3. Energy Security in the Pacific

This chapter provides a review of the current status of energy security in the Pacific, with a focus on Pacific Island Countries and Territories (PICTs). First, we examine what energy security means for the Pacific, the data available to assess energy security, and selection of suitable indicators at a regional level. We then present the data available for selected indicators and discuss the implications for different aspects of energy security. The limitations and challenges, and additional indicators that could be used to assess energy security, are then presented. Finally, the chapter touches upon future trends that could affect energy security in both a negative and positive way and makes some recommendations for the way forward.

The concept of ‘Energy Security’ has many aspects and thus has been defined and refined in many ways over the last 20 years (Raghoo et al. 2018). Assessing Pacific energy security should carefully consider the concept from several perspectives (governments, urban dwellers, low-income households, etc.) and both over the short-term and longer term (Johnston 2012). Long-term energy security often focuses on major investments to secure a more reliable supply which aligns with sustainable development and environmental imperatives, while short-term energy security is more about the ability of a given energy system to react promptly to sudden changes in the supply–demand balance (IEA 2021a). The classic International Energy Agency (IEA) formulation focusing on availability, accessibility, affordability, and acceptability does not embed the concepts of risk and resilience or address “security for whom?”, “security for which values?” and “security from what threats?” (Månsson et al. 2014). These are valid questions which are amongst the elements of energy security that this chapter will examine.

All countries are vulnerable to adverse environmental, economic, and financial conditions with low- and middle-income countries particularly vulnerable due to less diversified and robust economies, often geographical remoteness, a higher dependency on development assistance, and constrained human capacity. The Pacific region has a mix of remote high-, middle- and low-income countries with the majority being the Pacific Island Countries and Territories (PICTs).¹ As these 14 countries and eight territories face the greatest challenges in the Pacific in terms of energy security and climate change, this chapter focuses on them.

Due to their status as middle-, low-income and Least Developed Countries² and natural geographic characteristics, PICTs are extremely susceptible to natural disasters, climate change, external economic fluctuations, and shocks (ADB 2021b). They are facing the devastating impacts of climate change including increasing droughts and water scarcity, coastal flooding and erosion, changes in rainfall that affect ecosystems, forestry, and food production and have adverse impacts on human health (IPCC 2021).

The Pacific region is also expected to be increasingly impacted by cyclones. The increasing severity, rainfall, and flooding impacts of these is discussed in Chap. 5. As examples of the economic damage from individual storm events, Vanuatu and Fiji lost 64% (ILO 2015) and 33% (Government of Fiji 2016) respectively of their GDP in 2015 and 2016 when they were hit by Cyclones Pam (Vanuatu) and Winston (Fiji). Four PICTs (Papua New Guinea [PNG], Solomon Islands, Tonga, and Vanuatu) rank in the top ten globally for disaster risk, where very strong exposure to natural hazards combined with poor economic and social circumstances, makes them particularly vulnerable (United Nations University 2016). Amongst other aspects, the vulnerability of PICTs is characterized by a high to very high dependence on development assistance and remittances, a narrow export base, low foreign direct investment, and high poverty rates. PICTs populations are also disproportionately at higher risk of adverse consequences of global warming above 1.5 °C. With a very high proportion of PICT populations being coastal and agricultural communities dependent on food production and coastal livelihoods, they are particularly threatened by climate change induced sea-level rise (IPCC 2018). Impacts of the COVID-19 pandemic have exacerbated existing challenges and pose a severe threat to development (ADB 2021b).

This vulnerability is further compounded by very high dependence on imported fuel for commercial energy production (UNDP 2007) and constrained access to reliable, affordable energy. Seven of the ten countries in the Asia and Pacific region most vulnerable to oil price volatility are PICTs (ADB 2009). The PICTs’ geographical isolation and small fuel volumes result in high transport costs which, alongside shocks in fuel prices, can decrease both energy and food security. In July 2008, for instance, the Republic of the Marshall Islands government declared a State of Economic Emergency due in part to high fuel and food prices (CFE-DM 2019).

Petroleum consumption in PICTs has increased from 76,000 barrels per day to almost 110,000 in line with population and GDP growth between 2000 to 2017 (Fig. 3.1). The top four consumers for which data was available, Fiji, Guam, PNG, and New Caledonia, account for about 80% of the total.

A line graph of fuel consumption versus the years. The lines of fuel and G D P rise with fluctuations, while the line of population increases slightly between 2000 and 2017.

Recent accurate data showing energy use by sector is not available for the PICTs. While there is limited up-to-date and consistent data on the use of commercial energy, there is nearly no reliable data on non-commercial energy consumption (e.g., wood for cooking).^4,5 Commercial energy consumption in PICTs from 2000 to 2017 (Fig. 3.2) shows a modest 2% average annual increase in commercial energy use in representative PICTs.⁶

A line graph plots G J per capita versus years from 2000 to 2017. The line represents a slightly increasing trend with fluctuations.

Final commercial energy consumption by sector was estimated at 38.4% transport, 10.9% residential, 41.4% industry, and 9.3% others in 2008 (APEC, ADB 2013). Based on 2017 data from IRENA and USEIA, and power sector fuel consumption from the Pacific Power Association (PPA), commercial energy use has been approximated at 56% transport, 34% electricity, and 10% other uses (see Fig. 3.3). The lack of sectoral data at the national level and the uncertainty and inconsistency regarding final energy consumption by sector demonstrates the need for improved data collection, analysis, and dissemination. The available sectoral breakdowns are qualitative, but access to energy for transport (currently petroleum) is a crucial factor in energy security, although PICT policies and targets have focused primarily on a transition to renewables in the electricity sector as shown in the following sections of this chapter and covered in detail in Chap. 12.

A pie chart represents the breakdown of commercial energy. The data in percentage is transport, 56. Electricity, 34. Other services, 10.

The concept of energy security was developed by the IEA in the 1970s and initially concerned adequate supplies of liquid petroleum fuels, gas, and electricity for the wealthier nations. Today it considers the adequacy of responses to energy supply and distribution problems to maintain or improve reliance. It can be ambiguous, can involve different priorities for different people, government, or organizations and has evolved and is still evolving with time. Governments may assume that less reliance on petroleum imports, a higher percentage of energy from local renewable resources, improved efficiency of energy end-use, affordability, and a wider range of sources for petroleum fuels automatically improve energy security (UNESCAP 2012). However, these goals can often compete and there may be different short-term and long-term dimensions (UNESCAP 2012). Regardless of the definition adopted, changes in PIC energy security over time are not easy to definitively quantify due to incomplete data and multiple ways in which energy security could potentially be defined and measured.

The traditional and most broadly accepted definition is that of the IEA (2021a): “the uninterrupted availability of energy sources at an affordable price” with long-term aspects (timely investments to supply energy in line with economic developments and environmental needs) and short-term (the ability of the energy system to react promptly to sudden changes in the supply–demand balance). In the past, the emphasis was on petroleum and other fossil fuels but recently the IEA has included renewables and promoted the need for reducing vulnerability by improving resilience to a wide variety of shocks, including natural disaster and geopolitical conflicts.

Despite evolution in the IEA approach, there is no consensus on a definition of energy security (Ebinger 2011) in part because the concept depends on where in society one sits: governments tend to emphasize measures to mitigate supply disruptions (e.g., through supply diversification or energy stocks), private citizens and small business want reliability and affordability, and urban communities want to avoid power disruptions. For low-income groups and rural communities, a limited basic supply of commercial fuel and electricity can empower women and girls, lead to better education for children, and improve health and healthcare. For the poor, energy security is also often about guaranteed access.

In Australia, the Clean Energy Council defines energy security in relation to the electricity grid or power system and includes “the grid’s capability to react and recover securely to major events such as faults or generation tripping” while the Federal Government takes a broader definition, that energy security consists of “adequate, reliable and competitive supply of energy across the electricity, gas and liquid fuel sectors, where reliability is the provision of energy with minimal disruptions to supply” (Australian Government 2012).

Only in the last decade has there been much discussion of what energy security means for PICTs with the concept becoming associated in part with the transition to renewable energy and linked to climate change mitigation. On the other hand, until recently PICT energy policies, strategies, and plans either did not mention at all or placed little emphasis on adaptation to climate change for energy systems. This is starting to change with the new regional Framework for Energy Security and Resilience in the Pacific (FESRIP: 2021–2030),⁷ which was endorsed by the region’s leaders at the 2021 Pacific Island Forum (PIFS 2021).⁸

FESRIP emphasizes energy sector climate robustness and resilience (SPC 2021) and PICT governments are beginning to integrate climate change adaptation into energy plans, for example, the Tonga Energy Road Map Plus Framework (Government of Tonga 2020). However, the identification of increased energy security with increased use of renewable energy and responses to the climate emergency have not been taken up universally across the Pacific region, with the Australian Federal Government’s hesitancy to move away from fossil fuels⁹ at odds with most PICTs and individual Australian states and territories which are setting targets of 100% renewable electricity and making net zero pledges. Additionally, the ban on nuclear power stations in both Australia and New Zealand means that non-fossil fuel transition will necessarily be towards renewables. Therefore, the reality of energy security in the Pacific region and the PICTs remains complex, is evolving and involves several, sometimes competing government and societal aspects, such as reliability, cost, availability, and universality of supply versus affordability and climate action versus national security considerations.

The PICT’s Framework for Action on Energy Security in the Pacific (FAESP): 2010–2020 (SPC 2010), stated that, “Energy security depends on the availability, accessibility, affordability, stability, and uses of energy” and “Energy security exists when all people at all times have access to sufficient sustainable sources of clean and affordable energy and services to enhance their social and economic well-being”. This definition is highly ambitious, and not easy to quantify and therefore measure progress over time. The 2020–2030 FESRIP does not provide a definition but specifies that its focus is on “improving energy sector robustness and resilience to adverse climate change and natural disasters …, universal access to secure, robust, sustainable and affordable electricity, transport fuel and household energy services that are increasingly supplied by renewable resources, with improved energy efficiency, upgraded energy infrastructure and improved technologies”. Those aspects most commonly used to describe energy security or used alongside energy security and other joint objectives in the FESRIP and PICT national energy frameworks, roadmaps, strategies, and policies include:

Achieving energy security is linked to various socio-economic benefits, including energy for the transport and productive sectors, water, and agriculture in particular. Energy security is also strongly linked to an affordable energy supply for key industries such as tourism which drives the economies of several PICTs. For health, energy has always been a key consideration, with an emphasis on electricity as vital for good functioning of health facilities. This has again been evident during the COVID-19 pandemic, for example for vaccine refrigeration. Lastly, achieving energy security links to a wide variety of socio-economic and environmental targets of the Sustainable Development Goals, as discussed in detail in Chap. 16.

Accounting for, and adapting to, the impact of climate change is essential for the future energy security of PICTs for supply and demand for RE but also for fossil fuels. Bulk fuel storage capacity is a good short- to medium-term security indicator but only if installations account for and mitigate the risks of flooding, sea level rise, and increased intensity of cyclones due to climate change. Energy secure facilities need to be well-maintained and located in areas unlikely to flood,²⁰ with independent certification indicating high resistance to floods and cyclone damage, as it is for renewable installations. In Fig. 3.13 (Climate Central Inc. 2021) for Tonga’s main island of Tongatapu, land shown in red is highly vulnerable to future flooding during the lifetime of new facilities constructed now; any energy facilities located there only provide long-term security if specifically designed for flood conditions, if at all (SPC 2021).

A map of Tongatapu highlights the coastal areas in the north at risk of flooding by 2050.

Some types of energy generation may be more vulnerable to adverse climate change than others, as illustrated in Table 3.6. The interface of water resources (Chap. 2) on energy generation and security is also shown to impact oil storage, natural gas, hydropower, and biomass technologies.

Short-term vulnerability to climate change, and thus reduced energy security, is exacerbated by Pacific specific practices and environmental conditions. These are (SPC 2021):

Finally, although the impact of climate change on energy demand is uncertain, there is some evidence that an increase in demand from increased use of air conditioning may arise.

Uncertainty remains around the exact impacts of climate change on energy supply, distribution, storage and generation across fossil fuels, traditional biomass and renewable energy, as well as its influence on demand as there is limited data to assess the above dimensions and technologies. Given the vulnerable status of energy security and the need to plan ahead²¹ to improve resilience and energy security, further investigation into supply-side and demand-side impacts of climate change should be undertaken with urgency and integrated into the appropriate regulations and policies, insurance and financing and risk modelling.

This chapter cannot capture all the aspects of energy security in the Pacific. Important aspects not discussed but included in SPC’s energy security indicators, provide opportunities for further assessment of progress including energy intensity (MJ/US$ of GDP), carbon footprint (tonnes of CO₂ emissions/GDP or per capita), and fuel supply security (days of storage). As the PICTs transition to renewables (Republic of the Marshall Islands 2018; Government of Fiji 2018; Government of Tonga 2020; SPC 2021; ADB 2021b), the supply, storage, and distribution of fossil fuels in the interim needs to be secure. For regional security the main fuel re-exporting PICTs should agree to share with the other PICTs in times of supply crisis if tankers are available. The capacity of bulk fuel storage in days or months of consumption is an appropriate indicator of short- to medium-term national energy security if the storage facilities are well-maintained and not in danger of failure in the short-term or to severe threats of climate-induced disruption in the medium- to long-term. An improved measure of fuel security might be storage capacity restricted to those facilities that meet international safety standards, are well maintained, and are resistant to floods and climate change (SPC 2021).

Considering the emergence of resilience to climate change and the transport sector as crucial dimensions of energy security, the indicators used to measure security should be re-assessed at the regional and national level. Indicators examined in this chapter show the limitations of a focus on electricity but also the difficulty in selecting measurable, fair, transparent, and equitable indicators and timely data acquisition. It is further recommended that additional indicators be considered. The following dimensions would enrich the conversation around energy security in the Pacific:

Indicators for these would vary for Government, the commercial sector, urban dwellers, rural people, and rural economic activities. A non-exhaustive list of possible indicators for the different energy security dimensions above are presented in Table 3.7 which could assist to strengthen monitoring of progress towards sustainable energy security.

This is an extensive list yet is far from complete and omits some key areas such as rural non-commercial energy use. Measuring rural biomass use for cooking and agricultural processing, for example, would require surveys (physical measurements) of the quantities used, which are expensive and difficult to carry out across all the PICTs.

Existing indicators (Sect. 3.3) and others developed by SPC (2011a) can also be used alongside the proposed indicators (Table 3.7) to give a fuller picture of energy security in the Pacific in the future. Apart from using a wider selection of indicators, access to accurate, consistent and up-to-date national energy data to measure progress is essential and remains an issue. The need for improved data has been highlighted at numerous meetings of the region’s energy ministers in the past decade, most recently in September 2019 at the Pacific Energy Ministers’ meeting (SPC 2019).²⁴ Having advocated for more indicators it is also important to bear in mind the capacity for data collection and analysis. National staff (including national statistics offices, departments of energy and transport, power utilities, etc.) are already hard-pressed to gather and analyze data in many areas. Therefore, to strike a balance, it may be useful to agree on a minimum set of indicators for which data can be reliably and regularly collected at reasonable cost, and which enable a satisfactory monitoring of progress of energy security.

Energy security in the PICTs has progressed in some areas (energy access, renewable power generation, reduction in petroleum imports as a percentage of GDP), and enabling environment (more so for RE than for EE) but arguably not in others such as energy cost and affordability, while other aspects are difficult to assess at this time. It is also clear that there are many different aspects of energy security, and each can take on a different meaning depending on whether the perspective is from the national or household level, urban or rural, higher or lower income, businesses or individuals. The analysis undertaken in this chapter, which aggregated the PICTs, would likely look somewhat different in many respects if the larger countries (PNG, Fiji) are excluded. Therefore, energy security for the PICTs is best assessed and reported on a country-by-country basis and including additional indicators to integrate new aspects of energy security, notably climate resilience, transport, and gender.

Not all of these aspects can necessarily be quantified and measured easily. There needs to be a considered approach to balance the cost and effort against the available capacities and the benefit of the data collected, to optimize the type, quantity, and frequency of data collection against that needed for good, evidence-based decision making. One recommendation on data is to increase support for existing data collection efforts at both national (census, HIES, national energy databases) and regional (PRDR, Pacific Power Association utility benchmarking reports) rather than setting up new initiatives.

To improve energy security, financing and investment is a very important element. Climate finance has become a key part of the investment landscape in RE for electricity in the PICTs. The 2009 commitment by developed countries²⁵ to provide USD 100 bn per year by 2020 to assist developing countries implement adaptation and mitigation actions can contribute to improving energy security development in the PICTs, especially if directed towards both RE and EE plus transport and gender.²⁶ Also important is a shift in climate finance for PICTs from mitigation to adaptation and development of resilient energy systems.²⁷ However, finance must also be found for securing petroleum supplies while they are still needed.

Funding of PICT energy projects has largely been from the public sector and overseas development aid. PICTs have indicatively mobilized over USD 2.2 billion in climate finance in the past 10 years across all sectors (UNDP 2021). The amount of climate finance being accessed by PICTs is increasing but is still well short of the estimated investment needs required to meet NDC targets including in the energy sector, estimated at over USD 3 bn over 10 years (UNDP 2021), while aid dependence arguably reduces energy security, as anticipated future levels and sources of aid flows are not guaranteed.

It is also recognized that public finance alone, whether domestic or international, stands no chance of meeting climate mitigation and adaptation needs, but although globally the private sector has provided the bulk of investment for the energy transition (OECD 2020), in the PICTs, private investment has been slower to mobilize. The continued reliance on donor finance to fund large scale renewable energy projects contributes to the disincentivization of the domestic private sector from investing in renewable energy (UNDP 2021). Strengthening the investment environment such as RE feed-in tariffs and EE fiscal regulatory measures examined earlier in this chapter and introducing measures to also promote investment into resilience and adaptation would support greater private sector participation.

PICTs face difficulties meeting their infrastructure needs (construction and O&M) in general, not just in the energy sector. Investment requirements are high and expected to increase further in the years ahead. Taking Fiji as an example, its climate vulnerability assessment emphasized the need for future infrastructure investment to ensure resilience to climate change and natural hazards and indicated that almost FJD 9 billion will be needed to climate-proof infrastructure, including energy, transport, water, and sanitation over the next ten years. Climate-ready energy infrastructure typically adds 3% to upfront costs globally but typically saves $4 overall for every dollar spent (Global Commission on Adaptation and World Resources Institute 2019). Therefore, to strengthen energy security cost-effectively, every energy infrastructure project going forward needs to find the finance to cover this upfront adaptation cost to lower the long-term adaptation cost to the PICTs. A regional approach and cooperation on best practices, standards, and other areas, could assist in aggregation of projects, increase effectiveness and efficiency, and incentivize private sector investment, particularly for energy in tourism, maritime and land transport, and energy efficiency.