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首页文档碳中和资料研究报告促进能源有效转型2021版（英）-世界经济论坛

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INSIGHT REPORT
APRIL 2021
Fostering Effective
Energy Transition
2021 edition
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Fostering Effective Energy Transition 2021 edition 2
Foreword
Executive summary
1. Introduction
2. The Energy Transition Index in a decade to deliver
3. Overall results
4. Sub-index and dimension trends
4.1 Key findings
4.2 System performance
4.2.1 Economic development and growth
4.2.2 Energy access and security
4.2.3 Environmental sustainability
4.3 Transition readiness
4.3.1 Regulation and political commitment
4.3.2 Capital and investment
4.3.3 Energy system structure
5. Building resilience to overcome new risks
5.1 Societies and policy
5.1.1 The risk landscape
5.1.2 Considerations to build a resilient transition
5.2 Energy systems and technologies
5.2.1 The risk landscape
5.2.2 Considerations to build a resilient transition of energy systems and technologies
5.3 Finance
5.3.1 The risk landscape
5.3.2 Considerations to build resilient finance to support the transition
6. Conclusion
Appendix
Contributors
Endnotes
Contents
© 2021 World Economic Forum. All rights reserved. No part of
this publication may be reproduced or transmitted in any form
or by any means, including photocopying and recording, or by
any information storage and retrieval system.
Cover: GETTY/Inakiantonana
Inside: All photos GETTY/AvigatorPhotographer; Nikada; rusm; Liam Matter; Kontrast-
fotodesign; Tongpatong; Federico Rostagno; Scharfsinn86; Genkur; Viktoriia Hnatiuk; Imantsu
Fostering Effective Energy Transition
2021 edition
APRIL 2021
Fostering Effective Energy Transition 2021 edition 3
This edition marks the 10th anniversary of
the Energy Transition Index (ETI). In the past
decade, we have witnessed an unprecedented
acceleration of the energy transition. Two
examples illustrate the point: the growing speed
of renewable energy penetration (particularly
wind and solar), and the important strides made
in energy access. These changes have been
facilitated by several factors, among which
technological advancement and growing
political support stand out. However,
extraordinary as this evolution has been, there
remain some critical challenges to delivering
sustainable and affordable energy while
improving access and security.
A year has passed since the world was hit by
what became the greatest global health challenge
in over a century. The crises generated by the
COVID-19 pandemic continue to affect countries
across the world in multiple ways, underscoring
key unsolved societal issues. For example,
as economic development has stumbled or
reversed, the health emergency has exacerbated
inequality and hampered efforts to tackle energy
poverty. Unilateral approaches adopted by
governments in their handling of challenges
during the pandemic, from personal protective
equipment to the approval and dissemination
of vaccines, have also raised concerns about
the international community’s ability to come
together in coordinated action across countries
and sectors. Moreover, uneven compliance to
recommended public health measures, driven
either by economic reasons or differences in
values, illustrates the challenges in mobilizing
all sections of society in a cohesive response
to a shared problem. The latter is critical as
we look to take effective collective action on
energy transition.
When we published last year’s ETI and discussed
its findings, we were only a few months into the
pandemic. We talked about how energy systems
were subject to compounded disruptions and we
wondered what a new normal would look like.
Some of the questions raised at that time have
been answered, but many important pieces in this
complex, evolving puzzle have not yet been put
together. The actions we take in the early years of
this decade of delivery and action will be critical
in ensuring that strong, long-term ambition is
supported by concrete, immediate progress. We
are eager to see stimulus and recovery packages
playing an important role in this journey.
This report discusses the key findings from the Energy
Transition Index 2021. For this report, we have made
a few changes in the methodology to reflect the
rising sense of urgency of climate change, and we
have refreshed some the indicators to use available
data more effectively. The ETI supports decision-
makers with a transparent fact-base on the progress
and gaps in the energy transition, the complexity
of that transition, and its interdependence with
social, political, environmental, economic and
institutional elements. Coming out of a challenging
2020, and based on discussions with key global
experts, this edition pays special attention to the
climate component. In addition, we address how to
improve the robustness and resilience of the transition
and how to tackle elements that could derail the
successful transformation of our energy systems.
One of the key findings is a call for coordinated,
multi-stakeholder action to achieve an effective
energy system evolution. To that end, the World
Economic Forum encourages the sharing of leading
practices and the use of its platform for public-
private collaboration to facilitate the process of
energy transition around the world.
Roberto Bocca
Head of Shaping the Future of Energy,
Materials, and Infrastructure, Member
of Executive Committee World
Economic Forum
Muqsit Ashraf
Senior Managing Director and Global
Energy Industries Lead, Accenture
Stephanie Jamison
Senior Managing Director and
Global Utilities Lead, Accenture
Foreword
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INSIGHTREPORTAPRIL2021FosteringEffectiveEnergyTransition2021edition3461015181920212324262627272931313235353639394043444546FosteringEffectiveEnergyTransition2021edition2ForewordExecutivesummary1.Introduction2.TheEnergyTransitionIndexinadecadetodeliver3.Overallresults4.Sub-indexanddimensiontrends4.1Keyfindings4.2Systemperformance4.2.1Economicdevelopmentandgrowth4.2.2Energyaccessandsecurity4.2.3Environmentalsustainability4.3Transitionreadiness4.3.1Regulationandpoliticalcommitment4.3.2Capitalandinvestment4.3.3Energysystemstructure5.Buildingresiliencetoovercomenewrisks5.1Societiesandpolicy5.1.1Therisklandscape5.1.2Considerationstobuildaresilienttransition5.2Energysystemsandtechnologies5.2.1Therisklandscape5.2.2Considerationstobuildaresilienttransitionofenergysystemsandtechnologies5.3Finance5.3.1Therisklandscape5.3.2Considerationstobuildresilientfinancetosupportthetransition6.ConclusionAppendixContributorsEndnotesContents©2021WorldEconomicForum.Allrightsreserved.Nopartofthispublicationmaybereproducedortransmittedinanyformorbyanymeans,includingphotocopyingandrecording,orbyanyinformationstorageandretrievalsystem.Cover:GETTY/InakiantonanaInside:AllphotosGETTY/AvigatorPhotographer;Nikada;rusm;LiamMatter;Kontrast-fotodesign;Tongpatong;FedericoRostagno;Scharfsinn86;Genkur;ViktoriiaHnatiuk;ImantsuFosteringEffectiveEnergyTransition2021editionAPRIL2021FosteringEffectiveEnergyTransition2021edition3Thiseditionmarksthe10thanniversaryoftheEnergyTransitionIndex(ETI).Inthepastdecade,wehavewitnessedanunprecedentedaccelerationoftheenergytransition.Twoexamplesillustratethepoint:thegrowingspeedofrenewableenergypenetration(particularlywindandsolar),andtheimportantstridesmadeinenergyaccess.Thesechangeshavebeenfacilitatedbyseveralfactors,amongwhichtechnologicaladvancementandgrowingpoliticalsupportstandout.However,extraordinaryasthisevolutionhasbeen,thereremainsomecriticalchallengestodeliveringsustainableandaffordableenergywhileimprovingaccessandsecurity.Ayearhaspassedsincetheworldwashitbywhatbecamethegreatestglobalhealthchallengeinoveracentury.ThecrisesgeneratedbytheCOVID-19pandemiccontinuetoaffectcountriesacrosstheworldinmultipleways,underscoringkeyunsolvedsocietalissues.Forexample,aseconomicdevelopmenthasstumbledorreversed,thehealthemergencyhasexacerbatedinequalityandhamperedeffortstotackleenergypoverty.Unilateralapproachesadoptedbygovernmentsintheirhandlingofchallengesduringthepandemic,frompersonalprotectiveequipmenttotheapprovalanddisseminationofvaccines,havealsoraisedconcernsabouttheinternationalcommunity’sabilitytocometogetherincoordinatedactionacrosscountriesandsectors.Moreover,unevencompliancetorecommendedpublichealthmeasures,driveneitherbyeconomicreasonsordifferencesinvalues,illustratesthechallengesinmobilizingallsectionsofsocietyinacohesiveresponsetoasharedproblem.Thelatteriscriticalaswelooktotakeeffectivecollectiveactiononenergytransition.Whenwepublishedlastyear’sETIanddiscusseditsfindings,wewereonlyafewmonthsintothepandemic.Wetalkedabouthowenergysystemsweresubjecttocompoundeddisruptionsandwewonderedwhatanewnormalwouldlooklike.Someofthequestionsraisedatthattimehavebeenanswered,butmanyimportantpiecesinthiscomplex,evolvingpuzzlehavenotyetbeenputtogether.Theactionswetakeintheearlyyearsofthisdecadeofdeliveryandactionwillbecriticalinensuringthatstrong,long-termambitionissupportedbyconcrete,immediateprogress.Weareeagertoseestimulusandrecoverypackagesplayinganimportantroleinthisjourney.ThisreportdiscussesthekeyfindingsfromtheEnergyTransitionIndex2021.Forthisreport,wehavemadeafewchangesinthemethodologytoreflecttherisingsenseofurgencyofclimatechange,andwehaverefreshedsometheindicatorstouseavailabledatamoreeffectively.TheETIsupportsdecision-makerswithatransparentfact-baseontheprogressandgapsintheenergytransition,thecomplexityofthattransition,anditsinterdependencewithsocial,political,environmental,economicandinstitutionalelements.Comingoutofachallenging2020,andbasedondiscussionswithkeyglobalexperts,thiseditionpaysspecialattentiontotheclimatecomponent.Inaddition,weaddresshowtoimprovetherobustnessandresilienceofthetransitionandhowtotackleelementsthatcouldderailthesuccessfultransformationofourenergysystems.Oneofthekeyfindingsisacallforcoordinated,multi-stakeholderactiontoachieveaneffectiveenergysystemevolution.Tothatend,theWorldEconomicForumencouragesthesharingofleadingpracticesandtheuseofitsplatformforpublic-privatecollaborationtofacilitatetheprocessofenergytransitionaroundtheworld.RobertoBoccaHeadofShapingtheFutureofEnergy,Materials,andInfrastructure,MemberofExecutiveCommitteeWorldEconomicForumMuqsitAshrafSeniorManagingDirectorandGlobalEnergyIndustriesLead,AccentureStephanieJamisonSeniorManagingDirectorandGlobalUtilitiesLead,AccentureForewordFosteringEffectiveEnergyTransition2021edition4Thepastdecadehasestablishedthestronginitialmomentumtotransformtheenergysystemforthedecadesahead.Thescalingofnascenttechnologiesandanincreasedfocusonclimatechangehavefixedglobalattentionfirmlyonthedecarbonizationofenergysystems.Thisjourneyisfarfromover.Asof2018,81%oftheworld’senergywasstillsuppliedbyfossilfuels,1globalgreenhousegasemissionsrosethrough2019andmorethan770millionpeoplearoundtheworldstilllackaccesstoelectricity.2ThetransformationofourenergysystemsneedstoincreaseitsmomentumtohelpachievecriticalobjectivessuchastheUN’sSustainableDevelopmentGoalsandtheParisAgreement.Adecadeintotheenergytransitionmarksanewhigh,butaccelerationisrequiredThiseditionmarksthe10thanniversaryoftheWorldEconomicForum’sbenchmarkingofcountriesontheirenergytransitionprogress.Wehavetakentheopportunitytolookbackatthelessonslearnedfromthepastdecade,whilealsolookingforwardtothejourneyahead.–AggregateETIscoresroseoverthepastdecadeforcountriescollectivelyaccountingfor86%ofglobaltotalenergysupplyandfor88%ofglobalCO2emissionsfromfuelcombustion.–TherankingoftopcountriesontheETIhasremainedbroadlyconsistentoverthepastdecade.Denmark,FinlandandtheUnitedKingdom,highestimproversinthetop10positions,wereabletoimprovetheirenergysystemperformanceandsustainabilityoutcomesthankstoastableregulatoryenvironment,diversifiedenergymixandcost-reflectiveenergypricing.–Countrieswithrisingenergydemand,suchasChina,IndiaandSub-SaharanAfricannations,haveregisteredthelargestgains,buttheirscoresontheETIremainlowinabsoluteterms.Stridesmadeonenergyaccess;reliabilityisthenextfrontierOverthepast10years,morethan70%ofthecountriesintheETImadeprogressontheenergyaccessandsecuritydimension,primarilyduetoimprovementinlevelsofelectricityaccessaroundtheworld.However,moreeffortsareneededtoimprovethequalityofelectricitysupplyinnewlyelectrifiedareas.Thisiscriticalforthedeliveryofpublicservices,suchastestingandvaccinationprogrammesforCOVID-19.Moreover,increasinglyfrequentandunpredictableextremeweathereventshaveexposedthevulnerabilityofgrids,underscoringtheurgentneedtomodernizeandenhancetheresilienceofelectricitytransmissionanddistributioninfrastructure.Stronggainsmadeinenvironmentalsustainability,butsignificantgapsremainEncouragingprogresshasbeenmadeinenvironmentalsustainabilityoverthepast10years,withcountriesaccountingfor88%ofglobaltotalenergysupplyimprovingtheirscoresonthisdimension.–Globalaverageenergyintensityfellby15%between2010and2018.However,thisimprovementhasyettofullytranslateintomeaningfulgains,asthecarbonintensityoftheenergymixwasbroadlyflatoverthesameperiod.–Whiletherehasbeenencouragingprogressinareassuchasrisinglevelsofinvestmentandpoliticalcommitment,progresshasbeenfarslowerintranslatingambitionsintoactionsandinrealizingthetransformationoftheenergysystemstructureitself.–Thetotalamountofelectricitygeneratedfromcoalhasbeenonanupwardtrajectoryoverthepast10years.Identifyingviablewaysfortheearlyretirementofcarbon-intensiveassetswillbeneededtoacceleratethetransition.AssessingtheresilienceofenergytransitionOverthepast10years,only13ofthe115benchmarkedcountrieshavemadeconsistentgains(definedasconsistentlyabove-averageperformanceimprovementsontheindex).Thisdemonstratesthedifficultyinsustainingprogressandthecomplexitiesoftheenergytransition.Systemicdisruptionssuchasthepandemichaveunderscoredtheimpactofexternalshocks.TheenergytransitionhasshownsignsofresilienceExecutivesummaryFosteringEffectiveEnergyTransition2021edition5throughCOVID-19,whichhighlightedtheresilienceofrenewablesinparticular.3However,despitetheshortdropinemissionsduringthepandemic,globalemissionshavesincerebounded,accordingtotheInternationalEnergyAgency.4Asweheaddeeperintothedecadeofaction5–duringwhichwemustaccelerateprogresstowardstransitionandhalveemissionsby2030toremainontracktomeetthe1.5°CParisAgreementgoal–wecannotaffordtolosemomentumor,worse,gointoreverse.Thisreportidentifiesthreeimperativestoincreasetheresilienceoftheenergytransition:1.Delivera“justtransition”forall.Inequalityisontheriseandbroadstakeholderbuy-inisapre-requisiteforresilience.Theenergytransitionitselfwillchangeresourceflowsandresetsectorsoftheenergysysteminwaysthat,ifnotplannedfor,couldleadtounintendedconsequencesandleaveentirecommunitiesadrift.Policy-makersshouldprioritizemeasurestosupporttheeconomy,workforcesandsocietyatlargeascountriesshifttoalow-carbonenergysystem.Thiswillrequireaninclusiveapproachtoevaluatingenergypolicyandinvestmentdecisions.2.Accelerateelectrificationandgobeyond.Electrificationandthescalingupofrenewablesarecriticalpillarsoftheenergytransitionandneedtoberampedupquickly.However,coordinationonthedemandsideandthecontributionofotherenergysourcesarenecessarytoachievethefullimpactrequired.IncreasedR&Dfundingandcross-sectorcollaborationareneededtofullydecarbonizeenergysystems,fromgreenhydrogenandnegativeemissiontechnologiestodigitallyenableddemandoptimization.3.Double-downonpublic-privatesectorcollaboration.TheUNIntergovernmentalPanelonClimateChange(IPCC)estimatesthatannualinvestmentsincleanenergyandenergyefficiencyneedtoincreasebyafactorofsixby2050,6comparedwith2015levels,tolimitwarmingto1.5˚C.Despitethegrowinginflowofcapitalintothesector,significantfundinggapsremain,particularlyinemergingmarketsandnascenttechnologies.Collaborationbetweenpublicandprivatesectors,includingrisk-sharingaslow-carbonsolutionsmature,willattractthediversified,resilientsourcesofcapitalneededformulti-yearandmulti-decadeinvestmentsintoenergysystems.Buildinganeffectiveandresilientenergytransitionrequiresallhandsondeck.AscountriesseektorecoverfromtheimpactofCOVID-19,thereisanopportunitytoresetandrethinkthewaywepoweroureconomies,producematerialsandevenhowwetravelandlive.Itiscriticaltoroottheenergytransitionineconomic,politicalandsocialpracticessothatprogressbecomesirreversible.1FosteringEffectiveEnergyTransition2021edition6IntroductionFosteringEffectiveEnergyTransition2021edition7Thepastdecadesawtransformativechangesacrosstheenergysystem.In2011,theaveragepriceforcrudeoilwascloseto$100/barrel.7Solarandwindenergywereeconomicallyuncompetitivecomparedtofossilfuel-basedelectricitygeneration,andjustover70GW8ofsolarand238GWofwindcapacityhadbeeninstalledglobally.From2011to2019,globalinstalledcapacitygrewsevenfoldforsolarPVandapproximatelythreefoldforwindenergy,9supportedbyimprovingcostcompetitivenessandoperationalefficiency.Globalinvestmentintheenergytransitionrosefromlessthan$300billionperannumin2011toalmost$500billionby2020.10Eightoutoftheworld’s10largesteconomieshavecommittedtoachievenet-zeroemissionsbymid-century.11However,clearchallengesremain.Asof2018,81%oftheworld’senergycamefromfossilfuels,12globalemissionsrosesteadilyovertheperiodto2019andmorethan770millionpeoplearoundtheworldstilllackaccesstoelectricity.Istheenergytransitionresilient?This10thanniversaryreportistheopportunitytoreflectandaskthequestionwhethertheenergytransitionisresilientandifthemomentumissufficient.Aresilienttransitionisonethatmaintainsthedirection,speedandrequiredrateofprogresstowardsasecure,affordable,sustainableandinclusiveenergysystemeveninthefaceofdisruptions.Throughout2020,theWorldEconomicForumengagedglobalexpertsfromthepublicandprivatesectorsandacrosstheenergyvaluechain.Thebroadconsensusisoneof“cautiousoptimism”butwithclearrecognitionoftheworkstillneeded,especiallywithrespecttoclimatechangeandemissionstargets.Aswecontinuethroughthedecadeofactionanddeliveryontacklingtheclimatechangechallenge,itismoreurgentthanevertoacceleratetheenergytransition.Thisreportwillfocusontheenvironmentalsustainabilitydimensionoftheenergytriangleandhowleadingcountrieshaveachievedprogressonthatdimension,eveninthefaceofemergingrisksandchallenges.ThereportsummarizesinsightsfromouranalysisoftheETIandthelessonsfrom10yearsofbenchmarkingcountriesonenergytransition.WethenprovideanassessmentoftheevolvingrisklandscapeandsomekeyconsiderationsforincreasingthemomentumandbuildingresilienceintotheenergytransitionFosteringEffectiveEnergyTransition2021edition8EnergytransitionoverthelastdecadeFIGURE1:HIGHERNEGATIVEIMPACTHIGHERPOSITIVEIMPACTDeepwaterHorizonexplosionandsubsequentspillintheGulfofMexicoFukushimaDaiichinuclearincidentleavesfutureofnuclearenergyindoubtCallfordeepemissionsreductionsandrapid,far-reachingandunprecedentedchangesinallaspectsofsocietytomeet1.5degreestargetDONGEnergyrebrandedtoOrstedandbecomesfocusedongreenenergyChinafirstcountrytobuildinstalledsolarPVcapacitybeyond100GWTCFDreleasesclimate-relatedfinancialdisclosurerecommendationsViennaAlliancesignedacross24oil-producingcountriestocooperateonproductionoutputUSnetexporterofhydrocarbonsfor1sttimesince1940Shelldeliversworld'sfirstcarbonneutralLNGcargotoTokyoGasandGSEnergyPresentationofEUClimateTargetPlanGlobalpandemiccreatesdropinenergydemandby5%worldwideStimulustodatenetnegativeenvironmentalimpactin15G20countriesExtremecoldtriggerblackoutaffecting3millionpeople0.9degreecelsiusglobaltemperatureanomalycomparedto20thcentury4.7tonsofCO2eqpercapita0.5degreecelsiusglobaltemperatureanomalycomparedto20thcentury21.4$billioninternationalfinancialflowstodevelopingcountriesforcleanenergy586GWSolar10millionelectricvehiclesontheroad623GWWind50$/bbloilprice4.9tonsofCO2eqpercapita(peak)100$/bbloilprice40GWSolar180GWWind10.1$billioninternationalfinancialflowstodevelopingcountriesforcleanenergyRenault-Nissanalliancereachedglobalsalesof100,000all-electricvehiclesinJuly2013UNSustainableDevelopmentGoalssetatUNGeneralAssemblyParisClimateAgreementisadoptedby196partiesatCOP218000megatonnesofcoalconsumption(peak)Source:WorldEconomicForum2010201120122013201520172018201920202021CO2$$$FosteringEffectiveEnergyTransition2021edition9KeytrendswithintheenergytransitionFIGURE2:Source:BloombergNewEnergyFinance,InternationalEnergyAgency,InternationalRenewableEnergyAgency,SustainableEnergyforAll,andothers2010LATESTYEAR250$billion$billion500globalinvestmentintheenergytransition0.38$/kWhsolarPVLCOE0.086$/kWhonshorewindLCOE0.07$/kWhsolarPVLCOE(2019)0.053$/kWhonshorewindLCOE(2019)globalinvestmentintheenergytransition(2020)0.5millionmillion10cumulativeglobalEVandplug-insales1.2billion#ofpeoplewithoutaccesstoelectricity770million#ofpeoplewithoutaccesstoelectricity5.4MJ/$energyintensity33gigatonnesemissionsfossilfuelcombustionandindustrialprocesses-CO2eq,world34gigatonnesemissionsfossilfuelcombustionandindustrialprocesses-CO2eq,world(2020)4.6MJ/$energyintensity(2018)cumulativeglobalEVandplug-insales(2020)19%26%shareofelectricityfromrenewables,incl.hydroshareofelectricityfromrenewables,incl.hydro(2019)FosteringEffectiveEnergyTransition2021edition102TheEnergyTransitionIndexinadecadetodeliverEnergytriangleSystemperformanceimperativesTransitionreadiness:enablingdimensionsSecurityandaccessEnvironmentalsustainabilityCapitalandinvestmentInfrastructureandinnovativebusinessenvironmentEnergysystemstructureRegulationandpoliticalcommitmentInstitutionsandgovernanceHumancapitalandconsumerparticipationEconomicdevelopment&growthEnablingdimensionsSource:WorldEconomicForum,FosteringEffectiveEnergyTransition:AFact-BasedFrameworktoSupportDecisionMaking,2018FosteringEffectiveEnergyTransition2021edition11Systemperformanceprovidesanassessmentofacountry’senergysystemperformanceacrossthreekeypriorities:–theabilitytosupporteconomicdevelopmentandgrowth–universalaccesstosecureandreliableenergysupply–environmentalsustainabilityacrosstheenergyvaluechainTheobjectiveofenergytransitioninacountryshouldbetosimultaneouslydeliveracrossthesethreepriorities,therebymaintainingabalancedenergytriangle.Pursuingalong-termgoalofabalancedenergytrianglecansupportthechoiceofappropriatepoliciesandinstrumentsaswellassynchronizeeffortsacrosscountries.Theprogressonenergytransitioninacountryisdeterminedbytheextenttowhicharobustenablingenvironmentcanbecreated.Thisincludespoliticalcommitment,aflexibleregulatorystructure,astablebusinessenvironment,incentivesforinvestmentsandinnovation,consumerawarenessandtheadoptionofnewtechnologies.TheETImeasuresprogressalongthesedimensionsinthetransitionreadinesssub-index.Energytransitionisnotrestrictedtolinearshiftsinfuelmixorthesubstitutionofproductiontechnologies.Rather,thesocial,economicandtechnologicalsystemsneedtoco-evolve13toshapethetransition.14TheETIprovidesadata-drivenframeworktofosterunderstandingoftheperformanceandreadinessofenergysystemsacrosscountriesfortransition.Thisyear’seditionincludesmethodologicalupdates(seeBox1)toreflectchangesintheglobalenergylandscapeandtheurgencyofthetaskahead,particularlyintakingactionsthatwillreducecarbonemissions.PreviouslypublishedastheEnergyArchitecturePerformanceIndex(EAPI)seriesfrom2013to2017,theETIwasdevelopedtoreflecttheinterdependenciesofenergysystemtransformationwiththemacro-economic,political,regulatoryandsocialfactorsthatdetermineacountry’sreadinessfortransition.TheETIframeworkiscomposedoftwoequallyweightedsub-indices(seeFigure3):thecurrentenergysystemperformanceandtheenablingenvironmentfortheenergytransition.Aneffectiveenergytransitioncanbedefinedasatimelytransitiontowardsamoreinclusive,sustainable,affordableandsecureenergysystemthatprovidessolutionstoglobalenergy-relatedchallenges,whilecreatingvalueforbusinessandsociety,withoutcompromisingthebalanceoftheenergytriangle.EnergyTransitionIndexframeworkFIGURE3:FosteringEffectiveEnergyTransition2021edition12BOX1:MethodologicalrevisionsinETI2021TheEnergyTransitionIndex(ETI)isregularlyrefinedtoreflectchangesintheglobalenergylandscapeandtoimprovethequalityofinsightsdeliveredtostakeholders.Duetotherevisionsmadethisyear,theresultsofthisyear’sindexarenotdirectlycomparabletoETI2020.Forthepurposeoftrendanalysis,wehaverecalculatedhistoricalscoresusingtherevisedmethodology.Changeshavebeenmadeinthreekeycategories:–Frameworkweights.Asweenteracrucialjunctureofglobalactiontowardsasustainableenergyfuture,wehaveadjustedtheweightsofseveralcoreenergysystemindicators.Wehavedonethistoemphasizetheurgencyofcountryactionneededtodecarbonizetheirenergysystems.Countriesthattakegreateractiontoshifttheirenergysystemsawayfromfossilfuelswillseegreaterimprovementsintheirscoresgoingforwards.–Thresholds.TheETIadoptsamin-maxmethodtonormalizeindicatorscoresonacommonscaleof0-100.Inmostcases,thedatarangesarenarrowedtocontrolforoutliers.Themin-maxthresholdsneedtobeupdatedatregularintervalstoaccountfornaturalevolutioninthespreadofcross-sectionaldata.Thisyear,inlinewiththebroadermethodologyreview,wehaveupdatedthethresholdsinlinewiththemostup-to-datedata.Outofthe39indicators,10havebeenupdated,covering30%oftotalindexweight.–Datasources.Wehavealsoupdatedthedatasourcesforseveralofourindicatorsduetoconsiderationsofdatarecencyandavailability.Note:Afullaccountofthemethodologicalchangesconductedcarefullyinconjunctionwithexpertsandouradvisoryboardwillbepublishedinaseparateaddendumtothisreport,alongwithafulllistofdatasources.Countriesarescoredalong39indicators(seeAppendix)onascaleof0to100.Countriesscoringtheglobalmaximumonagivenindicatorareassignedascoreof100onthatindicator.Giventhesystemicandendogenousnatureoftheenergytransition,countryscoresaretheresultofablendoffactorsincludingresourceendowments,geography,climate,demographyandeconomicstructure.Moreover,countryscoresinsomedimensionsarebasedonfactorsbeyondthescopeofnationaldecision-making,suchascommoditymarketvolatility,geopolitics,internationalclimatechangeactionandfinancialmarketsentiment.Countryrankingsshouldthereforebeconsideredinthecontextofacountry’suniquesetofcircumstancesandnotaclear-cutdiagnosisofenergytransitionaccomplishment.FosteringEffectiveEnergyTransition2021edition13ETI2021resultstableFIGURE4:Source:WorldEconomicForum5858585857575656555555545556575756575454545353535352525252515150505050505051525254545758775060708030405060797676757372717171717171696967676766656467676666666665656565666464646363636261606060605959596061616264646868686949494848484444423949484848661245678910111213141516171819202527282930313233343536373839404142434445AdvancedEconomiesCommonwealthofIndependentStatesEmerginganddevelopingAsiaEmerginganddevelopingEuropeLatinAmericaandtheCaribbeanMiddleEastandNorthAfricaSub-SaharanAfrica464748495051525354555657585960616263646566676869707172737475767778798081828384858687888990919293949596979899100101102103104105106107108109110111112113114115NamibiaElSalvadorKenyaPolandTurkeyUnitedArabEmiratesVietnamMoroccoPhilippinesChinaSriLankaBoliviaIndonesiaJordanRussianFederationOmanTajikistanEgypt,ArabRep.GuatemalaDominicanRepublicAlgeriaTanzaniaSaudiArabiaBruneiDarussalamKazakhstanSerbiaTrinidadandTobagoJamaicaIndiaTunisiaHondurasRepublicofMoldovaUkraineNepalCambodiaKyrgyzRepublicZambiaNicaraguaBangladeshBosniaandHerzegovinaIran,IslamicRep.CameroonNigeriaKuwaitEthiopiaPakistanBotswanaSenegalMozambiqueBahrainBeninSouthAfricaVenezuelaLebanonMongoliaHaitiZimbabwe21222324263SP1RankRankCountryETIscore(2012-2021)ETIscore(2012-2021)CountryTR2SP1TR21Systemperformance20212Transitionreadiness202157.764.460.363.760.955.661.064.966.555.467.170.167.851.766.055.555.758.660.959.466.257.057.457.864.159.461.653.058.257.558.164.358.152.258.452.351.056.859.154.655.956.657.151.553.056.253.951.255.642.953.055.560.342.751.546.739.284.482.774.879.975.273.575.876.577.675.071.273.178.370.272.667.869.767.471.667.867.170.071.870.774.573.071.271.271.474.970.871.067.468.268.873.865.670.368.562.168.473.668.369.568.267.774.371.963.363.764.562.261.566.764.069.363.660.572.770.878.273.075.273.069.265.664.466.970.668.462.967.564.969.466.969.264.866.366.963.561.462.358.359.361.160.760.456.860.459.862.962.061.155.263.458.459.565.759.353.557.956.356.956.448.849.958.357.856.558.058.553.255.448.953.756.758.651.855.951.854.259.454.048.747.058.046.342.744.860.645.754.554.351.348.449.441.650.650.249.743.447.645.353.247.346.746.139.845.551.144.750.351.245.241.846.244.844.043.148.245.941.643.245.741.353.843.140.534.846.037.037.139.5ETIprogressionsince20122021GlobalAverage(59%)ETI2021scoreFortheETI2021methodology,seethemethodologyaddendumpublishedseparately.Note:TheEnergyTransitionIndexbenchmarkscountriesontheperformanceoftheirenergysystem,aswellastheirreadinessfortransitiontoasecure,sustainable,affordable,andreliableenergyfuture.ETI2021scoresonascalefrom0to100.SwedenNorwayDenmarkSwitzerlandAustriaFinlandUnitedKingdomNewZealandFranceIcelandNetherlandsLatviaUruguayIrelandLithuaniaEstoniaSpainGermanyPortugalBelgiumSingaporeCanadaCroatiaUnitedStatesAlbaniaCostaRicaItalyIsraelColombiaBrazilSloveniaHungaryGeorgiaChileAustraliaParaguayJapanRomaniaMalaysiaLuxembourgMaltaPeruSlovakRepublicAzerbaijanCzechRepublicMexicoArgentinaEcuadorKorea,Rep.PanamaCyprusMontenegroQatarGreeceThailandGhanaArmeniaBulgariaAdvancedeconomiesAdvancedeconomieshaveimprovedthegroupaveragescoreby2pointsoverthepastdecade,thoughtheimprovementshaveplateaued.ProgresshasbeenmadeinreducingCO2percapitaandtheCO2intensityofthefuelmix,howeveremissionsremainstructurallyhigherthantherestoftheworld.Economicdevelopmentandgrowthconsiderations,reliabilityofenergysystemsfromincreasedintermittencyanddecarbonizationofhard-to-abatesectorswillbefocusareasforenergytransitioninthisgroup.CommonwealthofIndependentStatesTheCommonwealthofIndependentStatesimprovedtheiraggregateETIscoresby5%overthelastdecade.Averagescoresontheeconomicdevelopmentandgrowthdimensionhavedeclinedasfuelexportrevenuesfellduetocommoditymarketvolatilities.However,progressisencouraginginenvironmentalsustainability,energyaccessandqualityofelectricitysupply.Lookingforward,effortstowardseconomicdiversificationandastableregulatoryenvironmenttosupportenergytransitionwillbecritical.EmerginganddevelopingAsiaEmerginganddevelopingAsiahasimprovedatthefastestratecomparedtootherregions–6%sinceadecadeago.Gainshavebeenespeciallypronouncedinenergyaccessandsecurity.However,challengesoverthenextdecadeabound.Energydemandpercapitahasgrown18%inthelastdecadeandisprojectedtodoubleby2050.Recenttrendsindicatethatcoalcontinuestoplayasignificantroleintheenergymix.Creatingarobustenablingenvironmenttosupportinvestmentsandacceleratedeploymentofnewtechnologies,whilepursuing“justtransition”pathways,canhelptheregiontomeetfuturedemandinaclimate-friendlyway.LatinAmericaandtheCaribbeanLatinAmericaandtheCaribbeanregion’saverageETIscoreremainedconsistentoverthelastdecade.Theregionleadsinenvironmentalsustainability,duetoaheavyhydroelectric-installedbase.Furtherimprovementscanbeunlockedthroughimprovingenergyaffordability–electricitypricesonapurchasingpowerparitybasisremainhighintheregion.Althoughtheregionhasachievednear-universalaccesstoelectricity,thequalityofsupplyremainschallenginginmanycountries.Increaseddiversificationoftheimportcounterpartsanddiversifyingtheenergymixcanfurtherimproveenergysecurity.MiddleEastandNorthAfricaScoresintheMiddleEastandNorthAfricafelllastyearbuttheoveralltrajectoryremainsmoderatelypositive.Heavyrelianceonoilrevenuecontinuestopresentchallengestosustainablegrowth.Diversificationoftheeconomyandtheenergysystemcanimproveprospects.Challengesremaininaccessandsecurity,withheavyconcentrationinprimaryenergysources.Severalcountriesintheregionhavesetoutambitiousrenewablestargetsfor2030.Forthisregion,thecomingdecadepresentsopportunitiestoinvestinanenergytransitionthatcanunlocksignificantcross-systembenefits.68.22%58.62%52.82%56.85%54.96%5%8%2.4t7%7%3.9tEmerginganddevelopingEuropeEmerginganddevelopingEurope’saverageETIscoreincreasedby5%between2012and2021.Theregionsawabalancedimprovementacrossallthreedimensionsoftheenergytriangle.Improveddiversityofenergymix,higherqualityofelectricitysupplyandstrongenergyintensityreductionswereprimaryimprovementlevers.However,thisregionhasahighershareofcoalthantheEuropeanaverageandflexibilityremainslow,whichmayprovechallengingastheshareofrenewableenergygrowsinpowergeneration.AccordingtoIRENA,renewablesourcescouldcovermorethanonethirdofenergydemandinthisregion,withbenefitsinsavingsfromenergycosts,healthandreduceddependenceonimportsforprimaryenergy.61.05%3%2%5.2tSub-SaharanAfricaSub-SaharanAfrica'strajectoryontheenergytransitionjourneyhasbeenapositiveone,althoughtheregionremainsthemostchallengedgloballyinaccessandsecurity.Accesstoelectricityandbasicenergyservicesremainslowestinthisregionat56%.Theregionhasgreatpotentialtoleapfrogbyavoidingexpensive,inefficientandmorepollutingenergyinfrastructure.Countriesshouldconsiderallavenuestoimproveaccess,includingoff-gridelectrificationgiventhefallingcostsofsolarpanels.Improvingtheenablingenvironmentfortheenergytransition,includingpoliciesforenergyefficiencyandelectrificationoftransport,canacceler-ateprogressintheregion.50.72%2%8%1.1t30%13%10.1t6%3%8.5t40%47%3.74t%ofglobalCO2emissions%ofglobalpopulationCO2percapitaSource:WorldEconomicForumFosteringEffectiveEnergyTransition2021edition14Regionalscoresandkeyinsights:averagescoresbypeergroup–ETI2021andchangefromETI2012(recalculated)FIGURE5:FosteringEffectiveEnergyTransition2021edition153Overallresults1.GlobalaverageETIscoreshaveincreasedin8outofthelast10years2.Only25%ofcountrieshavebalancedthethreeimperativesoftheenergytriangle3.Progressinenergyaccessandenvironmentalsustainabilityisstrong,buteconomicgrowthchallengesremain4.Top10countriesaccountforonly3%ofglobalCO2emissionsfromfuelcombustion5.Only13outof115countrieshavemadesteadygainsinthepastdecade6.Speedofenergytransitionisfastinemergingeconomies,butlargegapsremainKeyhighlights:FosteringEffectiveEnergyTransition2021edition16ETI57.659.361.853.5201254.801020304050607063.8SystemperformanceTransitionreadiness2021ETI2021GlobalaveragescoresFIGURE6:Source:WorldEconomicForumThisyearmarkedthehighestglobalaveragescoressincetheinceptionoftheETI,withprogressmadeacrossbothsystemperformanceandtransitionreadiness.Figure6showsglobalaveragescoresacrosstheETIinenergysystemperformanceandtransitionreadinessfor2012and2021.However,progressisuneven.High-incomecountriesaremakingmoreprogressinenvironmentalsustainabilityrelativetotherestoftheworld.Progressinemergingeconomieshastendedtocomefromimprovedaccessandsecurityascountriesdevelop.Swedenleadstheglobalrankings,followedbyNorwayandDenmark.Amongtheworld’s10largesteconomies,onlytheUnitedKingdomandFrancefeatureinthetop10.Thetop10accountforonlyaround3%ofenergy-relatedCO2emissionsandaround2%oftheglobalpopulation.ThelistoftopperformersintheETIhasstayedbroadlyconsistentoverthecourseofthedecade.Althougheachcountry’senergytransitionpathwayisdifferent,theyallsharecommonattributesincluding:–lowlevelsoffossilfuelsubsidies,–enhancedenergysecurityfromadiversityoffuelmixandimportpartners,–improvingcarbonintensity,–reduceddependenceonfossilfuelsintheenergymix,and–astrongregulatoryenvironmenttodrivetheenergytransition.Denmark,FinlandandtheUnitedKingdom–thetopimproversinthetop10–wereabletotranslatedevelopmentsinleadingindicatorssuchasregulatoryenvironmentandenergymixintoimprovedoutcomesinsystemperformance,particularlyontheenvironmentalsustainabilitydimension.Figure7showscountries’ETIscoreprogressionbetween2012and2021.Outof115countries,92countrieshavemadeprogressoverthisperiod,butonly68haveimprovedtheirscoresbymorethantwopercentagepoints.Notably,largeemergingcentresofdemand,suchasChinaandIndia,haveseenstrongimprovements.Meanwhile,scoresinBrazil,Canada,Malaysia,SingaporeandTurkeyhavebeenrelativelystable.Only13outofthe115countrieshavemadesteadygains(definedasconsistentlyabove-averageperformanceimprovementsontheETI).Thisdemonstratesthedifficultyofsustainingprogressandtheinherentcomplexityoftheenergytransition.Inthenextdecade,consistent,acceleratedprogressiskeytomeetingtheworld’sclimatetargetsaswellastheUN’sSustainableDevelopmentGoals.FosteringEffectiveEnergyTransition2021edition17ChangeinETIscorebetween2012-2021(%)-7%0%16%Source:WorldEconomicForumFIGURE7:Countries’changeinEnergyTransitionIndexscore,2012-2021FosteringEffectiveEnergyTransition2021edition184Sub-indexanddimensiontrends9080706050403020304050607080TRANSITIONREADINESSSCORESYSTEMPERFORMANCESCORE10%ofglobalCO2(10%in2012)6%ofglobalGDP(7%in2012)35%ofglobalCO2(31%in2012)64%ofglobalGDP(67%in2012)31%ofglobalCO2(2%in2012)19%ofglobalGDP(2%in2012)17%ofglobalCO2(49%in2012)7%ofglobalGDP(19%in2012)Leadingcountries:50countrieswithwell-performingenergysystemsandhightransitionreadiness,indicatingtheabilitytoaddresstheenergytransitionbasedoncurrentperformance–upfrom44countriesin2012.Leapfrogcountries:16countrieswithsystemperformancebelowthemean,butrelativelyhightransitionreadiness,indicatingapositiontoleapfrogtheirdevelopment–upfrom10in2012.Emergingcountries:36countrieswithsystemperformanceandtransitionreadinessscoresbelowthemean,indicatingachallengingstartingpositiontousetransitionopportunities–downfrom49in2012.Countrieswithpotentialchallenges:13countrieswithabove-averagesystemperformancebuttransitionreadinessbelowthemean,indicatingtheneedforincreasedeffortstomaintainandimprovecurrentperformancelevels–upfrom12in2012.Source:WorldEconomicForumFosteringEffectiveEnergyTransition2021edition19Keyfindings4.1TheoverallETIscoreiscomposedoftwosub-indicesasdescribedintheprevioussection:energysystemperformanceandtransitionreadiness.Figure8showsthedistributionofcountriesacrossfourquadrants,dependingontheirscoresonthesetwosub-indicesin2021,andthecumulativeGDP(nominal)andCO2emissionsfromfuelcombustionofcountriesintherespectivequadrantsin2021and2012toreflectnetprogressoverthisperiod.Thefigureassignseachcountrytooneoffourquadrants:–Leadingcountries–withwell-performingenergysystemsandhightransitionreadiness–Leapfrogcountries–withbelow-averagesystemperformancebuthightransitionreadiness–Emergingcountries–withbelow-averagesystemperformanceandbelow-averagetransitionreadiness–Countrieswithpotentialchallenges–withabove-averagesystemperformancebutbelow-averagetransitionreadinessInthecategoryofcountrieswithpotentialchallenges,withahighlevelofcurrentsystemperformancebutaweakenablingenvironment,therehasbeenrelativelylessmovementsince2012.Thestrongperformanceofenergysystemsinthesecountriesissupportedbyabundantnaturalresourceendowmentsandtherobustnessoflegacyenergyinfrastructure.However,theseattributescanbeimpedimentsforacceleratedprogressonenergytransition,giventheinertiafromalegacy-installedbase.Thetrajectoryofleadingcountriesoverthepastdecadehasbeenlargelyconsistent,displayingtheadvantagesofbuildingastrongenablingenvironmentandcontinuingthemomentumofpoliciesthatsupporttheenergytransition.Forcountrieswithbelow-averageenergysystemperformance(mainlythosecountrieswithanincreasingdemandforenergy),therehasbeensignificantmovementfromthe“emerging”tothe“leapfrog”category,signallingthegradualstrengtheningofenablingenvironmentsinemergingdemandcentres.Theenergytransitionisanopportunityforemergingeconomiestoavoidtheriskofcarbonlock-inbyleveragingtheincreasingcost-competitivenessofnewenergytechnologies.ETIsystemperformanceandtransitionreadinessscores,2021FIGURE8:FosteringEffectiveEnergyTransition2021edition20Overthepastdecade,70%ofthecountriestrackedbytheETIhaveimprovedtheirenergysystemperformancescores,providingastrongindicationofthegrowingcapacityoftheirenergysystemstodeliveracrossthefollowingthreeperformancedimensions:–Economicdevelopmentandgrowth–Energyaccessandsecurity–EnvironmentalsustainabilityHowever,thepatternofimprovementsonsystemperformancevariesbydimension.Morethan70%ofcountries(representing86%ofglobaltotalenergysupply)haveimprovedtheirscoresonenergyaccessandsecuritysince2012.Higherrelativegainswereachievedbycountriesinemergingandleapfrogcategories,drivenbyimprovementsinenergyaccess.Leadingcountrieshaveonlymanagedtoachievemarginalimprovements,whichistobeexpectedgiventhematurityoftheircurrentenergysysteminfrastructures.Theenvironmentalsustainabilitydimensiondisplayssimilartrends,withacomparablenumberofcountriesimprovingonthisdimension.However,thegainsonenvironmentalsustainabilityarehigherforcountriesintheemergingandleapfrogcategories,supportedbythestrengtheningoftheirenablingenvironments.Thetrendsontheeconomicgrowthanddevelopmentdimensionhavebeenmixed,withmorethanhalfofcountriesregressingoverthepastdecade.Inrelativeterms,economiesintheemergingcategoryhavebeenabletomakefasterprogressonthisdimension,buttheiraveragescoresremain30%lowerthanleadingcountries.Thefollowingsectionsprovidefurtherinsightsintotheevolutionofcountriesonthesedimensionsoverthepastdecade.Systemperformance4.2Changeinsystemperformancedimensionscoresbycountryarchetype,2012-2021FIGURE9:-15-10-5051015-20-100102030-10-5051020EconomicdevelopmentandgrowthEnergyaccessandsecurityEnvironmentalsustainabilityEmergingPotentialchallengesLeapfrogLeadingSource:WorldEconomicForum62%86%13%11%88%37%FosteringEffectiveEnergyTransition2021edition21Theeconomicdevelopmentandgrowthimperativeofenergytransitionstemsfromthecriticalroleplayedbytheenergysectorinsocio-economicdevelopment.Currenteconomicgrowthpathwaysrelyontheavailabilityofabundant,secureandaffordableenergysupplies.Asisevidentinemergingeconomiesaroundtheworld,thedemandforenergyisgrowingastheyprogressalongtheireconomicgrowthjourneys.Whileeconomicgrowthmaynotbethesoleobjectiveofenergytransition,theeconomicbenefitsshouldoutweighthecosts.TheETI’seconomicdevelopmentandgrowthdimensiontrackstheaffordability,competitivenessandfiscalimplicationsoftheenergysectorincountries.Overthepastdecade,theaverageglobalscoresforthisdimensionhavebeenlargelyflat,reflectingthecontinuingchallengetodecoupleeconomicgrowthfromenergyproductionandconsumption.However,thetrendsvarydependingonthestageofeachcountry’seconomicdevelopment.Whilemorethanthree-quartersofthecountriestrackedincreasedtheiraggregateETIscoresoverthepastdecade,fewerthanhalfwereabletodosowhilealsoincreasingtheirscoresontheeconomicdevelopmentandgrowthdimension.Theeffectismorepronouncedforadvancedeconomies,withtheprimaryfactorbeinga25%real-termsincreaseinaveragehouseholdelectricitytariffsoverthepastdecadeforthispeergroup.Forexample,theincreaseintheretailelectricitypriceacrosstheEuropeanUnion(EU)outpacedtheconsumerpriceinflationindexbetween2010-2019.15Atthesametime,theexternalitiesofenergyconsumptioncontinuetobeinefficientlypriced,whichrisksexacerbatingtheaffordabilitychallenge.Whilethecostoffailingtodeliveronenergytransitionmightbehigherthanthecostofenergytransition,distributionalconsiderationsremainatthecentreofthischallenge,especiallyinaglobalclimateofwideningincomeinequality.16Theimpactoftheenergytransitiononlabourmarketsiscentraltothe“justtransition”challenge(seeBox2).Whileenergytransitionwillcreatesubstantialemploymentbecauseofpoliciesandinvestment,itisalsoleadingtojoblossesinthefossilfuelsector.AccordingtotheInternationalLabourOrganization(ILO),theshifttowardssustainablepracticesisexpectedtocreate18millionnetjobsby2030.17AsshowninFigure10,countriesleadingontheETIhavealargershareofjobsinlow-carbonsectorsasashareoftotaldomesticlabourforce.Evidencesuggeststhatjobsinrenewableenergyandenergyefficiencyaregeographicallymorediversified,moregender-diverse18andmorelikelytoemployyoungpeople–asopposedtothemorelocalized,gender-biasedandageingworkforceofthefossilfuelsector.19However,intheshortterm,geographicalredistributionandtimingofavailabilityofnewjobscancreatelabourmarketdislocations,disproportionatelyaffectingcommunitiesreliantonfossilfuelsectors.Focusedsocialprogrammesforthereskillingandrehabilitationoffossilfuelworkers,andinvestmentindevelopmentoflow-carbonvaluechainslocally.Thesemeasuresarecriticaltogainingemploymentdividendsfromtheenergytransition.TheongoingreallocationofpublicfundstofueltheeconomicrecoveryfromCOVID-19isanopportunityforcountriestoaddressthisimbalance.4.2.1EconomicdevelopmentandgrowthJusttransitionBOX2:Ajusttransitioniscommonlydefinedasthemovetowardsanenvironmentallysustainableeconomywhilecontributingtothegoalsofdecentworkforall,socialinclusionandtheeradicationofpoverty.Decentwork,povertyeradicationandenvironmentalsustainabilityarethreeofthedefiningchallengesofthe21stcentury.Economiesmustbeproductivetomeettheneedsoftheworld’sgrowingpopulation.Societiesmustbeinclusive,providingopportunitiesfordecentworkforall,reducinginequalitiesandeffectivelyeliminatingpoverty.Thiswillensurethatno-oneisleftbehindastheworld’seconomiesadaptandadjusttothechangesrequiredtomitigatetheimpactsofclimatechange.20Source:UNFrameworkConventiononClimateChangeFosteringEffectiveEnergyTransition2021edition22ETI2021scoresandpercentageofjobsinlow-carbonsectorsFIGURE10:Sources:WorldEconomicForum,InternationalRenewableEnergyAgency(IRENA),WorldBank21TheCOVID-19pandemichasledtoashiftinenergyconsumptionpatterns–primarilyduetoremoteworkingarrangements,adeclineinbusinesstravelandtheexponentialriseofdigitallyenabledservices.Additionally,anincreasingnumberofmajorautomobilemanufacturersareaggressivelypursuingelectrificationoftheirproductlines.Thesetrendscouldhavealastingimpactonthedemandforoil.Whileforecastsofpeakoildemandvaryconsiderably,someanalystsarguethatthepandemicmighthavefast-trackedthetimeline,withimplicationsforcountriesacrosstheoilsupplychain.22Foroil-producingcountries,thisincreasestheurgencytodiversifytheireconomiestomaintainasteadysourceoffiscalrevenue,andtoharnessthesynergiesfromlegacytechnologicalandoperationalexpertisetoobtaincompetitiveadvantageinthenewenergylandscape.Forenergy-consumingcountries,consumptiontaxonroadtransportisasignificantcomponentoftheirtaxbase(e.g.5%forOECDcountries),whichriskserosionfrompotentialchangesintravelhabitsandtheelectrificationoftransportation.23Thisunderscorestheneedforefficientpricingoftheexternalitiesoffossilfuelconsumptionandfiscalreformstodesignataxsystemforalow-carbonfuture.ETI2021score(outof100)8070605040201004.0%3.5%3.0%2.5%2.0%1.5%1.0%0.5%0.0%Jobsinlow-carbonsector(asashareoftotaldomesticlabourforce)ETI2021score–countriessortedhighesttolowestJobsinlow-carbonsector2019–shareoftotaldomesticlabourforceLinear–jobsinlowcarbonsector(shareoftotaldomesticlabourforce)EmerginganddevelopingAsiaSub-SaharanAfrica0%82%97%56%42%10%20%30%40%50%60%70%80%90%100%20122021FosteringEffectiveEnergyTransition2021edition23Energyaccessandsecurity4.2.2Globalaveragescoresremainthehighestintheenergyaccessandsecuritydimension.Morethan70%ofcountrieshaveimprovedtheirscoresinthisdimensionsince2010.Advancedeconomiesandlargefuelexportersscorehighly,duetomorematureenergyinfrastructureanddomesticreserves.Thehighestimprovementsinthisdimensioncomefromlowermiddle-incomeandlow-incomecountries,notablyinSub-SaharanAfricaandemerginganddevelopingAsia(e.g.Ghana,Kenya,Mozambique,CambodiaandVietnam)thathavesteadilyincreasedelectricityaccessoverthepastdecade.AccordingtotheInternationalEnergyAgency(IEA),energysecurityisdefinedas“theuninterruptedavailabilityofenergysourcesatanaffordableprice.”Forcountriesdependentonimportedenergysupplies,maintainingdiversityofimportcounterpartsiscritical.TrendsfromtheETIindicatepositivedevelopmentsoverthepastdecade,withthemajorityofcountriesdiversifyingbothimportcounterpartsandtheirenergymix.Renewableenergyandenergyefficiencyhaveasynergisticeffectofreducingimportdependencewhileaddingdiversitytotheenergymix,underscoringthesecuritygainsfromenergytransition.Thenumberofpeoplewithoutaccesstoelectricityhasdeclinedto770millionin2019–thelowestonrecord.However,progressremainsunevenand75%ofthepopulationwithoutaccessnowlivesinSub-SaharanAfrica,asharethatisrisingduetoagrowingpopulation,accordingtotheIEA.Further,pastprogressisthreatenedbyCOVID-19.TheIEAsuggeststhatthenumberofpeoplewithoutaccesstoelectricityinSub-SaharanAfricaissettoincreasein2020,pushingmanycountriesfartherawayfromachievingthegoalofuniversalaccessby2030.Beyondenergyaccess,thequalityandreliabilityofelectricityareoftopimportance.Figure12showsthechallengeinqualityofelectricitysupply,particularlyinSub-SaharanAfricancountries.Reliablepowersupplyiscriticalforthedeliveryofpublicservices,includinghealthcare.24LackofreliableelectricityisoneofthebottlenecksinrapidCOVID-19testingandvaccinationprogrammesinAfricancountries.25Inalmostallcountries,thetop10%incomegroupconsumes20timesmoreenergythanthebottom10%.26Energyaccessprogrammesneedtofocusonthequalityofenergysupply,thediversityofenergyservicesavailabletohouseholdsandthedistributionofconsumptionacrossthecountry.Addressinginequalitiesinenergyaccessisanimportantmechanismtoensuretheresilienceoftheenergytransition.FIGURE11:ElectrificationratesinemerginganddevelopingAsiaandSub-SaharanAfrica,2010and2020Source:WorldBank27Qualityofelectricitysupply8(high)0(low)FosteringEffectiveEnergyTransition2021edition24Qualityofelectricitysupply(2019)FIGURE12:Source:WorldBank28Afocusongridresilienceisespeciallycrucialasenergysystemstransitiontoasystemwithmorevariableanddistributedgeneration.Recentextremeweatherevents–includingwildfiresinCaliforniaandAustralia,andcoldsnapsinTexas29andJapan30–haveshownthatgridoperatorsalsoneedtobecognizantoftail-risksandplanforagridthatcanbouncebackquicklyfromcrises.Inthefaceofextremeweatherevents,leversforimprovinggridsafetyandreliabilityinclude:enhancingsystemflexibility,increasinggridrestorationeffectiveness,networkhardening,effectivecommunicationwithstakeholdersandaccurateforecastingofweatheranditsimpact,accordingtoarecentstudybyAccenture.31Withanincreasingshareofelectricityinfinaldemandduetotheelectrificationofend-use,therisksfromtherisingunpredictabilityandfrequencyofextremeweathereventsarecompounded,makinggridsaseriousareaofvulnerabilityintheenergytransition.Environmentalsustainability4.2.3Encouragingprogresshasbeenmadeinthisdimensioninrecentyears,withglobalaveragescoresreachinganall-timehighinETI2021andimprovementsacrossallindicators.Muchoftheprogresscanbeattributedtoreductionsinenergyintensity–thequantityofenergyrequiredperunitofoutputorproduct(abasicmeasureofenergyefficiency).Progressinthisspacecanleadtoareductionincarbonemissionsandcanalsoimprovethemarginalcontributionofenergytolivelihoods,throughco-benefitssuchasbetterair-qualityandreducedenergycostsforhouseholdsandbusinesses.Figure13showsataleoftwointensities.Globally,energyintensityfellby15%between2010and2018,indicatingadecouplingbetweenprimaryenergyuseandGDPgrowth,drivenbyfactorssuchasimprovedenergyefficiency.Whilereducingtheeconomy’srelianceonenergyisvital,equallyimportantforimprovementsinenvironmentalsustainabilityisreducingthecarbonintensityofenergyuse–measuredintheETIasunitsofCO2perunitofenergysupply.Globally,theCO2intensityofenergyusehasremainedbroadlyflatsince2010,suggestingacontinueddependenceonhigh-carbonenergysourcesandongoinginertiafromlegacyenergyinfrastructure.FosteringEffectiveEnergyTransition2021edition25201020112012201320142015201620172018110105100959085807570CO2percapita(tonnes/capita)CO2intensity(kgCO2/GJ)Energyintensity(MJ/$2017PPPGDP)Advancedeconomies-5%-5%0%-2%+1%-2%-1%CommonwealthofIndependentStatesEmerginganddevelopingAsiaEmerginganddevelopingEuropeLatinAmericaandtheCaribbeanMiddleEastandNorthAfricaSub-SaharanAfrica0CO2intensity(kgCO2/GJ)10203040507060World(-1%)20102018Environmentalsustainabilityindicators–ataleoftwointensities(2010=100)FIGURE13:Sources:InternationalEnergyAgency,WorldBank32Aregionalviewrevealssignificantvariation(seeFigure14).CO2intensityhasfalleninadvancedeconomiesandinmuchofEuropeduetosustainedreductioninthecarboncontentofenergyproduction.Thisismainlyaresultofswitchingfromcoaltogasforpowergeneration.However,CO2intensityisstagnantorrisinginregionswhereenergydemandisgrowing–inemergingAsia,LatinAmericaandSub-SaharanAfrica.ThissuggeststhatCO2-intensivesourcescontinuedtofuelincrementaldemandoverthepastdecade.Trendsinpercapitaemissionssupportthisconclusion.WhileabsoluteemissionsinNorthAmericaandEuroperemainstructurallyhigherthantherestoftheworld,CO2percapitaisfalling.However,CO2percapitahasriseninregionswhereenergydemandgrowthisthehighest.CO2intensitybyregion(kgCO2/GJ),2010and2019FIGURE14:Sources:InternationalEnergyAgency,WorldBankBoostingprogressacrosstheselaggingvariables,includinginadvancedeconomieswhereheadwayhasbeenmade,willbeakeymeasureofsuccessoverthenextdecade.Countriesshouldseektolowerthecarboncontentinenergyproductionacrossallend-uses.Moreeffortsareneededtotransfertechnology,provideaccesstofinance,andfosterinternationalcooperationtoenabledevelopingcountriestomeetnewdemandgrowthwithlessCO2intensitythanthepathwaytakenbydevelopednations.Attentionalsoneedstoturntocuttingemissionsintensitybeyondelectricityinothersectorssuchastransport,manufacturingandthebuiltenvironment.Countrieswithhighlyenergy-intensiveindustries,includingoilandgasproducers,canmakeimprovementsinthisdimensionbyfocusingonreducingemissionsintensity.InCanada,forexample,thegovernmenthassetnewregulationsthatrequiretheoilandgassectortoreduceitsmethaneemissionsby40%from2012levelsby2025.33FosteringEffectiveEnergyTransition2021edition26Transitionreadiness4.3Theenergysystem’sabilitytodeliverontheimperativesdescribedintheprecedingsectionsdependsonthepresenceofanenablingenvironmentforenergytransition,measuredintheETIframeworkbythetransitionreadinesssub-index.Readinessforenergytransitionisdeterminedbyfactorsincluding:stabilityofthepolicyenvironmentandlevelofpoliticalcommitment,investmentclimateandaccesstocapital,levelofconsumerengagement,anddevelopmentandadoptionofnewtechnologies.Whiletheaveragetransitionreadinessscorereachedahighthisyear(54.7comparedto53.5in2012),progressacrossdimensionsshowsamixedpicture.Datasince2012showsmarkedprogressinthedimensionsofregulationandpoliticalcommitment,andcapitalandinvestment,borneoutbyincreasedinternationalcommitmenttoclimateactionandgrowinglevelsofenergytransitionfinance.34Progressisslowerinotherreadinessdimensions,includingenergysystemstructure,whichtracksthetransformationofacountry’senergydemandandsourcesofsupply.Regulationandpoliticalcommitment4.3.1Enhancedpoliticalcommitmentandimprovedregulatorysupportfortheenergytransitionisencouraging.Lastyearsawaproliferationofnet-zeroannouncementsandtargets.Nowaround68%oftheworld’semissionsfromfuelcombustionarecoveredbysometypeofnet-zerotarget.35Thiscompareswithjust16%ayearearlier.OneofthemostsignificantannouncementscamefromChina,withapolicymandatetoachievenet-zeroby2060.However,thisratchetingupofambitionneedstobereflectedinlegislation,policyandregulation,andsupportedbyconcreteroadmapsandmilestones.36Statusofcountries’net-zerotargets,2020FIGURE15:Sources:EnergyandClimateIntelligenceUnit,InternationalEnergyAgency,WorldBankNet-zerotargetstatusAchieved0%4%27%12%21%33%0%2%33%10%19%32%0%6%16%23%24%31%InlawInpolicydocumentTargetunderdiscussionUncoveredProposedlegislationShare(%)ofglobaltotalenergysupplyShare(%)ofglobalCO2emissionsfromfuelcombustionShare(%)ofglobaltotalnominalGDPFosteringEffectiveEnergyTransition2021edition27China10485401661331088858545143UnitedStatesJapanGermanyUnitedKingdomFranceNetherlandsIndiaNorwaySpain200040060080010001200RenewablesOtherenergytransitioninvestmentCapitalandinvestment4.3.2Thecapitalandinvestmentdimensionisanotherenablershowingstrongimprovementoverthepastdecade,primarilysupportedbyimprovementsinaccesstocreditandinvestmentfreedomlevels.Thislaysthefoundationforinvestmentsintheenergytransition.Recordflowsoffinancehavebeenpouringintotheenergytransition,totalling$501billionofglobalinvestmentin2020,upfrom$458billionin2019.37However,maturerenewableenergytechnologiesaccountformostofthisinvestment,whileotherenergytransitionareassuchasmobility,electrifiedheat,storage,andcarboncaptureandstorage(CCS)accountforasmallproportionofthetotalinvestment.Globalenergytransitioninvestment,2016-2020($billion)FIGURE16:Source:BloombergNewEnergyFinanceFigure16showsthatenergytransitioninvestmentisconcentratedinahandfulofeconomies,withChinaandtheUnitedStates(US)accountingforthelargeshareofinvestments.However,investmentoutsidethetop10isgrowingsteadily.CountriessuchasVietnam,Kenya,Brazil,SouthAfricaandChilehaveshownthatacombinationoftherightenablingpolicies,infrastructureandbetterintegrationintoglobalfinancialmarketscanleadtorecordlevelsofnewinvestment.Byenactingmeasuresincludingdeepeningnationalcapitalmarkets,developingnewriskmanagementsolutionsandgeneratinghealthyreturnsfromlow-carbonsolutions,countriescancreateapipelineofbankableprojectsthatwillattractthecapitalneededtopropeltheirenergytransitions.Energysystemstructure4.3.3Inthenextdecade,politicalcommitmentandincreasedcapitalwillneedtotranslateintostructuralshiftsintheenergymix.Progresshasbeenmadeinrenewablecapacityandgeneration.Theshareofrenewablesintheglobalelectricitymixgrewfrom18%in2000to26%in2019.38Muchofthisprogresshasbeendrivenbyadditionsinsolarandwindcapacity.Solarandwindgenerationisgrowingatrecordpace,withsolarup22%andwindup12%between2018and2019.39Thelatestestimatessuggestthatrenewableshavebeenresilientthroughoutthepandemic.Astheworldwentintolockdown,thepowermixshiftedtowardsrenewablesduetodepresseddemand,lowoperatingcostsandrenewables’priorityaccesstothegrid.FosteringEffectiveEnergyTransition2021edition28Totalelectricitygenerationfromcoal(TWh)Shareofcoalinelectricitymix(%)1050042%34%35%37%38%39%40%41%36%10000900095008500800075002010201120122013201420152016201720182019Annualglobalgrowthinvariablegeneration(TWh)Shareofvariablegenerationasashareoftotalelectricitygeneration(%)35030025020015010050201020112012201320142015201620172018201909%8%7%6%5%4%3%2%1%0%8%2%Changeinglobalvariablegeneration,2010-2019FIGURE17:Sources:BP,StatisticalReviewofWorldEnergy2020;Ember,GlobalElectricityDataDecarbonizingtherestoftheenergysectoriscriticaloverthenextdecade.Achievingourclimategoalswillrequireelectrificationacrossothersectorsofenergyend-use,notablyindustries,HVAC(heating,ventilationandairconditioning)andtransport.Thismeansthatrenewableswillneedtomeetapproximately80%ofglobalelectricitydemandgrowthinthenext10years.RecentprogressinrenewablesistemperedbytheviewthatifEuropeandtheUSareexcluded,coal’sshareintheelectricitymixhasbeenrising,notfalling.Inadvancedeconomies,coalgenerationappearstobeinstructuraldecline,duetocontinuedgrowthinrenewablesandcoal-to-gasswitching.In2019,thestrongestdeclinesincoal-firedpowergenerationwereintheEU,whichsawcoalusedeclineby19%or111milliontonnes,andintheUSwherecoalusefellby14%or87milliontonnes.However,coalgenerationremainshighandgrowinginmanypartsoftheworld.Forexample,intheAsia-Pacificregion,coalconsumptionincreasedby1.2%or69milliontonnesin2019.40Globalcoalgenerationvsshareofgeneration,2010-2019FIGURE18:Source:BP,StatisticalReviewofWorldEnergy2020Moreover,whilecoal’sshareintheelectricitymixgloballyhasbeendeclining,electricitygenerationfromcoalinabsolutetermshasbeenonanupwardtrajectorysince2010,despiteaslightdipin2019(seeFigure18).Newcoalpowerplantshavelongoperatinglifetimesandcanlockinfutureemissionsfordecades.Breakingthecarbonlock-inwillrequireearlyretirementofexistingassetsandrevisitingthelong-termviabilityofassetsnotyetinoperation.5FosteringEffectiveEnergyTransition2021edition29BuildingresiliencetoovercomenewrisksKeyhighlights:1.Therisksfacingenergytransitionareevolving,threateningtoderailmomentumforchange2.Risingsocialinequalities,internationalcooperationchallengesandgeopoliticalshiftscallforinclusiveandholisticapproach3.Forrobustandresilientprogress,energytransitionneedstobefirmlyrootedinlegislation,consumerawareness,infrastructureandinvestmentsFosteringEffectiveEnergyTransition2021edition30EnergytransitionresilienceSocietyandpolicyFinanceEnergysystemsPolicydesigne.g.stablelong-termcommitments,adaptiveandrobustpoliciesandroadmapsEnergysupplye.g.Scalingnewtechnologies,e.g.CCUS,hydrogen,biofuels,net-zeroE&Poperations,renewableexpansion,digitalgridandenergysystemflexibility,gasandpowermarketdesignandmodernizationEnergydemande.g.Smartandcleancities,energyefficiencies,industrialclusters,electrificationofheatandindustrialprocessesIncentives&fundinge.g.Carbon-pricingframework,newinstrumentsandfunding,innovativePPAGovernance&reportinge.g.ESGframework,climateriskdisclosureandreportingTruste.g.justandinclusivetransition,supportforinternationalcooperationandagreementsThepreviouschaptershowedthatdespitegrowingmomentum,progressintheenergytransitionrequiresfurtheracceleration.Forthisreason,andconsideringtheimpactoftheCOVID-19pandemic,itiscriticaltofocusontheresilienceoftheenergytransition.Astherisklandscapeevolves,thetransitionwillfailtodeliverthestepchangerequiredwithoutbuildingingreaterresilience.Resilienceisaholisticconceptthatembracestheenablersoftransitionreadinessandcutsacrossthefollowingdimensions:–Societiesandpolicy–Energysystemsandtechnologies–FinanceInthischapter,welookathoweachofthesedimensionsisimpactedbyheightenedornewrisks,weexaminetheimplicationsfortheenergytransition,andweanalysekeyconsiderationsandcasestudiesforthoseseekingtoembedresilienceintheenergytransition.AdefinitionfortheresilienceoftheenergytransitionTheabilityoftheenergytransitiontoabsorb,recoverfromandadapttodisruptionsandcontinuealongapathwaytodeliverasecure,sustainable,affordableandinclusivelow-carbonfuture.”EnergytransitionresiliencedimensionsandillustrativemechanismsFIGURE19:Source:WorldEconomicForumFosteringEffectiveEnergyTransition2021edition31Societiesandpolicy5.1Therisklandscape5.1.1AsdemonstratedbytheCOVID-19pandemic,thenegativeimpactsofmajorsocio-economicdisruptionsfallhardestonthemostmarginalizedmembersofsociety.Climatechangeisnodifferent.Inequalityhasbeenincreasingacrosstheworld,bothbetweenandwithincountries,andclimatechangeisoneofthecontributingfactors.41Toberesilient,theenergytransitionwillrequiretheactiveparticipationofallsectionsofsociety.Itmustberootedineverycountry’slaws,politics,societiesandpatternsofconsumerbehaviour.Costs.Theenergytransitionwillnotcomewithoutcosts.Carbontaxes,removaloffossilfuelsubsidiesandleviesonelectricitybillscouldalladdtothecostofelectricityandfuels,leadingtoaffordabilitychallengesforsome.Significantinfrastructureinvestmentswillberequired.Thepandemic-relatedrecoverypackagesdraftedbygovernmentsaroundtheworldprovideaone-offopportunitytofundsomeoftheseinvestments.However,researchfromVividEconomicsandtheClimateActionTrackersuggeststhatrecoverymeasuresannouncedtodateacrosstheG20mayhavearegressiveenvironmentalimpact.42Workers.Anadditionalchallengecomesfromthepotentialimpactofthetransitiononexistingworkforces.Whileitisestimatedthatrenewableenergycouldemploymorethan100millionpeopleintheenergysectorby2050—boostingglobalGDPby2.5%—thesegainsarenotevenlydistributed.Somecountriesandcommunities,especiallythosethatrelyheavilyonfossilfuels,willloseoutasaresult.Consumerbehaviour.Householdconsumption–through,forexample,heating,lighting,cookingandcommuting–accountsforaroundtwo-thirdsofglobalgreenhousegas(GHG)emissions.43Changesinbehaviour–especiallyonmeasuresrelatingtoenergyefficiency,transportation,dietandresponsibleconsumption–areprovingincreasinglychallengingtolockin,giventhevaryingconsumerpreferencesandabilitiestoactthatweseeacrossdifferentcountries.Internationalcooperation.Energytransitionrequirescollectivecommitmentandinternationalcooperation,buttrustintheabilityofcountriestoactcollectivelyforthecommongoodhasbeensteadilyeroded.ThiswashighlightedbytheCOVID-19crisis,whenmanycountriesbecamemoreinwardlyfocusedintheirapproaches.Examplesofvaccinenationalism,44rangingfromconditionalsubsidiesthroughtoexportcontrols,demonstratedthetensionbetweeninternationalcooperationandcompetitionwhennear-termnationalinterestsareatstake.Internationalcooperationisalsoneededtocreateviablecarbonmarkets.Theeffectsofcarbontaxesontradeandcompetitivenessrequirecooperationbetweengovernmentsandbetweencompaniesandgovernments,toensureefficientandfairpricingofcarbonacrosstheglobaleconomy.45However,theaccelerationofclimateactionandtheshiftingoftradeflowsawayfromfossilfuelstocleanertechnologiescoulddisruptexistinggeopoliticalalliancesandreshapeglobalpowerdynamics.Anuncoordinatedtransitionisinherentlymoreuncertainthanoneunderpinnedbystabilityandagreedrulesofengagement.FosteringEffectiveEnergyTransition2021edition32AsystemvalueframeworkapproachtoevaluatingpolicyandinvestmentdecisionsCasestudy:Thesystemvalueframework,48jointlydevelopedbetweentheWorldEconomicForum,Accentureand30+CEOsofglobalenergycompanies,providesaframeworktoevaluatepolicy,investmentandsolutions.Itcomprises12dimensions,eachrepresentinganoutcomethatdeliversvalue,suchasjobs,emissionsreductions,airqualityandhealth,reliability,resilienceandinvestmentcompetitiveness.ConsiderationstobuildaresilienttransitionJusttransition.Aprerequisiteforresilienceistobuildajusttransition–onethatnotonlyaddressesenvironmentalsustainabilitybutalsoprovidesdecentwork,enhancessocialinclusionandhelpseradicatepoverty.46Policy-makersshouldprioritizepoliciesandincentivestosupporteconomies,workforcesandwidersocietyascountriesshifttolow-carbonenergysystems.Thismaytaketheformoffiscaltransfers,expandedwelfareandsocialprotection,andlabourmarketschemessuchasreskillingandtrainingtosupportaffectedcommunities.TheEU’sJustTransitionMechanism47isoneexampleofhowgovernmentsarelookingtosupportaffectedcommunitiesandbusinesses,andencouragethemtotakeanactiveroleinpreparingforthenewjobsandopportunitiesthatwillarisefromtheenergytransition.Systemvalueframework.Buildingresiliencemustalsostartwithbusinessleadersandpolicy-makersconcurrentlyevaluatingtheeconomic,environmental,socialandenergysystemoutcomesofpotentialenergysolutions.OneexampleofaframeworktoguidethisapproachisthesystemvalueframeworkdevelopedbytheWorldEconomicForuminpartnershipwithAccentureandothers.Thisquantitativeapproachshiftsthepoliticalandcommercialfocusbeyondcosttoincludevaluecreationandprovidesacommonagendaforstakeholderdecision-making.5.1.2CO2emissionsCO2emissionsbasedonenergysource,generationmixandloadchangesAccesstoelectricityPhysicalandeconomicaccesstocleanelectricitytosupportindividualorsocietydevelopmentFlexibilityAbilitytomanagegeneration,demandandpowerflows(incl.powerquality)acrossthegrid,enabledbydigitalizationandstorageSystemupgradeTechnology(incl.digital)andcapitalinvestmentsinT&D(incl.interconnections)toupgradethesystemforvariablerenewablesanddistributedenergyresources(DER)CostandinvestmentcompetitivenessMarketattractivenessandpolicycertaintytobusinessesandpolicy-makersforinvestmentincludingR&DandlevelizedcostofenergyReliabilityandservicequalityLifecycleapproachtoensuringhighsystemavailability;improvedcustomerserviceForeigndirectinvestmentMarketattractivenessforFDIwithreliableenergyandskilledresourcesEnergyproductivityandsystemicefficiencyEnergyefficiency&systemicefficiency(optimizationofinteractionsamongenergyvaluechainelementstomaximizeenergyproductivity)JobsandeconomicimpactInfluxofjobsduetoenergytransitionandrenewablesResilienceandsecurityUninterruptedanddiversifiedenergysupplyataffordablepriceswiththecapacitytobouncebackfromdisruptionsWaterfootprintWaterfootprintbasedonenergysource,generationmixandloadchangesAirqualityandhealthImpactstohumanhealthandnaturalenvironmentfromairandwaterpollutants,landuse$FosteringEffectiveEnergyTransition2021edition33Howgovernmentscandriveafaster,bigger,betterenergytransitionByNigelTopping,UKHighLevelClimateActionChampionfortheUN’sCOP26climatesummitTheveryfirstautomobiles,introducedinthe1880s,wereexpensive,nicheandusedonlybytherich.Within30years,Ford’sModelTenteredmassproduction,pushedthenumberofcar-owninghouseholdsintheUSfrom8%in1918to60%by1928,andtriggeredthespreadofelectrification,suburbs,cinemas,shoppingcentres,sophisticatedadvertisingandmuchmore.That’snotlineargrowth,it’sexponential.We’veseenithappentimeandagainthroughouthistory,whetherfromhorsestocarsorvalvestotransistors,andeachtimeithasfundamentallychangedthewayweliveandoperate.Ourracetoazero-carbonenergysystemwillbenodifferent.Butinthesamewaythatpro-businesspoliciesspurredtheAmericaneconomicboomandinnovationliketheModelTinthe1920s(followingtheSpanishflupandemic),thecleanenergytransitionmustbebackedbyholisticgovernmentpolicy.Keytothisisgettingmorespecificinnationallydeterminedcontributions(NDCs)undertheParisAgreement–settingouthowandwheneachsectorwillreachzeroemissions,andinvolvingalleconomicactorsandgovernmentministries.Thebenefitsofdecarbonizingenergyextendwellbeyondthesector–tohealth,jobs,education,equality,natureconservation.Buttheworkbehinditdoestoo.Thisistheyeartodoit,aheadofNovember’sCOP26climatesummitinGlasgow,whereallcountriesmustraisetheirNDCs.Asafirststep,governmentsmustrallytheirministersofenergy,climate,transport,healthandotherportfoliosaroundthesamegoal:zero-carbonenergy.MinisterscanthenaligntheirpolicieswiththeNDCtargetsandstartimplementing.Theenergysectorisalreadyleadingthechargetozeroemissions,withbreakthroughsandrapidpricedeclinesacrosstheauto,powerandlightingsectors.Globally,thenumberofelectricvehiclesontheroadhasjumpedfrom17,000in2010tomorethan7.2milliontoday.Theinstallationofsolarpowerwentfrom290megawatts(MW)in2001toaround100,000MWin2020.TheshareofLEDbulbsinthelightingmarketisgrowingfrom1%in2010toanexpected69%in2020andnearly100%by2025.Thegrowthishappeningevenwheregovernmentslagbehind.Butit’sfasterifledbypolicy.Chinahas420,000electricbusesontheroad,drivenbyBeijing’swaronairpollution.Norwaylastyearbecamethefirstcountrytosellmoreelectricvehiclesthanpetrol,dieselandhybrid,backedbyOslo’stargettoendinternalcombustionenginesalesin2025.Lawsandpoliciestobackambitions.Long-termambitionsaloneareinsufficienttoachievetheenergytransition.Toturndecarbonizationambitionsintoclimateactionthatisresilienttopoliticalcycles,countriessuchastheUKhaveembeddednet-zeroemissionstargetsintolaw.49ThislegalfoundationandtheUK’sstableclimatepolicyframeworkhavetheeffectofstimulatingtheinvestmentsrequiredtoconvertcommitmentintoaction.TheUK,forexample,reduceditsemissionsby44%from1990to2019,whileitseconomygrewbytwo-thirds.Thisis1.8timesfasterthantheEUaveragesince1990andsignificantlyfasterthantheUS,whichsawitsemissionsriseslightlyoverthesameperiod.50Thefinancialsectorhasbecomeanincreasinglystrongvoicestressingtheneedforastablepolicyframeworktobuildinvestorconfidence.Strongerinternationalcooperation.Governmentsmustaligntodefineacommonsetofrulestoensureplayershavealevelplayingfieldinthemarket.Toolssuchasacommoninternationalcarbonmarketorcarbonborder-adjustmentmechanismscanbeconsidered.InternationalcooperationonenergytransitionwillonceagaincomeunderthespotlightduringthedelayedCOP26,expectedinNovember2021.Globaltradewillalsoplayakeyrole.Reformsofglobaltradeagreements–includingthereductionoftradebarriers,reductionoffossilfuelsubsidiesandthefacilitationofglobaltechnologytransfers–willhelpensurethatemergingmarketscanaccessnewenergytechnologiesinanequitableandaffordableway.Forexample,theEUcalledforgreaterfocusoncleanenergytransitionandsustainabledevelopmentaspartofitsproposedWorldTradeOrganizationreformsinFebruary2021.51Incentivesforconsumers.Consumersneedincentivestochangetheirbehaviourandembracetheenergytransition.Therighteconomic,legalandinfrastructurepolicies,plusfiscalinterventions,canchangeconsumptionpatternsandincentivizesustainablebehaviour.Countrieswillnotallfollowthesamepath,butitiscriticaltoidentifywaystomakechangeattheindividuallevelmoreattractiveandaccessible.OneexampleisNorway’sdrivetoadoptelectricvehicles(EVs).Thegovernmenthasadoptedamixofmeasures:mandatestophaseoutinternalcombustionenginesby2025,incentivesforthepurchaseofzero-emissionvehicles(e.g.0%VAT),urbanroad-tollexemptionsforEVs,andtheinstallationofaccessible,efficientcharginginfrastructure.Bystartingearlywithincentivesandadaptinginfrastructureandtechnologytofitdemand,Norwayhasfosteredaneco-conscioussocietythatseesEVsasapreferredchoice.52FosteringEffectiveEnergyTransition2021edition34All-of-societytransformationTheseadvancementsdriveall-of-societytransformation.Theycreatewell-payingjobs,53preventprematuredeathsthroughreducedairpollution54andintroduceaffordableenergytoruralareas,allowingpeopletorefrigerateproduceormedicationandchildrentostudybylightaftersunset.ButreachingthenecessarypaceandscalerequireswhatUNSecretary-GeneralAntónioGuterrescalled“inclusive,networkedmultilateralism”.55Themoreambitionpoliticalleadersdemand,themorebusinesses,investors,citiesandregionsarechallengedtoadvance.Thefarthertheygo,thehighergovernmentscanpushtheirtargets,andsoforth.It’sanambitionloop.PlatformsliketheMarrakechPartnership’sClimateActionPathways,56theMissionPossiblePartnership57andtheRacetoZeroBreakthroughs58areenablingthiskindofpre-competitivecollaboration,reducingtheriskofthetransition.Changeisgainingmomentum,inthemidstoftheCOVID-19healthandeconomiccrisis,withlargeemittingcountriessettingnet-zeroemissionsgoals:Chinaby2060;theEU,US,Canada,SouthKorea,JapanandSouthAfricaby2050.TheUK’snewNDC59isrootedintheplanforagreenindustrialrevolution,60creating250,000Britishjobsthisdecade.In2030,Londonintendstohaveendedthesaleofpetrolanddieselcars,reached5gigawattsofgreenhydrogenproductioncapacityandquadrupledoffshorewindcapacity,amongotherplans.SouthAfrica’snewgoalfornetzeroby2050isbackedbyastrategytocutcoal-firedpowersupplyfromaround90%nowto46%by2030and30%by2050,whileboostingwind,solarandhydro.ThisfallsshortoftheParisgoals,buttheambition–setagainstaseriouseconomicbatteringfromhighCOVID-19rates–islaudable.Yetthebiggersignsoftransformationarecomingfromtheprivatesector.InternationalAirlinesGroup61andOneworldAlliance62areaheadoftheInternationalCivilAviationOrganizationinsettingnet-zerotargets.GeneralMotorsisaimingfornetzeroby2040andcallingontheUSgovernmenttoforgeanationalzero-emissionsvehicleprogramme.63Nestléintendstohalveitsemissionsby2030bysupportingtheshifttoregenerativeagricultureandplantinghundredsofmillionsoftrees.64GovernmentpolicywillhelprealizethisambitionandcontinuouslyrampitupthewayParisdemands.NDCscoulddrivedecarbonizationbyendingfossilfuelsubsidiesandpricingcarbon,shiftinginvestmentsfromfossilfuelstorenewables,endingthesaleofpetrolanddieselvehicles,andendingdeforestation,theNDCPartnershiprecommends.65Investingincities–includinglow-carbonbuildingsandmobility,renewablepowerandgreenspaces–wouldalsoenhancenationalCOVID-19recoveriesandPariscontributions,theCoalitionforUrbanTransitionsstates.66Ofcourse,allthesepoliciesmustupholdtwopillarsintheracetoahealthy,resilient,zero-emissionsworld:thejusttransitionandnatureregeneration.Weknowthetransitionwillcreatejobs,butthosejobsmustbemadeavailableinplaceswhereworkersandcommunitiesrelyonfossilfuels.Thejusttransitionisalocalchallenge,andpoliticalandbusinessleadersshouldtreatitassuch.Andweknowthatslashingemissionswillonlygetuspartofthewaytogreaterhealthandresilience–wemustsimultaneouslyregeneratenature.Byreformingtheirmeasureofeconomicsuccess,andplacingthepremiumonworkingandlivingsustainablyratherthandestroyingnature,governmentscanrestorehumanity’srelationshipwithitsmost“preciousasset”,theEconomicsofBiodiversity:DasguptaReviewmakesclear.67Theworldweliveintodayhasbeenshapedbythebreakthroughsofourpast–fromtheModelT’sassemblyline,tothespreadofmobilephonesacrosspreviouslyunconnectedruralareas.Suchbreakthroughscontinuetopropelustowardsasaferfuture,aslongasgovernmentsmakesurethewholeofsocietycomesalongfortheride.FosteringEffectiveEnergyTransition2021edition35Energysystemsandtechnologies5.25.2.1TherisklandscapeTheshiftswithinandacrosstheenergysupplychain,alongsidethegreaterneedforflexibilityacrossincreasinglydiversifiedenergysources,willpresentnewchallengesandrequirementsforchange.Marketreforms.ArecentanalysisontheEuropeanelectricitymarket,completedbytheWorldEconomicForum,showsthatEuropecouldreach60%annualpenetrationofwindandsolarby2030.Atsuchlevels,powermarketreforms,increaseddemand-sideparticipationandsignificantchangestohowthenetworkoperateswillbeneededasthegridtransformstowardsvariablegeneration.Cybersecurity.Energycompanies,particularlyinthepowersector,areincreasinglydigitalizingtheiroperationstooptimizetheend-to-endvaluechain.Moredigitalizationmeanshigherexposuretocyber-attacks.Thenumberofidentifiedgroupstargetingtheenergysectorhasrisenfrom87inearly2015to155bytheendof2019.68Gridinfrastructure,nuclearplants,gaspipelinesandsafetysystemsforoilproductionoperationshaveallbeenthetargetofcyber-attacksinthepastfiveyears.Rareminerals.Theproductionofmineralssuchasgraphite,lithiumandcobaltcouldincreasebynearly500%by205069tomeetthegrowingdemandforcleanenergytechnologies.Thesematerialsaregenerallyproducedindevelopingcountries,andsometimesinchallengingenvironmentalandsocialconditions.Thescrambletoacquirethesemineralshasresultedinahighconcentrationofresourcesinthehandsofafewcountries,increasingpotentialriskstotimelysupply.Deepdecarbonization.Forindustriesthatrequirehigherenergydensitytofunction,suchasheavyindustriesorheavytransportation,progresstosignificantlyreducecarbonemissionshasbeenslowertodate.Forexample,despitetheParisAgreementtakingeffectin2016,therewasnoemissions-relatedcommitmentfromtheshippingindustryuntil2018,whentheInternationalMaritimeOrganization(IMO)committedtoa50%reductioninemissionsby2050(comparedto2008).70Innovationrisk.Withinthefossilfuelindustry,low-carbontechnologies–includinghydrogenandcarboncapture,utilizationandstorage(CCUS)–provideapotentialpathforward.Theabilitytoscaleeachofthetechnologiesdependsoncollaborationacrosssectors(andwithpolicy-makersandfinancialinstitutions)asnosectoralonecanfundandtakeontheriskofscalingthesetechnologies.Theincreasinginvestmentintoindustrialclusters,wherethesesolutionscanbescaledup,suggestsapathaheadandspeakstothetypesofpartnershiprequiredforsuccess.FosteringEffectiveEnergyTransition2021edition36CleanthecoreAcceleratethetransitionExtendthefrontierCleanhydrocarbonsystemEfficientgenerationassetsEnergy-efficientprocessesEnergy-efficientappliancesICEvehicleefficiencyPlant/Well-siteCCUSGreyhydrogenElectrificationofheating/cooling/cookingCircularfeedstocksModularnuclearSynfuelsandammoniaHydrogenforheat-intensiveindustryCarbon-freecementandindustrialprocessesAviationbiofuelsandhydrogenScaledupCCUSGreen/bluehydrogenHeavy-transportEV,LPGEVsatscaleWind&solarpowerGasasatransitionfuelEnergystorageAcceleratethetransitionReplacetoday’ssourcesofenergyandmethodsofconsumptionwithcleanerandzero-emissionalternativesCleanthecoreMinimizeemissionsandmaximizeefficiencyfromcurrentinfrastructureandvaluechainsExtendthefrontierScaleupsolutionsandcommercializebeyondwhatisfeasibletodayBuildingresilienceinthetransformationofourenergysystemsanditstechnologieswillrequireincreasedflexibility,greatercollaborationamongandacrossstakeholders,andachangeinbehaviour.Regionalinterconnectionsandinteroperablemarkets.Cross-border,connectedinfrastructurecanprovideflexibilityindemand/supplybalancing.In2020,38%oftheEU’selectricitywassuppliedfromrenewables,makingrenewablesahighersourceofEurope’senergymixthanfossilfuels.71InterconnectionsandincreasedinteroperabilityofmarketdesignacrossEurope’snationalelectricitymarketshavebeencentralinenablingthecontinenttoachievethishighshareofwindandsolarpenetrationwhilemaintaininggridresilienceandflexibility.ENTSO-E–theEuropeanNetworkofTransmissionSystemOperatorsforElectricitythatrepresents42electricitytransmissionsystemoperators(TSOs)from35countriesacrossEurope–istaskedwithcontinuouslycoordinatingandevolvingtheEU’selectricitygridsystemoperationsasthecontinentacceleratesitscleanenergytransitionandpreparesformoredistributedandvariableresourcestobeaddedtotheelectricitynetwork.Optimizenon-buildsolutions.Anestimated185GWofelectricitycouldbefreedupbysystemflexibilityanddigitallyenabledsmartdemandresponse–roughlyequivalenttotheinstalledcapacityofAustraliaandItalycombined.Thiswouldobviatetheneedforaround$270billionofinvestmentinnewelectricityinfrastructure–fundingthatcouldberedirectedtowardstransition-linkedopportunitiesinstead.72Weather-proofinfrastructure.Theenergytransitionjourneyisnotfullypredictableand,asexperiencedinTexaswiththeFebruary2021winterstorm,increasinglyvolatileclimateeventscanleadtoexceptionaldemandincombinationwithfailuresofsupply.Subsequentdiversionsoffundingforrepairsandmaintenancecouldstarveinvestmentincleanerenergysourcesandleadtoquestionsregardingshort-termversuslong-termpriorities.Resilienceofthetransitionmaythereforerequirelegacyenergyassetstotoplayacriticalbridgingroleastheoverallsystemtransitions.Low-intensityoilandgas.Reducingthecarbonintensityofoilandgasindustrycoreoperationsisneededtoachieveshorter-termobjectives,whileprovidingtheplatformforlonger-term,morestructuralshifts.Thelargestshareofthepotentialemissionsimprovementbetweennowand2050willbeduetoactionsthatimprovetheperformanceofcurrentcoreenergysupplyanddemandassets.ThreesetsofactionstoachievethedecarbonizationtransitionConsiderationstobuildaresilienttransitionofenergysystemsandtechnologiesFIGURE20:Source:Accentureanalysis5.2.2FosteringEffectiveEnergyTransition2021edition37Asco-chairsoftheWorldEconomicForum’sPartneringAgainstCorruptionInitiative(PACI),wearecommittedtostrengtheningtrustandtransparencybetweenpublicandprivatestakeholders.Thetransitiontoamoreinclusive,affordableandsustainableenergyfutureprovidesauniqueopportunityforstakeholderstocometogethertotransformintentintoimpact.Deliveringthetransitionwillrequireintegrity,trustandcollaborationacrosstheentireecosystem.Accenture’sanalysissuggeststhat25%ofpotentialemissionsreductionsachievableupto2050–equivalenttoover10GTperyear–aredependentoncollaborationbetweenenergysuppliersandtheircustomers.Themessageisclear:whenitcomestocreatingthenewenergyfuture,noonecompanyorcountrycandoitalone.Companies,partners,suppliers,customers,communitiesandgovernmentsallplayarole.Simplyyetboldlysaid,weareataninflectionpoint.Byacceleratingtheglobalconsciousnessofthefragilityofourplanet,COVID-19hastriggeredthesinglebiggestchangeinhumanbehaviourintheworld’shistoryand,inturn,hastriggeredthesinglebiggestreinventionofindustryinlivingmemory.Collectively,thereisanurgencylikeneverbeforetoputourtrustinoneanotherandourinstitutionstocomethroughthepandemicstrongerandmoreresilient.Tosucceedintheenergytransition,wewillneedtosimilarlyrallyaroundasharedpurpose,collectiveactionand,aboveall,thebeliefthatweareallinthistogether.ThreeleversoftrustSecuringthepublic’strustduringtheenergytransitionisgoodforboththeplanetandthebottomline.Accenture’sCompetitiveAgilityIndex,whichmeasuresthevalueofacompany’sinterdependentgrowth,profitabilityandsustainabilitystrategy,hasfoundthatcompaniesthatexperiencealossintrustalsoseetheirindexscoredeclineandthiscanleadtoanalmost10%negativeimpactonEBITAgrowth.Togalvanizethetrustthat’sneeded,webelievecompaniesmustactivatethreelevers.–Purpose.Leadersmustarticulatetheirenergy-transitiongoalsanddemonstrateacommitmenttodeliveronpromisesmade.Doingsoisnotjusttherightthingtodo.It’swhatconsumersexpect.Accentureresearchrevealedthatalmosttwo-thirdsofconsumersareeagerforcompaniestotakeastanceonissues.76AtTotalandAccenture,wehavebeenoutspokenaboutourintentionstoberesponsiblebusinessleaders.Weareembeddingsustainabilityandresponsiblebusinesspracticesinallwedo,sothatwemaycreateabetter,moreinclusivefutureforallanddeliveraccesstoreliable,affordableandcleanenergy.Inthecontextofenergysustainability,TotalandAccenturehavebothpubliclycommittedtogettingtonetzero,togetherwithsociety,tosupportthecarbon-neutralityobjectiveoutlinedintheParisAgreement.–Actions.Sustainabilityisabusinessimperativeforleadersinallindustries.77Forthatreason,companiesinvolvedinthetransitionmustbecommittedtodeliveringontheirgoals–andhelpingothersdothesamewheneverpossible.Scaleupthroughcollaboration.Newmodelsofcross-industrycollaborationcancreatethenecessarysolutionstosupportinvestmentinlow-carbontechnologiesandextendthepossibilityfrontierforthetransition.TheNorthernLightsproject,73partoftheNorwegianfull-scalecarboncaptureandsequestrationproject,isacollaborationbetweenEquinor,ShellandTotalinpartnershipwithheavyindustriesintheOslofjordregion.NorthernLightscapturesCO2fromtheproductionofcementandwaste-to-energy,transportsitandstoresitoffshoreundertheNorthSea.Public-privatesectorcollaborationandinternationalcooperationwillbecrucialinthescalingupofhydrogen.Chile,forexample,hassetanambitiontobecomealeadinggreenhydrogenexporter,withatleast5GWofelectrolysiscapacityby2025.ItsNationalGreenHydrogenStrategy74identifiedcross-sectorcollaborationandinternationalcooperation—especiallyincommonstandard-settingandinfrastructureplanning–ascrucialpillarsforsuccess.Theimperativeistokick-startdomesticproductionthroughpublic-privatesectorcollaboration,particularlyinareassuchasammonia,oilrefiningandmining.Focusoncities.Urbanareasaccountfortwo-thirdsofglobalfinalenergydemandand70%ofglobalGHGemissions.75Today,55%oftheworld’spopulationlivesinurbanareasandthisisexpectedtogrowto68%by2050.Consequently,citiesareaprimaryfocusfortheenergytransition.Buildingresilienceintothetransitionofurbanenergydemandrequiresbothtechnologicalandbehaviouralchange.Best-practiceexamplesincludeelectrifiedmass-transitsystems,intelligentpower,smartmeters,andsmartbuildingsthatfeatureautomatedsystemsforlighting-andclimate-controlalongwithmicro-generationandsolarheating.TrustinourenergyfutureByJulieSweet,ChiefExecutiveOfficer,Accenture,andPatrickPouyanné,ChiefExecutiveOfficer,TotalGroupFosteringEffectiveEnergyTransition2021edition38Thelattercouldmean,forexample,runningofficeswith100percentrenewableenergyandworkingwithsupplierstoreducetheiremissions.78Anotherkeyleverinthisjourneycomesfromcombiningsustainabilityanddigitaltechnologiestodrivefuturecompetitiveness.79Migratingto“greenercloud”solutions,forexample,canreduceon-premiseenterpriseIT-relatedcarbonemissionsbyupto84%–andtotalcostofownershipbyupto40%.80Forenergycompanies,thiscouldmeandrasticallydecreasingemissionsfromtheiroperations,transformingthemixofenergyproductsthattheyselltotheircustomers,andsteeringthemtowardslow-carbonenergyproductsandsolutions.Additionalpathscouldmeaninvestingmassivelyinrenewableelectricityproductionandexpandingactivitiesinbiofuels,energystorageandgreengases,betheybiogasorhydrogen.Bythesametoken,theuseofacarbonpriceinprojectassessmentwouldensureprojectsandlong-termstrategyareviable.Furthermore,investmentsincarbonsinksbasedontechnologiessuchascarboncapture,utilizationandstorage(CCUS)oronnature-basedsolutionsareanimportantpartofthispuzzle.Itisincreasinglyimportanttokeepinmindthatwhilecontributingtotheirnet-zeroambitionthroughinnovations,energycompaniesmustalsoboostenergyefficienciesandloweremissionsfortheircustomers.Actiononenergytransitionrequiresworkingwithpartnerstoenablechangebeyondacompany’sownoperationsandcustomers.Todeliverenergyaccessinremoteareas,internationalenergycompaniescanpartnerwithlocalbusinessesanddevelopmentagenciestoscaleupoff-gridenergysolutions.TheOilandGasClimateInitiative(OGCI),forexample,isaCEO-ledinitiativethataimstoacceleratetheindustryresponsetoclimatechange.81OGCIhasformedseveralpartnershipstoexploreCCUStechnology.82–Transparency.Companiesleadingthetransitionmustcontinuallymeasuretheirprogressandclearlycommunicatetheresultsoftheirefforts.Doingsonotonlybuildstrust,butalsoservestoencourageotherstofollowsuit.Thismeansmeasuringactionsacrosstheboardandpublishingtheseresultsregularlyandexternally–fromhoweffectivelyenergycompaniesarereducingemissionsandadjustingthemixofenergyproducts,toencouragingbehaviouralchangesamongcustomers.Beyondmeasuringtheirownsustainabilityprogress,companiescanalsohelpclientsmeasuretheirs.Forexample,acarbon-intensityindicatorcanbeusedtoevaluatetheaverageGHGemissionsfortheenergyproductssoldtocustomersonafull-lifecyclebasis.83Thisindicatorcantrackcustomers’demandforlower-carbonproductsandmeasurethetransitioningofacompany’senergymix.AnotherexampleistheGreenNavigator,atoolthatenablescustomerstomeasuretheircarbonreductionswhentheymovetotheCloud.84TransitioningwithmomentumThisisthemomentforbusiness,governmentandsocietytocometogethertoreimagine,rebuildandtransformourglobaleconomyintoonethatworksforthebenefitofall.AtTotalandAccenture,weareexcitedthatsomanycompanies,organizationsandgovernmentsarealigningaroundacommonpurposeofaffordable,reliable,sustainableenergy–asshownbylastyear’sdoublingofgovernmentandbusinessescommitmentstoreachnetzero.85Nowisthetimeforallofustobuildonthismomentum.Tostepupouractions.Todeliveronourpromises.Andtoprovidethetransparencyneededtobuildandsustaintrust.FosteringEffectiveEnergyTransition2021edition39Finance5.3Theabsenceofsufficientcapitalandinvestmentsupportingthetransitionremainsoneofthegreaterriskareas.Hasteningprogressandrootingtheenergytransitionforthelongtermwillrequireacriticaltransformationinhowandwhereinvestmentsareallocated.Therisklandscape5.3.1Globalinvestmentincleanenergygrewfrom$60billionin2004toanaverageof$311billionperyearoverthepastdecade.86FinanceinstitutionsareincreasinglyaligningtheirobjectivestotheParisAgreement.Assetmanagersrepresentingmorethan$9trillionofassetsundermanagement(AUM)havelaunchedtheNetZeroAssetManagersInitiative,inwhichtheycommittosupportinvestingalignedwithnet-zeroemissionsby2050.Whilewelcome,theIPCCestimatesthatannualinvestmentsincleanenergyandenergyefficiencywouldneedtoincreasebyafactorofsixby2050,comparedwith2015levels,tolimitwarmingto1.5˚Cabovepre-industriallevels.87Atthesametime,IEAestimatesshowthatinvestmenttrendsarefailingtoleadtoalargeenoughreallocationofcapitaltosupporttheenergytransition.88Beyondpower.Investmentsareconcentratedinthepowersector.Eventhoughelectrificationwillplayaleadingroleinthetransition,itisimperativetoattractcleanenergyinvestmentintosectorssuchassteelandcement,heavytransportandHVACtoachieveourclimateobjectives.Partofthereasonthatfinancetonon-powersectorshaslaggedisthelackofscaleintechnologiesandthedifficultyinabatingsomeindustrialemissions.Itisalsoduetothe“crowding-out”effectcreatedbyheadlinewindandsolarPVopportunities.However,theincreaseinnet-zerocommitmentsinEurope,ChinaandJapanwillforcecountriestoputpoliciesinplacetosupportinvestmentsthataddressemissionsoutsidethepowersector.Emergingmarkets.Insufficientinvestmentsareflowingintoemergingmarkets.Despitemakingstrides,fargreaterresourcesareneededinthoseregionswheremostofthegrowthineconomies,populations,energydemandandemissionsisexpected.Thisyear’sETIresultscontinuetohighlightthestructuralgapincarbon-relatedmetrics,withCO2intensityrisinginregionssuchasemergingAsiaandSub-SaharanAfrica,whereenergydemandisgrowing.Thistrendisdrivenbycontinuedgrowthincoalpowersectoremissions.Carbonlock-in.Capitalisstillbeingchannelledintoenergyassetsthathavelongoperatinglifetimes,lockinginfutureemissions.Breakingthecarbonlock-inwillrequireanewapproachtoinvestmentinfossilfuelsand,insomecases,theearlydecommissioningofexistingassets.Limitingglobaltemperatureincreaseto1.5˚Cimpliesthatasignificantshareofexistingoil,gasandcoalassetsandreservesareoutsidethecarbonbudget.89FosteringEffectiveEnergyTransition2021edition40Morediversefinance.Todatemostofthefinancefortheenergytransitionhasbeenattractedbytariffsandpremiumguaranteesawardedbygovernmentsdirectlytoprojectdevelopersorthroughregulatedbodies.Innovationinfinancialproductsandarrangementsisrequiredtoincreasethediversityofavailablefinanceandtostimulateinvestmentincleanenergy.Corporatepowerpurchaseagreements(PPAs)arelong-termprocurementcontractsthatgiveprojectdevelopersandbanksrevenuecertaintytoinvestincleanenergy.ThecorporatePPAmarketisgrowingrapidly,althoughitisstillprimarilyconcentratedintheUSandEurope.Recently,however,ithasstartedtogaintractionglobally,inparticularwithlargepowerconsumers.Greenbondsandsustainability-linkedbonds.Greendebtissuancelinkedtosustainabilityhasgrownfromaround$1billionin2009to$270billionin2020.90TheClimateFinanceLeadershipInitiativesuggeststhatsustainabilitybondsareusefultofundthetransition,particularlyinmorecarbon-intensivesectors.91Forexample,in2019,theinternationalenergygroupEnelwasthefirstcompany92tolaunchsustainability-linkedbondsinUSandEuropeanmarkets.Enellinkeditssustainabilitystrategytothetermsofgeneralcorporatedebt,usingapricingmechanismthatincentivizestheachievementofambitioussustainabilitytargetswithinapre-determinedtimeline.Theseinstrumentshavesincebeenrecognizedinternationally,includingbytheInternationalCapitalMarketAssociation93andtheEuropeanCentralBank.94Publicsectorrole.Governmentscanalsotaketheleadindeployinginnovativefinancingsolutions,suchas“climateauctions”,andthroughregulatorystandardsmandatingcutsinemissions.TheWorldBank’sclimateauctionmodel,forexample,isaperformance-basedmechanismtostimulateinvestmentinprojectsthatreduceGHGs.ThismodelofclimateauctionwastrailedbytheBank’sPilotAuctionFacility,whichhostedthreeauctionsbetween2015and2017,allocatingnearly$54millioninclimatefinancewiththepotentialtoabateover20milliontonsofCO2e.95PublicsectorfinancewillalsohavetotaketheleadindevelopingnewtechnologieswhoselongR&Dcyclesaredifficulttosupportoncorporatetimescales.Publicbudgetswillbeneededtosupportthecommercializationoftechnologiesthroughsubsidiesorrisk-sharingmechanismslikeloanguarantees.Bankableprojects.Inemergingeconomies,thekeytoincreasingcapitalflowsistoimprovethebankabilityofinfrastructureprojectsbyallocatingtherisksfairlyacrossallparties.TheAsiaPacificRiskCentre96hascreatedasetofbankabilityguidelinescriticaltounlockinginternationalfinanceinemergingmarkets.Theseincludeappropriatecovenantsandfundingstructures,thepresenceoflegalandeconomicrecourse,thoroughduediligence,arobustrighttopayment,andwell-structuredconcessionrights.Standardizingcontractssotheyreflectinternationalleadingpracticeonkeybankabilitydimensionscanreducetransactioncosts,easeduediligenceforinvestorsandbanks,andshorteninvestmentcycles.InvestinginhomegrownenergytransitionchampionsCasestudy:Investmentinlocalcapitalanddevelopinglocalchampionscanbeakeytransmissionmechanismforsocialcapital,jobs,skillsandothereconomicbenefits,addingfurtherresiliencetotheenergytransition.AgoodexampleofthisisReNewPower,India’sleadingrenewableenergyindependentpowerproducer.GoldmanSachswasanearlyinvestor,providing$470millionincumulativefundingatdifferentstages.AsReNewPowergrew,itattractedanetworkofinstitutionalinvestors,includingtheAsianDevelopmentBank,theCanadaPensionPlanInvestmentBoardandJERA,thelargestpowergenerationcompanyinJapan.ThisearlyinvestmentinReNewPowerallowedittobecomealeaderinIndiaandcatalyseddevelopmentofthedomesticcapitalmarketthroughafirst-of-its-kindpublic-privatepartnershipgreenbondissue.5.3.2ConsiderationstobuildresilientfinancetosupportthetransitionConcessionalfinance.DevelopmentFinanceInstitutions(DFIs)canunlockprivatecapitalbypartneringwithbanksandassetmanagerstofinanceprojects.ConcessionalfinanceprovidedbyDFIscanreducethetimeneededforlow-carbontechnologiestobecomemorecostcompetitivethantheircarbon-intensivecounterparts.Securitizationofstrandedassets.Afinancialframeworkcanbeappliedtoacceleratetheshiftawayfromcoalpowerintorenewablesandmitigatetheriskofstrandedassets.Anexampleofthisissecuritization,wheretheregulatedreturnsoftheassetownerarecollateralizedaspartofnewdebtissuance.Proceedsfromthedebtissuancetoretiretheassetcanbeusedtoreinvestinrenewables,andevensupportcommunitiesimpactedbytheclosure.SomeUSstatessuchasColorado,NewMexicoandMontanahaveproposedlegislationtoauthorizesecuritization.97Stakeholdercapitalismmetrics.AcceleratingtheadoptionofaminimumsetofcommonmetricstoreportprogressonsustainabilityperformancewillFosteringEffectiveEnergyTransition2021edition41Acommon,globalESGdisclosureframeworkwillhelpacceleratethetransitiontoalow-carboneconomyandbuildgreaterfinancialresiliencetotheimpactsofclimatechange.Thechallengeswefacedasasocietyin2020andcontinuetofacetodayareareminderofourglobalinterdependencyandoursharedopportunitytocreatepositivechange.Fromthehealthcrisistoeconomicinequalitiestotheongoingimpactsofclimatechange,theeventsofthepastyearshowcasedhowleadersineverysector–government,business,civilsociety–areworkingtogethertohelpsocietymoveforward.Fortheprivatesector,thepastyearhasunderscoredtheimportanceofstakeholdercapitalism–aframeworkdefinedandchampionedbytheWorldEconomicForumforhalfacentury.Agrowingnumberofcompaniesaroundtheworldareembracingthismodel:committingtodeliveringgreatshareholderreturnsandhelpingdriveprogressonsocietalpriorities,includingclimatechange.Thereis,ofcourse,ampleevidencesupportingthisapproach.TheBankofAmericaglobalresearchteam,forexample,hasfoundthatcompaniesthatpaycloseattentiontoenvironmental,socialandgovernance(ESG)prioritiesaremuchlesslikelytofailthancompaniesthatdonot.However,companiesneedaframeworkformeasuringanddemonstratingprogressonsocietalpriorities.Withthatinmind,in2017,theForum’sInternationalBusinessCouncil(IBC),whichIhavethehonourtochair,beganajourneytoidentifyasetofcommonmetricsforsustainablevaluecreation.Wealignedtheconceptoflong-termvaluewithprogressontheUN’sSustainableDevelopmentGoals(SDGs),tohelpensurecorporategoalswereaimedatwell-definedandagreed-uponsocietalneeds.WorkinginclosecollaborationwithDeloitte,EY,KPMGandPwC–andinconsultationwithCEOs,investorsandthemostwidelyrecognizedstandard-setters,suchastheSustainabilityAccountingStandardsBoard(SASB)andtheGlobalReportingInitiative(GRI)–welookedacrossthediverselandscapeofexistingmeasurementsandmetricsinanefforttofindcommongroundandhelppromoteconvergencetowardsasinglesystemofglobalanduniversalstandards.In2020,theIBCpublishedacoresetof“StakeholderCapitalismMetrics”,providingcompanieswithasetofindustry-agnosticESGindicatorstoincludeintheirmainstreamreportstoinvestors.Havingacommonlanguagegivesinvestorsandotherstakeholderstheopportunitytolookacrossindustriesandcomparecompanies’abilitytocreatelong-termvalue.Inturn,thishelpsdriveinvestmenttowardsprogressontheSDGs.Todate,nearly70globalcompanieshavecommittedtovoluntarilyadoptthesemetricsintheirreporting–andthatnumbercontinuestorise.AcommonESGframework,whichincludesreportingconsistentwiththewidelyadoptedTaskForceonClimate-relatedFinancialDisclosures(TCFD),canhaveaprofoundimpactonhowtheprivatesectormanagesenvironmentalsustainability,helpingacceleratethetransitiontoalow-carboneconomyandbuildinggreaterfinancialresiliencetotheimpactsofclimatechange.Forexample,itallowsinvestorstomorepreciselytracktheprogressacompanyismakingtoreducegreenhousegasemissionsfromoperations(Scope1andScope2)andbenchmarkitagainstcompaniesaroundtheworldandacrossindustries.TheStakeholderCapitalismMetricsalsoenablegreatertransparencyinenvironmentalsustainabilitypracticesupanddownacompany’svaluechain(Scope3),helpinginvestorsassesstheoverallresilienceofthebusiness.Thiswillhelpmanageajusttransitiontowardsthelow-carbon,sustainablefutureweneed.And,overtime,thehundredsofbillionsofdollarsthatcompaniesspendeachyeardealingwiththeimpactofclimatechangecanstarttoflowtocleanenergyandinnovation.Theresourcesrequiredtodriveprogressonthisprioritywillcomefromcompaniesthatcancommitalltheiractivitiestothetask.Forexample,atBankofAmerica:–Wearecarbonneutralinouroperationstodayandhaveannouncedourgoaltoachievenet-zeroemissionsinouroperations,supplychainandfinancingactivitiesbefore2050.–Wehavea10-year,$300billioncommitmenttohelpfinancethetransitiontoalow-carbon,sustainableeconomy.catalysegreatercooperationandalignmentamongbusinessleaders,investorsandpolicy-makers.TheWorldEconomicForum,incollaborationwithBankofAmerica,Deloitte,EY,KPMGandPwC,hascuratedasetof21coreand34expandedmetricsoverthepasttwoyears,withthesupportofmorethan140stakeholders.Themetricscomprisenon-financialdisclosuresrestingonthefourpillarsofpeople,planet,prosperityandprinciplesofgovernance.Intentionallydrawingonexistingstandards,thepillarsincludemetricssuchasGHGemissions,payequalityandboarddiversityamongothers.RethinkingtheglobalfinancialsystemwithacommonESGframeworkByBrianMoynihan,ChairmanandChiefExecutiveOfficer,BankofAmericaFosteringEffectiveEnergyTransition2021edition42–Wearealeadingunderwriterofgreenbonds.–Wehavehelpedcompaniesraise$40billionthattheyhaveearmarkedtosupporttheirmovetocarbonneutralityandtohelpthemfundover200environmentalprojects.–WehelpshepherdclientdemandforESGproductsandinvesting.Withmorethan$3trillionofclientassetsundermanagement,wehelpinvestorsputtheirmoneywiththecompaniesthataremakingprogressonclimatechangeandotherimportantissues.Andwe’rejustonecompany.AsmorecompaniesaligntheiractivitiestodemonstratehowtheycanhelpdriveprogressontheSDGs,whilealsodeliveringlong-termvalueforshareholders,wewillhelpmeetthesustainable,clean-energyandothersocietalgoalswehaveset.Aglobalstandardwouldgiveusthedisclosureframeworktodoexactlythat.Weareseeingconcreteprogressandsustainedmomentumtowardsthatobjective.Thefivemainsustainabilityandintegratedreportingorganizationshaveoutlinedtheirvisionofconsolidationandconvergence,andtheInternationalFinancialReportingStandards(IFRS)Foundation,withthesupportofsecuritiesregulators,isconsideringitsroleinoverseeingaglobalsystemofcomprehensivecorporatesustainabilityreporting.Fornow,reportingonthecommonsetofStakeholderCapitalismMetricswillprovidearunningstartforcompaniestodemonstratetheprogresstheyaremakinginintegratingsustainabilityintotheirbusinessactivities.6FosteringEffectiveEnergyTransition2021edition43ConclusionAnalysisoftheEnergyTransitionIndexhasshownencouragingprogressontheenergytransitionoverthepastdecade.Butmoreprogressisneeded.Evolutioninareassuchasenvironmentalsustainabilityremainsunevenandinsufficient,whileprogressonotherdimensionssuchaseconomicgrowthhasbeenmixed.Recentdisruptions,whethercausedbyCOVID-19ortheclimate,havechallengedtheresilienceoftheenergytransition.Asenergysystemsbecomemorevariable,distributedanddigitalized,newrisksareemergingthatthreatenthereliability,resilienceandaffordabilityoffutureenergy.Understandinghowtoboosttheresilienceoftheenergytransitionandidentifyingtheleversrequiredtodosowillbecomeincreasinglycriticalduringthisdecadeofactionanddelivery.Policy-makers,businessleadersandconsumersallhaveaparttoplayindeliveringabalanced,resilienttransitionwhichcontinuestospeedprogressregardlessofdisruptionsandopposition.Whilethereisnosingleapproach,somecommonkeythemesareemergingacrossdifferentgeographies:–Energytransitionmustbeajusttransition.Thischallengeisaboutmorethansimplyenergysystemperformance.Theenergytransitionisasystemictransformationofentireeconomiesandsocieties.Itfollowsthattransitionmeasuresmustaddresstheissuesofequity,jobs,publichealth,accessandaffordability.Policy-makersandinvestorsmustconsideralltheseissueswhenevaluatingandcommunicatingtheirdecisions,togaincooperationfromabroadcoalitionofstakeholders.–Electrificationisnecessarybutnotsufficient.Acceleratingelectrificationandshiftingtorenewableswillbecriticaltoachievetheemissionreductiongoalsofthenextdecade.Butthatalonewillnotbeenough.Jump-startingthetransitioninotherareasoftheenergysystem,fromheavy-dutytransporttohard-to-abateindustriessuchascementandsteel,isnowanecessity.Weneedtocommercializeandscaleupawiderangeofemergingcleanenergytechnologiestofullydecarbonizeallenergysystems.Wewillalsoneedtofosterandfundinnovationandcollaborationacrossindustrysectors.–Collaborationbetweenpublicandprivatesectorsisvitaltosharerisks,scaleupfundingandde-riskinvestmentsmadewithmulti-yearandevenmulti-decadetimehorizons.Thisiscrucialforemergingmarketsandnew,cleantechnologies,wheretheeconomicsarenotyetcompetitivewithmore-establishedenergyinvestments.Lookingahead,therearetwomajoropportunitieswhichwillhaveprofoundimpactsforthecomingdecades.First,theunprecedentedlevelofgovernmentstimulustocombatthesocialandeconomicimpactsofCOVID-19couldbetargetedtobuildresilienceintheenergytransitionandprovideanear-termfocusonenergytransition.Second,theupcomingCOP26summitinNovemberholdsthepotentialtosetthetoneandtrajectoryforcoordinatedinternationalactiononclimatechange.Developmentsinthisdecadewillbecrucialinresettingoureconomiesandinourfightagainstclimatechange.Policy-makersandprivatesectoractorsmustworktogetherandseizetheopportunitiestobuildthefoundationforaresilientenergytransition–onethatnotonlyensureslong-termsustainabilitybutalsodeliversinclusivegrowthandlong-termprosperity.Affordability20%Industrycompetitiveness20%Fossilfuelsubsidies20%Costofexternalities20%GDPcontribution20%EconomicDevelopment&GrowthEnergyaccessSecurity&Access33%AirpollutionEnergyintensityCarbonintensityCarbonemissionspercapita25%25%25%25%QualityofsupplySecurityofsupply33%17%50%EnvironmentalSustainabilityAbilitytoinvestAccesstocapitalRecentinvestmentintoEERecentinvestmentintoRES33%33%0%33%Capital&investmentCommitmenttointl.agreements20%Stablepolicy20%60%RegulationtosupportEE,RES,AccessRegulation&PoliticalCommitmentTransparency&politicalstabilityRuleofLawStablefinances33%33%33%Institutions&GovernanceTradelogisticsTransportationinfrastructureAvailabilityoftechnologyInnovativebusinessenvironment33%33%0%33%Infrastructure&InnovativeBusinessEnvironmentQualityofeducation50%Jobsinrenewableenergysector50%HumanCapitalandConsumerParticipationEnergydemandgrowthElectricityenergymixFossilfueldependency20%60%20%EnergySystemStructure17%17%17%17%17%17%ETIscore33%33%SystemPerformancescore50%TransitionReadinessscore50%FosteringEffectiveEnergyTransition2021edition44AppendixMethodologyFordetailsonselection,aggregationandnormalizationofindicatordata,anddatasources,pleasereferto:Singh,H.V.,Bocca,R.,Gomez,P.,Dahlke,S.,&Bazilian,M.(2019),“TheEnergyTransitionsIndex–Ananalyticalframeworkforunderstandingtheevolvingglobalenergysystem”,EnergyStrategyReviewsVolume26.doi:10.1016/j.esr.2019.100382.FosteringEffectiveEnergyTransition2021edition45ContributorsDatapartnersBloombergNewEnergyFinance,BPStatisticalReview,ClimateActionTracker,Enerdata,Ember,FitchRatings,HeritageFoundation,InternationalEnergyAgency,InternationalGasUnion,InternationalMonetaryFund,InternationalRenewableEnergyAgency,Moody’s,PBLNetherlandsEnvironmentalAssessmentAgency,Standard&Poor’s,TransparencyInternational,UNSEforALL,UNStatisticsDivisionandUNCTADstat,WorldBankGroup,WorldHealthOrganization,WorldTradeOrganizationChiefexpertadvisorsTheWorldEconomicForumacknowledgesandthankstheindividualsandexpertswithoutwhosesupporttheFosteringEffectiveEnergyTransition2021reportwouldnothavebeenpossible:ProjectSponsorsAccentureStephanieJamison,SeniorManagingDirectorandGlobalUtilitiesLeadMuqsitAshraf,SeniorManagingDirectorandGlobalEnergyIndustriesLeadWorldEconomicForumRobertoBocca,HeadofShapingtheFutureofEnergy,Materials,andInfrastructure,MemberofExecutiveCommitteeContributorsAccentureMelissaStark,ManagingDirectorandGlobalRenewablesLeadDavidRabley,ManagingDirectorandGlobalEnergyTransitionLeadinOil&GasKarlyWai,SeniorManager,Utilities,Strategy&ConsultingSylvainVaquer,SeniorManager,Energy,Strategy&ConsultingIishanLow,Consultant,Strategy&ConsultingWorldEconomicForumPedroG.GomezPensado,HeadofOilandGasIndustryHarshVijaySingh,ProjectLeadMorganBazilian,ProfessorofPublicPolicy,andDirectorofPayneInstitute,ColoradoSchoolofMines,USADominicEmery,ChiefofStaff,BP,UnitedKingdomLinBoqiang,Dean,ChinaInstituteforStudiesinEnergyPolicy,XiamenUniversity,People’sRepublicofChinaRabiaFerroukhi,Director,Knowledge,PolicyandFinanceCentre,InternationalRenewableEnergyAgency(IRENA)BertrandMagne,SeniorEconomistandEnergySpecialist,InternationalAtomicEnergyAgency(IAEA)DavidePuglielli,HeadofScenarioPlanningandGroupStrategicPositioning,Enel,ItalyDavidVictor,Professor,UniversityofCalifornia,SanDiego(UCSD),USARigobertoArielYepez-Garcia,Chief,EnergyDivision,Inter-AmericanDevelopmentBankJohnScott,HeadofSustainabilityRisk,ZurichInsuranceGroup,SwitzerlandFosteringEffectiveEnergyTransition2021edition46Endnotes1InternationalEnergyAgency(IEA),“TotalEnergySupplybySource,World1990-2018”,WorldEnergyBalances2020,https://www.iea.org/data-and-statistics?country=WORLD&fuel=Energy%20supply&indicator=TPESbySource2InternationalEnergyAgency(IEA),SDG7:DataandProjections,October2020,https://www.iea.org/reports/sdg7-data-and-projections/access-to-electricity3Naschert,Camilla,“‘ImmunetoCOVID-19’:Renewablesbehind90%ofnewcapacityin2020–IEA”,S&PGlobalMarketIntelligence,10November2020,https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/immune-to-covid-19-renewables-behind-90-of-new-capacity-in-2020-8211-iea-611897914InternationalEnergyAgency(IEA),GlobalEnergyReview:CO2Emissionsin2020,https://www.iea.org/articles/global-energy-review-co2-emissions-in-20205UnitedNationsDepartmentofEconomicandSocialAffairs(UNDESA),“SDGSummit,24-25September2019,NewYork”,https://sustainabledevelopment.un.org/sdgsummit6IntergovernmentalPanelonClimateChange(IPCC),Mitigationpathwayscompatiblewith1.5°Cinthecontextofsustainabledevelopment,2018,https://www.ipcc.ch/sr15/chapter/chapter-2/7Statista,“AverageannualOPECcrudeoilpricefrom1960toi2021”,2021,https://www.statista.com/statistics/262858/change-in-opec-crude-oil-prices-since-1960/8Ritchie,HannahandMaxRoser,“RenewableEnergy”,OurWorldInData,2020,https://ourworldindata.org/renewable-energy9ibid.10BloombergNewEnergyFinance,EnergyTransitionInvestmentTrends,19January2021,https://assets.bbhub.io/professional/sites/24/Energy-Transition-Investment-Trends_Free-Summary_Jan2021.pdf11WorldBank,“WorldGDP1960-2019”,https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?most_recent_value_desc=true12InternationalEnergyAgency(IEA),“TotalEnergySupplybySource,World1990-2018”,WorldEnergyBalances2020,https://www.iea.org/data-and-statistics?country=WORLD&fuel=Energy%20supply&indicator=TPESbySource13Cherp,Alehetal.“Integratingtechno-economic,socio-technicalandpoliticalperspectivesonnationalenergytransitions:Ameta-theoreticalframework”,EnergyResearch&SocialScience,vol.37,2018,pp.175-19014Fordiscussiononenergysystem’sinterlinkageswithothersystems,seeFosteringEffectiveEnergyTransition2019,WorldEconomicForum15EuropeanCommission,EnergyPricesandCostsinEurope,14October2020,https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52020DC0951&from=EN16UNNews,“Risinginequalityaffectingmorethantwo-thirdsoftheglobe,butit’snotinevitable:newUNreport”,21January2020,https://news.un.org/en/story/2020/01/105568117InternationalLaborOrganization(ILO),“Employmentandtheroleofworkersandemployersinagreeneconomy”,WorldEmploymentandSocialOutlook2018–Greeningwithjobs,https://www.ilo.org/weso-greening/documents/WESO_Greening_EN_chap2_web.pdf18InternationalRenewableEnergyAgency(IRENA),RenewableEnergy:AGenderPerspective,January2019,https://www.irena.org/publications/2019/Jan/Renewable-Energy-A-Gender-Perspective19Czako,V.,EmploymentintheEnergySector,(p.40,section7),EUR30186EN,PublicationsOfficeoftheEuropeanUnion,Luxembourg,2020,https://ec.europa.eu/jrc/en/publication/eur-scientific-and-technical-research-reports/employment-energy-sector20UnitedNationsFrameworkConventiononClimateChange(UNFCCC),JustTransitionoftheWorkforce,andtheCreationofDecentWorkandQualityJobs,https://unfccc.int/sites/default/files/resource/Just%20transition.pdf21Sources:InternationalRenewableEnergyAgency,IRENA,“RenewableEnergyEmploymentbyCountry”,2019,https://www.irena.org/Statistics/View-Data-by-Topic/Benefits/Renewable-Energy-Employment-by-CountryandWorldBank,“LaborForce,Total”,2020,https://data.worldbank.org/indicator/SL.TLF.TOTL.IN22Randall,TomandHayleyWarren,“Peakoilissuddenlyuponus”,Bloomberg,1December2020,https://www.bloomberg.com/graphics/2020-peak-oil-era-is-suddenly-upon-us23Elgouacem,Assiaetal.,Thefiscalimplicationsofthelow-carbontransition,IssuePaper,OrganisationforEconomicCo-operationandDevelopment(OECD),26November2019,https://www.oecd.org/greengrowth/GGSD_Forum%20Paper_Fiscal%20Implications.pdf24Fetter,Robetal.,“Youcan’tfightpandemicswithoutpower–electricpower”,BrookingsInstitute,5June2020,https://www.brookings.edu/blog/future-development/2020/06/05/you-cant-fight-pandemics-without-power-electric-power/25Ogunbiyi,Damilola,“Here’swhyenergysecurityisavitaltoolintacklingapandemic”,WorldEconomicForum,6April2020,https://www.weforum.org/agenda/2020/04/pandemic-energy-access-coronavirusFosteringEffectiveEnergyTransition2021edition4726Source:SchoolofEarthandEnvironment,LeedsUniversity,UK27WorldBank,“WorldDevelopmentIndicators”,https://data.worldbank.org/indicator/EG.ELC.ACCS.ZS28WorldBank,DoingBusiness2020,http://documents1.worldbank.org/curated/en/688761571934946384/pdf/Doing-Business-2020-Comparing-Business-Regulation-in-190-Economies.pdf29FinancialTimes,“BlackoutsspreadbeyondTexasasfrigidweatherknocksoutpowerplants”,15February2021,https://www.ft.com/content/4d07eedc-b3ec-417e-8cb1-5895178c9f9b30Ochiai,ShuheiandMitsutoshiMasuno,“Facingblackout,Japan’sTepcoasksothersectorsforelectricity”,NikkeiAsia,6January2021,https://asia.nikkei.com/Business/Energy/Facing-blackout-Japan-s-Tepco-asks-other-sectors-for-electricity31Accenture,FromReliabilitytoResilience:ConfrontingtheChallengesofExtremeWeather,2020,https://www.accenture.com/_acnmedia/PDF-124/Accenture-Resilience-Extreme-Weather-POV.pdf#zoom=4032InternationalEnergyAgency(IEA),WorldEnergyBalances2020;2017GDPPPPdatafromWorldBank:https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD;PopulationdatafromWorldBank:https://data.worldbank.org/indicator/SP.POP.TOTL33Konschnik,KatherineandFrancesReuland,“Canadastepsupitseffortstoreducemethaneemissions”,InternationalEnergyAgency(IEA),17February2020,https://www.iea.org/commentaries/canada-steps-up-its-efforts-to-reduce-methane-emissions34BloombergNewEnergyFinance,EnergyTransitionInvestmentTrends,2021,https://about.bnef.com/energy-transition-investment/35EnergyandClimateIntelligenceUnit,“Netzero:thescorecard”,2020,https://eciu.net/analysis/briefings/net-zero/net-zero-the-scorecard36ClimateActionTracker,“MethodologyNote”,CATClimategovernanceseries,December2020,https://climateactiontracker.org/documents/839/2020-12_CAT_ClimateGovernance_Methodology_Note.pdf37BloombergNewEnergyFinance,EnergyTransitionInvestmentTrends,2021,https://about.bnef.com/energy-transition-investment/38Calculatedfrom:BP,StatisticalReviewofWorldEnergy,2020,https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy.html39Calculatedfrom:Ember,GlobalElectricityReview,2020(datafrom2019),https://ember-climate.org/data/global-electricity/40InternationalEnergyAgency(IEA),Coal2020,Analysisandforecastto2025,December2020,https://www.iea.org/reports/coal-2020/demand41UNNews,“Risinginequalityaffectingmorethantwo-thirdsoftheglobe,butit’snotinevitable:newUNreport”,21January2020,https://news.un.org/en/story/2020/01/105568142VividEconomics,“GreenStimulusIndex”,24April2020,https://www.vivideconomics.com/wp-content/uploads/2020/05/200506-Stimulus-Green-Index-summary-report.pdf43UnitedNationsEnvironmentProgramme(UNEP),EmissionsGapReport2020,9December2020,https://www.unenvironment.org/emissions-gap-report-202044TheEconomist,“Themanyguisesofvaccinenationalism”,11March2021,https://www.economist.com/finance-and-economics/2021/03/13/the-many-guises-of-vaccine-nationalism45WorldBank,“Statement:PuttingaPriceonCarbon”,3June2014,https://www.worldbank.org/content/dam/Worldbank/document/Carbon-Pricing-Statement-060314.pdf46JustTransitionCentre,JustTransition,AReportfortheOECD,May2017,https://www.oecd.org/environment/cc/g20-climate/collapsecontents/Just-Transition-Centre-report-just-transition.pdf47EuropeanCommission,“TheJustTransitionMechanism:makingsurenooneisleftbehind”,https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal/actions-being-taken-eu/just-transition-mechanism_en48WorldEconomicForum,“SystemValue”,https://www.weforum.org/projects/system-value49ClimateChangeCommittee,“Buildingbackbetter–RaisingtheUK’sclimateambitionsfor2035willputNetZerowithinreachandchangetheUKforthebetter”,9December2020,https://www.theccc.org.uk/2020/12/09/building-back-better-raising-the-uks-climate-ambitions-for-2035-will-put-net-zero-within-reach-and-change-the-uk-for-the-better/#:~:text=Under%20the%20UK%20Climate%20Change,be%20legislated%20by%20June%20202150TheEconomist,“HowBritaindecarbonizedfasterthananyotherrichcountry”,15February2021,https://www.economist.com/britain/2021/02/15/how-britain-decarbonised-faster-than-any-other-rich-country51EuropeanCommission,“QuestionsandAnswers:Anopen,sustainableandassertivetradepolicy”,18February2021,https://ec.europa.eu/commission/presscorner/detail/en/qanda_21_64552EuropeanAlternativeFuelsObservatory,“Alternativefuels,Vehiclesandfleet,Norway”,July2020,https://www.eafo.eu/countries/norway/1747/incentives53InternationalLaborOrganization(ILO),WorldEmploymentandSocialOutlook2018–Greeningwithjobs,14May2018,https://www.ilo.org/global/publications/books/WCMS_628654/lang—en/index.htmFosteringEffectiveEnergyTransition2021edition4854TheGlobalAllianceforCleanCookstoves,“DeliveringontheSDGsthroughcleancooking”,https://sustainabledevelopment.un.org/content/documents/11416Global%20Alliance%20for%20Clean%20Cookstoves%20-%20Delivering%20on%20the%20SDGs%20through%20Clean%20Cooking.pdf55UnitedNations,“Inclusive,NetworkedMultilateralismVitalforBetterWorldGovernance,SaysSecretary-General,atGeneralAssembly’sSeventy-FifthAnniversaryMeeting”,21September2020,https://www.un.org/press/en/2020/sgsm20264.doc.htm56UnitedNationsFrameworkConventiononClimateChange(UNFCCC),ClimateActionPathways,2021,https://unfccc.int/climate-action/marrakech-partnership/reporting-and-tracking/climate_action_pathways57WorldEconomicForum,“MissionPossiblePartnership”,https://www.weforum.org/projects/mission-possible-platform58RaceToZero,UnitedNationsFrameworkConventiononClimateChange(UNFCCC),TransformingOurSystemsTogether:AglobalchallengetoacceleratesectorbreakthroughsforCOP26–andbeyond,2021,https://racetozero.unfccc.int/wp-content/uploads/2021/02/Race-to-Zero-Breakthroughs-Transforming-Our-Systems-Together.pdf59UKGovernment,“UKsetsambitiousnewclimatetargetaheadofUNSummit”,3December2020,https://www.gov.uk/government/news/uk-sets-ambitious-new-climate-target-ahead-of-un-summit60UKGovernment,TheTenPointPlanforaGreenIndustrialRevolution,November2020,https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/936567/10_POINT_PLAN_BOOKLET.pdf61InternationalAirlinesGroup,“Flightpathnetzero”,https://www.iairgroup.com/en/sustainability/flightpath-net-zero62OneWorld,“oneworldmemberairlinescommittonetzerocarbonemissionsby2050”,11September2020,https://www.oneworld.com/news/2020-09-11-oneworld-member-airlines-commit-to-net-zero-carbon-emissions-by-205063GeneralMotors,“ReducingCarbonImpact”,2019SustainabilityReport,https://www.gmsustainability.com/material-topics/reducing-carbon-impact.html64Nestlé,“Nestlésetsoutplantohalfemissionsby2030andbenetzeroby2050”,3December2020,https://www.nestle.co.uk/en-gb/media/pressreleases/allpressreleases/nestle-global-roadmap-to-achieve-net-zero65NDCPartnership,https://ndcpartnership.org/66Gulati,Manishaetal,TheEconomicCaseforGreeningtheGlobalRecoverythroughCities:7prioritiesfornationalgovernments,14September2020,https://urbantransitions.global/en/publication/the-economic-case-for-greening-the-global-recovery-through-cities/67UKGovernment,TheEconomicsofBiodiversity:TheDasguptaReview,14August2019,https://www.gov.uk/government/collections/the-economics-of-biodiversity-the-dasgupta-review68WorldEnergyCouncilandMarsh&McLennan,CyberchallengestotheEnergyTransition,2019,https://www.worldenergy.org/assets/downloads/Cyber_Challenges_to_the_Energy_Transition_WEC_MMC_2019.pdf69WorldBank,“MineralProductiontoSoarasDemandforCleanEnergyIncreases”,11May2020,https://www.worldbank.org/en/news/press-release/2020/05/11/mineral-production-to-soar-as-demand-for-clean-energy-increases70InternationalMaritimeOrganization(IMO),TheInternationalMaritimeOrganization’sInitialGreenhouseGasStrategy,April2018,https://theicct.org/sites/default/files/publications/IMO_GHG_StrategyFInalPolicyUpdate042318.pdf71Ember,EUPowerSectorin2020,https://ember-climate.org/project/eu-power-sector-2020/72InternationalEnergyAgency(IEA),DigitalisationandEnergy,November2017,https://www.iea.org/reports/digitalisation-and-energy73NorthernLights,“Acceleratingdecarbonisation”,https://northernlightsccs.com74GovernmentofChile,NationalGreenHydrogenStrategy,November2020,https://energia.gob.cl/sites/default/files/national_green_hydrogen_strategy_-_chile.pdf75InternationalEnergyAgency(IEA),“Citiesareatthefrontlineoftheenergytransition”,7September2016,https://www.iea.org/news/cities-are-at-the-frontline-of-the-energy-transition76Accenture,ToAffinityandBeyond:FromMetoWe,TheRiseofthePurpose-ledBrand,2018,https://www.accenture.com/_acnmedia/Thought-Leadership-Assets/PDF/Accenture-CompetitiveAgility-GCPR-POV.pdf77Lauchlan,Stuart,“Bringingsustainabilityinfromthecorporatesidelines–apost-pandemicenterpriseambitionfromAccentureandSalesforce”,29January2021,Diginomica,https://diginomica.com/bringing-sustainability-corporate-sidelines-post-pandemic-enterprise-ambition-accenture-and78BusinessWire,“AccentureSetsIndustry-LeadingNet-Zero,WasteandWaterGoals”,8October2020,https://www.businesswire.com/news/home/20201008006080/en/Accenture-Sets-Industry-Leading-Net-Zero-Waste-and-Water-Goals79Accenture,TheEuropeandoubleup,22January2021,https://www.accenture.com/us-en/insights/strategy/european-double-up80Accenture,Thegreenbehindthecloud,22September2020,https://www.accenture.com/us-en/insights/strategy/green-behind-cloud81OilandGasClimateInitiative,https://oilandgasclimateinitiative.com82OilandGasClimateInitiative,“Ourportfolio:Recyclingcarbondioxide”,https://oilandgasclimateinitiative.com/climate-investments/investment-portfolio-recycling-carbon-dioxide-ccus/FosteringEffectiveEnergyTransition2021edition4983Total,“ClimateIndicators:GHG–Scope1(operatedscope)”,https://www.sustainable-performance.total.com/en/climate-indicators84Accenture,“AccentureIntroducesGreenTechnologySuitetoHelpOrganizationsUseITtoAssessandImproveGreenAgenda”,23July2008,https://newsroom.accenture.com/subjects/technology/accenture-introduces-green-technology-suite-to-help-organizations-use-it-to-assess-and-improve-green-agenda.htm85UnitedNationsFrameworkConventiononClimateChange(UNFCCC),“CommitmentstoNetZeroDoubleinLessThanaYear”,21September2020,https://unfccc.int/news/commitments-to-net-zero-double-in-less-than-a-year86ClimateFinanceLeadershipInitiative,FinancingtheLowCarbonFuture:APrivate-SectorViewonMobilizingClimateFinance,September2019,https://data.bloomberglp.com/company/sites/55/2019/09/Financing-the-Low-Carbon-Future_CFLI-Full-Report_September-2019.pdf87IntergovernmentalPanelonClimateChange(IPCC),SpecialReport:GlobalWarmingof1.5˚C,2018,https://www.ipcc.ch/sr15/88InternationalEnergyAgency(IEA),WorldEnergyInvestment2020,May2020,https://www.iea.org/reports/world-energy-investment-202089Thefossilfuelreservesheldbythetop100listedcoalcompaniesandthetop100listedoilandgascompaniesrepresentpotentialemissionsof745GtCO2.Thisexceedstheremainingglobalcarbonbudgetof565GtCO2by180GtCO2(30%over).Source:https://www.banktrack.org/download/unburnable_carbon/unburnablecarbonfullrev2.pdf90FinancialTimes,“Analystsexpectasmuchas$500bnofgreenbondsinbumper2021”,3January2021,https://www.ft.com/content/021329aa-b0bd-4183-8559-0f3260b73d6291ClimateFinanceLeadershipInitiative,FinancingtheLowCarbonFuture:APrivate-SectorViewonMobilizingClimateFinance,September2019,https://data.bloomberglp.com/company/sites/55/2019/09/Financing-the-Low-Carbon-Future_CFLI-Full-Report_September-2019.pdf92BNPParibas,“TheAscentofSustainability-linkedBonds”,16December2020,https://cib.bnpparibas.com/sustain/the-ascent-of-sustainability-linked-bonds_a-3-3900.html#93InternationalCapitalMarketAssociation(ICMA),Sustainability-LinkedBondPrinciples:VoluntaryProcessGuidelines,June2020,https://www.icmagroup.org/assets/documents/Regulatory/Green-Bonds/June-2020/Sustainability-Linked-Bond-Principles-June-2020-171120.pdf94EuropeanCentralBank(ECB),“ECBtoacceptsustainability-linkedbondsascollateral”,22September2020,https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200922~482e4a5a90.en.html95WorldBank,“WorldBankAnnounces$14MillionBondPaymentforMethaneandNitrousOxideReduction”,3December2020,https://www.worldbank.org/en/news/press-release/2020/12/03/world-bank-announces-14-million-bond-payment-for-methane-and-nitrous-oxide-reduction?cid=EXT_WBEmailShare_EXT96Ra,SungsupandZhigangLi,ClosingtheFinancingGapinAsianInfrastructure,June2018,AsianDevelopmentBank,ADBSouthAsiaWorkingPaperSeriesNo.57,https://www.adb.org/sites/default/files/publication/431261/swp-057-financing-gap-asian-infrastructure.pdf97Handler,BradandMorganBazilian,“SecuritizationaUsefulFinancingToolforTransitionFromCoal”,Power,23November2020,https://www.powermag.com/securitization-a-useful-financing-tool-for-transition-from-coal/FosteringEffectiveEnergyTransition2021edition50TheanalysispresentedintheFosteringEffectiveEnergyTransition2021insightreport(herein:“Report”)isbasedonamethodologyintegratingthelateststatisticsfrominternationalorganizations.Thefindings,interpretationsandconclusionsexpressedinthisworkdonotnecessarilyreflecttheviewsoftheWorldEconomicForum.TheReportpresentsinformationanddatathatwerecompiledand/orcollectedbytheWorldEconomicForum(allinformationanddatareferredhereinas“Data”).DatainthisReportissubjecttochangewithoutnotice.ThetermscountryandnationasusedinthisReportdonotinallcasesrefertoaterritorialentitythatisastateasunderstoodbyinternationallawandpractice.Thetermscoverwell-defined,geographicallyself-containedeconomicareasthatmaynotbestatesbutforwhichstatisticaldataaremaintainedonaseparateandindependentbasis.AlthoughtheWorldEconomicForumtakeseveryreasonablesteptoensurethattheDatathuscompiledand/orcollectedisaccuratelyreflectedinthisReport,theWorldEconomicForum,itsagents,officersandemployees:(i)providetheData“asis,asavailable”andwithoutwarrantyofanykind,eitherexpressorimplied,including,withoutlimitation,warrantiesofmerchantability,fitnessforaparticularpurposeandnon-infringement;(ii)makenorepresentations,expressorimplied,astotheaccuracyoftheDatacontainedinthisReportoritssuitabilityforanyparticularpurpose;(iii)acceptnoliabilityforanyuseofthesaidDataorrelianceplacedonit,inparticular,foranyinterpretation,decisions,oractionsbasedontheDatainthisReport.OtherpartiesmayhaveownershipinterestsinsomeoftheDatacontainedinthisReport.TheWorldEconomicForuminnowayrepresentsorwarrantsthatitownsorcontrolsallrightsinallData,andtheWorldEconomicForumwillnotbeliabletousersforanyclaimsbroughtagainstusersbythirdpartiesinconnectionwiththeiruseofanyData.TheWorldEconomicForum,itsagents,officersandemployeesdonotendorseorinanyrespectwarrantanythird-partyproductsorservicesbyvirtueofanyData,materialorcontentreferredtoorincludedinthisReport.UsersshallnotinfringeupontheintegrityoftheDataandinparticularshallrefrainfromanyactofalterationoftheDatathatintentionallyaffectsitsnatureoraccuracy.IftheDataismateriallytransformedbytheuser,thismustbestatedexplicitlyalongwiththerequiredsourcecitation.ForDatacompiledbypartiesotherthantheWorldEconomicForum,usersmustrefertotheseparties’termsofuse,inparticularconcerningtheattribution,distribution,andreproductionoftheData.WhenDataforwhichtheWorldEconomicForumisthesource(herein“WorldEconomi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