From Risk to the "energy tetralemma"

Fossil energy has played an important role in the development and industrialisation of the main economies in the 20th century. At the beginning of the last century, coal replaced wood, multiplying the productivity of industry and transport to unimaginable limits, and later, in the 1960s, oil took over the leading role. 

As if it were the strategy board game Risk, created by Albert Lamorisse in 1950, oil then gave the USA an advantage as the leading oil-producing power. After various moves on the geopolitical chessboard, the chips shifted to the Middle East and to an environment dominated by the "seven sisters", companies that have survived to the present day. 

In today's geopolitical context, rules also count, and in this case the so-called "energy trilemma" is a good starting point. It is a concept coined by the World Energy Council (WEC 2010) to measure the functioning of the energy systems of the largest countries. It is a three-dimensional indicator that assesses three basic pillars of energy: availability, equity and environmental impact. In the current Risk game, with the war in Ukraine, it is worth reflecting on how these three elements are positioned, which one becomes a priority, and we may agree that at times like the present, close to the next winter, the level and security of supply will come to the fore. 

Europe is fragile because of its production is highly dependent on oil and gas that it cannot extract within its borders and is imported from highly unstable environments. 

The current gas crisis is reminiscent of moments in the past, such as the Arab-Israeli Yom Kippur war in 1973, which resulted in the first major oil crisis.  A serious event followed by a major crisis for the industrialised economies after more than three decades of uninterrupted growth since World War II. 

The scenario, displaced in time, is quite similar to the current situation with the war in Ukraine, although fifty years later we still have similar patterns. At the time, the embargo on the West and the reduction in production in Arab oil-producing countries, in retaliation for their support for Israel, triggered a drastic rise in the price of crude oil. If the rules of energy risk were written down, we could say that when a war breaks out in oil-producing countries, the next moves include a rise in the price of fuel, then its unavailability, and then a switch to a new supplier. 

The usual reaction in the game of geopolitics is to flee from the unstable supplier by opening up new alternatives. After the war, Europe began diversifying its supply from unstable countries in the Middle East to Russia, a military power then considered secure enough to entrust a large part of its supply. Europe also sought to diversify sources in the following decade, opening the way to coal and nuclear power. 

Now, with huge doubts about how Europe will get through the winter making the situation even more complex, the global context is affected by the disruption of gas supplies. Rolling the dice on the energy market chessboard, the result was a total shortage between Germany and Russia (Nord Stream 1 and 2, branches of 1,200 km each capable of doubling from 27.5 billion m³/year to 55 billion m³/year) and turning the card shows that these infrastructures are sabotaged, reminding us that destroying something is much quicker than building. 

Some find success in moving from one mistake to another without losing enthusiasm, but gas is also the past, at the present moment we are again faced with a similar dilemma, a possible change of supplier, if LNG can compensate, players like the US or Algeria it is unethical to say that we are doing our best, when the solution goes deep again to go back to the initial box based on fossil energy, this cannot conform to us. 

In this new game of Risk, we have already had time to learn how to play in situations similar to 1973. Europe was and still is dependent on third countries and it is time to incorporate a new rule to the "energy tetralemma" and that is "self-sufficiency", something that will allow us to get out of the spiral of the game.  

COP 27 has come to an end, and although we attended with expectations, it once again left us with a feeling of a lack of commitment. The new rules of the game, with the "energy tetralemma", provide us with a new systemic vision of what should give priority to citizens and the environment, not wasting time in adjusting the course. Whoever is able to accelerate the race towards greater electrification on renewable and distributed sources will win the game. With our own capabilities, we must make the transition faster, and finish solving some challenges such as storage, prioritising innovation in pursuit of greater resilience. Our strengths are local and indigenous sources, which in addition to being much more affordable, because they lack variable costs, will improve our energy efficiency, making the leap in productivity exponential in this new industrial revolution. 

Rafael Sánchez Durán, General Manager of Endesa in Andalusia, Extremadura, Ceuta and Melilla.