IEEJ：March 2019○ｃIEEJ 2019
Special Bulletin
A Japanese Perspective on the International Energy Landscape (421)

March 29, 2019

Energy Security and Energy Geopolitics
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, Japan
Energy is an indispensable good for facilitating civilian life and economic/industrial
operations. It is also a strategic good that could occasionally become a military good. In this sense,
providing indispensable energy in necessary and sufficient volume at stable and affordable prices is
the most fundamentally and primarily important among energy-related matters for all people,
economic agents and states. This is the essence of energy security.
Over a long term from the beginning of human history, humans were basically
self-sufficient in energy. When humans depended on their own and domestic animal labor withwaterwheels or windmills for energy supply, energy self-sufficiency was natural. When industrial
development led human life to consume massive energy, however, energy self-sufficiency became
difficult to maintain. Transporting energy even at high cost from regions where energy could be
produced massively at low cost allowed massive energy consumption in energy-short regions.
Humans have thus transitioned to an economic system based on energy transportation. The transition
has represented the history of energy development, resulting in international energy trade, which has
led energy security to develop into an important international matter.
International energy trade has centered on oil. Oil as liquid energy has had an
overwhelming economic advantage over other energy sources in terms of transportation since thedevelopment of very large crude carriers and other large tankers. This is the reason oil is still thelargest internationally traded good and a key good supporting the global economy. Oil is thus
subjected to large-scale international trade between oil producing and consuming countries.
Following oil, natural gas and LNG have recently become a key internationally traded energy source.
Growing demand for natural gas as a clean energy source has been combined with the improved
economic efficiency of pipeline gas and LNG transportation to push up natural gas and LNG trade.
Natural gas is expected to increase its presence in international energy trade as natural gas and LNG
trade expands further.
International energy trade development has combined energy problems with internationalproblems. Energy and international problems characteristically interact with each other. Whenenergy problems’ influence on international problems is considered, it is important that international
economic conditions depend on energy problems. For example, crude oil price hikes bring about amassive income transfer in the form of oil payments from net oil importers such as Japan, the UnitedStates, Europe, China and India to net oil exporters like the Middle East and Russia. Regarding
diplomacy, energy problems affect countries’ political influence and diplomatic freedom, as seen in
the two oil crises in the 1970s.
International problems’ impact on energy problems include the global economy’s impact
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on the energy market, energy supply disruptions caused by wars or international conflicts, the effects
of political embargoes or economic sanctions on energy supply, the influence of strategic decisions
regarding international politics on energy sector investment as seen in pipeline politics, and theeffects of international agreements like the Kyoto Protocol and the Paris Agreement on energy
choices and investment. Given the present challenges facing the international energy market, it iseasily understood that interactions between energy and international problems have been important
historically and presently.
Interrelations between energy and international problems constitute the essence of energy
geopolitics. Geopolitics is an academic discipline that has developed since the second half of the19th century, being defined and viewed variously. Typically, geopolitics is defined as thecombination of geography and politics or as the study concerning states as geographicalorganizations or spatial phenomena. On the other hand, each state has its own primary objectives
such as survival and prosperity. The aspiration for those primary objectives is called the pursuit ofnational interests. State power consisting of military power, economic power, technological power
and resources is required to realize national interests. Interrelations between states with suchcharacteristics produce international politics or relations. Geopolitics thus represents a geographicalanalysis of international politics or relations. Then, energy geopolitics is designed to study
interrelations between geopolitical analyses and energy problems.
As international energy trade has so far centered on oil, energy geopolitics has focused on
oil-related problems. Oil-related geopolitical developments have become important matters of global
interest, including the first oil crisis and the Arab oil embargo, the U.S.-led creation of theInternational Energy Agency to counter oil producing countries, the Iranian revolution and thesecond oil crisis, China’s rise and growing presence in the international oil market, the United States’
energy dominance amid the shale revolution, Russia’s oil production even under Western economic
sanctions and its joint oil production cut with the Organization of the Petroleum Exporting Countries
attracting global attention. Recently, gas-related geopolitical developments have also attracted global
attention, including Russia’s suspension of natural gas supply to Ukraine and Europe, China’stransformation into the world’s largest gas importer (in terms of pipeline gas and LNG imports incombination) through rapid demand growth and the United States’ potential development into aleading LNG exporter. Today’s energy geopolitics has centered on relations between these major
actors such as the United States, China, Russia and the Middle East, as discussed in my column “AJapanese Perspective on the International Energy Landscape (416).”
As far as oil, gas and LNG continue to account for most of global energy trade, energy
geopolitics will continue to focus on oil, gas and LNG problems. Given that the electrification ofenergy supply and demand increases the importance of electricity in energy security and expands
international electricity trade through the spread of wide-area grid networks, however, energy
geopolitics factors regarding electricity problems may increase. Particularly, attention must be paid
to cybersecurity problems that are attracting interest as a new risk factor for electricity supply
security. From a wider point of view, problems regarding cutting-edge or innovative technologies
will grow more important for future energy problems. If major countries in the world compete fortechnological supremacy, geography could be combined with technology into geo-technology
regarding the geographical development and diffusion of cutting-edge or innovative energy
technologies. We will have to watch how problems regarding energy security and energy geopolitics
would develop in the world.
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