DE can reduce dependence on imported fuels such as natural gas.
Global consumption of natural gas is increasing sharply as the electricity sector looks more and more to this fuel to feed new power plants. Gas now dominates the fuel range for new plant in most countries. With this ascendancy comes increasing concern about its security of supply. Most countries must import gas which raises the issue for most governments about limited resources and scarce supply.
With energy demand growing globally, dependency on resource-rich countries and regions is likely to increase even further. As most oil and gas supplies are imported via politically unstable areas, supply can increasingly become affected by political disputes. Security of supply is therefore of increasing political and economic importance for most countries.
The European Union is a good example of an area heavily dependent on fuel imports. In recent decades Europe has witnessed an increased importance of gas in its energy mix yet it is highly import dependent. Cogeneration and DE are major tools to increase fuel independence on external suppliers. If Europe can achieve its target of doubling DE-based cogeneration capacity by 2010 from 1997 levels, it can reduce the volume of imported gas by almost 25%. The UK could reduce its fossil fuel use by 140PJ in 2023, a saving of 6.1% relative to central generation. This will not only enhance the European Union's immunity to import disruption – it will also save Europe a considerable amount of money.
With continuing economic growth, energy consumption will inevitably increase. Despite efforts in some areas of the world to decouple economic growth and energy intensity, fuel consumption has been on the rise in most countries. An increase in fuel efficiency and lowering system losses could be achieved by a higher share of DE generation as a recently commissioned WADE study called 'Decentralising UK Energy' has demonstrated.
Examples of Conflicts
In early 2006 a major dispute emerged between Russia and Ukraine over the price of natural gas. Russian state-owned Gazprom wanted to increase the price of natural gas it was supplying to the Ukraine to better reflect market prices. The Ukraine, like much of Europe, is highly dependent on Russia for its gas supply. When Ukraine refused to pay an increased price Russia cut off exports. The resulting decrease in gas pressure accross Europe caused immediate concern to the EU and price effects were felt around the world. Although the dispute was subsequently resolved the disagreement highlighted the reliance of the EU to foreign gas supplies and the event continues to haunt many top policy makers and industrialists.
The energy efficiency offered by DE is one key tool which is a strategic option for mitigating against dependency on foreign fuel supplies and is likely to continue to rise on the policy agenda of European nations as similar disputes arise in the future.
Chile is dependent on Argentinian natural gas for almost all its natural gas. In 2004 Argentina began to reduce its natural gas exports to Chile in response to tighter supply-demand balances domestically. If imports from Argentina continue to dwindle Chile may be forced to choose between supplying gas to domestic users for heating and cooking or to the industries which drive much of the country's economic prosperity. Increased investment in DE in Chile could help reduce the dependence on Argentina.