Measuring risk in fuel supply chains

Abstract

In assessing energy security, risk is recognised as being important. However, it is rarely assessed in a transparent quantitative way. To address this, we decompose the global energy system into 27 generic fuel supply chains and six sequential process stages. One of these fuels – ‘Demand Reduction’ – is conceived as ‘negative fuel’ to satisfy the supply/demand balance. We use 7 categories of risk and estimate the likelihood and impact for each cause of risk for each fuel and each process stage – demonstrating the tractability of creating a risk matrix for the whole energy system. Impacts of risk events are evaluated using the triple-bottom-line methodology, allowing for system resilience. This direct assessment of risk events is based on published data, interpretation and comment (with risk seldom directly articulated), and eliminates the need for arbitrary weighting of individual risks in the overall assessment. In a UK case study, 19 of the fuel categories were found to be relevant and those with the highest overall risk were a group of fossil fuels and nuclear fission. The least risky fuels were renewables, including solar (electric and thermal), wind, and hydro sources. Cost reduction alone was shown to be insufficient to deliver an efficient and more environmentally benign energy system. The UK case study demonstrates the need for governments to consider more closely policy relating to long-term energy security and identifies key elements of risk hindering the low-carbon transition.