What if energy imports mattered?

27 March 2018
Maddalena Ripa & Louisa Jane Di Felice

During the past few hundred years, growing numbers of people have obtained their energy from further and further afar, and supply has become inextricably linked to distant locations and events, expanding the spatial and temporal chain linking energy supply to demand. This is particularly true of oil, but also of all the other energy sources that can be moved across borders: coal, electricity, natural gas, and nuclear fuel (Overland, 2016). In 2012, the EU imported 53% of all the energy it consumed, at a cost of more than €1 billion per day. Looking at energy imports reveals how the decline in energy use per unit of GDP (i.e., Economic Energy Intensity) in EU advanced economies is not necessarily because they have become much more efficient in terms of energy and resources use, but because they increasingly rely on other countries to fulfil their supply of primary energy sources. Energy makes up more than 20% of total EU imports - a fifth of the EU's total import bill (European Commission, 2018). Implicit in the import of energy products is the indirect import of labour and resources, such as water and primary energy sources, embodied in the production process and transport of these products.
 

Specifically, the EU imports:

  • 88% of its crude oil
  • 66% of its natural gas
  • 42% of its solid fuels
  • less than 4% of its renewables (mostly concentrated on biomass)
  • 95% of its uranium
     

If we consider embodied fossil energy imports (also known as ‘virtual imports’), as for example the oil embedded in the import of diesel, the gap between fossil energy consumption and production (one traditional measure of energy security) in the EU is even larger than commonly assumed. This has prompted the MAGIC project to investigate the narrative of energy security as a nationally bounded imperative.
 

Figure 1. Percentage of fossil primary energy sources outsourced abroad – direct import in orange and virtual import in dark red
(DE – Germany, ES – Spain, FR – France, IT – Italy, NL – Netherlands, RO – Romania, SE – Sweden, UK – United Kingdom). More details available in MAGIC Deliverable 4.2.

MAGIC research has shown that the percentage of fossil primary energy sources directly and indirectly outsourced is higher than 80% in all most EU countries: Figure 1 shows the percentages of outsourced fossil primary energy sources, including coal, oil, gas produced outside the country, directly and indirectly required (virtual) to produce the total energy metabolized by UK, Sweden, Romania, Netherlands, Italy, France, Spain and Germany. 

Misrepresenting the share of inputs sourced from foreign suppliers can introduce a significant bias in the analysis. Indeed, the level of outsourcing of economic sectors heavily affects their performance. A country outsourcing the production of inputs that are particularly “costly” in terms of resources or labour requirement may appear more efficient than a country producing its own input.

In the EU, similar to other global economies, pressure for greater energy self-sufficiency is rooted in the narrative of preventing major supply disruptions (European Energy Security Strategy, 2014). This means that broader discourses on the socio-economic implications of the energy globalized trade are systematically ignored.

 

Figure 2. Percentages of working hours employed to produce the energy metabolized (directly and indirectly) by eight EU countries.
The blue part of the bar shows the percentage of working hours employed locally, whilst the red part of the bar expresses the outsourced percentage.

Figure 2 shows the percentage of labour (one key nexus element in MAGIC analysis) that is directly and indirectly required and outsourced (red bar) to produce the energy needed to sustain the country. This percentage is comparatively high and for some EU countries (e.g., Spain and Netherlands) it is higher that the local labour investment. In addition, the missing nexus link is that the EU workers whose job is moved offshore do not stop using energy, even if they become permanently unemployed or retire as a result of the change. And the beneficiary of the job transfer offshore will use more energy, as the accompanying increase in income translates into a standard of living that affords more consumer goods, and possibly a move to lower deinsity housing.

 

Table 1. Origin of oil imports (in %) for selected EU countries
(Regions of origin: RER -Europe , RU – Russia, RAF – Africa, RNA – North America, RLA – Latin America, RMS – Middle East, RAS – Asia and the Pacific)

Labour is an essential but often neglected nexus element that is of paramount importance to study the broader socio-economic implications of EU economies and provide trans-disciplinary insights. For example, Table 1 shows the origins of EU oil imports. The largest share of oil is derived from developing countries, where low income and illegal, low security jobs pose ethical issues that are not adequately tackled by the current EU legislation.

Globalization has demonstrated an unexpected ability ‘to manage the non-resolution of its problems, accommodate its dysfunctions, even drawing renewed strength from this state of affairs’ (Barca, 2017). These side-effects are serious and, if left unchecked, will impose limits on the ultimate extent of globalization's spread. Addressing this will require novel approaches and may result in some counter-intuitive solutions. Through the MAGIC project, our aim is to provide better quantitative framings of the issue at hand, in order to aid decision makers who are confronted with the complex challenges associated with an increasingly globalized world.

 

References

Barca, S. (2017). Labour and the ecological crisis: The eco-modernist dilemma in western Marxism(s) (1970s-2000s). Geoforum, (June), 0–1. https://doi.org/10.1016/j.geoforum.2017.07.011

European Commission, 2018. Press Release. http://europa.eu/rapid/press-release_MEMO-14-379_en.htm

European Commission, 2014. European Energy Security Strategy [COM(2014)330]

Overland, I. (2016). Energy: The missing link in globalization. Energy Research and Social Science, 14, 122–130. https://doi.org/10.1016/j.erss.2016.01.009