Reassessing energy security risk incorporating external shock: A variance-based composite indicator approach

As the global community shifts towards a clean energy paradigm, the understanding of energy security has witnessed significant evolution. Historical interpretations centered on the supply reliability and pricing stability. Contemporarily, terms such as “disruption”, “risk”, “threat”, and “vulnerability” have become central in shaping our perspective on energy security. This is particularly in light of external shocks including geopolitical conflicts, wars, acts of terrorism, extreme climatic occurrences, and other unpredictable challenges. In the face of these external pressures, conventional indicator-based methodologies exhibit inherent challenges in adequately quantifying national energy security. This study introduces a variance-based weighting approach within the classical composite indicator framework and characterize the influence of such external shocks into the weights of individual energy security indicators. As a result, this approach can provide a holistic, intuitive, and communicable tool in the integration of external shock factors into the assessment of energy security performance, all while staying true to the fundamental essence of energy security. Through a re-examination of the energy security risk in major energy-consuming countries from the 2020 GEI, this paper underscores the effectiveness and applicability of our approach.