World Economic Forum releases study measuring readiness for clean energy transition in 115 economies
Mita Srinivasan
10x Industry

World Economic Forum releases study measuring readiness for clean energy transition in 115 economies

The coronavirus pandemic risks cancelling out recent progress in transitioning to clean energy, with unprecedented falls in demand, price volatility and pressure to quickly mitigate socioeconomic costs placing the near-term trajectory of the transition in doubt.

Policies, roadmaps and governance frameworks for energy transition at national, regional, and global levels need to be more robust and resilient against external shocks, according to the latest edition of World Economic Forum's Fostering Effective Energy Transition 2020 report published this week.

COVID-19 has forced companies across industries to adapt to operational disruption, changes in demand and new ways of working, and governments have introduced economic recovery packages to help mitigate these effects. If implemented with long-term strategies in mind, they could also accelerate the transition to clean energy, by helping countries scale their efforts towards sustainable and inclusive energy systems.

The report draws on insights from Energy Transition Index (ETI) 2020, which benchmarks 115 economies on the current performance of their energy systems – across economic development and growth, environmental sustainability, and energy security and access indicators - and their readiness for transition to secure, sustainable, affordable, and inclusive energy systems.

The results for 2020 show that 75% of countries have improved their environmental sustainability, even as the global average score for this dimension remains the lowest of the three categories assessed. This progress is a result of multifaceted, incremental approaches, including pricing carbon, retiring coal plants ahead of schedule and redesigning electricity markets to integrate renewable energy sources.

However, this hard-won progress highlights the limitations of relying only on incremental gains from existing policies and technologies to complete the transition to clean energy. The greatest overall progress is observed among emerging economies, with the average ETI score for countries in the top 10% remaining constant since 2015, signalling an urgent need for breakthrough solutions, currently threatened by COVID-19.

Highlights from the Energy Transition Index 2020

Only 5 countries from the G20 make it to the top 10. Sweden leads the ETI for the third consecutive year, followed by Switzerland and Finland. France and UK are the only G20 countries in the top 10. Performance is mixed among the rest of the G20. Emerging centres of demand such as India (at 74) and China (at 78) have made consistent efforts to improve the enabling environment, which refers to political commitments, consumer engagement and investment, innovation and infrastructure, among others.

The fact that only 11 out of 115 countries have made steady improvements in ETI scores since 2015 shows the complexity of energy transition. More than 80% of countries have improved performance on energy access and security since 2015, but progress in developing countries in Asia and Africa remains a challenge. Energy access programs in these regions need to prioritize community services, such as street lighting, district heating and cooling, cold storages for food and pharmaceuticals preservation, urban sanitation and traffic management.

In advanced economies, “access” is defined by affordability. Utility bills represent growing share of household expenditure, a challenge that could be exacerbated by the economic uncertainties created by COVID-19. Furthermore, energy security is increasingly vulnerable to extreme weather events such as hurricanes, floods and wildfires – which have been rising in frequency and intensity – and cyber-attacks.

While the gaps between what is required, what is committed, and what is likely to be achieved remain large, the compounded disruptions from COVID-19 have destabilized the global energy system with potential short-term setbacks.

You can access the full report here.