Quantifying the geopolitical dimension of energy risks: A tool for energy modelling and planning

Energy risk and security are topical issues in energy analysis and policy. However, the quantitative analysis of energy risk presents significant methodological difficulties, especially when dealing with certain of its more qualitative dimensions. The aim of this paper is to quantitatively estimate the geopolitical risk of energy supply with the help of a multivariate statistical technique, factor analysis. Four partial energy risk factors were computed for 122 countries, which were subsequently aggregated to form the composite GESRI (Geopolitical Energy Supply Risk Index). The results demonstrate that advanced economies present a lower level of geopolitical energy risk, especially countries with energy resources, while less-developed countries register higher levels of risk regardless of their energy production. Although this indicator is computed for countries, it can be aggregated for regions or corridors, and it could also be applied to model and scenario building. The different uses of the GESRI could eventually lead to practical implications in the energy policy field, as well as in the energy planning and energy management areas.