The International Energy Agency has cautioned that oil and gas markets across the world may experience increased market volatility and concentration owing to the forces of demand and supply.
According to its analysis, IEA observed that this is likely to happen from two scenarios: Firstly, if reductions in oil and gas demand are outpaced by decreases in supply; and secondly, where available supply of oil and gas is concentrated in fewer countries.
To avert or slow down such effects, the IEA suggested that, “both the oil supply chain and the refinery sector will need to adapt to shifts in product markets, including more biofuels, and still ensure adequate oil product supplies.”
Therefore, in order to ensure oil supply security, the IEA has indicated that its oil emergency response system will continue to be a critical tool for such a purpose. However, it will need to be modernized as global oil demand is transitioning.
Following the risks facing global energy systems including climate patterns, cyber threats and the availability of critical minerals, this will require such critical considerations, IEA indicates.
While this transition has become necessary, the IEA highlighted that the adoption of digitalization presents opportunities to enhance energy security. The importance of digitalization is etched in its support of improved energy planning, real-time monitoring, facilitating the use of distributed energy resources to provide services to power systems and response to critical situations.
Governments laying down measures to ensure energy security
In order to propel digitalization in enhancing energy security, the IEA further adduced that governments need to ensure that emergency preparedness and response capabilities continue to be robust in a more digitalized and electrified system.
Meanwhile, IEA indicates that there is an urgent action by policy makers, utilities and stakeholders to enhance their systems’ resilience to climate change.
“The electricity and energy system face increasing adverse impacts of climate change, resulting in rising global temperatures, erratic patterns of precipitation, sea level rise and more frequent or intense extreme weather events.
“More resilient electricity systems reduce damage and loss from climate impacts. Weather proofing of the energy infrastructure is part of a strategy to increase the robustness, resourcefulness and recovery of the system.”
International Energy Agency, IEA
Furthermore, IEA recommends that governments should be prepared to address the impact of the energy transition on people and communities, notably with regard to employment, inclusiveness and equity.
It is an inarguable truth that energy transition will displace jobs and affect people, therefore, while an important endeavor, people should be put at the core. Also, to ensure public support, clean energy transitions need to enhance energy access, the security, affordability and reliability of energy supply.
In addition, the IEA stressed that “guiding clean energy transitions by boosting energy security, affordability and sustainable economic growth remains the critical task for G20 governments.”
The G20 governments’ summits have led to several important actions such as the 2014 principles on Energy Collaboration which set principles called for enhancing energy security through dialogue and collaboration on emergency response measures.
READ ALSO: Ghana imports US$1 billion worth of oil and gas in first 5 months of the year
