Energy-importing Countries Research Articles

Enhancing energy security and efficiency through a regional integration policy: The case of the Southern Cone

This paper addresses the knowledge gap concerning foreign exchange risk in energy transactions within the Regional Initiative Energy Integration System of the Southern Cone Countries (SIESUR) of the Latin American region. Focusing on the cross-border electricity, it investigates the impact of exchange rate fluctuations on the transaction model in SIESUR: US dollar-denominated cross-border energy contracts with a time lag between invoicing and payment. The objective of this paper is to estimate foreign exchange risk exposure and propose mitigation solutions. Analyzing foreign exchange risk of energy trading among SIESUR member countries reveals substantial financial costs hindering electricity integration. Energy importing countries, facing greater exposure of their local currencies and weakened bargaining power, are particularly vulnerable. A Monte Carlo simulation model, using historical exchange rate data, highlights significant currency volatility, emphasizing the substantial foreign exchange risk exposure within SIESUR. Notably, cost overruns of energy imports due to foreign exchange risk exposure can reach 12.6% of transaction value. Through a global analysis, potential strategies for risk management are explored to foster electricity exchange expansion. Efforts to mitigate foreign exchange risk are crucial for advancing electricity integration within the SIESUR region. This study underscores policy implications for enhancing regional energy security and promoting sustainable development.

Level of Urbanization and Renewable Energy Consumption: The Case of Azerbaijan and Türkiye

Conventional energy consumption requires serious costs, especially for countries that import this type of energy. In this study, one of the countries included in the analysis is considered as energy exporting countries and the other as energy importing countries. The study attempted to measure the relationship between urbanization levels and renewable energy consumption in Türkiye and Azerbaijan for the period 2000-2020. Granger causality test was applied to measure the effect of the relationship between variables in these countries. After the necessary assumption tests were applied, the analysis was started. According to the Granger test results, no causal relationship was found between the variables in both countries.

Will carbon neutrality alleviate China's energy security concerns? – The strategic importance of critical metals in batteries

How carbon neutrality may reshape energy security concerns weighs greatly for all major energy-importing countries, including China. Large-scale electrification and energy transition as a crucial pathway will potentially alter the strategic importance of different resources. This study examines three key battery-related metals – lithium, cobalt, and nickel – in China's carbon-neutral future by calculating their foreign dependency ratios and import costs and then comparing them with those of oil and natural gas. Scenario analysis shows that China's foreign dependency ratios of the metals could exceed 80% in many scenarios in 2030 and 2050 with import costs possibly reaching USD 135 billion in 2030 and USD 265 billion in 2050. Their strategic importance in 2050, as represented by import costs, can be equivalent to the average level during 2016–2020 for oil and natural gas if unfavorable conditions happen simultaneously, specifically high metal intensity, low recycling rates, and high metal prices. Hence for China, carbon neutrality might swap conventional energy security concerns with new ones, especially considering the much higher geographic concentration of metal imports. Nevertheless, their foreign dependency could also be substantially reduced or even completely avoided in low-demand scenarios with optimistic recycling rates.

How do climate risks impact the contagion in China's energy market?

Energy security is a critical facet of national security, especially in energy-importing countries, and significant fluctuations in the energy market can profoundly influence the real economy. With the intensification of global climate change, extreme weather events and diverse energy transition policies emerge as prominent risk factors driving energy market volatility. In this study, we employed a time-varying parameter vector autoregression (TVP-VAR) model and the spillover index method of generalized variance decomposition to assess the endogenous contagion and exogenous shock risk of China's energy prices and the systematic risk in the broader energy market. Our analysis included the coal, oil, and natural gas prices in both Chinese and international markets. The results indicate that the international oil market plays a dominant role in the energy risk spillover network, with the exogenous shock risk in China's energy market surpassing the endogenous contagion risk. Further, quantile models were used to investigate the impact of climate risks, namely climate disasters, climate policy uncertainty, and climate risk concern. We found that in high-risk environments, all climatic factors exert pronounced impacts on China's energy market risks, with climate risk concern being especially influential. Overall, this study has important policy implications for energy security and adaptation to climate change.

How Can Energy-Importing Countries Guard Against Geopolitical Risks - Take Japan as an Example

With the gradual decline of global economic growth, the world economic cycle is facing an important turning point at present, and various geopolitical crises have occurred one after another. Under this background, energy security risks of energy-importing countries have become increasingly serious. Therefore, it is particularly important to study the function principle and risk avoidance means of geopolitical events affecting energy security. This paper selects Japan, which has a very low energy self-sufficiency rate but achieved good economic development and energy security after World War II, as the research object, and selects the second oil crisis, the Great East Japan earthquake and nuclear leakage, and the novel coronavirus epidemic as the representatives of three geopolitical events to analyze the changes in Japan's energy structure and the policies and measures of the Japanese government. It is found that geopolitical events can affect a country's energy structure and energy strategy from three aspects: energy supply, energy demand and international relations. Finally, based on the experience of Japan, this paper provides reasonable suggestions for energy-importing countries to prevent and resolve the energy security risks caused by the geopolitical crisis.

The impact of Russia–Ukraine war on crude oil prices: an EMC framework

As the second-largest oil producer and natural gas exporter, Russia’s war with Ukraine has severely impacted the energy market. To what extent has the war influenced crude oil prices, and has it altered the long-term dynamics of oil prices? An objective analysis of the effects of the Russia–Ukraine war on the crude oil market can assist relevant entities in developing both short-term emergency strategies and long-term response plans. This study establishes an analytical framework of the event analysis method based on multiresolution causality testing (EMC). The results of the multiresolution causality testing reveal a significant one-way causality between the Russia–Ukraine war and crude oil prices. Afterward, using the event analysis based on variational mode decomposition (VMD), from October 1, 2021, to August 25, 2022, as the event window, we found that the war and its chain events caused the West Texas Intermediate (WTI) crude oil prices to increase by $37.14, a 52.33% surge, and the Brent crude oil price to rise by $41.49, a 56.33% increase. During the event window, the Russia–Ukraine war can account for 70.72% and 73.62% of the fluctuation in WTI and Brent crude oil prices, respectively. Furthermore, the war amplified oil price volatility and fundamentally altered the trend of crude oil prices. Consequently, this study proposes four recommendations: the establishment of an emergency management mechanism for the oil market, the diversification of oil and gas imports by energy-importing countries, the steady advancement of energy transformation, and the judicious use of financial instruments by enterprises to hedge risks.

Analyzing the EKC hypothesis for the top 10 energy-importing countries: a perspective for the COP27 targets

Analyzing the EKC hypothesis for the top 10 energy-importing countries: a perspective for the COP27 targets

Do geopolitical risks always harm energy security? Their non-linear effects and mechanism

Exploring the link between geopolitical risk (GPR) and energy security (ES) is essential for ensuring national security and sustainable economic development in the face of frequent global geopolitical conflicts and escalating geopolitical threats. Based on the newly developed GPR index, this research uses unbalanced panel data for 35 nations from 2005 to 2018 to examine the influence of GPR on ES and its impact mechanism. The results show that GPR causes the U-shape effect on ES that first decreases (GPR < 0.59) and then increases (GPR > 0.59), meaning that GPR causes both negative and positive effects on ES, and the results remain robust after a series of tests. Transmission mechanism analysis indicates that renewable energy technology innovation is the key transmission mechanism for the U-shape impact of GPR on ES. Moderating effect analysis shows that international trade reinforces the U-shape effect of GPR on ES, meaning that it reinforces both the negative and positive effects of GPR on ES, while FDI only reinforces the positive effect of GPR on ES. Heterogeneity analysis presents that the U-shape effect of GPR on ES is more significant in OECD countries and net energy-importing countries.

Declining real interest rates: The role of energy prices in energy importers

This study investigates whether the upward trend in real energy prices since the 1990s can account for the decreasing trend in real interest rates in energy-importing countries. By estimating dynamic panel data models, I first provide empirical evidence that a rise in real energy prices leads to falls in real interest rates and aggregate consumption in energy-importing OECD member countries. Using a life-cycle model, I show that the increasing trend in real energy prices decreased the equilibrium real interest rate by about 1.4 percentage points between 1990 and 2018. The mechanism for this effect is as follows: As a result of the increases in the real energy price, energy consumption falls, dampening the consumption of manufactured goods because of the complementarity in consumption between energy and manufactured goods. Accordingly, aggregate consumption declines, putting downward pressure on the real interest rate. Moreover, the increased real energy price decreases energy input in production, raising the capital/energy ratio and inducing a lower real interest rate via a fall in the marginal product of capital. Through a simulation, I also demonstrate that increases in the real energy price had a greater influence on the declining real interest rate in energy-importing countries during 1990–2018, compared to population aging.

Global energy security: Do internal and external risk spillovers matter? A multilayer network method

The spillover effects in the risk networks of global energy firms within and among economies have brought increasing uncertainty to national energy security, which is largely unexplored in the existing literature. To this end, our study examines the shock transmission within and among 46 economies from January 2006 to June 2022, by employing a complex multilayer risk network based on a high-dimensional framework. Furthermore, this paper investigates the impact of risk contagion on energy security using panel data models. The findings reveal significant spillover effects within and among economies, which show a pronounced upward trend since the outbreak of the global financial crisis in 2008, COVID-19 in 2020, and the war in Ukraine in 2022. We further find that the two types of risk spillovers can negatively affect national energy security. In particular, domestic risk contagion effects dominate security risks of countries worldwide, whereas cross-border risk spillovers weaken security performance of energy-importing countries. Moreover, energy production and end-use energy price serve as two influencing mechanisms through which risk contagion affects security issues. The adverse impact of domestic contagion relies on two channels, but the cross-border spillovers induce security risk only via the price channel. Overall, this paper offers some suggestions for policy makers worldwide regarding energy security strategies to prevent or mitigate energy shock-induced negative externalities.

Energy imports as inhibitor of economic growth: The role of impact of renewable and non-renewable energy consumption

ABSTRACT This study investigates the role of energy imports in domestic production function in the case of 15 energy-importing countries for the period of 1995–2015. Apart from energy imports, renewable energy consumption, non-renewable energy consumption, capital, trade openness, and urbanization are included in the growth model. In doing so, long-run elasticity coefficients are estimated with the Dynamic Seemingly Unrelated Regressions (DSUR) model after determining the cointegration relationship between the variables. In addition, for robustness checks, Panel Correlated Standard Errors (PCSE) and Feasible Generalized Least Squares (FGLS) estimators are applied. Our results show that renewable energy consumption, non-renewable energy consumption, trade openness, and capital have a positive effect on economic growth. Energy imports negatively affect economic growth. The Dumitrescu-Hurlin causality analysis reveals a bidirectional causality relationship between renewable energy consumption, capital, trade openness, urbanization, and economic growth. A unidirectional causality relationship exists from economic growth to non-renewable energy consumption and energy imports. This analysis can be interpreted as having a negative impact on economic growth by putting pressure on the current account deficit due to energy imports. Therefore, investments in the renewable energy sector will play an important role in economic growth.

A framework for determining the life cycle GHG emissions of fossil marine fuels in countries reliant on imported energy through maritime transportation: A case study of South Korea

This research was motivated to address limitations in the current lifecycle assessment frameworks with the absence of proper guidelines for developing default lifecycle values of energies in consideration of supply chain activities and maritime transportation. Given this, it aims to evaluate the level of life cycle GHG emissions of heavy fuel oil, LNG, LPG and methanol as marine fuels produced and supplied in energy import-dependent countries, using South Korea as a case study. The analysis clearly shows that the impact of international shipping on Well-to-Tank (WtT) GHG emissions for energy carriers would be subject to several factors: propulsion system types, the quantify of energy transported, and the routes and distances of voyages. For instance, transportation emissions from LNG carriers for LNG fuel vary significantly depending on the country of import, ranging from 2.26 g CO2 eq./MJ (representing 12.2 % of Well-to-Tank (WtT) emissions for Malaysia) to 5.97 g CO2 eq./MJ (representing 33.3 % of WtT emissions for Qatar). As a preliminary study, an enhancement on the quality of the input/inventory data is imperative for obtaining a reliability of results. Nevertheless, the comparative analysis of different fuels and life stages provides valuable insights for stakeholders to develop effective policies and energy refueling plans for reducing life cycle GHG emissions from marine fuels. These findings could also enhance the current regulatory framework and provide meaningful lifecycle carbon footprints of marine fuels for energy importing countries. The study results also strongly suggest that default values of GHG emission for different countries relying on energy imports via international maritime transport should be further developed in consideration of the impact of regional differences, such as distance, from the importing country for successful arrival of LCA application on marine industry.

Evaluation of alternative power-to-chemical pathways for renewable energy exports

Over the last five decades, there have been several phases of interest in the so-called hydrogen economy, stemming from the need for either energy security enhancement or climate change mitigation. None of these phases has been successful in terms of a major market development, mainly due to the lack of cost competitiveness and partially due to technology readiness challenges. Nevertheless, a new phase has begun very recently, which despite holding original objectives has the new motivation to be fully green, i.e. based on renewable energy. This new movement has already initiated bipartisan cooperation of some energy importing countries and those with abundant renewable energy resources and supporting infrastructure. One key challenge in this context is the diversity of pathways for the (national and international) export of non-electricity renewable energy. This poses another challenge, that is the need for an agnostic tool for comparing various supply chain pathways fairly while considering various techno-economic factors such as renewable energy sources, hydrogen production and conversion technologies, transport, and destination markets, along with all associated uncertainties.This paper addresses the above challenge by introducing a probabilistic decision analysis cycle methodology for evaluating various renewable energy supply chain pathways based on the hydrogen vector. The decision support tool is generic and can accommodate any kind of renewable chemical and fuel supply chain option. As a case study, we have investigated eight supply chain options composed of two electrolysers (alkaline and membrane) and four carrier options (compressed hydrogen, liquefied hydrogen, methanol, and ammonia) for export from Australian ports to three destinations in Singapore, Japan, and Germany. The results clearly show the complexity of decision making induced by multiple factors, and that the preferred supply chain combination (electrolyser technology, green energy carrier) in terms of least cost strongly depends on whether the expected levelized cost of hydrogen (ELCOH) or the expected levelized cost of energy (ELCOE) is used as a decision criterion. For instance, with ELCOH for the case study, under the given input parameters, the Ammonia combination with alkaline electrolysers (AE-NH3) becomes the least-cost supply chain option for Singapore, Japan, and Germany with values of 8.60, 8.78 and 9.63 $/kgH2, respectively. This leaves liquid hydrogen (with alkaline electrolysers) as the second-best supply chain route, with ELCOH values of 9.05, 9.39 and 10.70 $/kgH2, respectively. However, with ELCOE, methanol (with alkaline electrolysers) becomes the preferred supply chain path for all destinations, and liquid hydrogen (with alkaline electrolysers) keeps its place as the second-best alternative.

Driving factors of changes in energy intensity: A comparison between energy exporting and importing countries

This paper compares the driving factors of changes in energy intensity in both net energy exporting and importing countries using a DEA-Malmquist (Data Envelopment Analysis) and panel GMM (Generalized Method of Moments) methods over the period of 2000–2021. The findings show that technological progress has played a significant role in reducing of energy intensity in both groups. Moreover, we use the DEA method to decompose the Malmquist total factor productivity (TFP) into its components including technical change (TC), efficiency change (EC), pure efficiency change (PEC) and scale efficiency change (SEC). The results show that in energy exporting countries, the effects of each of these TFP components on energy intensity are negative but relatively weak, while the effects of these components on reducing energy intensity in importing countries is considerable. Specifically, the estimated coefficient of the pure efficiency component in reducing energy intensity in very remarkable, which shows the high importance of the efficiency components of TFP in energy management. Next, we investigate what is the main driver of technological progress in both the energy exporting and importing countries. The findings imply that in net energy exporting countries trade openness is a dominant factor to improve productivity, while in net energy importing countries, internal R&amp;D is the dominant factor for improving technological efficiency.

Energy and international business cycles

AbstractUS output is more strongly correlated with the output of energy-exporting countries than with that of energy-importing countries. I first document this empirical finding, then construct a three-country model in which countries’ different energy production and trade structures are considered. The three countries are the USA (an energy importer), a non-US energy importer, and an energy exporter. Consistent with the empirical findings, the model produces a higher output correlation between the USA and the energy exporter than between the USA and the energy importer. A positive productivity shock in the USA, raising its output, leads to increases in energy prices and its import demand for energy. The increased energy prices adversely influence output in the energy importer, whereas the rise in US energy imports has positive effects on output in the energy exporter, enabling the correlation of US output with the exporter’s output to be higher.

THE RELATIONSHIP BETWEEN RENEWABLE ENERGY USE AND ECONOMIC GROWTH FOR ENERGY IMPORTING EMERGING ECONOMIES

This study examines the relationship between renewable energy use and economic growth for 16 energy-importing countries for the period 1990-2018. These economies have attracted attention in the last 29 years by increasing their use of renewable energy by 556.21%, their total GDP by 466.19% and their total energy imports by 388.96%. Therefore, in this study, the long-term relationship is investigated by using annual data of real GDP, real gross capital, labor, and renewable energy use for 16 energy-importing countries. Firstly, unit root tests are used to determine the stationarity of the series. Then, the cointegration relationship was tested with a heterogeneous panel cointegration test and the cointegration relationship was found. The study found that all of the variables examined had positive and statistically significant coefficients. Additionally, the error correction model used in the study indicated that there is unidirectional causality from economic growth to renewable energy use in both the short and long term. This supports the conservation hypothesis, which suggests that economic growth and renewable energy use are interdependent. Therefore, the study's results suggest that any policies aimed at reducing energy use in these countries will not harm economic growth.

Has the Digital Economy Affected the Status of a Country’s Energy Trade Network?

The current global energy trade network is changing dramatically: the essence of the change is digitalization and renewable energy, and the study of the impact of the digital economy on the changing status of a country’s energy trade network is of great practical significance for each country to ensure energy security. We find that: the digital economy has a direct impact on a country’s climbing position in the fossil energy trade network and the renewable energy trade network. The high technology attributes of the digital economy lead to the rise of energy trading networks in energy-exporting countries by affecting their energy production efficiency and product competitiveness; the high energy-consuming attributes of the digital economy have an indirect effect by affecting the energy demand of energy-importing countries. The digital economy has a positive and increasing marginal nonlinear effect on the change in the status of renewable energy trade networks, and a positive but decreasing marginal nonlinear effect on the climbing status of fossil energy trade networks. This paper confirms the impact of the digital economy on a country’s changing position in the global energy trade network and provides policy insights for each country to ensure energy security.

Which clean energy contributes better for growth? – dynamic panel analysis of heterogeneous impacts of individual renewable sources on economic growth

The impact of renewable energy on economic growth has been controversial and the possible reason for this is that renewable energy is aggregation of sources with heterogeneous characteristics and different countries have different portfolio of renewable sources depending on their climate condition and technology maturity. This study examines the relationship between renewable energy sources such as solar, wind and bio energy and economic growth in 89 countries. For methodology, this paper adopted Islam's growth equation and performed Dynamic Panel Analysis based on Arellano-Bond GMM methodology. In addition to whole sample analysis, a sub-group analysis is performed between OECD and non-OECD countries, and between energy-importing and energy-exporting countries to examine how the relationship is affected by country's capital accumulation, technology maturity, energy cost, and energy security. The result shows that individual sources have the U-shaped relationships with growth, but the turning points where negative relationship changes to positive vary for different sources. For sub-group analysis, the U-shaped relationship was significant only in OECD countries and energy-importing countries. This shows that high technology development and capital accumulation of OECD countries and high energy cost and vulnerability to international energy market of energy-importing countries makes renewable sources more beneficial to economic growth.

Towards Renewable energy targets for the Middle East and North African region: A decarbonization assessment of energy-water nexus

Despite their huge fossil fuel potential, the Middle East and North Africa (MENA) region is sensitive to weakness in oil prices and this has a negative effect on the country's finances. Also, only 1.4% of the world's freshwater resources are found in MENA, despite having two-thirds or 66% of the world's known crude oil reserves. Despite that the energy importing countries in the MENA region benefit from lower energy prices, many of the countries like Libya, Syria, and Yemen have been shaken by wars, civil unrest, and political crisis, and this has created immense challenges in the energy situation. Another major challenge facing the MENA region is water scarcity. This region can be described as a desert area. There is a growing need for sustainable water management in the region as water scarcity is becoming increasingly critical. The government in North Africa have over the years set up laudable renewable energy projects to solve the prevailing energy crisis and improve their energy security. However, due to increasing population growth and increasing demand, there is still a huge gap between the renewable energy potential and generation that can be tapped. This study explores an hourly feasibility analysis of renewable energy production for electricity and freshwater production through the desalination process using the EnergyPLAN simulation environment. This study utilizes the planned renewable energy target set by the countries considered: Algeria, Morocco, Tunisia, Egypt, and Libya. The result shows that the increment of the renewable share to 52% in 2030 for Moroccos will cause a reduction in carbon emission by 52.09%. The emission recorded for the 2030 scenario for 52% renewable energy integration was 14.209 Mt. This represents a CO2 reduction of 78% from the 64.59 Mt emission in 2018. Also, for the projected 10% renewable electricity production target for Libya, the model shows that solar PV, wind energy, hydropower and CSP can supply a combined 6.61 TWh/year. The estimated technical result indicates that due to the extreme intermittency of renewable energy sources, the most probable scenario for meeting the future electricity demand in North Africa through a regional transmission grid is by hybrid renewable energy installations across the countries. Conclusively, it is presented that the actualization of renewable energy targets requires analysis and implementation of different policy strategies, especially for a region like North Africa, where there is a high reliance on fossil fuels for national revenue.

Relationship between Countries’ Energy Indicators and the Indices of GVC Participation: The Case of APEC Member Economies

In the 21st century the importance of global value chains continues to grow. There is a scientific gap in the research on the relationship between countries’ energy indicators and the GVC participation indices. Based on the analysis of the APEC member economies’ GVC participation, the presence of quantifiable links between the countries’ energy indicators and GVC participation indices was identified. APEC member countries have a higher index of forward GVC participation compared to a rather low index of backward participation. We have confirmed the following hypotheses. Countries with higher energy consumption and countries exporting fuel have higher forward GVC participation. Energy importing countries and countries with higher energy intensity have higher backward GVC participation. Countries with higher energy intensity have lower forward GVC participation than countries with lower energy intensity. It was concluded that concerted efforts of APEC member economies are needed to increase GVC sustainability and develop unified energy policy standards. Managerial implications of energy efficient and sustainable GVCs will include competitive advantages growth for all the countries and suppliers participating in a particular GVC.