Enhancing Energy Security through Portfolio Thinking: An Analysis of National Energy Portfolios

Abstract

Insisting on independently providing energy due to fossil fuel availability and Economic-political purposes has imposed financial-environmental risks on countries. Inefficient obsolete infrastructures and technologies have caused devastating losses causing technical vulnerabilities in the energy sector. Ungainful increasing consumption of water resources has superimposed severe environmental degradation, threatening long-term energy planning. Successively, the energy security debate has turned into a challenging necessity for countries. This study developed a classic approach based on Modern Portfolio Theory (MPT) and Capital Allocation Line (CAL) reinforced with aggregated evaluative measures to deal with the financial-environmental complexities of national energy portfolios. Results prove that countries are not even aware of the risky hidden brittleness of their energy portfolio. Futuristic policymaking should be adapted to gradually change the national energy structure from fossil fuel dependency to portfolio thinking to avoid risks and achieve more security.

Keywords

• capital allocation line
• energy security
• middle east
• modern portfolio theory
• national energy portfolio