Quantifying the supplier-portfolio diversity of embodied energy: Strategic implications for strengthening energy resilience

This paper investigates energy resilience of countries by quantifying the supplier diversification of both direct and embodied energy import. In particular, we quantify two approaches to diversify a country's supplier portfolio: by lowering the dependency on each supplier (portfolio diversification) and by having embodied energy suppliers that are different from its direct energy suppliers (portfolio differentiation). We examine possibilities for strategic utilization of embodied energy trade to compensate for low diversity of direct energy trade for three types of fossil resources: coal, oil, and gas. We find that the diversity of embodied energy import is much greater than that of direct energy import. Of the three energy resources, coal enables countries to adopt portfolio diversification and portfolio differentiation more than gas and oil. Our results suggest embodied energy can be considered as a transfer of energy resources across national borders that can directly benefit from the diversity of the world energy production by “skipping” the limited diversity of the world energy export.