A Study on Integrated System Model for
Energy Security Evaluation of East Asian Countries

March 2013

Yudha Prambudia

A Study on Integrated System Model for Energy Security
Evaluation of East Asian Countries
Abstract
Energy security is an issue of great importance in many regions around the World because
energy underpins economic development. The importance of the issue is much more
profound in the East Asia region due to the staggering increase of energy consumption as theconsequence of the regions’ rapid economic growth. Therefore, improving energy security isan important policy agenda for East Asia countries. This study aims to provide policy
recommendation to East Asia countries in improving their energy security.
This thesis can be divided into three main parts. The first part comprises chapters 2 and 3.
These chapters address the background and motivation that underpin the integrated systemmodel approach proposed in this thesis. Chapter 2 explains the importance of energy security
for East Asia region. The rapid economic growth consequently brings rapid increase ofenergy consumption. However, East Asia’s energy resources are limited and also subject todepletion. In the wake of this, East Asia countries acknowledged that energy security is afundamental factor for the region’s economic growth. In chapter 3, the variations of energy
security definition and conventional approaches to energy security evaluation are reviewed.
Two shortcomings of conventional approaches are identified; the lack of consideration oninteractions among the factors of energy security and the lack of consideration on the contextof evaluation. The study tackled the shortcomings by proposing integrated system model
approach and considers the definition of energy security from the context of the countries
being evaluated. This approach towards energy security evaluation is the originality of thestudy.
The second part of the thesis consists of chapter 4. In this chapter, the process developing
integrated model for energy security evaluation is presented. The model development starts
from defining energy security based on the countries situation. Based on the energy security
definition, an evaluation framework is developed by determining the dimensions of energy
security and the indicators to measure them. The indicators are then decomposed into its
components by identifying their factors. At the same time, interrelationships among thesefactors were also identified. As a result, the initial structure of the system model is developed.
Based on this structure, a model is constructed using a system modeling tool, namely system
dynamics. Afterwards, structural and behavioral verification tests are performed for themodel. The structural test is done by checking statistically the relationships between thefactors. The Behavior test is performed by comparing the simulation result with historical
data. The process of model construction and verification is iterative. Finally, validation of themodel is performed to check whether the model is in concord with the evaluation framework.
This is done simply by a checklist of dimensions and indicators that can be measured by thefinal model.
The third part of thesis demonstrates the application and usefulness of the proposed approach.
Three case studies are presented in chapters 5, 6 and 7. In chapter 5, a case study that takes
into account multiple dimensions and indicators of energy security is presented. This casestudy shows the usefulness of the approach for the broad energy security evaluation.
Indonesia is selected for this case study. Indonesia is facing multiple issues of energy
security; dwindling oil production, utilization of the abundant coal and gas is obstructed bymarket situation, the country population is still largely dependent on energy subsidy and its
CO2 emission from energy use is worsening. In this case, four energy security dimensions ofavailability, affordability, efficiency and acceptability are considered. Two central policies
are identified and simulated; increasing energy production and subsidy reduction.
Chapters 6 and 7 present two energy security evaluations. These cases show the usefulness ofthe proposed approach to narrow energy security evaluation. The case study in chapter 6 isfocused on oil sector. Malaysia is expected to transform from oil exporter country to oil
importer country. Recently, this issue has drawn many high profile debates in Malaysia
politics. The results of six policy scenarios simulations show the expected dynamics of
Malaysia’s dependence on oil import and when it will likely to become a net oil importer
country. In Chapter 7, evaluation of environmental aspect of energy security of China, Japanand Indonesia is presented. The selected countries represent three distinct country
characteristics in East Asia region. In the East Asia context, China’s economy is the largest,
where as Japan is the most advanced country. China is the highest CO2 emitter from thedeveloping economies of the region, whereas Japan is the highest emitter from the advanced
economies of the region. On the other hand, Indonesia is experiencing dynamicsocioeconomic development which may direct its energy requirement to expose higher CO2

emission. Under the Cebu declaration on East Asia Energy Security, the three countries are
expected to contribute to CO2 emission mitigation through their policy and measures.
However, the case study shows that the different circumstances of the selected countries leadto different policy preference and eventually resulted in different speed and magnitude of thedynamics of energy security level.
Chapter 8 presents the conclusion from this study. In relation to energy security of East Asia
countries, it can be suggested to Indonesia that in order to improve its overall energy security,
policy to reduce energy subsidy is more effective than policy to increase production of energy.
For Malaysia, it can be suggested that the most effective strategy to delay the transformation
to a net oil importer country is by reducing oil consumption through eliminating oil subsidy.
Considering the performance of China, Japan and Indonesia, this study suggests East Asia
countries to advance the Cebu declaration towards a more obligatory pledge with clear CO2emission reduction targets. In relation to the approach to energy security evaluation, the study
shows that the integrated system model able to shows the various impact of one policy
implementation to multiple dimensions of energy security. In addition, the model allows exante energy security evaluation to be performed more accurately due to consideration ofvarious factors influencing energy security level.