Energy in Crisis: The current and future threats facing the industry

Climate change and rapid technological advancements in energy infrastructure have significantly heightened energy-related security concerns. This trend is expected to continue escalating throughout the twenty-first century.

The diverse array of energy resources available brings a wide range of security risks. Both traditional resources like oil and gas and emerging alternatives like renewables and non-renewable minerals have distinct vulnerabilities that businesses and governments must address to protect against potential attacks.

Considering the necessary focus on energy within geopolitics and overall security, our new Energy in Crisis series analyses threats specifically against these industries. In doing so, we examine the challenges within the traditional energy sphere, such as oil and gas, while also exploring the transition to renewable energy and other potential future sources.

Shifts in power relations

An essential focus of this series delves into the dynamic shifts in power relations among nations, particularly as the international community grapples with significant events such as the Russian invasion of Ukraine. This scenario raises crucial questions about the implications for countries serving as alternative sources of oil and gas, primarily the Middle East and Latin America.

These countries will at least in the short term be afforded greater economic and political leverage, but what will be the geopolitical consequences of this increased power?

While the immediate focus remains on oil and gas relations, a similar shift in power dynamics is also unfolding among nations that lead in renewable energy, as well as those with potential resources for such development in the future.

Presently, Iceland, Norway, Sweden, Brazil, Denmark, Austria, Switzerland, Finland, and Colombia stand out as leaders in renewable energy generation.

Outside of Europe then, Latin America is a key region which possesses substantial renewable, as well as traditional energy resources. Consequently, we may witness a future increase in Brazil's and Colombia's political and economic influence as the world increasingly seeks to transition to renewable energy sources.

Renewable energy

Apart from the countries mentioned above that focus on renewable energy generation, there are several other nations playing a vital role in the overall process of renewable energy advancement.

Among these countries is Mexico, which brings another crucial aspect into consideration: state expropriation. As countries navigate through the energy transition, they will strive to consolidate their power and strengthen their positions.

Mexico, being a significant supplier of copper and zinc - critical materials for the transition to renewables - is also seeking to reclaim its power. This was evident in the past year, with sweeping regulations enacted by the Mexican government, making it more challenging for companies to secure mineral concessions.

There are also emerging concerns regarding human rights abuses in the exploration of another critical mineral for renewables, lithium, particularly in certain regions of the African continent. These concerns pose additional obstacles for companies attempting to enter such markets.

Such government decisions will have global investment consequences, potentially pushing foreign businesses towards unfavourable trade relationships or seeking alternative options in unfamiliar territories. Both choices will require implementing risk mitigation measures, which may involve conducting more thorough due diligence on state-owned companies or conducting comprehensive country risk assessments to identify potential risks in uncharted regions.

Non-state actor threats

Outside governments, non-state actors also significantly threaten the traditional and renewable energy industries. This threat originates from environmental activism, but also as with any lucrative resource, criminal actors who seek to capitalise on energy assets. This may come in the physical form of attacks such as oil-bunkering, but also attacks in the cyber-sphere.

The latter of which is pertinent for the growing renewable energy industry, where assets are scattered regionally or globally, but connected digitally, leaving it increasingly vulnerable to cyber-attack.

To avoid becoming victims themselves, both governments and businesses must take heed of historic case studies and apply fortifying measures to protect themselves from this snowballing threat.

The Energy in Crisis series emphasises the escalating threats facing the energy industry, encompassing both short and long-term perspectives.

By analysing pivotal case studies, we can draw valuable lessons from them. Moreover, the series explores actionable strategies that businesses can adopt in the future to safeguard themselves from falling prey to similar threats.

Each week, our Threat Intelligence team will be analysing a different energy industry (including Nuclear, Wind, Solar, Hydroelectric and more), starting with Oil next week. Follow us here or on LinkedIn to stay up-to-date with the latest analysis.