WEF Fostering Effective Energy Transition 2020 Edition
WEF Fostering Effective Energy Transition 2020 Edition
WEF Fostering Effective Energy Transition 2020 Edition
May 2020
World Economic Forum
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Preface 4
Executive summary 6
1. Introduction 9
2. Framework 11
3. Overall results 15
4. Sub-index and dimension trends 19
4.1 System performance 19
4.1.1 Economic development and growth 21
4.1.2 Environmental sustainability 25
4.1.3 Energy access and security 25
4.2 Transition readiness 27
5. Imperatives for the energy transition 29
5.1 Regulations and political commitment 29
5.2 Capital and investment 32
5.3 Innovation and infrastructure 35
5.4 Economic structure 37
5.5 Consumer engagement 39
6. Conclusion 42
Appendices 44
1. Annual Energy Transition Index score differences, 2015-2020 44
2. Methodology 45
3. Regional classification 46
Contributors 47
Endnotes 48
The World Economic Forum Platform for Shaping the Future of Energy and Materials, with the
support of its global community of diverse stakeholders, serves to promote collaborative action and
exchange best practices to foster an effective energy transition. The annual benchmarking of energy
systems across countries has enabled tracking the speed and direction of their energy transition and
identifying opportunities for improvement. The transformation of the energy system over the past
decade, although slower than required to achieve the objectives of the Paris Agreement to combat
climate change, has been significant. But this hard‑earned momentum now risks being lost, as the
ongoing COVID‑19 pandemic continues to cause economic and social damage.
The COVID‑19 pandemic is unprecedented in its scale and speed in recent times, and it has the
Roberto potential to redefine economic, political and social aspects relevant to the energy transition. It has
Bocca, Head forced society to change and relinquish valuable commodities and freedoms to collectively address
of Shaping the this global outbreak. An effect of similar magnitude is required for a successful energy transition.
Future of Energy Beyond the uncertainty over its long‑term consequences, it has unleashed cascading effects in real
and Materials, time. Compounded disruptions from the erosion of almost a third of global energy demand, delayed
Member of or stalled investments and projects, uncertainties over the employment prospects of millions of
the Executive energy‑sector workers, in addition to unprecedented oil price volatilities and subsequent geopolitical
Committee, World implications have created a perfect storm for energy markets. The new Earth 2.0 that will emerge after
Economic Forum COVID‑19 will be a “new normal”, but many fundamental challenges will still exist. Chief among them
is the imperative to collectively work towards an effective and inclusive energy transition.
This report highlights the key findings from the Energy Transition Index (ETI) 2020, part of the World
Economic Forum Fostering Effective Energy Transition initiative. The ETI builds on its predecessor,
the Energy Architecture Performance Index (EAPI), establishing fact‑based insights to support
decision‑makers in their pursuit of a roadmap for a secure, sustainable, affordable and inclusive
future energy system. The ETI does not only benchmark countries on their current energy system
performance, but also provides a forward‑looking lens as it measures their readiness for the energy
transition. The unforeseen risks uncovered by the current global environment make a strong case for
strengthening the energy transition fundamentals – characterized as enablers for energy transition
readiness. However, energy systems across countries are unique to local circumstances, the
economic structure, socio‑economic priorities, and countries will adopt multiple pathways to pursue
an effective energy transition.
Through these efforts, the World Economic Forum encourages the sharing of best practices and the
use of its platform for effective public‑private collaboration to facilitate the energy transition process
in countries around the world.
The year 2020 marks the beginning of the “decade of The gap between average ETI scores for countries in
delivery” on energy transition. The ongoing COVID‑19 the top quartile and the rest is gradually narrowing,
pandemic has put a stop to business as usual, setting off reflecting growing global consensus on the priorities
a chain of events disrupting all sectors – including energy. and speed of the energy transition.
The current status of the energy transition and progress in
multistakeholder collaboration have been slow to achieve – Sweden leads the rankings table for the third consecutive
and costly to build, and efforts must be made to ensure year, followed by Switzerland and Finland. France and
the clock is not reset. Resilience, in economic, financial, the United Kingdom are the only G20 countries in the
regulatory and infrastructure terms, is a crucial prerequisite top 10. The list of top 10 countries has been roughly the
for an effective energy transition. same over the past six years, highlighting the robustness
of their energy transition roadmaps.
This report presents the findings from the Energy Transition
Index (ETI) 2020, summarizing insights on countries’ – Countries in the bottom quartile are gradually narrowing
energy system performance and their energy transition the gap with countries in the top quartile. While this
readiness. The indicators reflect trends in the global energy illustrates that emerging economies are slowly moving
transition leading up to 2020. The circumstances were the needle on their energy transition, it also highlights the
radically transformed in the first few months of 2020 due ceiling of incremental gains from the current set of policies
to compounded disruptions from COVID‑19. Analysing and technologies in advanced economies, raising the
the drivers of progress in the past can offer lessons for urgency for breakthrough and radical measures.
accelerated recovery in the near future.
– Energy transition readiness improved across
Countries are transforming their energy systems, but countries, mainly due to an increased level of political
the improvements are not consistent across countries commitment and better access to capital and
or over time. investment. Sustained progress requires a similar
momentum along other enablers, such as human
– Of the 115 countries monitored, 94 countries have capital preparedness, robust institutional frameworks
improved their composite ETI score over the past six and innovative business environments. Colombia,
years. These nations represent more than 70% of the the Czech Republic, Hungary, Kenya, Morocco,
global population and 70% of global CO2 emissions from Thailand and the United Arab Emirates have
fuel combustion. achieved substantial gains on their transition readiness,
by targeting improvements along multiple enablers.
– Maintaining steady progress on the energy transition is
a challenge for all countries. Of the 115, only Argentina, Economic development and growth
Bulgaria, China, the Czech Republic, the Dominican
Republic, India, Ireland, Italy, the Slovak Republic, – Prior to the precipitous decline in the second quarter of
Sri Lanka and Ukraine have made consistent and 2019, wholesale natural gas prices had increased in all
measurable progress on their energy transition over the regions except North America since 2016, undermining
past six years. the competitiveness of heavy industries and the
replacement of coal in power generation. Infrastructure
– The world’s largest energy consumers differ in their and supply chain constraints as well as different price
energy transition trajectories. Emerging demand determination mechanisms were contributing factors.
centres like India and China show strong and steady
improvement, while scores for Brazil, Canada, Iran and – An increasing number of countries are adopting
the United States are either stagnant or declining. cost‑reflective energy pricing, as 82% of the countries
that improved their ETI scores over the past six years
– Fuel importing countries continue to outperform fuel also reduced pre‑tax energy subsidies. However, pricing
exporting countries, as the gap between their average instruments are yet to tackle the rising externalities
scores increased. The key parameters of differentiation associated with energy production and consumption,
are environmental sustainability, access to capital and such as global warming, health risks, traffic congestion
investment in new energy infrastructure, and political and road accidents.
commitment to the energy transition.
– The affordability constraints of electricity and heating
in advanced economies are compounded by the
combined effects of above‑average tariffs and high per
capita consumption levels, highlighting the importance
of energy efficiency.
– Although political commitment, public engagement and – Low fuel prices and falling consumer demand in advanced
investor attitudes towards environmental sustainability economies offer opportunities to initiate structural
continue to advance, average scores and gaps between economic transformation and diversification in emerging
countries remained lowest on this dimension. This economies and fuel exporting countries, which could
implies the continued prioritization of economic and prove challenging otherwise in normal circumstances.
social considerations above environmental sustainability.
Economic development and growth: The global economy The front lines of energy security are evolving. The year
is entering its most uncertain phase in living memory, as 2019 was marked by extreme weather events, as tropical
COVID-19 has challenged the current economic order like storms and wildfires in various parts of the world exposed
never before. Additionally, the year 2019 saw an abnormal infrastructure vulnerabilities and caused widespread and
level of street protests across the world.1 Among the many frequent power outages. Incidences of cyberattacks on the
reasons for the mass mobilization at this unprecedented electricity infrastructure are rising, with recent incidences
scale, contributing factors included economic inequality and in India,6 the EU7 and the United States,8 which emphasize
high costs of living. The adaptation costs of climate change the urgent need to act quickly to avoid potential large‑scale
and the energy transition can widen these rifts as they pose disruptions. Additionally, the low‑carbon energy transition
systemic risks to the financial system – both in terms of has prompted countries to lock in their competitive
physical risks to capital and infrastructure, and transition advantage by securing supplies to materials such as lithium,
risks from disorderly mitigation strategies.2 Stakeholders cobalt and rare earth metals, leading to a high degree of
from across the world reiterated the importance of concentration in terms of the control, refining and export of
sustainable economic growth3 at the World Economic these materials.9
Forum Annual Meeting 2020 in Davos‑Klosters.
Environmental sustainability: The year 2019 marked a
In early 2019, average oil prices were higher than the step change on environmental sustainability. The emissions
year before,4 contributing to increasing investments in from the energy sector remained flat,10 even as global GDP
capital projects and R&D for clean energy technologies. grew by 2.3%.11 Global spending on renewable energy
The beginning of 2020, however, was volatile for the continued to increase,12 as the share of electricity from
energy sector, due to price and demand shocks from renewable sources increased substantially in multiple
the COVID‑19 pandemic. The coming years could prove countries. The share of electricity produced by coal is
to be a very uncertain time for energy markets and, expected to have declined by 3% in 201913 – the largest
given that fuel exports are 19% of international trade annual drop on record – primarily due to large‑scale thermal
and a large source of income for many countries, the power plant shutdowns in the EU and United States. The
situation could lead to further geopolitical shifts, as trend in electrification continued, as investment in the power
recently evidenced in the OPEC+ manoeuvres. The sharp sector was higher than in oil and gas supply for the fourth
decline in industrial activity, transportation services and consecutive year.14
household consumption has stoked fears of a recession,
prompting governments to launch stimulus measures to The environmental sustainability agenda received a major
support the economy and society. Ongoing and planned boost from the financial sector, as an increasing number
projects may experience capital constraints, leading to and different kinds of asset managers looked to reduce
delays. As governments act to ensure economic growth their carbon exposure, leading to divestments totalling
through needed measures, the trade‑offs can affect the more than $14 trillion to date.15 An increasing number
speed of the energy transition. Emerging economies of non‑finance private‑sector organizations, including
are particularly at risk, as their export‑oriented growth international oil companies, are actively working towards
model requires growing consumer demand in advanced their pledged carbon neutrality goals. Total green bonds
economies. The lower oil price environment also hinders and loans issued globally increased 49% year‑on‑year to an
the competitiveness of energy efficient alternatives, electric all‑time high of $255 billion.16 The U.S. Business Roundtable
vehicles and batteries. These developments confirm the redefined the purpose of a corporation to include serving
mutually reinforcing links between energy transition all stakeholders, reflecting a strong move towards
and economic growth – as much as energy transition environmental, social and governance (ESG) principles
is a factor in economic growth, sustained economic in the allocation of capital.17 At the same time, countries
growth is needed for the energy transition. and subnational jurisdictions across the world have either
declared or are working towards net‑zero emissions targets.
Energy access and security: The share of natural gas The demand from civil society for faster responses to
in the energy mix grew, due to demand from power climate change and decarbonization has increased, as
generation and the continued increase in global trade in climate protests have intensified across the world.
liquefied natural gas (LNG) for the fifth consecutive year.
This raises new energy security constraints, as natural
gas is geographically more concentrated than oil, and the
supply chain infrastructure is insufficient. The geopolitical
balances of energy were dynamic, as the United States
established itself as an oil exporter to 31 countries in 2019,
and the world’s largest energy consumers discussed
forming an oil buyers’ alliance.5
The Fostering Effective Energy Transition initiative, facilitated Progress on a country’s energy transition will be determined
by the World Economic Forum, aims to accelerate the by the extent to which a robust enabling environment can
speed of the global energy transition by promoting the be created. This includes strong political commitment, a
adoption of effective policies, corporate decisions and flexible regulatory structure, a stable business environment,
public‑private collaboration for the transition to a secure, incentives for investments and innovation, consumer
sustainable, affordable and inclusive future energy system. awareness and the adoption of new technologies, among
The Energy Transition Index (ETI), a part of this initiative, other factors. Energy transition is not restricted to linear
establishes and disseminates a fact‑based framework to shifts in the fuel mix or the substitution of production
foster greater understanding of the state and readiness of technologies that can be unilaterally achieved by policies
energy systems across countries for this transition. or innovation or investments. Rather, the social, economic
and technological systems that are connected to the energy
The ETI 2020 is a continuation of the annual energy system system need to co‑evolve19 to shape the transition.20
benchmarking series published by the World Economic
Forum. Previously published as the Energy Architecture The ETI benchmarks the state of the energy transition
Performance Index (EAPI) series from 2013 to 2017, the in 115 countries. These countries constitute 90% of the
framework was revised to reflect the interdependencies global population, 93% of global total energy supply and
of energy system transformation with macroeconomic, 98% of global nominal GDP. The ETI is a composite score
political, regulatory and social factors that determine a of 40 indicators, sourced from reliable international data
country’s readiness for transition. providers to ensure comparability across countries and
consistency over time. The indicators are standardized
The ETI framework consists of two parts: current energy and grouped together to derive scores for higher order
system performance and the enabling environment for dimensions (Figure 1), which are equally weighted to obtain
the energy transition (Figure 1). System performance scores for the system performance and transition readiness
provides an assessment of countries’ energy system sub‑indices. The composite ETI score is the average of
related to their delivery in three key priorities: the ability these two sub‑indices.21
to support economic development and growth, universal
access to a secure and reliable energy supply, and In addition to summarizing insights from the ETI 2020
environmental sustainability across the energy value scores, this report also examines the evolution of the global
chain. The objective of energy transition in a country energy transition since 2015. Scores for the ETI composite,
should be to deliver simultaneously across these three sub‑indices and dimensions were back‑casted prior to 2018
priorities, thereby maintaining a balanced “energy for a consistent group of 115 countries. Six years may not be
triangle”. However, countries approach energy transition long enough to study transitions, but given the speed of new
from different starting points and unique socio‑economic policy announcements, increasing volumes or investments,
characteristics, and hence prioritize objectives for energy and technology deployments, this time frame provides useful
transition that reflect country‑specific circumstances. insights into the effectiveness and sufficiency of the efforts
Such priorities may include expanding access to modern and the roadblocks that may lie ahead.
energy services, meeting a rising energy demand,
modernizing energy system infrastructure, providing
employment, reducing environmental footprints of
energy‑sector activities, etc. While countries will inevitably
choose a diverse set of short‑term objectives, pursuing
the long‑term goal of achieving a balanced “energy
triangle” can support the choice of appropriate policies
and instruments, and help the synchronization of efforts
across countries and the maintenance of a steady course
on the global energy transition.
Energy
triangle
Enabling
dimensions
An effective energy transition is a timely transition technologies for extraction and conversion,
towards a more inclusive, sustainable, affordable and and end‑use sectors, an effective energy transition
secure energy system that provides solutions to global needs to balance the priorities of diverse stakeholder
energy‑related challenges, while creating value for groups. The World Economic Forum Fostering Effective
business and society, without compromising the balance Energy Transition initiative offers a platform to establish
of the energy triangle. While a long‑term vision and a common understanding among all stakeholder groups
objectives are necessary, remaining flexible in a dynamic on the end‑state of the energy transition, necessary
environment is critical. Given the complexity and scale of imperatives, market and policy enablers, and the
the energy system, which includes different fuel sources, resulting human impact.
Country name 2020 ETI System Transition Country name 2020 ETI System Transition
Score2 Performance Readiness Score2 Performance Readiness
Sweden 74.2% 79% 69% Greece 55.0% 63% 47%
Switzerland 73.4% 77% 70% Armenia 54.9% 60% 49%
Finland 72.4% 71% 74% Bulgaria 54.2% 59% 49%
Denmark 72.2% 69% 76% Montenegro 54.2% 55% 53%
Norway 72.2% 81% 63% United Arab Emirates 54.0% 56% 52%
Austria 70.5% 70% 71% Namibia 53.6% 54% 53%
United Kingdom 69.9% 72% 68% Vietnam 53.5% 57% 50%
France 68.7% 74% 64% Ghana 53.2% 59% 47%
Netherlands 68.0% 68% 68% Turkey 53.1% 57% 49%
Iceland 67.3% 74% 61% Bolivia 53.0% 64% 42%
Uruguay 67.0% 75% 59% Poland 52.9% 57% 48%
Ireland 66.9% 69% 65% Indonesia 52.4% 61% 44%
Singapore 65.9% 67% 65% Dominican Republic 52.4% 59% 46%
Luxembourg 65.1% 62% 68% Republic of Moldova 52.4% 61% 43%
Lithuania 65.1% 71% 59% Oman 52.1% 54% 50%
Latvia 64.9% 69% 60% India 51.5% 54% 49%
New Zealand 64.6% 73% 57% Jamaica 51.5% 54% 49%
Belgium 64.5% 65% 64% Guatemala 51.2% 58% 45%
Portugal 64.2% 69% 59% Trinidad and Tobago 50.9% 58% 44%
Germany 63.9% 64% 64% China 50.9% 50% 52%
Estonia 63.3% 64% 63% Kenya 50.6% 47% 54%
Japan 63.2% 64% 63% Russian Federation 50.5% 63% 38%
Slovenia 63.1% 66% 60% Tajikistan 49.8% 49% 51%
Spain 62.9% 67% 59% Jordan 49.8% 46% 53%
Colombia 62.7% 72% 54% Algeria 49.1% 61% 37%
Italy 62.0% 68% 56% Egypt, Arab Rep. 49.1% 52% 46%
Costa Rica 61.9% 72% 52% Honduras 49.0% 51% 47%
Canada 61.7% 67% 56% Saudi Arabia 48.7% 54% 43%
Chile 61.1% 65% 57% Bangladesh 48.4% 54% 43%
Israel 60.8% 66% 56% Kazakhstan 48.3% 59% 38%
Hungary 60.7% 66% 55% Tunisia 48.2% 53% 43%
United States 60.7% 66% 56% Bahrain 48.1% 46% 51%
Slovak Republic 60.5% 66% 55% Cambodia 47.8% 49% 47%
Malta 60.4% 65% 56% Tanzania 47.4% 47% 48%
Romania 59.9% 68% 52% Kuwait 46.9% 52% 42%
Australia 59.7% 66% 54% Pakistan 46.6% 46% 47%
Croatia 59.7% 66% 54% Nepal 46.3% 45% 47%
Malaysia 59.4% 64% 55% Nicaragua 46.1% 50% 42%
Peru 59.2% 69% 49% Ethiopia 45.9% 47% 45%
Panama 58.9% 66% 52% Zambia 45.7% 47% 45%
Georgia 58.8% 61% 57% Botswana 44.7% 45% 44%
Czech Republic 58.5% 61% 56% Serbia 44.3% 50% 39%
Paraguay 58.4% 68% 49% Iran, Islamic Rep. 43.5% 55% 32%
Azerbaijan 58.1% 67% 49% Ukraine 43.3% 50% 37%
Ecuador 58.1% 72% 45% Bosnia and Herzegovina 43.2% 47% 39%
Cyprus 58.0% 63% 53% Senegal 43.1% 39% 47%
Brazil 57.9% 69% 46% Kyrgyz Republic 42.7% 42% 43%
Korea, Rep. 57.7% 59% 57% South Africa 42.7% 47% 38%
Brunei Darussalam 57.0% 66% 48% Zimbabwe 42.6% 41% 45%
Mexico 56.5% 64% 49% Mongolia 42.1% 45% 39%
Morocco 56.5% 61% 51% Mozambique 42.0% 47% 37%
Albania 56.5% 63% 50% Benin 41.5% 41% 42%
Thailand 56.3% 61% 51% Venezuela 41.2% 55% 27%
Qatar 56.1% 60% 52% Cameroon 41.0% 40% 42%
Sri Lanka 55.8% 65% 46% Nigeria 40.5% 46% 35%
Argentina 55.8% 68% 44% Lebanon 38.5% 36% 41%
Philippines 55.3% 62% 49% Haiti 36.0% 35% 37%
El Salvador 55.3% 61% 50%
Advanced Economies For the ETI 2020 methodology, see the methodology addendum at the end of this report. Country figures are rounded to full PPT, but exact
figures are used to determine rankings. Therefore, countries with the same ETI scores may have different rankings.
Commonwealth of Independent States
Note 1: The Energy Transition Index benchmarks countries on the performance of their energy system, as well as their readiness for transition to a
Emerging and Developing Asia secure, sustainable, affordable, and reliable energy future. ETI 2020 score on a scale from 0 to 100%.
Emerging and Developing Europe Note 2: ETI 2020 score on a scale from 0% to 100%.
Latin America and the Caribbean
Middle East, North Africa and Pakistan
Sub-Saharan Africa
The ETI benchmarks countries on their energy system be plateauing. The average ETI score for countries in the
performance and their readiness for a fast and effective top 10 percentile has been constant since 2015. Leading
transition. Countries are scored along 40 indicators countries play a critical role in the global energy transition,
on a scale of 0 to 100.22 Countries scoring the global by highlighting best practices that inform the development
maximum on a given indicator are assigned a score of of roadmaps for other countries. This implies that
100 on that indicator. incremental gains from the current set of policies and
technologies might be limited, and the need for radical
Given the systemic and interdisciplinary nature of the and breakthrough ideas is urgent.
energy transition challenge, country scores on different
ETI indicators depend on factors such as natural resource
endowments, geography and climate, population, the level
of socio‑economic development and path dependencies
of legacy energy systems. Moreover, country scores on
some ETI indicators are determined by factors beyond
the scope of national decision‑making, such as energy
market volatilities, the emerging regulatory landscape in
trading partners, global financial market sentiments and
international climate change frameworks. Hence, no country
scores 100 on the ETI.
-4% 0% 10%
Figure 3: G20 countries’ Energy Transition Index 2020 ranking and share of global total energy supply, 2017
78 32 80 22
Japan
Russian 20 47
Federation
Germany Brazil
United States
China 28 86 50
Rest of World
Canada Mexico
Saudi
48 Arabia United 7
Korea, Rep. Kingdom
74 26 106
8 70 Italy South
Africa
Indonesia
36 56
Argentina
India
Australia
France 67
Turkey
G20 Countries’ ETI Rank Areas represent countries’ share of global total energy supply (%)
1 115 Figures in the top right corner indicate country ranking on Energy Transition Index 2020
Sources: World Economic Forum and IEA, World Energy Balances 2019
61%
59%
57%
55%
53%
51%
49%
47%
45%
2015 2016 2017 2018 2019 2020
On average, the ETI score improvement has been the critical role of energy in the economic structure are
higher for energy importing countries than for fuel contributing factors. However, fuel importing countries
exporting countries, leading to a substantial increase outperform them on the key parameters of environmental
in the gap between their average scores. A comparative sustainability, political commitment to the energy
analysis of these two groups (Figure 5) indicates that transition, and access to capital for investment in new
fuel exporting countries perform better on the energy energy infrastructure. This is likely due to the additional
sector’s contribution to economic development and pressure on energy importers to improve on energy
growth, and comparably on energy access and security. security by prioritizing domestically available renewable
Access to domestic reserves at affordable prices and sources of energy.
Figure 5: Average scores on Energy Transition Index dimensions for net energy importers and exporters, 2015‑2020
Economic Development
Political Commitment
Regulations and
Institutions and
Energy System
Energy Access
Human Capital
and Innovation
Environmental
Infrastructure
Sustainability
and Security
Governance
and Growth
Capital and
Investment
ETI Score
Structure
2015
2016
2017
2018
2019
2020
4.1 System performance Over the past six years, 75% of the countries have
increased their scores on the system performance
Energy is a critical enabler of modern economy and dimension. The global average scores for system
society. Regardless of the economic structure and performance increased successively each year from 2015 to
socio‑economic priorities of countries, the domestic energy 2019, before declining year‑on‑year between 2019 and 2020
sector has strong forward and backward linkages in a (Figure 4). The year‑on‑year decline is primarily driven by rising
nation’s economy. The energy sector uses outputs from natural gas prices for importing countries leading up to 2019,
a variety of industries, spurring demand for products and and the emerging evidence on externalities as associated
services such as capital equipment, metals and mining, with energy‑sector activities. Figure 6 shows scores for the
manufacturing, procurement, construction, and engineering system performance dimensions, with country scores sorted
and design. At the same time, energy is an intermediate from minimum to maximum for the years 2015 and 2020.
input for most industrial sectors and services,24 in addition
to addressing final demand for lighting, heating, cooking The global average score for environmental
and transportation. Hence, it is critical for countries to sustainability in 2020 remains the lowest among
ensure an abundant and secure provision of modern forms the three dimensions. However, 75% of the countries
of energy at affordable prices to maintain an optimal level have improved on this dimension between 2015 and
of economic activity and provide better quality of life to 2020, by approaching the challenge from multiple
their citizens. The system performance component of angles, including technology mandates and equipment
the ETI measures the extent to which the energy system labelling, carbon pricing, retiring coal plants ahead of
in a country contributes towards the three key priorities: schedule, and redesigning electricity markets to integrate
economic development and growth, energy access and renewable energy sources. Progress on the environmental
security, and environmental sustainability. sustainability of the energy system has been particularly
challenging among fossil fuel exporting countries.
Economic Development and Growth Environmental Sustainability Energy Access and Security
100
Dimension Score (out of 100)
90
80
70
60
50
40
30
20
10
0
0 10 20 30 40 50 60 70 80 90 100 0 10 20 30 40 50 60 70 80 90 100 0 10 20 30 40 50 60 70 80 90 100
Percentage of Countries
2020 Scores 2015 Scores 2020 Global Average
The energy access and security dimension continues importing countries have been primary contributors to
to exhibit the highest global average score, with 80% of strong global progress on energy access and security.
the countries having achieved progress between 2015 However, as the dimension’s profile in Figure 6 shows, the
and 2020. Large‑scale programmes targeting access to gap between the top and bottom performers on this
electricity in South and South‑East Asia and the further dimension is the highest of the three dimensions.
diversification of import counterparts among energy
ty
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r ts
2P
PM
En
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2.5
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PM2.5 – Fine particulate matter air pollutant
Source: World Economic Forum
Figure 8: Household electricity tariffs (US¢ 2018, PPP) vs per capita* electricity consumption (kWh)
0 10 20 30 40 50 60
60000
Median
ISL
Electricity Consumption per capita 2017 (kWh)
30000
NOR FIN
SWE
QAT CAN LUX
10000 USA
KOR AUS
SAU AUT SGP
NZL
TTO CHE JPN BEL DEU
RUS ISR FRA NLD EST SVN CZE ESP
IRL
5000 BGR MLT GBR CYPITA PRT DNK
OMN KAZ MYS GRC SVK
SRB HUN
CHN LTU POL
CHL
4000 ZAF
HRV
LVA
BIH TUR Median
IRN
3000 ARG LBN UKR URY
MEX THA ROU
BRA
VEN MNG PAN
2000 CRI ARM AZE ALB
PRY VNM JOR
EGY DOM
DZA ECU PER MDA TUN
HND COL
1000 SLV JAM
IND IDN PHL
ZMB BOL MAR
ZWE PAK LKA GTM NIC
BGD GHAMOZ CMR
NGA
KHM
NPL KEN SEN HTI
ETH
10 20 30 40 50 90
Household Electricity Prices 2018 (US¢/kWh, PPP)
Advanced Economies Emerging and Developing Asia Sub-Saharan Africa Middle East and North Africa
Emerging and Developing Europe Latin America and the Caribbean Commonwealth of Independent States
*Based on total electricity consumption (does not consider segmentation by final demand category).
Sources: World Economic Forum with data on 2018 household electricity tariffs from Enerdata, and on per capita electricity consumption from IEA, “Data and
statistics” 2017
Fostering Effective Energy Transition 2020 edition 21
Figure 9: Average household electricity bills* as percentage of private final consumption expenditure per capita,
2018 (current international $, PPP)
0% 2% 4% 6% 8% 10% 12%
Iceland
Finland
Czech Republic
Estonia
Belgium
Spain
Sweden
Slovenia
Portugal
Germany
Cyprus
Norway
Denmark
Jamaica
South Africa
China
Vietnam
Slovak Republic
Singapore
Chile
Poland
Japan
Serbia
Bosnia and Herzegovina
Cambodia
Thailand
Korea, Rep.
Brazil
Greece
Hungary
Turkey
Albania
Australia
Croatia
Luxembourg
Nicaragua
Italy
Ireland
Austria
New Zealand
Tunisia
Uruguay
Latvia
France
Canada
Netherlands
Jordan
Honduras
Bulgaria
Morocco
Malta
Malaysia
Romania
India
Philippines
Saudi Arabia
Russian Federation
Azerbaijan
Colombia
Lithuania
Armenia
Ukraine
Israel
Mongolia
Dominican Republic
United Kingdom
Indonesia
Peru
Senegal
El Salvador
Qatar
Switzerland
Algeria
Cameroon
United States
Bolivia
Oman
Ecuador
Costa Rica
Guatemala
Paraguay
Mexico
Sri Lanka
Kenya
Egypt, Arab Rep.
Pakistan
Lebanon
Ghana
Bangladesh
Nigeria
Haiti
Advanced Economies Emerging and Developing Asia Sub-Saharan Africa Middle East and North Africa
Emerging and Developing Europe Latin America and the Caribbean Commonwealth of Independent States
*Calculated based on overall energy consumption (does not consider segmentation by final demand category)
Sources: World Economic Forum with data on 2018 electricity tariffs from Enerdata; on per capita energy consumption from IEA, “Data and statistics”
2017; and on private final consumption expenditure from the World Bank, “Households and NPISHs [Non‑profit institutions serving households] final
consumption expenditure, PPP (current international $)”, https://data.worldbank.org/indicator/NE.CON.PRVT.PP.CD
18
16
14
Wholesale Gas Price, $/MMBtu
12
10
0
2013 2014 2015 2016 2017 2018
Source: International Gas Union, Wholesale Gas Price Survey 2019 edition
2017
2015 -50%
2013
2017
2013
2017
2013
0.0% 0.8% 1.6% 2.4% 3.2% 0.0% 0.8% 1.6% 2.4% 3.2% 0.0% 0.8% 1.6% 2.4% 3.2%
Source: World Economic Forum based on International Monetary Fund, “Global Fossil Fuel Subsidies Remain Large: An Update Based on Country‑Level
Estimates”, 2019
Figure 12: (left) Energy consumption vs population, (right) Energy consumption per capita vs population, 2000 and 2017
100 800
700
80
600
70
60 500
50 400
40
300
30
200
20
100
10
0 0
0 20 40 60 80 100 0 20 40 60 80 100
Percentage of global population Percentage of global population
2000 2017
Sources: IEA, World Energy Balances 2019; World Bank population data
Regulations and Political Commitment Institutions and Governance Capital and Investment
100
90
80
70
60
50
40
30
20
Dimension Score (out of 100)
10
0
Percentage of Countries
90
Potential challenges Leading
80
COL
System Performance (%)
70
HRV HUN
MAR
60 THA CZE
ARE
NAM
50
KEN
JOR
40
Emerging Leapfrog
30
20 30 40 50 60 70 80
Transition Readiness (%)
2015 2020
Overall, the capital and investment and regulations The cascading effects of the COVID‑19 pandemic,
and political commitment enablers show maximum immediately following prolonged international trade
improvement, increasing by 12% and 6%, respectively, disputes, have brought the global economy to a grinding
over the past six years, supported by technological halt – sending shockwaves through the energy markets.
improvements and public engagement, and capitalizing As countries and companies rapidly reallocate resources
on the economic expansion leading up to 2019. However, to protect lives and livelihoods, their immediate priorities
the environment has shifted fast in the wake of compounded may shift away from energy transition and climate change.
disruptions from the COVID‑19 pandemic, potentially The era of compounded disruptions is a litmus test
straining the bandwidth of investors and policy‑makers for the energy transition, asserting the importance
to pursue long‑term plans for energy transition with the of the twin objectives of robustness and resilience.
same sense of urgency. The energy system has withstood Robustness in policy design implies institutional and political
recurring disruptions over the past few decades. While some characteristics remaining functional at a desired level during
of these conditions, such as extreme weather events like external shocks, and resilience indicates the need for
wildfires and tropical storms, and mixed reactions to carbon systems and processes to identify “black swan” events and
prices or environmental legislation, have been localized to be prepared to address them when they occur.45
to countries or industry sectors, the current environment
constitutes a perfect storm of compounded disruptions,
touching every corner of the planet.
As the world becomes more interconnected, society The near‑term prospects of multilateral cooperation appear
becomes increasingly susceptible to compounded bleak, with the postponement of the COP26 UN climate
disruptions that reverberate globally. The beginning of change conference in Glasgow due to the COVID‑19
2020 has demonstrated the scale and impact of a global pandemic. In the current context, unilateral action by
contagion and, subsequently, what these exogenous countries,50 including those where simultaneous gains
shocks can do to the systems in place. Viruses are for the energy transition and the health emergency could
spreading faster and wider, wildfires are intensifying, be achieved, should be sought. For example, the bailout
hurricanes are causing more damage, the global financial package of the American automotive sector in 2009 in the
system is more leveraged and vulnerable. Even our aftermath of the financial crisis required compliance with
infrastructure is sensitive to cyberattacks from abroad. more stringent fuel economy standards.51 To encourage
How our climate and energy imperatives in this era of governments to raise the level of ambition for the energy
unprecedented shocks are managed remains to be seen, transition and environmental goals, it is important to
but it is critical not to lose sight of long‑term goals that consider the following:
could easily be overshadowed by short‑term priorities.
– Net‑zero emissions commitments need consistent
5.1 Regulations and political commitment definition, tangible roadmaps and milestones.
Although the cumulative emissions and energy
While governments around the world are scrambling to consumption of countries with net‑zero ambitions
deal with the fallout from the COVID‑19 pandemic, the oil remain a small proportion of the total (Figure 15), the
shock and financial market volatility, maintaining focus on concept of “net zero” has different interpretations.
the energy transition and climate change is essential. The Factors such as the choice of greenhouse gases, the
effects of the COVID‑19 pandemic and climate change treatment of offsets and negative emission alternatives,
are similar in terms of their global scale, the exponential boundaries for accounting emissions, and target starting
growth of their impacts, the need for decisive action, the points and timelines can have different implications
importance of scientific evidence, the risks to all parts of for establishing adaptation and mitigation roadmaps,
the economy, and the existential threat to the less affluent including the speed and scale of the energy transition.
sections of society. Moreover, as is the case with COVID‑19, Terms such as “carbon neutral”, “climate neutral”, “net
it is only through concerted societal action that the zero”, “zero emissions” or “decarbonization” have been
primary objective of “bending the curve”,46 in this case of used interchangeably,52 leading to ambiguity in setting
emissions, can be achieved. Furthermore, effective actions milestones and monitoring progress. As more and more
that withstand the test of time require a comprehensive countries step forward to declare their commitments,
approach to decision‑making that results in long‑term, net‑zero targets need a consistent definition.
stable and ambitious policy actions.
Share (%) of Global Total Share (%) of Global Total Share (%) of Global CO2 Emissions
Net Zero Target Status
Energy Supply, 2017 Nominal GDP, 2017 from Fuel Combustion, 2017
Achieved ~0% ~0% ~0%
In Law 3.8% 8% 2.3%
Proposed Legislation 8.7% 15% 7.8%
In Policy Document 0.5% 1.5% ~0%
Under Discussion 7.8% 6.9% 6%
Uncovered 79.3% 68.7% 84%
Sources: Energy & Climate Intelligence Unit, “Net Zero Tracker, Net Zero Emissions Race”, February 2020, https://eciu.net/netzerotracker; Total energy supply:
IEA, World Energy Balances 2019; Nominal GDP: World Bank, “GDP (current US$)”, 2019, https://data.worldbank.org/indicator/NY.GDP.MKTP.CD; Global
CO2 emissions from fuel: Global Carbon Atlas, 2020, http://www.globalcarbonatlas.org/en/content/welcome‑carbon‑atlas
– A sector‑specific approach, gradual implementation – Incentives and regulations can increase the
and distributional considerations are critical for coverage of corporate commitments to climate
success where carbon pricing mechanisms are action. Actions by corporations can make a significant
established. So far, implemented or scheduled carbon difference, especially in countries where national targets
pricing instruments account for 20% of global greenhouse are yet to be determined. An increasing number of
gas emissions.53 At COP25 in Madrid, parties failed to companies have declared net‑zero emissions targets,
agree on regulations and frameworks for carbon markets. doing so to respond to consumer preferences, gain a
One of the reasons was the regressive nature of carbon competitive edge and future proof their business. By and
taxes and the challenges to trade competitiveness that large, however, corporate commitments come from large
could arise from carbon leakage. Evidence suggests global organizations, many with end‑consumer‑facing
that leakage risks are restricted to sectors exposed to business models, operating in low abatement cost
international trade and not to sectors with local boundaries, sectors (though not all). Organizations that are small
such as power generation, transportation and buildings.54 or medium sized, in hard‑to‑abate sectors or with
Carbon pricing, if accompanied by targeted fiscal support less end‑consumer interaction would benefit from
to sectors vulnerable to a loss of competitiveness from more effective incentives and regulations to commit
carbon leakage, could be more effective. Gradually to transforming their businesses in line with Paris
increasing the carbon price floor to an optimal level, as Agreement targets.
implemented in Canada,55 can mitigate the economic
consequences by allowing business more time to adjust
smoothly. Finally, to avoid a disproportionate effect on
the cost of living of households in the lower‑income
bracket, carbon pricing should include revenue recycling
mechanisms56 for progressive taxation.
By Christiana Figueres, Founding Partner, Global Demands for governments to follow such a path are
Optimism, United Kingdom surging. Whether it’s protestors in the streets, legal action,
or appeals from health professionals, investors, unions and
The COVID pandemic has coincided in 2020 with the non‑profits, the momentum behind the climate movement
necessary climate turning point, the point at which is unstoppable. Demands for leaders to act on the scientific
greenhouse gas (GHG) emissions must begin their imperative are driven by outrage and fear for the future,
steady decline in order to avoid the worst impacts of but they’re also inspired by the undeniably desirable
climate change. We know that greenhouse gases outcomes of such action: the clean air imperative, the
will drop this year due to the worldwide economic health imperative, the energy independence imperative,
paralysis, but that is by no means good news due the economic imperative, the resilience imperative, the
to the high humanitarian price we are paying. It is social and intergenerational justice imperative and the
also not the approach anyone would take to addressing jobs imperative, all stacked up on each other, mutually
climate change. reinforcing, and pointing in the same direction.
To be effective, the decarbonization of the economy The fossil fuel and big agriculture industries were, in
needs to be pursued in a planned and constructive their nascency, driven by noble imperatives as well, but
manner, having overwhelmingly beneficial effects for the unintended consequences, so damaging to our
society and the economy. That is precisely the potential planet and our health, are now well documented. The
silver lining in the health crisis. We now have no option time is over for justifying policies and subsidies that
but to rebuild our economy, and that rebuilding can be enable such damage to continue. We now have the
thoughtfully designed to both provide millions of jobs in understanding, the technology and the capital to forge
the short term, as well as strengthen the resilience of the a different path. A path full of opportunity, excitement
economy in the long term. But we have to take those and benefit, and the ways forward – already under
decisions now. pursuit by many – are laid out in this excellent report.
The scientific evidence is clear about anthropogenic Technology alternatives to fossil fuels are rapidly
influences on climate change, and there is limited time maturing and ready to scale, and finance is already
for action. Over the next 10 years, we must halve our shifting in favour of the great decarbonization. At the
GHG emissions output by drawing down a staggering time of writing, US$39 trillion of the world’s annual
amount of carbon now concentrated in our atmosphere gross domestic product (GDP), or around 49%, is being
from coal, oil and gas combustion, deforestation and generated in jurisdictions with an actual or proposed
commercial agriculture. net‑zero target. That includes 121 nations which have
either set or proposed or are currently discussing a goal
This 10‑year transformation will put us on track to limit to cut their carbon emissions down to net zero in or
the temperature rise to 1.5ºC, enabling humanity to adapt before 2050. Carbon pricing has been implemented or
as best we can to the challenges of our changing climate scheduled for over 20% of global GHG emissions across
and to ultimately survive and prosper. 40 national jurisdictions. The challenge now is less about
the direction of travel and more about speed.
The impacts manifesting as a result of our inaction
to date have been shocking: this year’s bushfires in But if we are to unlock faster progress in the energy
Australia, the floods in Indonesia and the locust swarms transition, which we must, we will have to put our minds
in East Africa have been deeply painful. Leaders are to it. We have to intentionally choose it. We now have
waking up to what is at stake. first‑hand experience of shattering impacts worldwide.
As we also bear witness to the devastating impacts of
As we have learned from the health pandemic, to be climate change on our homes and communities across
effective in the face of risks, governments must be the globe, we can clearly see what a deteriorated
decisive. Once governments choose to pursue the future will mean for our children. Delaying any further
necessary emissions cuts and restoration of nature, is unconscionable. We must choose to increase our
and their commitments are incorporated into improved ambition, to increase our emissions cuts, and to increase
pledges under Paris, the post‑2020 Biodiversity our efforts to protect biodiversity.
Framework and domestic policies, the door of resilience
and possibility will be flung open. As the world turns its attention to the recovery we must
ignite, we must commit to rising to the increasing global
risks in a timely fashion. It is a commitment to ourselves,
to each other and, above all, to all those whose destiny
depends on us.
The definition of governance An ambition to protect the An ambition to end poverty An ambition to ensure that
is evolving as organizations planet from degradation, and hunger, in all their forms all human beings can enjoy
are increasingly expected to including through and dimensions, and to prosperous and fulfilling
define and embed their sustainable consumption ensure that all human beings lives and that economic,
purpose at the centre of and production, sustainably can fulfil their potential in social and technological
their business. But the managing its natural dignity and equality and in a progress occurs in harmony
principles of agency, resources and taking urgent healthy environment. with nature.
accountability and action on climate change,
stewardship continue to be so that it can support the
vital for truly “good needs of the present and
governance”. future generations.
By Kenneth Rogoff, Thomas D. Cabot Professor of Phasing out coal is far more challenging for Asia
Public Policy and Professor of Economics, Harvard than for Europe and the US, in part because coal
University, USA plants in advanced economies are already nearing
the end of their life cycle and in part because coal is
It is hard to imagine any way forward on global warming plentiful. Of course, for this reason, carbon capture
that does not centrally feature placing a uniform global technologies also have to be a leading option.
price on carbon emissions. Global, because today
emerging markets account for the lion’s share of Admittedly, the political economy of a World Carbon
emissions growth. Uniform, because the cost of carbon Bank would be challenging. Rich countries, many in the
emissions is roughly the same no matter what country the midst of populist uprisings, need to be persuaded that
source, and having substantially different prices in different dramatic changes are needed for future generations.
countries will lead to widespread distortions. Having a COVID-19 has now forced a reallocation of resources
price on carbon is important to incentivize producers and and will likely continue to do so until normalcy is restored.
consumers to conserve carbon‑intensive activities, and Programmes for aid must be resistant to gaming
to incentivize innovation and investment. The challenges because countries could exaggerate their plans to build
are many, from developing clear technical standards to new coal plants. And there is the question of how to
persuading rich‑country citizens to change their lifestyles. transfer new technologies to emerging markets without
simply bidding up prices for monopoly innovators, so that
However, a major piece of any solution has to involve in effect most of the financial aid intended for emerging
buy‑in from emerging markets and developing countries, markets ends up in the pockets of wealthy private
where emissions growth is greatest (particularly out of entrepreneurs. These are challenges but, with thoughtful
Asia) and where energy needs in many quarters are often design, it should be possible to overcome them.
desperate. In Africa, only 43% of people have access
to electricity, versus 87% worldwide. So far, most of the To be clear, eligibility for World Carbon Bank aid would
political discussion in advanced economies has focused ultimately require that countries buy in to instituting a
on how to decarbonize at home without recognizing that carbon tax at the global level. Alternative approaches to
this will do little good if pollution continues unabated raising the price of carbon are possible, and it is true that
elsewhere. Indeed, the debate has many parallels to various rationing schemes have proven more politically
discussions of inequality in most advanced economies, palatable in domestic politics. However, centuries
which reflect a legitimate need to achieve greater income of experience with international trade agreements
equality within rich countries, but pay only cursory underscore that price mechanisms are much more
attention to the rest of the world, which is by and large transparent and straightforward to monitor.
vastly poorer. For the inequality debate, the disconnect
sometimes seems hypocritical. For dealing with global It should be mentioned that Europeans aim to incentivize
warming, if rich countries continue to ignore the needs of emerging markets with the stick of a border adjustment
the rest of the world, it could prove catastrophic. tax, imposed on countries that do not institute a
carbon tax/price at the European level. This is far from
It is high time to think about building global institutions adequate, however, first because it may simply redirect
to help facilitate the necessary transfer of resources and trade and production, but perhaps more importantly
technologies from high‑income to low‑income countries, because developing countries will likely see this as a
and to get serious about how to finance them. There are trade war. The US and Europe have been responsible
many possible approaches, but a practical one is to start for most of the carbon build‑up to date and still have
a World Carbon Bank that will serve both to facilitate far higher carbon emissions per capita. For them to
transfers, but also house technical expertise, and to say they will stabilize or slightly reduce their high per
provide a platform so that country governments can capital emissions, but developing countries should just
share experiences and best practices. accept that they cannot follow the same energy‑intensive
development path, is a recipe for unsustainable political
From an administrative point of view, I have in mind a frictions. Any plan, including a border tax plan, needs
framework parallel to the World Bank and International to support carbon‑reduction adaptation in emerging
Monetary Fund, with their emphasis on having markets, and any plan needs a technocratic framework
outstanding technocratic staff and the use of “mission for implementing the politically agreed solution.
technology”, both honed for providing policy advice.
Importantly, however, the financing for the World Carbon There is no single comprehensive solution to global
Bank must come in the form of outright aid and not warming, but a global carbon tax is the nearest thing.
simply subsidized loans. At the same time, the likely And it will be meaningless to try to enforce one without
scale of the aid will be far greater than the annual cost enthusiastic participation from major emerging markets
of the existing institutions. As for the early projects of such as India and China. A World Carbon Bank is a
a World Carbon Bank, probably none is higher priority logical step forward.
than helping sharply scale back the use of coal in Asia.
Figure 17: Levelized cost of energy for onshore wind, solar PV and lithium‑ion batteries, 2009‑2018
Onshore Wind – Unsubsidized, $/kWh Solar PV – Unsubsidized, $/kWh Li-ion Battery Pack, $/MWh
120 300
1000
100 250
800
-69% -88%
-85%
80 200
600
60 150
400
40 100
20 50 200
0 0 0
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2010
2011
2012
2013
2014
2015
2016
2017
2018
Sources: Lazard, “Levelized Cost of Energy and Levelized Cost of Storage 2018”, 8 November 2018, https://www.lazard.com/perspective/
levelized‑cost‑of‑energy‑and‑levelized‑cost‑of‑storage‑2018; BloombergNEF, “A Behind the Scenes Take on Lithium‑ion Battery Prices”, 5 March 2019,
https://about.bnef.com/blog/behind‑scenes‑take‑lithium‑ion‑battery‑prices
Figure 18: Average energy intensity (GJ/$GDP PPP, 2011) for regional clusters, 2007 and 2017
9.0
8.3 Average Energy Intensity, 2007 Average Energy Intensity, 2017
8.0
8.0
6.9
7.0 6.5
6.0
5.4
5.2 5.2 5.1 5.2
4.8 4.9
5.0 4.7
4.3 4.3
4.0
3.0
2.0
1.0
0.0
Commonwealth Sub-Saharan Middle East Latin America Emerging and Emerging and Advanced
of Independent Africa and North Africa and the Developing Asia Developing Economies
States Caribbean Europe
Figure 18 shows the average energy intensity for the workforce, and economic growth relies to a large extent on
115 countries in the ETI, by regional classification. Some the demand for consumer goods in developed economies.
high‑income countries have managed to decouple the Notwithstanding the importance of basic activities to
energy consumption and total carbon emissions from produce essential items, substantial productivity and
economic growth, by shifting the structure of their energy efficiency gains can help emerging economies transition to
system and the economy as a whole. Transforming the higher complexity activities.
structure of the energy system requires a mix of supply‑
and demand‑side interventions, to shift the installed – Countries with higher levels of economic complexity
base of technologies in energy production and final are better prepared for the energy transition. Figure
demand towards low‑carbon alternatives. On the other 19 illustrates that a higher level of decoupling between
hand, shifts in the economic structure imply diversifying emissions and economic growth72 is associated with
economic activities to reduce dependence on fossil fuels both a higher degree of economic complexity73 and
and changing the composition of a country’s productive transition readiness (as measured in the ETI). The
output to higher value‑add and complex sectors. capabilities leading to increasing levels of economic
Complex economies generate a larger share of GDP complexity in countries are largely similar to the enablers
from knowledge‑intensive products, characterized by for energy transition, indicating the synergies between
sophistication and specialization. While an increase in structural economic transformation and effective
economic complexity leads to a short‑term increase in energy transition. In addition to the traditional economic
emissions, evidence from multiple countries shows a growth model with capital and labour inputs, structural
decline in emissions in the long run.70 Moreover, a higher transformation can be accelerated though capabilities
level of economic complexity is also associated with lower such as human capital development, physical and digital
levels of unemployment.71 This is particularly relevant for infrastructure, and a robust institutional framework with
emerging economies, where energy‑intensive sectors like rule of law, property rights, etc.74
agriculture and extractives employ significant portions of the
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
Higher level of decoupling between total emissions and GDP growth
Sources: Economic complexity from the Atlas of Economic Complexity, Harvard University, https://atlas.cid.harvard.edu/, and Transition Readiness from
the World Economic Forum
Figure 20: Selected survey responses from “Youth Perspectives on Energy Transition” (n = 150)
41%
25%
To what degree does the energy
efficiency labelling of devices 15% 13%
inform your purchase decisions? 7%
29% 31%
36%
32%
By David Victor, Professor, University of California, Lurking in all this are important matters of justice.
San Diego (UCSD), USA Subsidies and other forms of price controls are often
cloaked in the logic that they help the poor. (Gabriela and
Consumer acceptance is essential to sustainable energy I found that, for the most part, these subsidies benefit
transitions, especially in these hard economic times richer consumers.)
caused by the global pandemic. Consumers, of course,
ultimately pay for whatever happens in the energy Often those who pay the most have a hard time
system. They are also constituents whose interests – organizing and expressing their political voice, which
reflected in many ways from voting to protest to other is why careful attention to consumer impacts is so
forms of political support and opposition — shape what important. The political system, on its own, won’t
is feasible. For too long, analysts have been imagining ensure a just transition. Many elements of the energy
clever energy transitions that can solve many problems transition that are most exciting and urgent, such as
of environmental sustainability, such as climate change deep decarbonization and the creation of distributed
and water scarcity, without paying enough attention to prosumers around power grids, are unlikely to be free
political sustainability. Consumers sit at the centre of that or even cheap. Policies that can make the energy
political equation. transition align with the goals of social justice will have
many dimensions, including worker retraining and
One thing that is clear about consumer behaviour is re‑employment. At the centre, however, will be active
that people are often highly sensitive to visible changes policies to manage the cost impacts on consumers who
in price. That’s particularly evident in the politics of fuel are the least well off economically.
pricing, which can be treacherous. Even as political
leaders have found multiple ways of adopting costly Technology will be pivotal. On the one hand,
policies in many sectors of the economy, anything that technological change has made it easier to segment
conspicuously raises fuel prices must be treated with markets and to tailor services exactly to the people who
political caution. The “yellow vests” movement in France is can pay. Those innovations have the potential to erode
but one example. Fuel riots in Iran and consumer pressure the social contract that has guided much of modern
against climate policies in the United States are others. energy supplies — for example, the idea that every
household should have access to a reliable power grid at
In all these cases, consumer reactions are a blend of reasonable cost. On the other hand, technologies such
many different factors — the yellow vests movement, as smart cards and modern control systems have made
for example, isn’t simply about the cost of a carbon tax it easier to target the benefits of subsidies and other
but also about the cost of living in rural areas and the energy policies to the households that need them most.
peripheral feeling of being left behind while elites at the Technology and markets, on their own, won’t ensure a
centre, in Paris, push the country in new directions. But just transition.
the fact that fuel prices become the weapon for protest
makes politicians skittish, and that makes politically On every front, then, policy is essential to steering the
sustainable energy transitions hard to organize. energy transition. In a global economic crisis, with
lots of potential for massive reform and restructuring,
This political wariness of creating visible costs from it is particularly important to focus on how policies
policy has been particularly evident to reformers of affect consumers and what they are willing to support
fossil fuel subsidies. For decades it has been known politically. It can help ensure that energy transitions are
that subsidy reform is one of the most cost‑effective just and reasonable — and effective at delivering what
ways to reduce emissions and get market signals society wants from its energy systems.
aligned in energy markets. For decades, politicians have
learned that subsidy reform is hard – in part because
special interests are tightly co‑mingled with consumer For too long, analysts have been
wariness about change. Working with a team of experts imagining clever energy transitions that
from the World Bank, leading economist Gabriela can solve many problems of environmental
Inchauste and I published a study in 2017 that looked
closely and systematically at the politics of subsidy sustainability, such as climate change and
reform and found that successful reform strategies water scarcity, without paying enough
require politically strategic choices. They must figure out attention to political sustainability.
which interest groups can be taken on and also how to Consumers sit at the centre of that
keep broad public acceptance of reform. Reform, nearly political equation.
always, is not across‑the‑board following elegant,
simple principles of economic policy design, but a
kind of sausage‑making that must navigate political
obstacles and create political allies.
The ETI 2020 analysis indicates gradual progress on As countries act to control the economic and social
the energy transition over the past six years. A majority consequences of COVID‑19, the situation today could
of countries have made varying degrees of progress on provide an opportunity to leapfrog into the energy
the three dimensions of the energy triangle: economic transition. Applying economic stimulus to areas such
development and growth, environmental sustainability, and as energy infrastructure modernization, research and
energy access and security. The lack of consistent progress development, and human capital development can
in many countries, however, highlights the challenges in deliver long‑term sustainable economic growth, while
navigating the complexity of the energy transition. The also achieving step change in the energy transition.
gaps between the top performers and the rest have been Policy‑makers, private‑sector entities, civil society groups
steadily decreasing, mainly due to rising levels of political and consumers will play a critical role in this process –
commitment and improving access to capital for investment highlighting the importance of a common understanding of
in emerging economies. This also highlights the need for the priorities among all stakeholder groups, and increased
transformative and breakthrough solutions to unlock the next multistakeholder collaboration at the national, regional and
wave of substantial gains for advanced economies. global levels.
Advanced Economies Note: The Energy Transition Index benchmarks countries on the performance of their energy system, as well as their readiness
Commonwealth of Independent States for transition to a secure, sustainable, affordable, and reliable future energy system. ETI 2020 scores on a scale of 0 - 100.
Emerging and Developing Asia
Emerging and Developing Europe
Latin America and the Caribbean
Middle East, North Africa and Pakistan
Sub-Saharan Africa
The framework for the ETI, the classification of indicators in dimensions and their respective weights are summarized in
Figure 21:
ETI score
Infrastructure
Economic Regulation Energy
Environmental Energy Access Capital & Institutions & & Innovative Human
Development & & Political System
Sustainability & Security investment Governance Business Capital
Growth Commitment Structure
Environment
33% 33% 33% 17% 17% 17% 17% 17% 17%
Affordability
Industry competitiveness
Fossil fuel subsidies
Cost of externalities
GDP contribution
Air pollution
Energy intensity
Carbon intensity
Energy access
Quality of supply
Security of supply
Ability to invest
Access to capital
Recent investment into EE
Recent investment into RES
Commitment to intl. agreements
Quality of supply
Regulation to support EE, RES, Access
Rule of law
Stable finances
Trade logistics
Transportation infrastructure
Innovative business environment
Quality of education
Details on the selection, aggregation and normalization of indicator data and the data sources can be found in Singh et al., “The energy transitions index:
An analytic framework for understanding the evolving global energy system”, Energy Strategy Reviews, vol. 26, 2019.
Source: World Economic Forum
3. Regional classification
Others (No Data) Emerging and Developing Europe Middle East and North Africa Latin America and the Caribbean
Commonwealth of Independent States Advanced Economies Emerging and Developing Asia Sub-Saharan Africa
This map was created for illustrative purposes only, using publicly available sources. The boundaries shown do not imply any opinion on the part of the
World Economic Forum. No citation or use of this map is allowed without the written consent of the World Economic Forum.
Source: World Economic Forum
Climate Action Tracker, Enerdata, Fitch Ratings, Heritage Fahad Alidi, Fellow, Platform for Shaping the Future of
Foundation, International Energy Agency, International Energy and Materials
Gas Union, International Monetary Fund, International
Renewable Energy Agency, Moody’s, PBL Netherlands Roberto Bocca, Head of Shaping the Future of Energy and
Environmental Assessment Agency, Standard & Poor’s, Materials, Member of the Executive Committee
Transparency International, UN SEforALL, UN Statistics
Division and UNCTADstat, World Bank Group, World Health Pedro G. Gómez Pensado, Head of Oil and Gas Industry
Organization, World Trade Organization
Wan Sayuti, Fellow, Platform for Shaping the Future of
Chief expert advisers Energy and Materials
The World Economic Forum acknowledges and thanks the Harsh Vijay Singh, Project Lead, Platform for Shaping the
individuals and experts without whose support this report Future of Energy and Materials (lead author)
would not have been possible:
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