Energy security and its determinants in New Zealand.

ABSTRACT

New Zealand relies on imported fossil fuels for about 38% of its primary energy. The country's energy demand is expected to grow due to population and economic growth, which will put more pressure on the energy system. Besides, resource scarcity, energy price volatility, and environmental challenges have made energy security a major concern for New Zealand and other countries. Given the lack of significant research on the effects of energy security factors in New Zealand, this study aims to shed light on the primary determinants of energy security using the dynamic autoregressive distributed lag method based on time series data from 1978 to 2021. The study found that a long-run link exists between energy security and energy intensity (energy efficiency), renewable energy use, fossil fuel consumption, and global oil prices. Real GDP, renewable energy consumption, and energy security were found to improve energy security, while fossil fuel consumption and world oil prices had a negative impact. The study also revealed a one-way causality from real GDP, fossil fuel consumption, and renewable energy use to energy security. In contrast, the relationship between energy intensity and energy security is bidirectional. Simulation results showed that global crude oil prices have a lower impact on energy security compared to other variables and are most responsive to a 5% shock in fossil fuel consumption, followed by economic growth.