Accounting for hidden energy dependency: The impact of energy embodied in traded goods on cross-country energy security assessments

Abstract

Energy security ranks high on the policy agenda of many countries. Accordingly, to provide policy guidance, a large and growing body of literature has proposed metrics to measure security of (primary) energy supply which are then applied in cross-country energy security assessments. In general, the data used in these assessments are based on production-oriented energy accounting frameworks. In doing this, these studies neglect additional indirect foreign energy consumption – i.e. consumption of energy embodied in traded goods. This paper highlights this issue. It provides and applies a methodology that allows including indirect foreign energy consumption into commonly used energy security indicators. In particular, it shows that the inclusion of foreign primary energy embodied in traded goods does not only change values of energy security indicators but also alters perceptions on regional energy security performance over time as well as relative to other regions' performance.