The World Economic Forum report highlights several countries that have implemented encouraging policies for the energy transition. What remains to be done today and in the near future
The “Fostering Effective Energy Transition” report produced by WEF in collaboration with Accenture, in addition to pointing out the most critical aspects underlying the energy transition in the world, also highlights which countries are the most (and least) virtuous in this transition which includes production from renewable sources, but also attention to the fundamental aspects of a real transition which must include, in the most homogeneous way, equity, sustainability and safety.
Takeaway
The WEF report dedicated to the promotion of the Energy Transition lists several countries that have taken important steps. There are not only the “usual suspects”: from Kenya to Costa Rica, from Azerbaijan to Ghana, the attention to renewables is global as ever. What remains to be done to implement a transition from fossil fuels to renewables, promoting energy economies that contemplate equity, security and sustainability? We need investments, but we also need a regulatory framework that encourages and supports change. From energy storage to CCS systems, various technologies must grow almost exponentially in order to reach the goal of net zero economy by 2050.
The picture in the world: the most virtuous countries in the energy transition
A first element that unites the 120 countries analyzed with the lens of the Energy Transition Index is that they all share common attributes, including a reduced level of energy subsidies, greater energy security obtained thanks to a diversified energy and electricity mix, a greater share of “clean” energy in the same energy framework and a strong and favorable regulatory environment to guide the energy transition.
Most countries show progress, with developing nations taking center stage.
Looking at the top of the ranking, the top ten countries come from Western and Northern Europe and account for 2% of energy-related CO2 emissions, 4% of total energy supply and 2% of the world‘s population. It is not a representative sample of substantial change: proof of this is that of the ten largest economies in the world, only France figures in the top ten. In partial compensation, the top twenty positions include China and Brazil.
While there are many advanced economies in the top spots, it should also be noted that there are also 14 countries from developing and emerging Europe, developing and emerging Asia, Latin America and the Caribbean
As for the virtuous countries, Azerbaijan e Kenya they are the two countries that recorded the greatest improvements between 2022 and 2023. Having said that only India and Singapore are making progress on all aspects of the performance of the energy system, other virtuous countries can be seen in particular aspects. In terms of equity Oman, Canada, the United States and Sweden stand out while the best in terms of size safety, alongside advanced economies, such as the United States, Australia and Estonia, is Malaysia, a developing country. Still on the subject of security, Brunei, Ghana and Albania also show excellent results. The first state has focused on diversifying its energy sources, while Ghana and Albania have reduced imports and improved energy reliability.
In terms of sustainabilityLatin America leads the ranking in size with Costa Rica, Paraguay and Uruguay, thanks to its abundant hydroelectric potential.
Overall 62% of the world‘s population today resides in a country that is leading or progressing towards a just energy transition. In these countries, efforts are being made to promote conditions for achieving energy equity and to reduce social inequality, as well as to address wider energy affordability.
Energy Transition: the elements to consider today and tomorrow
To achieve an effective Energy Transition, countries must balance their energy system across the dimensions of equity, security and sustainability and make progress on all fronts. This is a shortcoming so far that is recognized in the vast majority of states.
The elements of the Energy Transition Index according to the analysts of the World Economic Forum
The problem is that, faced with a still uneven picture, there is a need to accelerate the transition towards renewable sources, towards systems and solutions capable of reducing an overall decarbonisation of many of the most impactful sectors. However, a picture remains, as stated in the report, in which:
“Several environmental, macroeconomic and geopolitical events over the last decade have affected the energy system in myriad ways and have highlighted the complexities of the energy transition. Over the past decade, the world has taken significant steps towards transitioning to low-carbon energy systems, albeit not at the pace needed to achieve net-zero emissions by 2050.
However, not all is bad. Far from it. This is confirmed by the fact that over the last decade, 83% of the countries monitored by the ETI have improved the performance of their energy system, an indication of their strong energy system growth. Overall average system performance scores have steadily increased.
Financial investments in renewable energy continue to be a key driver for economies in transition. They feed other enablers of the Energy Transition, such as the development and implementation of technology, actively facilitating the increase in the capacity of renewable energy and associated infrastructure. Despite the progress made, investment in clean energy supply still remains critical. Only six countries have managed to allocate more than 1% of their GDP in 2022 to investments in renewables.
As of 2023, only 17 out of 120 countries have managed to reflect their net-zero targets in the regulatory framework.
The International Energy Agency estimates that approximately US$2.8 trillion will be invested in energy in 2023. More than US$1.7 trillion will be allocated to clean energy, including renewable energy, nuclear, grids, storage, low-carbon fuels, efficiency and end use of renewable energy and electrification.
“For every dollar spent on fossil fuels, now 1.7 are spent on clean energy. Five years ago this ratio was one to one.”
Where you need to accelerate
A number of industries need to speed up the transition. In this sense, the industrialization of advanced solutions has the potential to reduce costs, so it is necessary to exponentially accelerate the speed and scope of their implementation. For example, to be on the road to net zero goals by 2050, the energy system must record a 15-fold growth in battery storage capacity while CCS (carbon capture and storage) systems by a good 40-fold by 2030. At the same time similarly, the green hydrogen market is expected to grow from $500 million to $120 billion and advanced biofuels from $3 billion to $180 billion.
Also according to the IEA, by 2030, 900 billion dollars will have to be invested to modernize electricity grids and build charging stations for public electric vehicles, hydrogen refueling stations, direct air and CO2 capture pipelines, storage facilities and import and export terminals. In addition, $1.7 trillion will need to be invested each year in low-carbon technologies in end-use sectors. Most of these funds will have to come from the private sector, supported by public policies capable of contributing with incentives. We need to speed up, therefore, and we need to do it now, highlights the WEF:
“Actions taken in the early years of this decade of achievement will be key to ensuring that strong long-term ambition is underpinned by immediate progress. The energy transition must be made resilient to maintain speed amid current volatilities and potential future disruptions.”
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