energy security.

The Minister of Petroleum and Energy of the Kingdom of Norway, Tord Lien, during his welcome speech to the participants of the ONS Summit in Stavanger (Photo: ONS/Ringe).

At the heart of two-day event, moderated by one of the world's leading energy experts, Daniel Yergin, were an analysis of global energy trends, their geopolitical and industry implications, and the challenges they pose to companies and states.

The Norwegian government, which supported the event, was represented by Prime Minister Erna Solberg, Minister of Foreign Affairs Børge Brende, and Norway's Minister of Petroleum and Energy Tord Lien. Discussants also included the Latvian Minister of Foreign Affairs, Edgars Rinkēvičs, and his Lithuanian colleague Linas Linkevičius, as well as other cabinet ministers from around the world. CEOs of major industry leaders, such as Statoil, Shell, ConocoPhillips, Eon and Wintershall, as well as senior representatives from Saudi Aramco, eni, and Iran's National Oil Company, also participated.


During the debate on security of supply in the wider European Area and the growing global energy demand, many leaders emphasized that the intersection of security, stability, and energy is becoming increasingly relevant and should be a top concern on every security agenda. The massive decline in oil prices, in particular, was seen as a major cause of instability for energy producing countries as well as for businesses. Other participants pointed to the dangers of separating security concerns from business interests. Only well-functioning and interconnected energy markets with an ability to react quickly to short-term disruptions would ensure both global growth and energy security.

 

Participants also debated the pipeline project Nord Stream II. Some argued that it should be seen as an opportunity to further secure European energy supply and to lower emissions from other fossil fuels like coal. Others expressed doubts about the real intentions behind this project. From their perspective, its main goal was to escape Ukraine as an energy transit country.

Many participants acknowledged the need to develop efficient energy markets across the globe in order to ensure security of supply and demand. "The goal must be to reduce and avoid barriers and tensions in the field of energy," argued one speaker.


Others pointed to the unpredictability of the energy world, as illustrated by the shale revolution. Years ago, the majority of energy experts would not have thought that the United States would turn into a leading energy-exporting country. Now, US gas imports were in direct competition with Russian and Norwegian gas.

 

Another debate concentrated on the impact of climate change - a real threat-multiplier that will radically change the way energy security should be approached, according to some participants. One discussant raised the point that even in a world of COP 21, energy demand will increase in light of the growing size of the world population. Several speakers underlined that the answer to climate change will have to be a grand transition of the energy sector. It would have to rely on a sustainable mix of natural gas and electricity. According to some of the participating business leaders, several international oil companies have already started to shift from oil to gas, but are also increasingly looking at electricity.


While the sessions featured open, frank, and controversial debates, there was broad agreement that the energy sector is currently undergoing a grand transition, faced with tremendous challenges. In particular, these included decarbonization based on the Paris Agreement, linked to fundamental changes in market design and business models; low entry barriers to the market, decentralization, digitization; and the growth of zero marginal cost energy. The latter, a speaker argued, would be particularly problematic since a massive delay of investments in exploration and producing facilities would strongly impact energy prices in the future. 

 

One participant concluded that, in order to meet these challenges, replacing old business models with innovative approaches will be more important for our energy security than any geopolitical developments. 

 

The Munich Security Conference Foundation will continue the energy security series, supported  by E.on, EnBw, Shell, and Socar, with an Energy Security Roundtable at next year's Munich Security Conference (February 17 to 19, 2017).

31. August 2016, von MSC

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