Fostering Effective Energy TransitionEnergy Transition Index 2018

Industry Agenda

Recent reports from the World Economic Forum System Initiative on Shaping the Future of Energy

About the Energy Transition IndexKey findings from the Energy Transition Index 2018

The System Initiative on Shaping the Future of Energy aims to accelerate the development of effective policies, private-sector actions and public-private collaboration for an inclusive, affordable, sustainable and secure energy future essential for economic and social development. The complexity of energy transition requires a systemic perspective and the mobilization of multistakeholder actions. The following reports summarize the Forum’s perspective on other complementary dimensions of energy transition.

Partnering to Accelerate Sustainable Energy Innovation

The implementation of new bold ideas and the replication of good practices are essential for faster innovation in sustainable energy. This report highlights barriers in the innovation process and offers recommendations for step changes to accelerate innovation in a wider set of sustainable energy technologies.

Global Energy Architecture Performance Index Report 2017

This fifth annual edition of the global Energy Architecture Performance Index (EAPI) examines the progress of the global energy transition – that of moving towards more sustainable, affordable and secure energy systems – by benchmarking the energy systems of 127 countries.

Game Changers in the Energy System – Emerging Themes Reshaping the Energy Landscape

This report offers a structured perspective of potential game changers in the next 10 to 20 years in the energy system, which can have step-change implications for different stakeholder groups.

The Future of Electricity – New Technologies Transforming the Grid Edge

The main trends affecting the electricity system are decentralization, digitalization and electrification. This report offers recommendations to accelerate the deployment of these grid edge technologies and effectively realize their economic and social benefits.

AcknowledgementsThe World Economic Forum Energy Transition Index was prepared with analytical support from McKinsey & Company, input from the Forum’s industry communities from Electricity, and Oil & Gas, and government and civil society constituents from the energy sector. The team would like to thank the chief expert advisers involved in this report: Dominic Emery, Vice-President, Long-Term Planning, BP; David Victor, Professor, University of California, San Diego (UCSD); Lin Boqiang, Dean, China Institute for Studies in Energy Policy, Xiamen University; David Turk, Head, Energy and Climate Division, International Energy Agency; Rigoberto Ariel Yepez-Garcia, Chief, Energy Division, Inter-American Development Bank; Davide Puglielli, Senior Manager, Strategy and Mergers and Acquisitions, Enel; Bertrand Magne, Senior Economist and Energy Specialist, SEforALL; Morgan Bazilian, Lead Energy Specialist, World Bank; and Eirik Waerness, Senior Vice-President and Chief Economist, Statoil. Thanks also go to the Climate Action Tracker, Fitch Ratings, Heritage Foundation, International Energy Agency, International Gas Union, International Monetary Fund, International Renewable Energy Agency, Moody’s, PBL Netherlands Environmental Assessment Agency, Standard & Poor’s, Transparency International, UN SEforALL, the UN Statistics Division and UNCTADstat, World Bank Group and the World Trade Organization as data contributors.

The energy transition framework and the index support a call to action for policy-makers, businesses and society to improve the quality of life for their people by creating an enabling environment for effective energy transition. The three major findings from the Energy Transition Index are:

1. Over the last five years, more than 80% of countries improved their energy systems, but further effort is needed to resolve the world’s energy-related challenges. – Current performance and recent improvement in environmental sustainability have done the least well

of the three triangle dimensions. Particle emissions worsened for more than 50% of countries, carbon intensity stayed flat and energy productivity improved by 1.8% per annum (p.a.), falling short of 3%, believed to be required to meet the Paris Agreement.1

– Security and access remains the area with the biggest gap between top- and bottom-performing countries. Almost all countries without total electricity access have seen progress. However, the absolute number of people without access still exceeds 1 billion people globally.2

– Household electricity prices have been rising in real terms since 2013 in more than half of countries globally,3 despite overall decreasing primary fuel prices. Such developments increase pressures to improve affordability of energy.

2. Countries can prepare for future progress by establishing favourable conditions for energy system stakeholders, by targeting improvement across all three triangle dimensions and by pursuing improvement levers with synergistic impact across the system. – The presence of enablers (transition readiness in the ETI) is a strong indicator for the increased

performance of countries’ energy systems. The countries with the highest readiness scores are leading the performance ranking. Without these enablers in place, countries’ performance would be average at best. Since transition readiness is multidimensional, countries need to establish favourable conditions across all six readiness dimensions to fully capture the opportunities from the energy transition.

– Countries that have not pursued a balanced approach to improve the energy triangle across its three imperatives showed below-average performance improvements across all dimensions. On the other hand, countries that managed to develop high performance levels show more balanced improvement across the three dimensions.

– The removal of fossil fuel subsidies and the reduction of energy intensity are important improvement levers as they showed synergistic impact on other dimensions of the energy triangle. Countries with progress in these two dimensions showed overproportionate improvement on the other dimensions across the energy triangle.

3. Countries follow different transition pathways and need to develop country-specific roadmaps; comparative analysis among peers can highlight opportunities to improve such roadmaps. – Countries with high performance and the majority of enablers in place (leading countries) have led the

improvement in environmental sustainability, while countries with relatively low performance or readiness managed to narrow the gap in security and access, and economic development and growth.

– Countries are encouraged to benchmark themselves against comparable peer groups (e.g. geographies, development status, energy trade balance) to identify good practice examples and develop suitable improvement levers, applicable for their circumstances.

– For example, energy importing economies showed higher transition readiness levels and also benefitted more from lower energy prices over the last five years. Of these countries, some with lower performance levels managed to establish a working ecosystem of enablers, including strong regulations, infrastructure and an innovative business environment, which allowed them to attract investment for future improvements, e.g. China or Kenya.

This index attempts to create a fact-based framework that lends transparency to the energy transition debate by benchmarking countries’ energy system performance across three key priorities: energy access and security, environmental sustainability, and economic development and growth.

Additionally, taking a forward-looking perspective, the index identifies a set of systemic enablers that need to be aligned to improve countries’ readiness for a transition towards a future energy system that is secure, affordable, inclusive and reliable. The index highlights countries’ comparative strengths and improvement areas, and allows stakeholders to compare countries’ relative system performance and transition readiness, and identify policy-making priorities as well as opportunities and threats to business.

Further information on the methodology behind the Energy Transition Index can be found in the methodological addendum in this report.

Economic development & growth

Security and access

Environmental sustainability

Energy Triangle

Enabling dimensions

System performance imperatives Transition readiness enabling dimensions

Institutions and governance

Regulation and political commitment

Infrastructure and innovative business environment

Capital and investment

Human capital and consumer participation

Energy system structure

White Paper

In collaboration with McKinsey & Company

Game Changers in the Energy SystemEmerging Themes Reshaping the Energy Landscape

January 2017

World Economic Forum

March 2017

In collaboration with Bain & Company

The Future of ElectricityNew Technologies Transforming the Grid Edge

Industry Agenda

Global Energy Architecture Performance Index Report 2017

Performance/Readiness Matrix

Regional Rankings

Table of RankingsEnergy Transition Index 2018 World Map

0%

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Advanced Economies Emerging and developing Europe Latin America and the Caribbean Commonwealth of Independent States

Emerging and developing Asia Sub-Saharan Africa Middle East, Northern Africa, and Pakistan

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Gre

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Ger

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Can

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Por

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Est

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Spa

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Bel

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Uni

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New

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Fran

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Nor

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Den

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Net

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Kin

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Pol

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Cro

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Her

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Ser

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Geo

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Aze

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Arm

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Fed

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Kaz

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Tanz

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1 2 3 4 5

6 7 8 9 10 11 12 14 16 17 18 19 21 22 23 25 26 30 31 33 35 41 42 46 49 51 57

Average: 64% 27

109 100

89 92

29 40 43 52 55 58 67

Average: 53%

13 20 24 28 32 34 37 38 39

48 56 60 62 69 80 85 94 111

93

Average: 55% 44 45 54

112

Average: 50%

104 82 75 70 68

15 36

50 53 61 63 66 76 78 87 88 90 105

Average: 52% 71 72 73

84 97 98 99 101 102 107 108 114

Average: 44%

110 113

47 59 74 77 79 81 83 86 91 95 96

103 106

Average: 49% 65 64

Emerging and developing Europe

Sub-Saharan Africa

Middle East, Northern Africa, and Pakistan

Commonwealth of independent states

Advanced economies

Latin America and Caribbean

Notes: For the ETI 2018 methodology, see the methodology addendum at the end of this report. Country scores are rounded to full PPT, but exact figures are used to determine rankings. Therefore, countries with the same ETI scores may have different rankings

1 ETI 2018 score on a scale from 0% to 100%

Country name 2018 ETI score 1

System Performance

Transition Readiness

1 76% 81% 71%

2 75% 84% 66%

3 73% 77% 69%

4 72% 72% 73%

5 72% 73% 72%

6 69% 71% 67%

7 69% 73% 65%

8 69% 69% 69%

9 69% 76% 61%

10 68% 74% 62%

11 67% 74% 59%

12 67% 68% 66%

13 66% 76% 57%

14 66% 69% 63%

15 65% 68% 61%

16 64% 65% 63%

17 64% 66% 61%

18 64% 61% 66%

19 63% 70% 57%

20 63% 70% 57%

21 63% 71% 55%

22 63% 68% 58%

63% 63% 62%

63% 67% 59%

25 63% 67% 58%

26 61% 63% 59%

27 61% 69% 53%

28 61% 71% 51%

29 61% 68% 53%

30 60% 64% 56%

31 60% 67% 54%

32 60% 74% 46%

33 60% 68% 52%

34 60% 68% 52%

35 60% 67% 53%

36 60% 69% 50%

37 59% 71% 48%

38 59% 70% 49%

39 59% 68% 51%

40 58% 61% 55%

41 58% 62% 54%

42 58% 66% 49%

43 57% 67% 48%

44 57% 67% 48%

57% 64% 50%

57% 64% 49%

47 57% 66% 47%

48 56% 69% 44%

49 56% 59% 53%

50 56% 62% 51%

51 56% 60% 52%

52 56% 65% 47%

53 55% 69% 42%

54 55% 63% 48%

55 55% 65% 46%

56 55% 69% 40%

57

Sweden

Norway

Switzerland

Finland

Denmark

Netherlands

United Kingdom

Austria

France

Iceland

New Zealand

Singapore

Uruguay

Ireland

Malaysia

Germany

Belgium

Luxembourg

Portugal

Costa Rica

Spain

Canada

Japan

Chile

United States

Estonia

Lithuania

Mexico

Latvia

Israel

Australia

Colombia

Slovenia

Peru

Italy

Brunei Darussalam

Paraguay

Brazil

Panama

Albania

Malta

Slovak Republic

Romania

Azerbaijan

Georgia

Cyprus

Morocco

Ecuador

Korea, Rep.

Philippines

Czech Republic

Croatia

Indonesia

Armenia

Hungary

Argentina

Greece 55% 66% 43%

Country name 2018 ETI score 1

System Performance

Transition Readiness

58 Turkey 54% 58% 50%

59 United Arab Emirates 54% 58% 50%

60 Jamaica 54% 56% 51%

61 Thailand 54% 58% 49%

62 Guatemala 53% 57% 50%

63 Sri Lanka 53% 61% 46%

64 Qatar 53% 59% 47%

65 Jordan 53% 52% 53%

66 Vietnam 52% 57% 47%

67 Poland 51% 56% 46%

68 Republic of Moldova 51% 59% 43%

69 El Salvador 51% 53% 49%

70 Russian Federation 51% 63% 39%

71 Kenya 51% 46% 55%

72 Namibia 51% 48% 53%

73 Ghana 51% 52% 50%

74 Tunisia 50% 57% 43%

75 Kazakhstan 50% 61% 38%

76 China 50% 48% 51%

77 Oman 49% 55% 44%

78 India 49% 52% 47%

79 Algeria 49% 62% 36%

80 Trinidad and Tobago 49% 58% 41%

81 Egypt, Arab Rep. 49% 57% 41%

82 Tajikistan 48% 46% 50%

83 Saudi Arabia 48% 55% 41%

84 Botswana 47% 49% 46%

85 Honduras 47% 48% 47%

86 Pakistan 47% 48% 47%

87 Cambodia 47% 49% 45%

89

Nepal 47% 47% 46% 88

Montenegro 47% 49% 44%

90 Bangladesh 47% 51% 43%

91 Yemen, Rep. 46% 60% 33%

92 Bulgaria 46% 50% 42%

93 Dominican Republic 46% 49% 43%

94 Nicaragua 46% 48% 44%

95 Bahrain 45% 44% 47%

97 Tanzania 45% 44% 47%

98 Zambia 45% 42% 49%

96 Kuwait 45% 54% 37%

99 Ethiopia 44% 43% 45%

100 Serbia 44% 51% 36%

101 Cameroon 44% 46% 41%

102 Senegal 43% 39% 47%

105 Mongolia 41% 47% 36%

104 Ukraine 41% 49% 34%

106 Iran, Islamic Rep. 41% 50% 32%

107 Benin 41% 41% 41%

103 Lebanon 41% 43% 39%

108 Nigeria 41% 48% 34%

109 Bosnia and Herzegovina 41% 44% 37%

110 Mozambique 40% 45% 36%

111 Venezuela 40% 52% 27%

112 Kyrgyz Republic 39% 37% 42%

114 Zimbabwe 37% 38% 35%

113 South Africa 38% 38% 37%

Emerging and developing Asia

24

23

45

46

Not Covered

10 10-20 20-30 30-40 40-50 50-60 60-70 70-80 80-90 >90 Low Performance High Performance

ETI Percentile Rank (%)

70%

40% 30%

80% 70% 50% 20% 60% 30%

80%

40%

50%

60%

90%

JOR

ISL

GRC

KAZ

JAM

IRL

KEN

ISR

IRN

HND

GTM

DEU

FRA

FIN

ETH

ITA

QAT

ZAF

SRB

POL

ESP

SVK

PRY

SVN

TZA

RUS

LKA

SAU

ROU

PRT

PER

SWE

SEN

PHL

CHE

KWT

TJK

SGP

MDA

THA

YEM

System Performance Score

VNM

KOR

VEN

URY

USA

MLT

GBR

ZWE

ARE

UKR

TUR

TUN

TTO

Transition Readiness Score

MNE

LUX

OMN

MAR

ZMB

LBN

NGA

CYP

CRI CAN

BWA DOM

BIH

BEN

BGD

EGY

BGR

BEL

CZE

MNG

CMR

ECU BRA

DNK COL

CHN

CHL HRV

SLV

KHM

NZL

LVA

MOZ

KGZ

NLD LTU

NAM PAK

NOR

PAN

NIC

MEX

MYS

NPL

DZA

AUS

ARG

ARM

AZE

ALB

BHR

AUT

JPN

IND

HUN

GHA

GEO

EST

IDN

BRN

Regions

Emerging and developing Asia

Sub-Saharan Africa

Middle East, Northern Africa, and Pakistan

Commonwealth of independent states

Advanced economies

Latin America and Caribbean

Emerging and developing Europe