Energy Security and The Green Transition

IMF Working Papers, January 12, 2024

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The current energy crisis has raised policy questions on how to strengthen short-term energy security while remaining firmly committed to the green transition, a challenge amplified by the recent consensus at COP28 to transition away from fossil fuels.
The paper examines:
- historical determinants of the security of energy supply, and
- green transition implications for energy security.

Over the last two decades, the diversification of energy trade partners, or the lack thereof, was the main factor that underpinned energy security dynamics within and across countries.
Diversification of energy trade partners is identified as the dominant historical determinant of energy security.

Looking ahead, the green transition is expected to have a net positive effect on energy security provided investments are aligned to address new challenges posed by the increased reliance on renewables.
The net effect on energy security depends on investment alignment to manage risks from reliance on renewable resources and associated market structures.

Subject: Commodities, Economic sectors, Electricity, Environment, Metals, Natural gas sector, Non-renewable resources, Renewable energy
Keywords: climate mitigation, country diversification indices, diversification of energy trade partner, Electricity, energy independence, Energy security, Europe, geo-political risks, Global, green transition, market concentration, Metals, Natural gas sector, Non-renewable resources, Renewable energy, risks from reliance