The Unassuming Economist

From a paper by Yannan Zhou, Ying Lu, Yu Yang, Yan Cheng, Ze He, Yuxin Wang, and Yuli Shan:

“In an increasingly globalized world, energy security is no longer solely determined by direct energy imports but also by complex, cross-border flows of embodied energy embedded within traded goods and services. This study investigates how these embodied energy transfers reshape national energy dependencies and risk exposures within global production networks. Using a multi-regional input-output (MRIO) model based on GTAP 11 and IEA data, this study develops indicators of embodied energy import dependency and diversification, and introduces an innovative energy-risk mask method to identify the spatial sourcing tiers of energy risks embedded in international trade. Our findings show that while global embodied energy dependency has declined slightly since 2000, highly globalized economies such as Singapore and Luxembourg remain extremely reliant on external energy inputs. In addition, countries including Norway and China exhibit structurally concentrated embodied energy import sources, increasing their exposure to potential supply chain disruptions. Moreover, over 50% of global medium- and high-risk embodied energy is transmitted through long-distance trade, with large emerging economies like China and India heavily reliant on energy embedded in imports from geopolitically unstable regions. These risks are often obscured by conventional energy security metrics, which fail to capture the hidden dependencies of complex global supply chains. This study calls for the integration of embodied energy flow considerations into national energy strategies, emphasizing the need for diversified sourcing, upstream risk monitoring, and trade-energy policy coordination to enhance resilience in a geopolitically interconnected world.”