Fostering Effective Energy Transition 2023

In collaboration with Accenture Fostering Effective Energy Transition 2023 Edition INSIGHT REPORT JUNE 2023

Images: Getty Images Contents Foreword 3 Executive summary 4 1 Introduction 6 2 Framework 8 3 Overall results 11 3.1 Transition scores 13 3.2 Transition momentum 15 4 Sub-index and dimension trends 19 4.1 System performance 20 4.2 Transition readiness 30 4.3 A closer look at innovation 31 5 Conclusion 33 6 Country performance pro昀椀les 34 Appendices 61 A1 Methodology 61 A2 Country ETI score evolution, 2014-2023 62 Contributors 64 Endnotes 66 Disclaimer This document is published by the World Economic Forum as a contribution to a project, insight area or interaction. The 昀椀ndings, interpretations and conclusions expressed herein are a result of a collaborative process facilitated and endorsed by the World Economic Forum but whose results do not necessarily represent the views of the World Economic Forum, nor the entirety of its Members, Partners or other stakeholders. © 2023 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. Fostering Effective Energy Transition: 2023 Edition 2

June 2023 Fostering Effective Energy Transition 2023 Edition Foreword Roberto Bocca Muqsit Ashraf Head, Centre for Energy Global Strategy Lead, and Materials; Member of Accenture the Executive Committee, World Economic Forum The transformation of the global energy system is developing countries, demonstrate the importance well under way. In just over a decade, investments of balancing the imperatives of security, equity and across multiple forms of renewable energy have sustainability for an effective energy transition. overtaken investments in fossil fuels. Energy and climate policies now take centre stage in domestic Considering today’s context, we have updated and international affairs. The geopolitical balance the ETI framework to ensure its usefulness for of energy has shifted signi昀椀cantly, and new decision-making. The revisions include the improved superpowers have emerged in renewable energy delineation of inclusiveness and equity, the component manufacturing, critical minerals and reprioritization of energy security, the sharpening of clean technology. The frontiers of energy innovation the enabling environment scope, and the articulation have been progressively rede昀椀ned, and thousands of transition momentum to complement energy of entrepreneurs are working to remake this huge system performance and transition readiness to industry. Enabled by mounting scienti昀椀c evidence, provide an in-depth view of how fast or slow a a steady rhythm of extreme weather events country is transitioning, beyond the snapshot values. and decades of awareness campaigns, climate consciousness is embedded in the public psyche. The actions taken in the early years of this decade of The Energy Transition Index (ETI) has supported delivery will be critical in ensuring that strong, long- decision-makers through this period, with a robust, term ambition is supported by immediate progress. consistent and comprehensive framework and a The focus needs to be on enhancing an equitable transparent fact base. transition which has been traded off rather than enabled by the focus on security and sustainability. Despite the strong momentum, the energy transition The energy transition must be made resilient to has been challenged by near-term exigencies. maintain speed under current volatilities and during Following the COVID-19 pandemic, a combination of potential future domestic or international disruptions. economic factors and supply chain constraints led Resilience needs to be built into the transition to to affordability challenges, shortages and blackouts maintain progress throughout ongoing and future in different parts of the world. The recent energy disruptions as COVID-19 and the energy crisis will crisis, a result of the Russia-Ukraine war, is the most not be the only international events in the coming severe in decades, leading to the highest levels decade and beyond. of in昀氀ation in decades, a cost-of-living crisis and macroeconomic instabilities. While investments and Through this effort, the World Economic Forum policy measures for energy transition have ampli昀椀ed encourages the sharing of best practices and despite the volatile environment, the delicate the use of its platform for effective public-private balance of the energy security architecture, and collaboration to facilitate the energy transition the adverse effects on vulnerable households and process around the world. Fostering Effective Energy Transition: 2023 Edition 3

Executive summary Even as the global energy transition is plateauing due to equity challenges, major economies are showing signi昀椀cant progress. The frontiers of the global energy transition are been incorporated as a measure to determine constantly shifting as countries attempt to emerge country progress on the system performance out of various health, geopolitical and economic parameters. Only two countries – India and crises. The “polycrisis” has forced countries to Singapore – are making advances on all aspects reallocate resources and implement measures to of energy system performance. address near-term energy security and affordability constraints. It has also provided an opportunity to The window of opportunity for the energy transition think about how various aspects of the “energy is closing fast. The limited number of countries triangle” have evolved. Equity and inclusiveness simultaneously advancing across all aspects of evolved from focusing only on access to embracing the energy triangle highlights the challenges that sustained economic development. Security countries face in progressing along their energy took a leap from ensuring supplies towards transition pathways. The following themes emerge diversifying the energy mix. And sustainability now from analysing the drivers of past progress that can includes a wider form of clean energy beyond highlight the path for an accelerated transition: decarbonization, whereas transition readiness demands more focus on regulatory and 昀椀nancial The current energy transition trajectory puts environments. Considering the changing needs equity under pressure. of the energy frontier, the Energy Transition Index (ETI) framework has been revised this year to The global average ETI score has increased each incorporate a wider approach of balancing the consecutive year over the last decade, but the three imperatives of the energy triangle – equity, growth has plateaued in the past three years, due security and sustainability – while harnessing to rising challenges to the equity and inclusiveness transition enablers effectively. of the transition. Energy market volatilities resulting from macroeconomic and geopolitical The ETI benchmarks countries on their current developments over the past three years have led energy system performance and provides a to extreme price shocks, exacerbating energy forward-looking measure of transition readiness. poverty and stalling energy access. High fuel prices Over the past decade, the global ETI scores have affected the cost-competitiveness of energy improved by 10%, supported by an increase intensive industries, and the rising subsidy burden of 19% in transition readiness scores, but only poses a risk to economic growth. Low-income a 6% increase in system performance scores. countries have been disproportionately affected, The Nordic countries (Sweden, Denmark, facing simultaneous challenges from fuel price Norway and Finland) continue to maintain their in昀氀ation, food in昀氀ation and rising debt burden. top rankings, scoring highly on both system While performance on environmental sustainability performance and transition readiness. A few has grown the fastest and countries are prioritizing countries, such as Kenya and Azerbaijan, energy security after lessons from the energy crisis, jumped signi昀椀cantly in rank this year for making inclusiveness and equity considerations need to be aggressive efforts towards transition readiness addressed for a robust and resilient transition. by improving their regulatory environment and infrastructure. Importantly, in the last decade, the The centre of gravity for energy transition is world’s largest energy consumer, China, gained shifting towards emerging and developing 43% – approximately double the global average – economies. in its transition readiness scores, making its way into the top 20 as the only Asian country. This With increasing populations and economic growth report spotlights certain countries accomplishing in developing countries, particularly China and noticeable achievements or laying the groundwork India, the global demand for energy remains for a robust energy transition (see section 6). unfazed. Short-term effects from the energy crisis notwithstanding, all emerging economies show This edition of the report refocuses on the need consistent improvement on transition readiness, for urgent action towards the transition. Despite performing better than the global averages over making progress on decarbonization and improving a longer-term horizon. The improvements in the on infrastructure, the world still falls short of growth of clean jobs, infrastructure development achieving balanced progress on all aspects of the (including the addition of renewables capacity) energy triangle. Thus, “transition momentum” has and political commitments have been signi昀椀cant. Fostering Effective Energy Transition: 2023 Edition 4

An opportunity also lies in the cost effectiveness Renewable energy deployment has grown of implementing clean solutions in emerging exponentially, though innovation in next- economies, as the average cost of reducing generation energy technologies is necessary. emissions in these economies is estimated to be approximately half of that in advanced economies. Despite the fastest growth among the three All of this, however, must be accompanied by dimensions of the energy triangle, the global improving the energy intensity of the economy, while average score on the sustainable dimension lags reducing the carbon intensity of the energy mix. the scores of the equitable and secure dimensions Further, directing investments towards developing on an absolute scale throughout the past decade. economies can help them boost acceleration. The silver lining, however, came in 2022 with investments in renewables reaching a record high of No one-size-昀椀ts-all dimensions exist for $1.3 trillion, a 19% increase from 2021 investment all countries. levels and a 70% increase from pre-pandemic levels in 2019. Around the globe, countries have The countries performing strongly on the added to their renewable capacities. One reason equitable dimension have been able to manage for this is the wide availability and maturity of affordability concerns due to less reliance on renewable technologies. To increase the supply energy imports and cost re昀氀ective energy pricing. of clean energy and its associated technologies, Oman, Canada, United States and Sweden are the innovation landscape of clean energy solutions top scorers on this dimension. Chronic energy must be boosted, including alternative fuels, access challenges are re昀氀ected in the low scores hydrogen, and carbon capture and sequestration. of Democratic Republic of Congo, Zambia, Tanzania and Senegal on this dimension. The Policies are paving the way for a progressive top scorers in the secure dimension are mainly transition, and diligence with implementation advanced economies, such as United States, would shape up the transition trajectory. Australia and Estonia, followed by Malaysia, a developing country. All these countries have a With updated country commitments, global highly diversi昀椀ed energy mix, minimal dependence greenhouse gas emissions coverage increased on fuel imports and minimal interruptions in energy from 69% to 77%. A combination of recent policies, supply. The countries scoring the lowest are such as the US In昀氀ation Reduction Act, Japan’s Lebanon, Jamaica and Dominican Republic, Green Transformation programme, the European mainly because of challenges on the diversity of Union’s Carbon Border Adjustment Mechanism, and the energy mix, the need for energy imports and evolving mandatory and voluntary carbon markets, electricity losses. Latin America leads the chart are accelerating clean energy supply and technology on the sustainable dimension with Costa Rica, scalability, and promoting demand ef昀椀ciency Paraguay and Uruguay, on account of abundant while allowing for transition-oriented economic hydroelectric potential. Fossil fuel exporting growth. The transition trajectory hinges on the countries Bahrain, Kuwait, Oman and Qatar quality of implementing these policies to stimulate score the lowest on this dimension, attributed to investments in enabling the transition infrastructure, high energy and carbon intensities and a very low while avoiding unintended consequences on energy share of clean energy in the mix. These results equity and global trade. Increasing 昀椀nancing for infer that, irrespective of economic development, a low-carbon energy system requires concerted countries can harness different available resources efforts from governments, emphasizing a strong to successfully transition on various aspects of the policy and price to ensure green investments offer energy triangle. an attractive risk-adjusted return. Fostering Effective Energy Transition: 2023 Edition 5

1 Introduction Recent crises have left countries continually struggling to balance energy security, equity and sustainability. The crisis has The energy transition is at a critical in昀氀ection the effects of the energy crisis on consumers and also shown that, point amid a series of shocks with compounding businesses imposed a heavy 昀椀nancial burden on under pressure effects (Figure 1). governments, with estimates of fossil fuel subsidies in 1 and led by strong excess of $1 trillion in 2022. Emerging economies, policy measures, Energy supplies and infrastructure have been already dealing with price shocks, are under an faster energy heavily weaponized during the Russia-Ukraine increasing debt burden due to monetary policy system changes war, exposing the vulnerabilities of the energy responses to control in昀氀ation. This exacerbates are possible. security architecture. Countries with otherwise the challenge of attracting low-cost capital on mature energy infrastructure and sophisticated a large scale to 昀椀nance the energy transition in supply chains were forced to resort to emergency emerging economies. Just Energy Transition measures to ensure adequate energy supply. Partnerships (JETPs) have emerged as novel bilateral Following the disruption of pipeline gas supply from arrangements to support coal-dependent emerging Russia, a combination of strong policy measures, economies in accelerating the phase-out of fossil alternative fuel supply agreements, accelerated fuels while addressing social impacts. lique昀椀ed natural gas (LNG) infrastructure development, demand management and The march of sustainable energy has kept pace curtailment, regional collaboration on the use of through this period of extreme volatility. Last storage reserves, and a milder than expected winter year, for the 昀椀rst time, investments in low-carbon 2 have helped Europe avoid energy shortages. energy technologies surpassed a record $1 trillion. Bilateral 昀椀nance 昀氀ows and early-stage 昀椀nancing Simultaneously, a concentrated fuel mix, reliance continued to grow, and global climate tech venture 3 on few trade partners and underinvestment capital funding totalled $82 billion. In response in energy systems emerged as important risk to the energy crisis, landmark legislations were factors. As a result, oil and gas 昀氀ows may have put forward, including the US In昀氀ation Reduction been permanently redirected, leading to the most Act, which was passed, and the proposed EU signi昀椀cant rebalancing of the energy geopolitical Net-Zero Industry Act to ramp up clean energy, landscape since the 1970s. Gas market volatilities drive innovation and set the scene for accelerated spilled over to electricity markets, prompting decarbonization. The electric vehicle market saw considerations for electricity market reforms. record growth as unit sales surpassed 10 million in 4 Competition for scarce LNG cargoes globally led 2022 and 14% of new cars sold were electric. More to some emerging economies being priced out, companies are committing to net zero. As of June resulting in blackouts in Pakistan and Bangladesh. 2022, 702 of the world’s largest 昀椀rms had set net- 5 The recent energy crisis is the 昀椀rst with a global zero targets though credibility gaps remain, leading scope due to interconnected energy supply chains to increasing scrutiny on the validity of targets and and calls for comprehensive rethinking of energy accountability of implementation. Post-pandemic security strategy in the face of the emerging risks recovery of energy demand and the energy crisis landscape. The crisis has also shown that, under may have led to a rebound in coal, with the slowest 6 pressure and led by strong policy measures, faster rate of coal plant closures in eight years. The latest energy system changes are possible, as seen with Intergovernmental Panel on Climate Change report Europe’s diminished dependence on Russian gas. warns that emissions need to be cut by almost half 7 by 2030 to limit warming to 1.5°C. The global energy crisis also highlighted multiple dimensions of the inclusiveness of the energy In light of these developments, it is now more transition. The unprecedented surge in energy prices important than ever for countries to further severely affected affordability, with poor households accelerate their energy transition in a way that spend a larger portion of their income on energy that balances and delivers on the need for affected the most. High energy prices sparked food an equitable, sustainable and secure energy in昀氀ation, leading to a cost-of-living crisis in many system, ensuring that it is right for the present countries. Energy market volatilities also affected and future. Policies will be at the core of shaping the competitiveness of energy-intensive industries a balanced energy transition by encouraging in some regions. Increasingly, 昀椀rms are seeking to investments in clean energy, promoting shift operations to markets with cheaper and more innovation, encouraging energy ef昀椀ciency reliable energy, raising concerns over employment and ensuring that the transition bene昀椀ts all in local communities. The 昀椀scal response to mitigate segments of society. Fostering Effective Energy Transition: 2023 Edition 6

FIGURE 1 Volatile period in the energy transition, 2020-2022 2020 2021 2022 Extreme weather events Russia-Ukraine war COVID-19 Key shocks Global energy crisis Inflation Structural changes to global crude oil markets and pricing system Drop in energy Global Supply chain Rebound Major outages Energy security Surge in crude Electricity demand by 4% economy disruptions and in energy affecting 350 vulnerabilities oil prices to costs up by worldwide shrank by 5.2% supply shortages demand and million people and supply $100/barrel in 30% consumption worldwide chain disruptions mid-2022 before 5% worldwide falling back fects Ef Drop in energy Global energy Government Tightening of Average global Prices for spot Increase in commodity investment support for energy markets temperature purchases of number of people prices by 40% plummeted by fossil fuels in pushed coal, oil 1.1 °C above natural gas exceed without access to $400 billion 51 countries and gas prices pre-industrial equivalent of electricity (770 doubled to up (80%) levels $250/barrel of oil million) after $697 billion years of decrease Drop in global Rebound in global Fossil fuel Energy poverty and energy-related energy-related CO subsidies at loss of industrial 2 CO2 emissions emissions by 6% (36.3 all-time high competitiveness by 5.8% billion tonnes) ($1 trillion) Presentation of EU Launch of Just Energy Transition Eight countries reached Climate Target Plan Partnerships (JETPs) and the net-zero emissions First Movers Coalition – US Inflation Reduction Act The world committed – EU Net-Zero Industry Act a record $501.3 billion Record 295GW of new renewable – EU Fit for 55 package to decarbonization power capacity added – Japan Green Transformation Milestones programme – First Movers Coalition Solar power became Announced stimulus of $17.2 Global investment in low-carbon the cheapest source trillion will have a net negative energy technology surged to $1.1 of electricity globally environmental impact in 15 of trillion (biggest share towards ($0.048/kWh) the G20 countries renewables and electrified transport) Lack of incentives to the private Ongoing subsidizing of coal, oil and Temporary sector to invest in clean electricity natural gas and lack of structural behavioural changes reforms and bold actions to phase instead of structural out fossil fuels in power generation Missed reforms to keep and expand energy efficiency and emissions low Only 6% of the G20’s recovery renewable power opportunities funding channelled towards clean energy Source: World Economic Forum Fostering Effective Energy Transition: 2023 Edition 7

2 Framework The ETI 2023 features a revised framework for effective decision-making in the evolving global energy landscape. Fostering Effective Energy Transition: 2023 Edition 8

Energy transition The ETI provides a data-driven framework to per unit of output or product – a basic measure readiness is measure and understand the performance of of energy ef昀椀ciency), to encourage responsible increasingly energy systems and readiness for energy transition consumption through lower energy and emissions shaping countries’ across countries focusing on the transition. footprint per capita, and to increase the share of competitiveness Given the emerging landscape and its potential clean energy in 昀椀nal demand, are essential. strategy, as they implications for energy transition decision-making, incubate nascent the ETI framework (Figure 2) has been updated The progress on energy transition is determined by industries to to ensure relevance and usefulness for making the extent to which a robust enabling environment decisions. While the energy triangle remains valid can be created. A robust regulatory framework support future – with a balanced approach towards the three and ability to attract and deploy capital on a large economic growth. priorities of equity, security and sustainability – scale remain the core components of an enabling the updated ETI framework identi昀椀es speci昀椀c environment. In addition to a comprehensive policy components of these dimensions. framework for renewable energy, energy ef昀椀ciency and energy access, regulatory frameworks The equitable dimension of the energy triangle is need to be aligned with a robust, ambitious and rooted in several aspects. It aims to ensure affordable credible roadmap to net zero, supported by access to modern and clean forms of energy for ef昀椀cient pricing of carbon. An investment climate all. It focuses on providing continuity of economic characterized by low cost of capital, liquidity in activities through competitive energy prices. It also domestic markets and attractiveness to foreign emphasizes maintaining cost-re昀氀ective energy direct investment is a strong enabler for mobilizing pricing while implementing mechanisms to protect increasing levels of capital for the energy transition. vulnerable consumers and small businesses. In Additionally, advanced economies need to meet addition, it leverages the green growth momentum the commitment of mobilizing $100 billion of to create shared prosperity. climate 昀椀nance annually to developing countries. Energy transition readiness is increasingly shaping Lessons from the recent energy crisis are re昀氀ected countries’ competitiveness strategy, as they in the de昀椀nition of the secure dimension. Supply incubate nascent industries to support future security through diversi昀椀cation remains important economic growth. Factors such as a skilled across three levers of diversi昀椀cation – in the energy workforce, innovation, and physical and digital mix, in their energy trade partners and in the infrastructure are essential, which are explicitly sources of electricity generation. Resilience, both in acknowledged as part of the revised ETI framework. gas supplies and the power system, is instrumental for energy security. In addition, as the number and Momentum range of power generation and management assets increase as a result of decentralization, reliability of In addition to improving system performance grids becomes critical. Future iterations can include through a balanced energy triangle and creating a other sources of resilience, such as secure supply robust enabling environment, consistent progress of critical minerals, different forms of energy storage, is essential for a timely and effective transition. grid interconnections and demand response upon This report proposes “momentum” as such a availability of robust, timely and consistent data. measure for energy transition to provide countries with an additional layer of benchmarking with Demand- and supply-side metrics constitute the peer economies. The ideation of momentum sustainable dimension. Supply-side sustainability considers different starting points, country-speci昀椀c requires the reduction of CO2 and methane intensity circumstances and energy system structures, and of energy supply. In addition to supply-side focuses on the short-term historical growth rate of measures, efforts to reduce the energy intensity the equitable, secure and sustainable dimensions of the economy (the quantity of energy required of the energy system. Fostering Effective Energy Transition: 2023 Edition 9

FIGURE 2 Energy Transition Index update – performance and readiness System performance Regulations and political commitment Transition readiness Core enablers Innovation Equitable Finance and investment Secure Sustainable Infrastructure Education and Source: World Economic Forum human capital FIGURE 3 Transition momentum Advancing Positive growth Leading Below-median score, rate (3-year) Above-median score, with a positive growth rate with a positive growth rate Low Momentum on the system High Performance performance dimension Performance At risk Stabilizing Below-median score, Negative growth Above-median score, with a negative growth rate rate (3-year) with a negative growth rate Source: World Economic Forum Fostering Effective Energy Transition: 2023 Edition 10

3 Overall results A majority of countries show progress, with developing nations taking centre stage in a shifting global landscape. Key 1 2 3 highlights Global average ETI scores Only 18% of countries in 2023 Equity was compromised as increased by 10% since 2014, have balanced the imperatives the transition centred on secure but showed only marginal of the energy triangle.* and sustainable. growth in the past three years. 4 5 * Balanced is de昀椀ned as The top 10 countries account Only 41 countries have when the spread between the for only 2% of global CO made steady progress in equitable, secure and sustainable 2 scores is less than 8.5 points. emissions from fuel combustion the past decade. and 4% of total energy supply. Fostering Effective Energy Transition: 2023 Edition 11

TABLE 1 ETI 2023 ranking table 1 2 1 2 ETI score 2023 SP TR ETI score 2023 SP TR Rank Country (2014–2023) ETI score ('23) ('23) Rank Country (2014–2023) ETI score ('23) ('23) 1 Sweden 78.5 81.0 74.8 61 Malta 54.9 61.5 45.1 2 Denmark 76.1 73.7 79.8 62 Georgia 54.8 64.0 41.0 3 Norway 73.7 77.3 68.3 63 United Arab Emirates 54.6 58.7 48.3 4 Finland 72.8 68.9 78.6 64 Ukraine 54.5 63.2 41.5 5 Switzerland 72.4 75.7 67.4 65 Turkey 54.3 58.9 47.4 6 Iceland 70.6 73.9 65.6 66 Sri Lanka 54.3 63.5 40.6 7 France 70.6 73.3 66.5 67 India 54.3 61.4 43.6 8 Austria 69.3 69.2 69.5 68 Mexico 54.1 64.9 37.8 9 Netherlands 68.8 65.7 73.5 69 Montenegro 54.0 62.4 41.5 10 Estonia 68.2 74.2 59.2 70 Singapore 53.7 51.2 57.6 11 Germany 67.5 64.6 71.9 71 Jordan 53.7 58.4 46.7 12 United States 66.3 68.4 63.2 72 Armenia 53.6 60.0 44.1 13 United Kingdom 66.2 67.7 64.0 73 Tajikistan 53.6 66.4 34.4 14 Brazil 65.9 68.9 61.3 74 Bolivia 53.5 66.0 34.7 15 Portugal 65.8 66.7 64.5 75 Cote d'Ivoire 53.1 64.0 36.9 16 Spain 65.0 65.1 64.7 76 Kazakhstan 53.0 61.1 40.9 17 China 64.9 65.0 64.8 77 Serbia 52.9 61.1 40.5 18 Hungary 64.3 68.8 57.5 78 Ecuador 52.8 67.8 30.2 19 Canada 64.2 66.7 60.3 79 Egypt, Arab Rep. 52.4 62.5 37.2 20 Luxembourg 64.2 61.5 68.2 80 Macedonia, FYR 52.3 61.4 38.7 21 Albania 63.7 71.6 51.8 81 Cameroon 52.2 65.4 32.4 22 New Zealand 63.7 68.2 56.9 82 South Africa 52.2 56.6 45.5 23 Uruguay 63.6 71.5 51.8 83 Lao PDR 52.1 59.2 41.6 24 Australia 63.6 63.1 64.3 84 Cambodia 52.1 59.9 40.4 25 Costa Rica 63.5 74.5 46.9 85 Argentina 52.0 63.1 35.5 26 Latvia 63.4 69.0 55.1 86 Algeria 51.9 64.8 32.6 27 Japan 63.3 63.7 62.9 87 Guatemala 51.9 65.2 32.0 28 Israel 62.7 67.3 55.7 88 Ghana 51.5 63.1 34.1 29 Slovenia 62.6 68.0 54.4 89 Tunisia 51.4 58.1 41.5 30 Chile 62.5 63.4 61.3 90 Oman 51.3 58.6 40.3 31 Korea, Rep. 62.3 60.3 65.3 91 Kyrgyz Republic 50.6 61.7 34.1 32 Azerbaijan 62.0 69.6 50.7 92 Iran, Islamic Rep. 50.4 61.6 33.6 33 Croatia 62.0 67.0 54.4 93 Dominican Republic 50.3 55.4 42.7 34 Paraguay 61.9 72.9 45.3 94 Philippines 50.2 61.5 33.2 35 Malaysia 61.7 70.0 49.3 95 Ethiopia 49.8 61.1 32.7 36 Lithuania 61.2 62.0 60.1 96 Gabon 49.5 64.7 26.8 37 Greece 60.9 60.3 61.7 97 Nepal 49.2 58.2 35.7 38 Italy 60.6 63.9 55.6 98 Trinidad and Tobago 48.3 56.8 35.7 39 Colombia 60.5 65.6 53.0 99 Angola 48.1 64.0 24.4 40 Poland 59.7 63.0 54.7 100 Honduras 48.0 59.6 30.5 41 Ireland 59.3 61.3 56.3 101 Republic of Moldova 47.8 55.7 36.1 42 Belgium 59.2 59.6 58.5 102 Kuwait 47.8 51.3 42.5 43 Viet Nam 58.9 60.3 56.9 103 Venezuela 47.7 64.3 22.7 44 Slovak Republic 58.8 64.9 49.7 104 Senegal 47.6 53.8 38.3 45 Czech Republic 58.6 66.2 47.2 105 Brunei Darussalam 47.3 55.0 35.7 46 Kenya 57.8 65.9 45.6 106 Botswana 46.9 54.9 34.9 47 El Salvador 57.3 72.2 35.1 107 Pakistan 46.9 55.2 34.5 48 Bulgaria 57.2 62.8 48.9 108 Nigeria 46.0 58.4 27.5 49 Romania 56.8 65.8 43.3 109 Mozambique 46.0 58.1 27.8 50 Bosnia and Herzegovina 56.7 60.3 51.4 110 Bahrain 45.7 52.0 36.3 51 Panama 56.4 66.2 41.7 111 Mongolia 45.4 56.3 29.0 52 Cyprus 56.4 61.7 48.4 112 Lebanon 45.2 50.1 37.9 53 Peru 56.4 70.7 34.9 113 Bangladesh 45.0 56.8 27.3 54 Thailand 55.9 62.3 46.2 114 Nicaragua 44.9 57.1 26.6 55 Indonesia 55.8 67.3 38.6 115 Jamaica 44.9 50.4 36.5 56 Morocco 55.6 60.7 48.1 116 Zimbabwe 44.7 50.7 35.7 57 Saudi Arabia 55.3 62.0 45.3 117 Zambia 44.3 56.7 25.8 58 Namibia 55.1 63.3 42.7 118 Tanzania 42.9 51.4 30.1 59 Qatar 55.0 58.2 50.2 119 Congo, Dem. Rep. 42.3 54.3 24.3 60 Mauritius 55.0 65.4 39.4 120 Yemen, Rep. 40.0 56.3 15.5 40 50 60 70 80 30 40 50 60 70 Emerging and developing Europe Commonwealth of Independent States Middle East, North Africa and Pakistan Advanced economies ETI Score 2014 2023 Sub-Saharan Africa Emerging and developing Asia 2023 Global Average (56.3%) Latin America and the Caribbean 1 System performance 2023; 2 Transition readiness 2023 Note: The average score for 2023 is 56.3. Source: World Economic Forum Fostering Effective Energy Transition: 2023 Edition 12

3.1 Transition scores All countries ranked in the top 10 are from Western – Increased share of clean energy in the fuel mix and Northern Europe, and account for 2% of energy-related CO2 emissions, 4% of total energy – A carbon pricing scheme supply and 2% of the global population. Sweden leads the global rankings, followed by Denmark – A strong and supportive regulatory environment and Norway. Among the world’s 10 largest to drive the energy transition economies, only France features in the top 10. The list of top performers in the ETI has remained High-ranking countries also show high scores broadly unchanged over the course of the past on transition readiness because of their strong decade. Although each country’s energy transition institutional and regulatory frameworks, their ability pathway is different, they all share common to attract capital and investment on a large scale, attributes, including: their innovative business environment and their high level of political commitment on energy transition. – Reduced levels of energy subsidies Both China and Brazil feature in the top 20, a result of their performance thus far and readiness to – Enhanced energy security from a diverse continue to transition. energy and electricity mix, as well as a mix of import partners The global average scores for the ETI have increased successively each year from 2014 to – Improved carbon intensity 2023, the result of gains across both system performance and transition readiness (Figure 4). FIGURE 4 Global average Energy Transition Index and sub-index scores, 2014-2023 70 60 50 40 30 20 10 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: World Economic Forum ETI overall System performance Transition readiness Certain large Of the 120 countries, 113 have made progress The top improvers between 2022 and 2023 emerging centres over the last decade but only 55 have improved are Azerbaijan and Kenya. Kenya has typically of demand, such their scores by more than 10 percentage points. progressed behind the global average while as China, India Notably, large emerging centres of demand, such Azerbaijan has been ahead of it. Both have and Indonesia, as China, India and Indonesia, have seen these shown large improvements across several have improved improvements. Only 41 countries have made steady transition readiness parameters, including their scores by gains over the last decade (de昀椀ned as consistently 昀椀nancial investment, infrastructure and innovation. more than 10 above-average performance improvements on Joining them among the top improvers is percentage points. the ETI). While this list includes many advanced Paraguay, which has made progress every year economies, it also has 14 countries from developing for a decade, and Zimbabwe, whose score and emerging Europe, developing and emerging grew by 9% but continues to lag the global Asia, and Latin America and the Caribbean. Qatar average. Importantly, as countries advance, and Mexico narrowly miss falling into the category; they should achieve a balanced energy system, they made steady gains until 2023 when their but only 18% of them have achieved this progress fell below the average. These insights balance, leaving those without it vulnerable demonstrate the dif昀椀culty of maintaining progress to risks related to energy security, inequality and the energy transition’s inherent complexity. and the consequences of climate change. Fostering Effective Energy Transition: 2023 Edition 13

GUEST PERSPECTIVE Business is backing the accelerated energy transition By Ana Botín, Group Executive Chair, Banco Santander; Chair, World Economic Forum International Business Council Recent experiences underline how crucial a secure, First, supported by our knowledge partner PwC, the IBC will affordable and sustainable energy system is to economic create a common vision for demand-side energy transition, growth, and an orderly and equitable transition. Look at with an eye towards reducing energy consumption as a the impact that rising energy prices have had on stoking portion of GDP and carbon-intensity within that equation. A in昀氀ation, which has hit low-income families and small key part will be how we support emerging and developing and medium-sized enterprises (SMEs) the hardest. This countries to do this. We will survey IBC members to help underscores the need for the energy transition, which the identify best practices, priorities and existing plans and targets, World Economic Forum supports, to tackle the trilemma: how as well as obstacles, which we will use as a baseline for do we get energy that is low carbon, affordable and reliable, action. Second, we will engage governments and multilaterals underpinning the growth needed to 昀椀nance the transition. to advocate for the policies needed to remove obstacles and promote demand-side energy transition, while also exploring The Forum’s International Business Council (IBC) has opportunities to contribute to sectoral transition frameworks. launched a project that can harness its members combined economic impact – 130 companies representing roughly IBC members, who are global leaders in their respective 3% of global energy demand – to accelerate the energy industries and regions, are uniquely placed to help accelerate transition. This project is not only a challenge, requiring the energy transition by catalysing company, sector and collaborative action across sectors, industries and borders, country-level action. The community has an opportunity but also an opportunity to foster growth and in昀氀uence the to leverage its collective in昀氀uence and convening power to way our economies and societies can provide safer, fairer and accelerate a low-carbon, secure and just transition of the more sustainable outcomes. global energy system by bringing together the private sector, governments and international organizations. Much of the focus has, understandably, been on energy supply. However, according to the International Energy We know the limits of a one-size-昀椀ts all approach but are also Agency’s Net Zero by 2050 pathway, to meet the Paris convinced we can share solutions and ef昀椀ciencies that can Agreement’s emissions goals by 2050, the world will need be adapted to have impact. We will not forget the importance to consume 8% less energy than it does today. At the same of SMEs and developing countries in this regard. We will not time, the world’s economies will need to grow in a sustainable only seek ways to support and incentivize them, but also to manner to provide for 2 billion more people. This means that unlock equity 昀椀nancing for the transition. All IBC members energy consumption as a portion of economic output as well are affected by the energy transition, and are relevant in as the carbon intensity of the energy individuals consume will in昀氀uencing it, both as energy consumers and producers. have to decline – that is, people will have to be smarter and more ef昀椀cient in their energy use. Banks, too, must play a role. Financing the energy transition is, and will continue to be, one of the major challenges, and IBC members have decided to focus on the demand side of opportunities, for 昀椀nancial institutions. This is especially true in energy transition. Managing and reducing the energy intensity Europe, where 70% of business 昀椀nance comes from banks. of demand is an area where our companies, as leaders in their sectors and as stakeholders in their home countries, can The task is daunting, but the goal is attainable if we foster more ef昀椀cient use of energy and promote policies and work together. Through collaboration within the business practices that can lead to success. The aim is to do this in a community, the public and private sectors and relevant global way that complements, rather than duplicates, other similar bodies, we can build an energy system that is low carbon, initiatives, within and outside the Forum’s ecosystem. affordable and reliable. Fostering Effective Energy Transition: 2023 Edition 14

Key 1 2 3 highlights Only 2 out of 120 countries 20% of the world is manifesting Countries accounting for over are accelerating across slowing (retracting) progress on 90% of the world’s emissions the equitable, secure and energy equity. are prioritizing sustainability. sustainable dimensions. 3.2 Transition momentum Momentum is The ETI scores measure a country’s current energy country that is leading or advancing on an equitable not equal across system, but not how fast they are transitioning. energy transition. These countries are promoting dimensions Momentum shows who is transitioning the fastest energy equity and addressing social inequality as and countries and which countries are at risk. No globally de昀椀ned well as addressing energy affordability. Kenya and are prioritizing percentage exists that de昀椀nes the progress of the Tunisia are demonstrating strong momentum in sustainability for energy transition. The transition’s pace will depend this dimension. On the other hand, nearly 20% of balanced economic on a variety of factors, including the speci昀椀c context the world’s population lives in countries at risk of growth, social of each country or region, the availability of resources not achieving an equitable energy transition. These well-being and and technology, the level of political will and public countries need to quickly identify challenge areas support and the urgency of the climate crisis. What is and resolve them by implementing infrastructure natural resource known, however, is that the energy transition needs upgrades, subsidies or supportive policies. preservation. to accelerate to limit the effects of climate change. Countries leading or advancing within the secure Figures 5A-C show the distribution of countries dimension have focused on ensuring a diverse energy across four quadrants for each system performance mix, increasing resilience to price volatilities and dimension, depending on the current score and strengthening infrastructure, including improved grid the three-year growth rate of the dimension score stability and 昀氀exibility; Brunei Darussalam, Ghana between 2020 and 2023. As a result, countries’ and Albania all demonstrate strong momentum here. near-term focus areas are visible as positive Each country’s progress towards a more diversi昀椀ed contributions to momentum. The 昀椀gures assign and secure energy system is at different stages, but each country to one of four quadrants: they all have fossil fuels in common as their primary energy source. Brunei has focused on diversifying – Leading countries – with above-median its energy sources, while Ghana and Albania have dimension scores and positive growth rates reduced imports and improved energy reliability. Although some countries have established secure – Stabilizing countries – with above-median energy systems, others are stabilizing in terms of dimension scores but negative growth rates momentum as they shift their focus to other areas. All countries must ensure that they shift to cleaner, local – Advancing countries – with below-median electricity generation and reduce reliance on fossil fuels dimension scores and positive growth rates (internal and imported). With 11 countries being at risk on both the equitable and secure dimensions, special – At-risk countries – with below-median attention must be given to identify blockers, and dimension scores and negative growth rates other countries should provide technical and 昀椀nancial support to move these countries back on track. Only 2 out of 120 countries – India and Singapore – are advancing across the equitable, secure and Many countries are prioritizing sustainability, sustainable dimensions, each with its own unique focusing on policies and programmes that promote transition journey. The limited number of countries energy conservation, renewable technologies and managing simultaneous advance on all elements of innovation in energy storage and grid modernization. the energy triangle highlights the challenges many Estonia and Luxembourg have both demonstrated countries face with balancing efforts and required, strong momentum. Each has a different pro昀椀le in focused investments and policy changes. terms of sustainability, but they are all signatories to the Paris Agreement. Estonia has prioritized Momentum for the equitable and secure dimensions investment in renewables, and Luxembourg in is more dispersed across the four quadrants due reducing greenhouse gas (GHG) emissions. Saudi to the dimensions’ previously being near-term Arabia is also advancing within sustainability but, focus areas for many countries. The results show considering its starting position, it needs to rapidly that 62% of the world’s population now reside in a step up the growth rate on sustainability. Fostering Effective Energy Transition: 2023 Edition 15

The countries at risk within the sustainable dimension are closely intertwined, as an unsustainable energy are major fuel exporting nations where transitioning system can pose a long-term threat to energy to sustainable energy sources may require signi昀椀cant security. By prioritizing sustainability, countries are investment and infrastructure upgrades (which can working towards achieving a balance between be dif昀椀cult to implement in resource-rich economies). economic growth, social well-being and the The sustainability and security of the energy system preservation of natural resources. FIGURE 5A Momentum across the equitable dimension Three-year compound annual growth rate (%) >6 5 Advancing Leading 36% of population 26% of population 4 3 2 1 0 -1 -2 -3 -4 17% of population 11% of population -5 At risk Stabilizing -6 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 2023 equitable dimension score Emerging and developing Europe Middle East, North Africa and Pakistan Sub-Saharan Africa Latin America and the Caribbean Commonwealth of Independent States Advanced economies Emerging and developing Asia Source: World Economic Forum FIGURE 5B Momentum across the secure dimension Three-year compound annual growth rate (%) >6 5 Advancing Leading 14% of energy supply 51% energy supply 4 3 2 1 0 -1 -2 -3 -4 10% of energy supply 14% energy supply -5 At risk Stabilizing -6 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 2023 secure dimension score Emerging and developing Europe Middle East, North Africa and Pakistan Sub-Saharan Africa Latin America and the Caribbean Commonwealth of Independent States Advanced economies Emerging and developing Asia Source: World Economic Forum Fostering Effective Energy Transition: 2023 Edition 16

FIGURE 5C Momentum across the sustainable dimension Three-year compound annual growth rate (%) >6 5 Advancing Leading 77% of emissions 11% of emissions 4 3 2 1 0 -1 -2 -3 -4 4% of emissions

FIGURE 6 Regional scores and key insights: Average scores by peer group – ETI 2023 Advanced economies Commonwealth of Independent States Emerging and developing Asia 65.2 Over the past decade, the ETI scores of advanced 54.6 The Commonwealth of Independent States witnessed an 53.4 Emerging and developing Asia, home to Average score economies improved steadily by 11%, led by the Average score improvement in aggregate ETI scores by 11% over the past decade. Average score the populous countries of India and China, Nordic region. All advanced economies have been But its system performance scores declined last year with an increase improved its ETI scores by 12% in the last 14% 34% able to achieve 100% access to electricity and 3% 7% in subsidies and high gas prices. In the last 10 years, the group 51% 39% decade. While this is one of two groups that develop reliable energy systems, but suffered greatly witnessed a jump of 22% in transition readiness scores, but that was have made greater than 10% improvement on 31% on affordability because of high energy prices in 7% limited to only 1.5% in the last year. The contribution to the large 46% the equitable dimension in the past decade, it the past three years. The group made tremendous increase comes from signi昀椀cant improvement within clean energy increased fuel subsidies dramatically in the last advances on regulatory policies, infrastructure, human jobs over the decade, providing hope and employment for a prepared year. Performance on the sustainable dimension capital and 昀椀nancial investment, but lags on innovation green workforce. In the future, the group should focus on improving remains 昀氀at with worsening carbon intensity. The where it could make pioneering developments. energy affordability for its consumers and reducing fuel subsidies, group should focus on improving both security which grew by a huge 17% in the last year. and sustainability given the energy demand per capita is projected to double by 2050. With a 28% increase in enabling environment scores, the region has strengthened its policy framework and 昀椀nancing environment. Focusing on innovation, adding more renewable capacity and diversifying the energy mix by moving away from fossil fuels can accelerate the transition for this group. Latin America and the Caribbean % of global population 54.8 This group showed the slowest gain, with ETI scores Average score increasing 5% over the last decade. The group leads % of global total enegy supply on the sustainable dimension due to heavy use of 9% 6% hydroelectric power. But surprisingly, its investment in % of global CO emissions renewables scores declined by 65% over 10 years. The 2 4% Renewables in Latin America and the Caribbean initiative, created at the end of 2019, aims to ful昀椀l 70% of the group’s electric energy consumption with renewables by 2030. Latin America produces several minerals necessary for clean energy technologies and could develop its 昀椀rmly set mining sector to diversify into new minerals. To unlock further improvements, the group can strengthen its enabling environment, where again it showed a modest growth of just 8% in 10 years. It should focus on leveraging its advantage in natural resources to boost innovation, promoting public-private partnerships for Emerging and developing Europe better credit access, and introducing environmental tax 57.7 This group showed the most promising reforms for long-term bene昀椀ts. growth, increasing ETI scores by 13% over Average score the past decade. But problems mounted 3% 3% last year as the energy crisis hit the group the hardest, leading to a decline in scores. 3% The wholesale prices of electricity and gas Sub-Saharan Africa Middle East, North Africa and Pakistan have surged 15-fold since the beginning of 2021, severely affecting households 49.2 Sub-Saharan Africa’s energy transition growth of 11% has been one of 50.5 The scores for the Middle East and North Africa and Pakistan and businesses. The group performed Average score the most promising in the last decade, and it is the strongest performer of Average score grew by 8% in the last decade and have been 昀氀at for the past well on transition readiness, with a gain of all groups on the sustainable dimension. On certain parameters, such as three years, where the heavy reliance on oil revenues continues 22% in its scores. In the past three years, 11% 4% scores for regulatory indicators for sustainable energy (RISE), creation of 9% 8% to pose challenges on the path to a sustainable energy the group signi昀椀cantly improved on adding green jobs, and regulation and political commitment, it was also the best transition. Even though subsidy scores improved by 200% – the clean energy jobs and on investments 2% performer. Sub-Saharan Africa showed the maximum gain of 18% on 7% maximum for any group – they plunged 33% in the last year in renewables, which was re昀氀ected in its scores on the equitable dimension in the past decade, but recent trends alone. This group needs to catch up on sustainable scores by renewable capacity addition scores. In show a slowdown, about which the region should be cautious. It needs reducing energy intensity and share of GHG emissions. On the short term, these countries need to to focus on improving its energy mix and harnessing its abundance of transition readiness, it was at par with other groups with a 20% focus on reducing energy demand and natural resources to transition faster to a low-carbon economy. The gain over the last 10 years but showed the maximum decline increasing affordability for their consumers, group can do so by attracting global investments, leveraging public- on innovation. Directing its investments towards development of while continuing to strengthen their private partnerships and strengthening its infrastructure. environmental technologies can help on this front. readiness for the future. Source: World Economic Forum Fostering Effective Energy Transition: 2023 Edition 18

4 Sub-index and dimension trends The current energy transition trajectory is masking a decline in equity and inclusiveness. Fostering Effective Energy Transition: 2023 Edition 19

4.1 System performance To achieve an effective energy transition, countries an indication of their strong energy system growth. must balance their energy system across the Global average system performance scores have equitable, secure and sustainable dimensions, steadily increased from 59.5 to 63.0. Improvement and make progress on all (Figure 7). In the last patterns differ across dimensions however, as decade, 83% of the countries tracked by the ETI countries face competing priorities, economic have improved their energy system performance, uncertainties and geopolitical challenges. FIGURE 7 System performance dimension scores, 2014 and 2023 Equitable Secure Sustainable 100 90 80 70 60 e (out of 100)50 40 30 Dimension scor20 10 0 0% 50% 100% 0% 50% 100% 0% 50% 100% Percentage of countries 2023 scores 2014 scores 2023 average Source: World Economic Forum The global average score for sustainable in 2023 continue the noticeable effect on the sustainable remains the lowest among the three dimensions. dimension to ensure a balanced energy system. Secure has progressed the most, narrowly Progress within sustainable is noticeably lacking outperforming sustainable, and to the detriment of within the fossil fuel-exporting nations. Countries’ the equitable dimension, which has slowed overall. evolution on these dimensions over the past Urgent and accelerated measures are needed to decade is further explored below. Fostering Effective Energy Transition: 2023 Edition 20

energy sector. Globally since 2014, the score for Equitable the equitable dimension has seen a 4% increase, with a recent 3% increase from 2021 to 2022 and The imperative of the equitable energy transition a 4% decline from 2022-2023 following market stems from the critical role played by the energy signals, as shown in Figure 8. Oman, Canada, the sector in driving socio-economic growth. While United States and Sweden are leading in 2023, the energy transition has the potential to create while countries in Sub-Saharan Africa, including economic opportunities, it could bring high costs the Democratic Republic of Congo, Zambia, and inequalities if not managed properly, particularly Tanzania and Senegal, rank in the lowest quartile. for the world’s most vulnerable populations. While global average scores on energy access This requires leaders to make dif昀椀cult choices, and economic development have seen gains particularly in emerging and developing economies, since 2014, those for energy affordability have to support economic growth that maximizes social substantially declined (5%), owing to the ongoing welfare while ensuring access to abundant and energy crisis and unprecedented shock to energy diverse forms of energy at affordable prices. prices and household expenditures. These trends, however, vary by country depending on the stage The ETI’s equitable dimension tracks the access, of economic development. affordability and economic development of the FIGURE 8 ETI equitable dimension trend, 2014-2023 68 66 63.0 60.9 61.3 61.7 64 62 65.8 e 64.2 63.9 63.9 63.5 60 63.3 Index scor58 56 54 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: World Economic Forum Global demand and prices for electricity and oil Estimates suggest that around 75 million people surpassed pre-pandemic levels in 2021 because of who gained access to electricity recently will likely the strong correlation between economic growth lose the ability to pay for it, and 100 million people and energy consumption. Natural gas prices also may go back to using traditional biomass for climbed to their highest in a decade in Europe, the cooking.8 ETI trends show that while the rate of United States and major Asian markets, owing to a access to electricity in rural areas as well as access combination of demand- and supply-side factors. to clean cooking fuels has slowed in the past three These imbalances carried over to 2022 with energy years, electricity prices remain high across several prices sustaining record-high levels due to the Russia- regions, including advanced economies, emerging Ukraine war. As the global energy crisis persists, the and developing Europe, and the Middle East, surge in energy prices continues to fuel in昀氀ationary North Africa and Pakistan. This implies a different pressures that deter investments in countries already set of affordability challenges, however, than those dealing with high interest rates and greater volatility. in Sub-Saharan Africa. To alleviate the effects of As a result, energy access investments dwindle while high electricity prices, many countries introduced affordability of energy services also becomes severely legislation and measures such as the regulation constrained, adding to concerns of the equity and of wholesale and retail prices; revenue caps on justice of the energy transition. renewables, nuclear and coal plants; reductions in Fostering Effective Energy Transition: 2023 Edition 21

There is risk energy taxes; and energy subsidies. While these are unable to make those commitments, this raises of a harmful market interventions can help mitigate the effects the question of how to make the energy transition subsidy race of the energy crisis, minimizing uncertainty in the inclusive. If the goal is to protect consumers where advanced investment landscape is required to ensure that these from price shock and to correct market failures, economies with measures do not deter much-needed investment. a coordinated approach is required, allowing greater 昀椀scal subsidies to be targeted to meet the needs of power might ETI trends further show that following an initial the poorest and most vulnerable nations and emerge as winners, decline in the last few years, energy subsidies households, and to ensure a level playing 昀椀eld. have been reintroduced rapidly and at much and emerging higher levels. Fossil fuel consumption subsidies and developing worldwide soared in 2022; oil subsidies increased Secure economies with by approximately 85%, and natural gas and scarcer 昀椀scal electricity consumption subsidies more than 9 Even though these subsidies are meant to Energy security is “a primary concern for resources would doubled. 昀椀nd it dif昀椀cult protect consumers from volatile energy prices, they governments and economic players across the to compete. create an additional burden on governments amid globe, and a dimension whose impacts multiply tightening 昀椀scal space and spending pressures on across supply chains, countries and international other priorities and reduce incentives for consumers systems. People, companies and nations depend to adapt energy consumption to price levels. In on secure and uninterrupted access to energy at 11 the face of persisting price pressures and crisis affordable prices”. The ETI’s secure dimension conditions, these measures require signi昀椀cant tracks energy supply, reliability and resilience. On cumulative resources, which poses serious risks a global scale, the secure dimension scores have for the energy sector particularly in emerging and shown the most progress over the past decade, developing economies. although they still lag the equitable and sustainable dimensions. Figure 9 shows the dimension score The risk now is a harmful subsidy race where over time. Advanced economies, such as United advanced economies with greater 昀椀scal power States, Australia and Estonia, score highly due to might emerge as winners, and emerging and mature energy infrastructure, and many are able developing economies with scarcer 昀椀scal resources to withstand potential disruptions to gas supply would 昀椀nd it dif昀椀cult to compete with them for chains. Malaysia scores highly due to supply investments. This could also hinder the transfer of diversity and reliability. Major fuel exporters, such as technology to these nations, ultimately raising the Saudi Arabia, UAE and Azerbaijan, also score highly 10 For countries that due to their gas reserves. cost of the energy transition. FIGURE 9 ETI secure dimension trend, 2014-2023 68 66 64 66.6 65.6 65.7 66.1 66.2 62 65.2 65.3 e 64.7 Index scor60 62.1 62.0 58 56 54 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: World Economic Forum Fostering Effective Energy Transition: 2023 Edition 22

Diversi昀椀cation is critical for a secure and economic maintenance, extreme weather events or 昀椀nancial energy system as it reduces dependency, enhances shocks (e.g. price volatility). Stability enhancements resilience, manages economic risks, fosters innovation which strengthen the reliability and resilience of the and competitiveness, and supports sustainability system have never been more important or more goals. Countries with energy security challenges 12 Force majeure events, including challenging”. 13 14 have typically failed to diversify either their domestic cold snaps in New York, heatwaves in Japan, 15 energy mix or their energy import partners, or both; and earthquakes in Turkey and Syria, have shown some of the results have been seen in recent months countries that grid operations need to be able to in Europe. The ETI shows that out of 29 advanced recover quickly in the event of tail-risk scenarios. economies, eight have fuel import dependency on just As energy systems become more interconnected three trade partners for over 70% of their net energy and reliant on advanced technologies, such as imports. Seven of these eight countries are in Europe. smart grids, supervisory control and data acquisition systems, and other digital infrastructure, they Three levels are needed for impactful diversi昀椀cation: can become vulnerable to cyberthreats. Thus, in the energy mix, electricity supply and consumption. cybersecurity measures and robust defences need Their importance is recognized by several of the to be prioritized to mitigate these risks as grids United Nation’s Sustainable Development Goals advance. The growing share of electricity in 昀椀nal directly or indirectly relating to electricity and energy demand due to electri昀椀cation, coupled with the rising diversi昀椀cation and consumption. Trends from the ETI unpredictability and frequency of extreme weather show that energy diversi昀椀cation is more advanced events, compounds the risks and vulnerabilities of than electricity diversi昀椀cation, with progress being energy grids in the ongoing energy transition. uneven; while the electricity mix is progressing, the energy mix remains stable. Some countries Maintaining global trust will be important in the that have successfully diversi昀椀ed their energy and future for ensuring stable energy supply and electricity mixes may now focus on improving quality demand at national and international levels. and reliability and reducing energy costs. Many Countries must have con昀椀dence in each other’s countries in the Sub-Saharan Africa and the Middle ability to honour their energy commitments, as East, North Africa and Pakistan regions, however, any disruption in the global market could have may need to 昀椀rst address energy access challenges severe consequences for economic and social before tackling grid infrastructure improvements stability. Interconnectors, both within countries and subsequent diversi昀椀cation efforts. Policies and across international borders, play a vital role also have an important role in driving innovation in facilitating this trust by enabling the ef昀椀cient Electri昀椀cation’s and expansion and in shaping energy systems to transmission and sharing of electricity, diversifying rise in 昀椀nal demand accommodate new technologies. The 2022 energy energy sources and promoting cooperation in the and extreme crisis incentivized renewable energy over gas in the face of geopolitical risks. The increasing activism weather events medium term. More incentives may be needed to of geopolitics, including the complex relationships increase risks for shift energy demand permanently towards clean between the Organization of the Petroleum energy and to accelerate electri昀椀cation. Exporting Countries, China, the United States energy grids in the and Europe, further emphasizes the importance ongoing energy Energy systems need to “withstand operational of interconnectors and ongoing cooperation in transition. disturbances, such as grid outages, planned ensuring a sustainable energy future. Fostering Effective Energy Transition: 2023 Edition 23

GUEST PERSPECTIVE Europe needs more wind now. And we need it fast. By Jochen Eickholt, Chief Executive Of昀椀cer, Siemens Gamesa Renewable Energy After decades of small steps, the EU and other parts of the We need to cut through the red tape. world – most notably the US – now seem to be serious about transforming energy systems. This is especially clear in the Slow permitting processes have been a thorn in the case of wind energy, where over the past year policy-makers European wind industry’s side. In Europe, an overall capacity introduced several new ambitious targets. of 80 GW is currently trapped in various stages of permitting. This is a big number given today’s overall capacity of a little Recently, the EU proposed the Net-Zero Industry Act, over 204 GW. Had those 80 GW been installed by 2022, they which includes increasing wind-turbine manufacturing could have eased the energy crisis in Europe. To speed up capacity to 36 GW annually by 2030. To put that into the process, it is crucial that every permitting authority act perspective: In 2022, Europe installed wind turbines totalling quickly and unbureaucratically. 16 GW. That’s half of what we need – a huge gap to 昀椀ll within a short period. Further needs are to diversify the supply chain, ensure in昀氀ation compensation and reassess auction design. The onshore market in Germany, for example, shrank 16 signi昀椀cantly in 2018 – and the number of offshore Wind turbine manufacturers have not been spared from the wind projects barely increased. This has forced suppliers signi昀椀cant disruptions in global supply chains. to close businesses, thousands of people to lose their jobs, and many skilled professionals to move into different While the European wind industry needs to do its part by sectors, making it even more challenging to achieve the implementing diversi昀椀cation strategies, the EU must do EU’s ambition of reaching 440 GW of wind energy its part as well. The energy transition will need a secure, capacity by 2030. abundant and affordable supply of critical minerals. While the recently passed Critical Raw Materials Act, which aims We need massive investments and better to secure and diversify a domestic supply chain of raw access to funding. materials, is a step in the right direction, we are still waiting on details regarding implementation. Raw materials must Wind turbine manufacturers are able and ready to contribute be available for wind turbine manufacturers at fair prices. to the ambitious installation targets in Europe and around the Otherwise, there is no level playing 昀椀eld. world. However, appropriate policy frameworks are necessary. Furthermore, given the critical role played by the private sector Massive investments need to be mobilized in key in the EU’s energy transition, building sustainable business infrastructure such as roads, ports and grids to meet the models is key. Cost escalations between auctions and project growing demand for renewable energy and to expand construction expose developers and manufacturers to rising production capacities. Given the slow expansion in recent costs that can dramatically exceed projected revenues and years, the major challenge – especially for offshore wind – reduce margins. This is due in part to broader macroeconomic will be to sustainably increase manufacturing capacities. and geopolitical factors. Mechanisms to compensate for Existing policy frameworks have hindered wind turbine in昀氀ation-induced cost escalations are crucial to create a risk manufacturers in establishing a sustainable business pro昀椀le conducive to long-term investments at scale. model. Future frameworks need to facilitate the expansion of production capacities and the EU, and its member Finally, policy-makers need to introduce and emphasize states, must put more substantial and 昀氀exible public funding qualitative auction criteria, such as sustainability, mechanisms in place if we want to achieve government cybersecurity and “made in Europe” elements. As it expansion targets. stands, the predominant weighting of the price criterion also increases electricity prices for end consumers, which This summer, the EU is expected to propose a Sovereignty contradicts the goal of affordable energy. Fund. It remains to be seen whether it will provide an approach as pragmatic and clear as that of the US In昀氀ation The goal is clear, and so is the path – now we have to Reduction Act, which mobilizes investment with a preference show we really want it. for domestic green technologies. The EU Innovation Fund, however, which is limited to the funding of technological If we really want energy independence in Europe, we need to breakthroughs and will be in place until the Sovereignty Fund make sure we have a healthy and resilient wind industry. There is established, is not suitable in its current form to support is no question that the wind industry is of enormous strategic accelerated investment in manufacturing capacity. importance. But we need to act fast. We need more wind now. Fostering Effective Energy Transition: 2023 Edition 24

South America. The countries from the Middle East, Sustainable North Africa and Pakistan region rank in the lowest quartiles on the sustainable dimension, despite their The ETI bases the sustainable dimension on a above-average performances on the equitable and combination of energy ef昀椀ciency, decarbonization secure dimensions. They can embrace sustainability and progress towards clean energy systems. In by switching to low-carbon sources of energy, the past decade, this dimension has seen a 7% eliminating water scarcity and improving household growth (Figure 10) in the global scores, with Costa waste management. This can happen with the Rica, Paraguay and Albania leading the charts for public and private sectors collaborating to make the 2023. Paraguay’s use of hydropower in its energy switch to a more sustainable way of life. The global mix has enabled it to maintain low-carbon intensity sustainable scores, however, need to improve further in its economy and effectively manage air pollution, to accelerate the transition, since improvement on providing it with one of the cleanest energy mixes in this dimension has a direct effect on net-zero goals. FIGURE 10 ETI sustainable dimension trend, 2014-2023 68 66 64 59.1 62 58.2 e 56.6 56.8 56.9 57.1 57.4 60 55.9 56.1 55.5 Index scor58 56 5454 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: World Economic Forum Transitioning towards sustainable energy systems approximately USD 250 billion a year being is a complex process requiring careful policy deployed from 2020 to 2023, equivalent to planning and implementation. A central theme two-thirds of total clean energy recovery 17 is that no one-size-昀椀ts-all policy package exists spending.” For example, also according to for sustainable energy transitions, as each the IEA, “under its recovery and resilience plan, country’s objectives and constraints will shape Spain intends to invest EUR 3.4 billion in half its policy approach. Yet around the world, many a million energy renovation actions through countries are undergoing or planning transitions tax incentives and the creation of ‘one-stop’ 18 towards sustainable energy systems through a renovation of昀椀ces”. combination of policy measures, technological advances and changes in consumer behaviour. – Technological advances: Achieving net- zero emissions requires the immediate and A few examples: widespread deployment of clean and ef昀椀cient energy technologies. Major economies are – Energy ef昀椀ciency: According to the integrating their climate, energy security and International Energy Agency (IEA), “Since 2020, industrial policies into broader strategies. governments worldwide have helped mobilise Examples include the US In昀氀ation Reduction around USD 1 trillion for energy ef昀椀ciency- Act, the Fit for 55 package and REPowerEU related actions such as building retro昀椀ts, plan in the EU, Japan’s Green Transformation public transport and infrastructure projects, programme, India’s Production Linked Incentive and electric vehicle support. This amounts to schemes and China’s latest Five-Year Plan. Fostering Effective Energy Transition: 2023 Edition 25

– Behavioural changes: Such changes, or reached a new high, surpassing 8 billion tonnes the daily alterations that diminish wasteful or in a single year for the 昀椀rst time and eclipsed the excessive energy consumption, are important previous record set in 2013. The bright side is that to reach net-zero emissions by 2050. At the governments, banks, investors and mining 昀椀rms 26th Conference of the Parties (COP26), Indian continue to show a reluctance to invest in coal, Prime Minister Narendra Modi unveiled Mission particularly thermal coal. No clear indications exist of LiFE (Lifestyle for Environment), a programme a reversal in investment trends outside of China and that aims to prioritize individual behaviour in the India, where domestic production has been raised global climate action discourse by shifting away 20 In addition, to decrease external dependence. from the current “use-and-dispose” economic the policy responses overall in many regions to the model towards a circular economy characterized global energy crisis, such as those taken in major 19 This economies (e.g. EU, United States and Japan), are by conscious and deliberate utilization. move should be welcome for a highly populous likely to accelerate clean energy developments further. country such as India, where behavioural changes can have a substantial effect. While global commitments and actions to advance the sustainable energy transition have increased Despite some of the progressive initiatives, the recently, they still fail to attain the required level to sustainable energy system remains vulnerable at limit the rise in global temperatures to 1.5°C and large. In 2022, the Russia-Ukraine war led to a global avoid the more severe consequences of climate energy crisis with skyrocketing prices and supply change. Several sustainable indicators have been disruptions. As a result, countries resorted to coal to analysed to evaluate how far countries are from the ful昀椀l energy demands. The world’s coal consumption ideal targets (Figure 11). FIGURE 11 Country density based on the 2030 targets derived from the IEA Net Zero by 2050 scenarios 0 2 4 6 8 10 12 14 16 18 20 Energy intensity of GDP, MJ/2017$ 32 countries hitting target, 11% of TES 86 countries behind target, 89% of TES 2 countries n/a,

To curtail global warming further to 1.5°C, global – Energy ef昀椀ciency: Increasing energy-ef昀椀cient GHG emissions must be cut by 45% within eight solutions for buildings, vehicles, appliances and years and continue to decline rapidly after 2030 to industry can create jobs while reducing emissions. avoid exceeding the remaining atmospheric carbon budget. The triple planetary crisis of climate change, – Electri昀椀cation: Electri昀椀cation in 昀椀nal pollution and biodiversity loss requires widespread demand can drive the rapid reduction implementation of renewable energy technologies, of emissions through electric vehicles in electric vehicles and energy-ef昀椀cient retro昀椀ts for transportation, heat pumps in buildings buildings. Cross-cutting systemic transformations and electric furnaces in industry. of food systems and the 昀椀nancial system are also necessary to reduce emissions beyond current – Bioenergy: Low-emission fuels and mitigation pledges. biomethane can replace natural gas for heating and transportation. The need now is to continue accelerating the overhaul of global energy systems and to set – Carbon capture, usage and storage: milestones for various sectors and technologies. This can help tackle emissions from existing Solutions include: assets like cement and enable low-emission hydrogen production. – Renewable energy: Solar photovoltaics and wind power should account for nearly 70% of – Hydrogen-based fuels: Hydrogen can be used global electricity generation in 2050. in heavy industries, such as steel and chemicals, and in transportation for ships and planes. Fostering Effective Energy Transition: 2023 Edition 27

TABLE 2 A closer look at the progress of sustainable dimension indicators over the past three years Progress on the sustainable dimension varies annual growth rate. It helps to identify individual depending on the indicator considered. This chart leaders as well as country focus areas and gaps. outlines 昀椀ve indicators using a three-year compound The order is consistent with the 2023 ranks. Energy CO CO per Share of Renewable Energy CO CO per Share of Renewable Country intensity ² ² Country intensity ² ² intensity capita electricity capacity intensity capita electricity capacity Sweden Malta Denmark Georgia Norway United Arab Emirates Finland Ukraine Switzerland Turkey Iceland Sri Lanka France India Austria Mexico Netherlands Montenegro Estonia Singapore Germany Jordan United States Armenia United Kingdom Tajikistan Brazil Bolivia Portugal Cote d'Ivoire Spain Kazakhstan China Serbia Hungary Ecuador Canada Egypt, Arab Rep. Luxembourg Macedonia, FYR Albania Cameroon New Zealand South Africa Uruguay Lao PDR Australia Cambodia Costa Rica Argentina Latvia Algeria Japan Guatemala Israel Ghana Slovenia Tunisia Chile Oman Korea, Rep. Kyrgyz Republic Azerbaijan Iran, Islamic Rep. Croatia Dominican Republic Paraguay Philippines Malaysia Ethiopia Lithuania Gabon Greece Nepal Italy Trinidad and Tobago Colombia Angola Poland Honduras Ireland Republic of Moldova Belgium Kuwait Viet Nam Venezuela Slovak Republic Senegal Czech Republic Brunei Darussalam Kenya Botswana El Salvador Pakistan Bulgaria Nigeria Romania Mozambique Bosnia and Herzegovina Bahrain Panama Mongolia Cyprus Lebanon Peru Bangladesh Thailand Nicaragua Indonesia Jamaica Morocco Zimbabwe Saudi Arabia Zambia Namibia Tanzania Qatar Congo, Dem. Rep. Mauritius Yemen, Rep. Progress > 67th percentile Progress 67th-33rd percentile Progress 33rd-0 percentile Negative progress Data not available Source: World Economic Forum Fostering Effective Energy Transition: 2023 Edition 28

GUEST PERSPECTIVE How Morocco stays the course on a just transition towards sustainable development By Leila Benali, Minister of Energy Transition and Sustainable Development of Morocco; President, United Nations Environment Assembly A nation loses critical energy supplies and looks for In Europe, commodity and utility bills soared to record alternatives, balancing its near-term needs against longer- levels. Countries scrambled to acquire supplies or curtail term sustainability goals. While most think this refers to a consumption. For some, 2022 resembled the 1970s oil European country following the Russia-Ukraine war of 2022, price shocks. This time, countries have barely emerged it also describes the Kingdom of Morocco, which managed from a global pandemic, with soaring in昀氀ation and tightening to meet its development needs without derailing the monetary policies. Energy poverty, supply insecurity and sustainability agenda, while increasing energy security. environmental degradation have become the norm in many countries, alongside food and water crises. 2022 will be remembered as the year when consumers and policy-makers favoured short-term security over A dif昀椀cult global environment makes informed sustainable sustainability. However, security concerns are neither economics and renewed multilateralism even more critical. temporary nor super昀氀uous. Energy transition takes time and This is key to tackle the triple crisis of this century: climate could require investments of $250 trillion over 30 years. In change, pollution and biodiversity loss. Three telling Africa alone, nearly 600 million people remain without access examples: to modern forms of energy. After lockdowns, wars and market dislocations, 2022 offered us a clear conviction: this – Carbon prices reached €100 per ton the 昀椀rst time in is the wrong time to lose credibility and trust after years of February 2023 in the EU emissions trading system, advocacy on climate, nature and biodiversity protection. pushing the value of traded global markets for CO close 2 to €1 trillion – a clear signal of informed economics. In 2021, a 10 billion cubic metre natural gas pipeline between Africa and Europe shut down, cutting Morocco – As we consider the theme of the sixth session of off. The country could have gone down an irreversible the United Nations Environment Assembly, to end path of retooling the energy system with fossil fuels. plastic pollution and promote nature-based solutions Instead, it joined the world at COP26 in resolutions to for supporting sustainable development, the call to move beyond coal. Though Morocco was still recovering reinvigorate multilateralism to overcome the multiple crises from the economic shockwaves of COVID-19, it that put the viability of life on earth at risk is pressing and turned this challenge into an opportunity by putting in needs to be supported with informed decisions. place a roadmap for energy security, including fast- tracking sustainable access to the international LNG – The July 2022 In昀氀ation Reduction Act’s Hydrogen Shot market to “power past coal,” decarbonizing industries incentives target $1 per kg by 2031, which is a positive and addressing the intermittency of renewables. economic signal. However, while some are lifting fracking bans, re-昀椀ring coal, and arbitrarily pricing in and out The integration with international LNG markets by externalities, policy-makers must ensure that taxpayers’ reversing the 昀氀ow of a transcontinental pipeline was a money is not used to incentivize new bubbles that generate critical move to restore the trust of people, investors negative returns to society, stranded assets or bankruptcies. and allies, with a just and informed energy, economic and social transition. Against a backdrop of uncertainty, If 昀椀nancial institutions and the private sector say that, with the Morocco decoupled supply from infrastructure and right economies of scale and incentives, properly structured increased the system’s security, sustainability and investments, and the right balance between adaptation and 昀氀exibility by enabling more renewables, pushing for mitigation, we can move together towards a just, informed, more ef昀椀ciency and increasing integration with global affordable and bankable transition, why not do just that? To markets – three pillars of its energy strategy. restore and nurture trust. Fostering Effective Energy Transition: 2023 Edition 29

4.2 Transition readiness Only six As mentioned in Fostering Effective Energy Similar to the progress achieved on global system countries managed Transition 2020 Edition, “the energy system’s performance imperatives, transition readiness to direct more than ability to deliver on the imperatives … depends on enablers sustained a growing global average 1% of their GDP the presence of an enabling environment for the performance over the past 10 years (Figure 12). in 2022 towards energy transition, measured in the ETI framework The direct enablers have been fuelling countries’ investments in by the transition readiness sub-index. Energy transition readiness and showcase the effect of renewables. transition readiness is captured by the stability of recent global focus on the policy and investment the policy environment and the level of political transition choke points. On the other hand, human commitment, the investment climate and access capital and innovation transition enablers did not to capital, the level of consumer engagement, the make substantial progress over the same period, development and adoption of new technologies, underscoring the importance of paying more etc. Some of these factors are beyond the scope attention to these blind spots to unlock further of the energy system”, such as skills or quality of transition momentum. In addition to a set of leading transport infrastructure, “but nevertheless determine advanced European economies, South Korea, China the effectiveness and future trajectory of energy and Japan are among the leading 20 countries 21 transition in a country.” regarding the enabling transition environment in 2023. FIGURE 12 ETI transition readiness trend, 2014-2023 65 60 55 ) 00 50 1 – (0 e 45 Scor 40 35 30 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Regulations and political commitment Education and human capital Innovation Infrastructure Finance and investment Source: World Economic Forum Financial investment in clean energy continues signi昀椀cantly. As of 2023, only 17 out of 120 countries to be a key enabler for transitioning economies. have managed to re昀氀ect their net-zero targets into It nurtures other enablers of transition, such as their respective laws, in a manner that targets all technology development and deployment, while GHG emissions and delivers in 2050 or earlier. actively facilitating the scale-up of renewables capacity and associated infrastructure. Despite the An effective country policy for energy transition progress achieved, investments in clean energy provides the necessary framework to accelerate supply remain a challenge. Only six countries the transition to a cleaner energy system and managed to direct more than 1% of their GDP in address the associated challenges of equity and 2022 towards investments in renewables. China security. While most countries have a strong had the largest share of GDP investments, investing enabling policy environment regarding energy more than 1.5% of GDP in renewables, followed by access, that environment is not as strong for Viet Nam, Azerbaijan, and Bosnia and Herzegovina. policies that enable scaling of renewable capacity or inducing energy ef昀椀ciency. Aside from a set Country commitments to their transition targets of leading advanced European economies, that were set as part of the Paris Agreement have South Korea, India, Mexico and Hungary have been translating into transition strategies. The level recently exhibited a strong enabling regulatory of granularity and maturity of these strategies varies environment to accelerate a balanced transition. Fostering Effective Energy Transition: 2023 Edition 30

4.3 A closer look at innovation Speed and scale: Advanced energy solutions decarbonize hard-to-abate sectors and eliminate CO from the atmosphere. 2 Advanced solutions – including hydrogen, sustainable aviation fuels, advanced nuclear, The IEA estimates that around $2.8 trillion will be storage, carbon and demand management – invested in energy in 2023. More than $1.7 trillion harness, manage and use clean energy across is going to clean energy, including renewable the energy system. As key enablers of the energy power, nuclear, grids, storage, low-emission fuels, transition, they help address the intermittency of ef昀椀ciency improvements and end-use renewables renewable energy, enable electri昀椀cation of transport and electri昀椀cation. For every $1 spent on fossil and industry, improve system ef昀椀ciency, fuels, $1.7 is now spent on clean energy. Five years ago this ratio was 1:1. FIGURE 13 The price of solar modules declined by 99.6% since 1976 Price per Watt of solar photovoltaics (PV) modules (logarithmic axis) The prices are adjusted for inflation and presented in 2019 US$. 1976 $100 1977 1978 With each doubling of installed capacity the price 1979 $50 of solar modules dropped on average by 20.2%. 1980 This is the learning rate of solar modules. 1981 $20 1983 1985 1986 $10 1990 1994 1998 1995 2000 $5 2002 2005 2008 2009 $2 2010 2011 $1 2012 2013 2015 2016 $0.5 2MW 5MW 20MW 50MW 2019 1 MW 10 MW 100 MW 1,000 MW 10,000 MW 100,000 MW = 1,000,000 Watt Cumaltive installed solar PV capacity (logarithmic axis) Source: Roser, Max, “Why did renewables become so cheap so fast?”, Our World in Data, 1 December 2020, https://ourworldindata.org/cheap-renewables-growth (accessed 17 May 2023). Like wind and solar, the giga scale and system needs to see battery storage capacity industrialization of advanced solutions have the grow 15 times22 and carbon capture, usage 23 potential to drive down costs – thus, there is and storage 40 times by 2030. Similarly, the a need to exponentially accelerate the speed clean hydrogen market is expected to grow 24 and advanced and scale of their deployment. For example, to from $0.5 billion to $120 billion 25 be on the path to net zero by 2050, the energy biofuels from $3 billion to $180 billion. Fostering Effective Energy Transition: 2023 Edition 31

Deployment at this scale needs to be backed by reach 380 GW by 2030, which is still little more than signi昀椀cant capital. The IEA notes that $0.9 trillion 28 half of 2030 needs” in that scenario. needs to be invested by 2030 to modernize electricity networks and build public electric vehicle However, it is often dif昀椀cult for investors to 昀椀nd charging stations, hydrogen refuelling stations, direct opportunities that match their pro昀椀le in terms of air capture and CO pipelines, storage facilities, scale and maturity. The risk appetite of 昀椀nancial 2 and import and export terminals. Further, $1.7 institutions is not always tailored to support trillion needs to be invested annually in low-carbon advanced solutions. This is a challenge in emerging 26 Most of this technologies in end-use sectors. markets and developing economies, causing investment will need to come from the private sector, them to receive a small fraction of investments. supported by public policies that create incentives In addition, sovereign and currency risks, the lack and set appropriate regulatory frameworks. of standards and regulations, and slow permitting processes remain signi昀椀cant barriers to clean A growing number of investors from both energy investments in these economies. specialized and larger infrastructure funds are actively seeking opportunities in the sector. Achieving the needed pace and scale of growth Moreover, governments provide strong support and investments requires innovators, large energy through policies aiming to multiply clean energy producers and users, and investors to form investments. Innovative capital market instruments, partnerships and play their part. To aid in this such as green bonds, open additional avenues process, the World Economic Forum is producing to increase funding. The green bonds market the “Handbook for Exponential Deployment experienced spectacular growth from $36 billion of Advanced Energy”, which will include a set 27 worth of issuances to $270 billion in 2020. of strategic recommendations for these key Subsequently, an increasing number of projects stakeholders to expand and accelerate the are being announced and deployed. The IEA has deployment of advanced energy solutions. This observed that, “announced [electric vehicle] battery initiative, led by the Forum’s Advanced Energy production capacity for 2030 is only 15% lower Solutions community, engages leaders in frontier, than the level of battery demand underpinning the fast-growing segments of the energy system and IEA’s Net Zero Emissions Scenario” and “cumulative seeks to help eradicate the green premium and output of electrolyser manufacturing capacity could maximize co-bene昀椀ts. Fostering Effective Energy Transition: 2023 Edition 32

5 Conclusion Several environmental, macroeconomic and effects of climate change. Most of these have geopolitical events over the past decade have existed for decades but will need greater and more affected the energy system in myriad ways and targeted investment or incentives. To ensure an highlighted the complexities of the energy transition. equitable transition, greater investment will also be Over the past decade, the world has made required in skills training, research, innovation and signi昀椀cant strides towards transitioning to low- incentives to build sustainable supply chains that carbon energy systems, although not at the pace 30 Policies have protect ecosystems and cultures. required to achieve net-zero emissions by 2050. emerged but require implementation. The lack of consistent and balanced progress for many countries highlights the challenge of The focus of the energy transition needs to shift navigating the energy transition. to more populous and developing nations in Asia, Latin America, Africa and the Middle East, as By elevating energy security to be a cornerstone of they account for a signi昀椀cant portion of the world’s the framework, advances in the secure dimension population as well as global carbon emissions. can be seen as countries aim for a stable and While several countries are committing to the secure supply of energy to maintain economic energy transition and have vast renewable energy growth, national security and the well-being of their resources, they lack the 昀椀nances and technical populations. Very few countries, however, are know-how to develop them fully. By collaborating advancing momentum across the equitable, and providing support, a more secure, sustainable secure and sustainable dimensions, and and equitable future can be found for many. improvements in security are being delivered at Bolstering the enabling environment will put these the expense of the others. The strong competition countries on the leading edge. for secured access to gas suppliers and stocks replenishment, along with concerns about security As for the upcoming COP28 summit, which will of supply, pose signi昀椀cant challenges for the include the conclusion of the 昀椀rst Global Stocktake, upcoming winter. Additionally, some areas will an assessment of the world’s progress towards come under future scrutiny, such as the importance achieving its climate goals. The stocktake will of critical raw materials, upcoming regulatory capture what countries and stakeholders are doing obligations for reporting on sustainable investments, or failing to do to ful昀椀l the Paris Agreement. What is and the vulnerability of energy systems to extreme clear from this year’s ETI, however, is that countries weather events. must move at a faster pace than they are now to transform their energy systems; moreover, While a decarbonized future energy system can the window for such effort is closing. The actions provide energy security dividends from abundant taken in the early years of this decade of delivery will and localized low-carbon energy sources, ensuring be critical in ensuring that strong, long-term ambition 31 energy security and affordability through the is supported by immediate progress. The focus transition will require fossil fuels in the medium must be on enhancing an equitable transition, which 29 Countries will need to adjust demand has been traded off rather than enabled by the term. and improve economics of supply to minimize focus on the secure and sustainable dimensions. emissions. Cleaner energy sources and The energy transition must be made resilient to technologies will be required in the next two to maintain speed under current volatilities and during three years to meet 2030 targets and limit the potential future domestic or international disruptions. Fostering Effective Energy Transition: 2023 Edition 33

6 Country performance pro昀椀les These countries stand out for laying the groundwork for a robust energy transition. Fostering Effective Energy Transition: 2023 Edition 34

Germany ETI Score Rank 67.5 11/120 Key macroeconomic and ETI data Population (millions) 83.2 Energy consumption per capita (GJ/capita) 140.1 GDP ($ trillions) 4.26 Energy intensity (MJ/$2017 PPP GDP) 2.70 Net energy imports (% of energy use) 65.0 CO intensity (CO /TPES) 50.62 2 2 Note: GJ = gigajoule; MJ = megajoule; PPP = purchasing power parity; TPES = total primary energy supply a Country and peer group system performance Energy transition and transition readiness, 2014-2023 current assessment 80 Momentum Transition readiness 6% 4% 60 Advancing 00) 1 2% – Leading 0 System performance e ( Advancing 0% Scor 40 -2% -4% Country Peer group 20 -6% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Equitable Secure Sustainable Note: a Relevant World Economic Forum peer group: Advanced economies Source: World Economic Forum System performance Transition readiness Equitable Regulations and political commitment Finance and Infrastructure investment 0 0 20 20 40 40 60 60 80 80 100 100 Sustainable Secure Innovation Education and human capital Source: World Economic Forum Fostering Effective Energy Transition: 2023 Edition 35

Stated energy transition goals Energy policy priorities Reduce GHG emissions by at least 55% Cover at least 80% of gross electricity Phase out coal-昀椀red power by 2030 compared to 1990 consumption by renewable sources generation by 2038 Achieve net-zero emissions by 2045 by 2030 Reduce primary energy Have at least 15 million electric cars consumption by 50% by 2050 in 2030 Install 1 million public charging points with non-discriminatory access by 2030 framework policy to enhance competition, security Country analysis of supply and sustainable energy production … Key progress on ETI Furthermore, this Act stipulates supplementary provisions for the access of electricity from renewable Germany is the fourth-largest economy in the sources to the grid as well as the construction of world and ranks 11 out of 120 countries on the ETI intelligent grids including electricity storage. In 2012 2023. Since 2014, Germany’s score on the ETI has the law was amended to speed up the expansion of increased by 6%, which shows both the robustness offshore wind farms. The major focus is on a system of its energy transition efforts and the challenges change towards a consistent and ef昀椀cient offshore large economies face in improving quickly. Within grid expansion by introducing a binding offshore grid 34 The government also passed system performance, Germany’s scores on the development plan”. secure and sustainable dimensions have improved, a law in 2020 that required phasing out all coal-昀椀red driven largely by supply security, an increase in share electricity generation no later than 2038; the timeline of renewable energy in the electricity mix and strong was recently brought forward to 2030. The net result reductions in the energy intensity of the economy. of these policies is re昀氀ected in the country’s high ETI Even though the carbon intensity of the overall scores on regulation and political commitment, as energy mix has declined over the years by 9%, it well as decarbonized and clean energy. remains relatively high, owing to persistent challenges What’s next? in decarbonizing hard-to-abate sectors, such as heating, transport and heavy industry. Germany Energy transition remains a process as Germany’s ranks 昀椀fth globally on transition readiness, which diversi昀椀cation of its energy mix is not purely focused provides an assessment of the enabling environment on sustainability and ef昀椀ciency gains but also on for energy transition, as it is one of the top three security. Over-reliance on imported gas from Russia countries on regulation and political commitment. and high energy prices were the main challenges Key imperatives and policies in place faced by Germany during the energy crisis. The Russia-Ukraine war prompted the government to The core elements of Germany’s energy transition institute emergency measures, such as building are improving energy ef昀椀ciency and expanding LNG regasi昀椀cation capacity and delaying coal renewables as quickly as possible. The government plant closures, which slowed down the transition has invested in the development of energy-ef昀椀cient momentum and locked in more emissions in the technologies and infrastructure, such as smart grids system. To ensure reduced dependence on Russian and electric vehicle charging stations. This has gas and accelerate the longer-term transition in resulted in Germany now producing over 40% of its Germany, the government has instituted numerous electricity from renewables,32 having set a goal of amendments to existing laws and funding 33 programmes that primarily focus on enhancing the reaching 80% by 2030. The country has introduced several policies aimed at increasing the share of nation’s renewable energy capabilities, particularly in renewables in the energy mix, phasing out nuclear onshore wind; increasing the volume of renewable power (with the last plant closing in April 2023) and power auctions; and speeding up grid planning reducing GHG emissions, resulting in the country and the growth of offshore wind connections to becoming a leader in the energy transition. The carry electricity generated from wind power in Energiewende (energy transition) was instituted nearly northern Germany to large industrial complexes in a decade ago as a plan for transforming the energy the south. Additional actions, such as “creating the system, making it more ef昀椀cient and supplied mainly legal and 昀椀nancial frameworks for carbon contracts by renewable energy. for difference, an instrument that supports industry in transitioning to climate-neutral production The German Renewable Energy Sources Act has 35 processes”, promoting research and development played a signi昀椀cant role in the transition by providing in green hydrogen to create modern future-oriented a legal framework and 昀椀nancial incentives for the climate protection technologies, and forming expansion of renewable energy sources. This, strategic partnerships, could help ensure an orderly together with the Energy Industry Act, forms the legal energy transition in Germany and provide lessons basis of the German energy industry and provides “a for other countries. Fostering Effective Energy Transition: 2023 Edition 36

United States ETI Score Rank 66.3 12/120 Key macroeconomic and ETI data Population (millions) 331.9 Energy consumption per capita (GJ/capita) 257.4 GDP ($ trillions) 23.32 Energy intensity (MJ/$2017 PPP GDP) 4.27 Net energy imports (% of energy use) -4.0 CO intensity (CO /TPES) 49.90 2 2 Note: GJ = gigajoule; MJ = megajoule; PPP = purchasing power parity; TPES = total primary energy supply a Country and peer group system performance Energy transition and transition readiness, 2014-2023 current assessment 80 Momentum System performance 6% Advancing 4% 60 00) 1 2% – 0 Transition readiness Leading e ( 66.3 0% Scor 40 Stabilizing -2% -4% Country Peer group 20 -6% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Equitable Secure Sustainable a Note: Relevant World Economic Forum peer group: Advanced economies Source: World Economic Forum System performance Transition readiness Equitable Regulations and political commitment Finance and Infrastructure investment 0 0 20 20 40 40 60 60 80 80 100 100 Sustainable Secure Innovation Education and human capital Source: World Economic Forum Fostering Effective Energy Transition: 2023 Edition 37

Stated energy transition goals Energy policy priorities Achieve an economy-wide target of reducing Reduce energy waste net GHG emissions by 50-52% below 2005 Electrify and drive ef昀椀ciency in vehicles, levels in 2030 Achieve net-zero emissions by 2050 buildings and parts of industry Scale up new energy sources and carriers, Reach 100% carbon pollution-free electricity such as carbon-free hydrogen by 2035 BIL includes signi昀椀cant funding for transmission Country analysis and grid improvements ($75 billion), increasing resilience of the nation’s natural and physical Key progress on ETI infrastructure ($50 billion), investing in a national electric vehicle charging infrastructure ($7.5 billion), The United States (US) ranks 12 out of 120 and reducing methane emissions from orphaned 36,37 countries on the ETI 2023. The overall ETI score oil and gas wells ($4.7 billion).” One of the BIL’s for the US has seen a 10% gain over the past most signi昀椀cant features is the creation of the 10 years, driven by improvements in system Of昀椀ce of Clean Energy Demonstrations (OCED), performance, particularly in the secure and dedicated to supporting “demonstration projects in sustainable dimensions. Within the sustainable clean hydrogen, carbon capture, grid-scale energy dimension, energy intensity and CO emissions per storage, small modular reactors, and beyond. With 2 capita saw marked gains since 2014, falling by 20% over $20 billion in initial funding, the OCED will fund and 22%, respectively. The focus on sustainability research and development and proof-of-concept is further highlighted by the country’s momentum projects that seek to galvanize follow-on private in this dimension. Within transition readiness, sector investment to deploy clean technologies”.38 further improvements can be found in areas such The IRA provides positive incentives to support the as renewable capacity buildout; development of energy transition in “the form of clean energy tax low-carbon jobs; public research, development and credits along with programs and pools of 昀椀nance demonstration; and sustaining a stable regulatory for commercial and emerging clean technologies, framework and political commitments. infrastructure, and products”, and local content requirements. “It commits roughly $369 billion in Key imperatives and policies in place funding for climate and clean energy provisions”, and it is estimated it will “reduce US net emissions The country’s ageing energy infrastructure poses by 32% to 42% below 2005 levels by 2030, signi昀椀cant challenges for the energy transition, compared to 24% to 35% without it, and scale clean 39 which requires massive deployment of energy generation to supply up to 81% of all electricity”. ef昀椀ciency and renewable energy, a nationwide modernization and expansion of the electricity What’s next? grid, and broadening accessibility and affordability of clean energy technologies. Achieving this in an Projections from these policies suggest a huge equitable way requires directing energy infrastructure potential for the US energy transition and provide and resilience investments to communities and many clean energy companies with the certainty industries that, until now, have struggled to they require. The relationship between incentives transition. In recent years, several policies have provided, capital invested and the effect of been implemented in the US to accelerate the emissions, however, is not always straightforward. energy transition. The federal government set Additional lessons for the US were identi昀椀ed to 40 ambitious targets for reducing GHG emissions, enable a more orderly transition. These include encouraged the deployment of renewable energy “designing and deploying a capital-ef昀椀cient technologies through tax credits and grants, and and affordable system; strengthening supply established mandatory renewable energy standards chains to provide stable access to raw materials, at the state level. Furthermore, the private sector components, and skilled labour; securing access has made substantial investments in clean energy to adequate land with high load factors for the research and development, and in the deployment deployment of renewables while taking into of renewable energy projects. The net result of account the needs of local communities; reforming these efforts is re昀氀ected in the country’s high ETI transmission development to include proactive scores on regulation and political commitment and planning, fast-track permitting, and systematic decarbonized energy, showing that the US is now consideration of transmission alternatives; creating well positioned as a leader in the global transition market mechanisms for expanding 昀椀rm capacity to towards a low-carbon, sustainable energy future. ensure reliable and adequate clean energy supply; and accelerating technological innovation to ensure 41 Two notable policies that appear to be working well timely deployment of new clean technologies”. for the US are the Bipartisan Infrastructure Law Without these additional elements, many of the (BIL) and the In昀氀ation Reduction Act (IRA). “The clean energy bene昀椀ts on offer may be lost. Fostering Effective Energy Transition: 2023 Edition 38

United Kingdom ETI Score Rank 66.2 13/120 Key macroeconomic and ETI data Population (millions) 67.3 Energy consumption per capita (GJ/capita) 96.07 GDP ($ trillions) 3.13 Energy intensity (MJ/$2017 PPP GDP) 2.29 Net energy imports (% of energy use) 28.1 CO intensity (CO /TPES) 46.96 2 2 Note: GJ = gigajoule; MJ = megajoule; PPP = purchasing power parity; TPES = total primary energy supply a Country and peer group system performance Energy transition and transition readiness, 2014-2023 current assessment 80 Momentum System performance 6% 4% 60 00) 1 2% Leading – 0 Transition readiness e ( Leading 0% Scor Stabilizing 40 -2% -4% Country Peer group 20 -6% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Equitable Secure Sustainable a Note: Relevant World Economic Forum peer group: Advanced economies Source: World Economic Forum System performance Transition readiness Equitable Regulations and political commitment Finance and Infrastructure investment 0 0 20 20 40 40 60 60 80 80 100 100 Sustainable Secure Innovation Education and human capital Source: World Economic Forum Fostering Effective Energy Transition: 2023 Edition 39

Stated energy transition goals Energy policy priorities Accelerate the shift to zero-emission Reduce emissions by at least 68% by Achieve 50 GW of power annually from 2030 compared to 1990 offshore wind by 2030, 70 GW of power vehicles Achieve net-zero emissions by 2050 annually from solar by 2035, and build new Invest in carbon capture, usage nuclear power stations to generate 24 GW and storage – four sites by 2030, of power annually by 2050 capturing up to 10 metric tonnes of Achieve 5 GW of low-carbon hydrogen CO2 emissions per year production capacity by 2030ns to generate 24 GW of power annually by 2050 between 2021-2022 and 2025-2026. It seeks to Country analysis further accelerate the transition in both energy- producing and energy-consuming sectors by rapidly Key progress on ETI expanding the portfolio of renewable investments; working through coalitions and partnerships under The United Kingdom (UK), ranking 13 out of 120 the Breakthrough Agenda; increasing investments countries on the ETI 2023, has seen an 11% in research and development of low-carbon improvement in its ETI score over the last 10 years. technologies; strengthening governance, policy It has been a consistent performer, demonstrating and regulatory frameworks and strategic energy a strong enabling environment for energy transition, systems planning; and deploying clean energy particularly on dimensions such as education and 46 projects in energy intensive industries. human capital, infrastructure, and regulation and political commitment. The UK’s momentum has Dependence on oil and gas has left the UK exposed stabilized in the secure dimension but continues to to the global fossil fuel price shock. Annual “gas lead in equitable and sustainable. As reported by and electricity price increases to April 2022 were Thanet District Council, “in 2019, the UK became the largest ever recorded in a series going back to the 昀椀rst major economy in the world to legislate 1970, and have continued to rise as Russia has a binding target to reach net zero emissions by restricted the supply of gas to continental Europe”, 42 Coal has been phased out of power increasing concerns about energy affordability 2050”. generation ahead of schedule, and the share of 47 To overcome these challenges, and security. renewables in the energy mix has increased. the government has been actively transitioning its energy sector to meet its 2050 net-zero target, Key imperatives and policies in place focusing on the production, distribution and consumption of energy in more sustainable ways. The UK’s legal framework, including the 2008 A British Energy Security Strategy was published, Climate Change Act, has provided stability aiming to decarbonize the electricity system and and consistency for investors and businesses, “set strong and stretching targets for the roll-out contributing to the success of renewable energy of low-carbon electricity generation” in the coming deployment and emissions reduction. The energy decade, though much of the strategy focuses on 48 policy, however, has undergone several changes in “electricity generation and oil and gas supply”. recent years, creating uncertainty in the market, and recent reports have highlighted the need to provide What’s next? 43 long-term policy commitments and regulations. Even so, the country has made signi昀椀cant The UK faces challenges with its grid, so any investments in offshore wind, with one of the largest lessons learned in this space could be applied to installed capacities globally, and is considered a others as well. To deliver genuine energy security, leader in this space. The development of a large the country is prioritizing improving energy ef昀椀ciency domestic supply chain for offshore wind energy has and reducing energy demand by implementing also created jobs and economic growth, which is policies to improve energy ef昀椀ciency in buildings, re昀氀ected in the high ETI scores for human capital. transport and industry. The Heat and Buildings Strategy includes a phase-out of gas boilers by Nuclear power is seen as a key part of the UK’s 2035 and the installation of 600,000 heat pumps 49 low-carbon energy mix, with recent investments per year by 2028. The Future Homes Standard to replace ageing infrastructure and introduce also sets new standards and regulations to reduce new facilities. The government’s ambition to carbon emissions in new homes from 2025, acting increase solar energy generation capacity by up as an incentive for solar installations in housing 50 to 70 gigawatt (GW) by 2035 demonstrates its developments. The UK has brought forward its 44 target date for discontinuing the sale of new petrol commitment to diversifying its energy mix further. To reduce emissions from hard-to-abate sectors, and diesel cars in favour of electric vehicles from 51 Backed by a £1.6 billion investment the UK is investing £20 billion over the next two 2040 to 2030. 45 from the Electric Vehicle Infrastructure Strategy, the decades to scale up its carbon capture sector. With its 2023 International Climate Finance (ICF) UK plans to expand its charging network to have 52 Strategy, the UK aims to double ICF to £11.6 billion 300,000 public chargers by 2030. Fostering Effective Energy Transition: 2023 Edition 40

Brazil ETI Score Rank 65.9 14/120 Key macroeconomic and ETI data Population (millions) 214.3 Energy consumption per capita (GJ/capita) 56.21 GDP ($ trillions) 1.61 Energy intensity (MJ/$2017 PPP GDP) 4.00 Net energy imports (% of energy use) -11.1 CO intensity (CO /TPES) 32.44 2 2 Note: GJ = gigajoule; MJ = megajoule; PPP = purchasing power parity; TPES = total primary energy supply a Country and peer group system performance Energy transition and transition readiness, 2014-2023 current assessment 80 Momentum System performance 6% 4% 60 00) 1 2% – 0 Leading e ( Leading Transition readiness 0% Scor 40 -2% At risk -4% Country Peer group 20 -6% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Equitable Secure Sustainable a Note: Relevant World Economic Forum peer group: Latin America and the Caribbean Source: World Economic Forum System performance Transition readiness Equitable Regulations and political commitment Finance and Infrastructure investment 0 0 20 20 40 40 60 60 80 80 100 100 Sustainable Secure Innovation Education and human capital Source: World Economic Forum Fostering Effective Energy Transition: 2023 Edition 41

Stated energy transition goals Energy policy priorities Achieve climate neutrality by 2050 Expand biofuel consumption, increase ethanol supply and Reduce GHG emissions from 2005 levels by 37% by 2025, raise the share of advanced biofuels and biodiesel in the mix and by 50% by 2030 Increase the share of renewables beyond hydropower to Achieve a 45% share of renewables in the energy mix by 2030 generate electricity to between 28% and 33% by 2030 Achieve an 18% share of sustainable biofuels in the energy mix Achieve 10% ef昀椀ciency gains in the power supply by 2030 by 2030 solar energy projects.56 The net results of these Country analysis policies are re昀氀ected in the high ETI scores on Key progress on ETI regulation and political commitment, infrastructure, and 昀椀nancial investment. Brazil is the ninth-largest economy in the world53 Brazil has become the largest producer of wind and ranks 14 out of 120 countries on the ETI 2023. 57 The overall ETI score for Brazil has seen an 8% energy in Latin America and ranks among the top 58 The Programme improvement since 2014, having slipped slightly 10 largest producers in the world. in 2020 and then increasing again. Brazil’s scores of Incentives for Alternative Electricity Sources on transition readiness have seen a signi昀椀cant paved the way to create local manufacturing improvement over the years. Today, Brazil ranks capacity for wind turbines and the components 59 The country has also implemented net among the top 14 countries on sustainability of industry. the energy system, owing to its high share of metering and the Energy Compensation System for renewables in the energy mix, with 80% of its Micro and Mini-Generation to promote distributed electricity coming from large hydropower plants.54 solar generation, which currently makes up 70% 60 Investments in wind and solar generation have of its installed capacity. Brazil’s national biofuels also increased signi昀椀cantly in recent years, making policy, RenovaBio, came into effect in 2020 Brazil’s electricity sector one of the least carbon- and set transportation emission targets, using intensive in the world. Recent droughts, however, decarbonization credits to encourage biofuel have caused the country to rely on more expensive production and consumption. RenovaBio also thermal power plants and imports to meet its promotes the development of advanced biofuels electricity demand, resulting in some challenges with even lower emissions and has succeeded in across the equitable, secure and sustainable making Brazil the second-largest biofuel producer 61 globally. dimensions within system performance. What’s next? Key imperatives and policies in place Brazil, with a large and complex grid system that While Brazil has made progress in creating a robust has not fully kept up with the demands of the enabling environment for energy transition – in energy transition, loses about 16% of the power it terms of building a stable regulatory environment generates. Historically, Brazil has lacked investment to attract capital and investment and building in new grid infrastructure, particularly in remote infrastructure to facilitate energy transition – areas where the potential for renewable energy more effort is needed to provide a stable policy development exists. A recent World Economic environment backed by ambitious targets to 62 highlights opportunities for the Forum report accelerate the transition. The government’s main country to unlock clean energy investments through goal is to structure the public policies needed to innovative solutions and collaborative actions, place the country as a world leader in clean energy focusing on three areas for acceleration: distributed while also leveraging its signi昀椀cant oil and gas generation, hydropower modernization and clean resources. Brazil has already implemented several energy access for isolated systems. These lessons policies to transition towards a more sustainable can also be applied to other countries at similar and low-carbon energy system. The Auctions levels of clean energy development. The proposed for Renewable Energy Support programme was solutions include the creation of a distributed launched in 2004 to encourage the installation generation 昀椀nancing toolbox to support developers of new renewable energy projects through a and 昀椀nanciers; suggestions of regulatory changes competitive bidding process. These auctions have to remove barriers to the commercialization not only helped reduce the cost of renewable of hydropower plant services; climate risk and energy in Brazil, making it more competitive with resilience mapping for hydropower generation traditional energy sources, but have also been assets; raising awareness of the Climate Bond successful in attracting signi昀椀cant investment in the Standard Hydropower Criteria among potential sector. With the A-3 and A-4 auctions in July 2021, investors; and creating a platform for existing the government allocated 420 MW of wind and 270 independent power producers to 昀椀nd developers as MW of solar, as well as biomass and hydro.55 In well as technical, marketing and 昀椀nancial support to addition, the Brazilian Development Bank recently integrate renewables and create hybrid generation approved $650 million in 昀椀nancing for wind and models in isolated systems. Fostering Effective Energy Transition: 2023 Edition 42

China ETI Score Rank 64.9 17/120 Key macroeconomic and ETI data Population (millions) 1412.4 Energy consumption per capita (GJ/capita) 103.8 GDP ($ trillions) 17.73 Energy intensity (MJ/$2017 PPP GDP) 6.37 Net energy imports (% of energy use) 23.0 CO intensity (CO /TPES) 68.81 2 2 Note: GJ = gigajoule; MJ = megajoule; PPP = purchasing power parity; TPES = total primary energy supply a Country and peer group system performance Energy transition and transition readiness, 2014-2023 current assessment 80 Momentum 6% System performance 4% 60 00) Leading 1 2% – 0 Leading e ( Advancing 0% Scor 40 Transition readiness -2% -4% Country Peer group 20 -6% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Equitable Secure Sustainable a Note: Relevant World Economic Forum peer group: Emerging and developing Asia Source: World Economic Forum System performance Transition readiness Equitable Regulations and political commitment Finance and Infrastructure investment 0 0 20 20 40 40 60 60 80 80 100 100 Sustainable Secure Innovation Education and human capital Source: World Economic Forum Fostering Effective Energy Transition: 2023 Edition 43

Stated energy transition goals Energy policy priorities Have CO2 emissions peak before 2030 Achieve 3,300 terawatt-hours of Achieve over 1.2 terawatts of wind and achieve carbon neutrality before annual renewable energy generation and solar power capacity by 2030 2060 by 2025 Strictly control coal-昀椀red power Lower CO emissions per unit of GDP Have renewables account for 33% projects during the 14th Five-Year 2 by over 65% from the 2005 level of energy consumption by 2025 Plan (FYP), and phase them down in the 15th FYP electricity consumption share of 33 percent (up Country analysis from 28.8 percent in 2020), and directs that 50 percent of China’s incremental electricity and energy Key progress on ETI consumption shall come from renewables over the period 2021-2025. … The RE plan is the second China ranks 17 out of 120 countries on the ETI major energy-related 14th FYP released [in 2022]. 2023 and is a new entrant in the top 20 countries. … [It] establishes detailed targets for primary energy It is among the biggest producers and consumers mix, power generation rate, electri昀椀cation rate, and of energy in the world while also being one of its more. …These two FYPs together reaf昀椀rm China’s biggest GHG emitters, currently accounting for commitment to honouring its carbon pledges one-third of the total global GHG emissions. China 66 through accelerated RE growth”. has maintained a consistent upward trajectory on the ETI over the past 10 years, improving strongly China has done a great deal to use green 昀椀nance on system performance and transition readiness. to increase renewables, investing over $380 billion Scores on the secure dimension within system in 2021, and being one of the 昀椀rst countries to performance have improved, mainly through better issue a green bond project catalogue, to develop quality of electricity supply diversi昀椀cation and its own Green Bond Principles and to work with the 67 associated grid improvements. Sustainable scores, EU to develop the Common Ground Taxonomy. however, remain low on an absolute scale as coal One of the most signi昀椀cant efforts in this surge is still the main fuel for generation, accounting for was powering industrial clusters with green and 63 despite large amounts renewable electricity. China’s environmental ministry 60% of total power output of renewable energy capacity 昀椀nanced and installed also proposed to support exploration of near over the years. zero-carbon emissions and carbon neutrality pilot demonstrations. Simultaneously, the country is Key imperatives and policies in place promoting construction of large-scale renewable energy bases, distributed development of wind and China’s attempts to improve the enabling photovoltaic in the central and south-east regions, environment for energy transition are steps in integrated development of water and solar bases in the right direction, evidenced by President Xi the south-west region, and centralized development Jinping’s September 2020 commitment at the of offshore wind in eastern coastal areas. UN General Assembly to reach peak carbon emissions before 2030 and achieve carbon What’s next? 64 China is emerging as a neutrality by 2060. world leader in innovation: public spending on The energy transition in China requires a huge shift research and development has risen by 35% in resources, innovation and new technologies 65 since 2014. In pursuing carbon neutrality, to enhance energy ef昀椀ciency and resource however, China faces the challenge of ensuring productivity. A recent World Bank report estimates continued energy security while shifting away that China will need between $14 trillion and $17 from fossil fuels. Nonetheless, in recent years, the trillion in additional investments up to 2060 for theme of China’s energy industry has been green green infrastructure and technology in the power development, with several policies and measures 68 and highlights and transport sectors alone designed to accelerate the energy transition, the important lessons, including the need for public net results of which are re昀氀ected in its high ETI and private sectors to work together, “a more score on regulation and political commitment. predictable regulatory environment as well as better access to markets and 昀椀nance that would allow In June 2022, China released its 14th FYP on the private sector to play a central role in delivering Renewable Energy Development (2021-2025). market solutions, improving productivity, reducing As reported by the Energy Foundation, it is “a costs, stimulating technological innovation, and comprehensive blueprint for further accelerating 昀椀lling the 昀椀nancial gap. … [In addition], training and [its] renewable energy (RE) expansion. The plan reskilling workers from the fossil fuel sector and targets a 50 percent increase in renewable energy providing targeted assistance to the most affected 69 could ensure an equitable generation (from 2.2 trillion kWh in 2020 to 3.3 local communities” trillion kWh in 2025), establishes a 2025 renewable energy transition. Fostering Effective Energy Transition: 2023 Edition 44

Canada ETI Score Rank 64.2 19/120 Key macroeconomic and ETI data Population (millions) 38.25 Energy consumption per capita (GJ/capita) 312.2 GDP ($ trillions) 1.99 Energy intensity (MJ/$2017 PPP GDP) 6.77 Net energy imports (% of energy use) -80.6 CO intensity (CO /TPES) 42.78 2 2 Note: GJ = gigajoule; MJ = megajoule; PPP = purchasing power parity; TPES = total primary energy supply a Country and peer group system performance Energy transition and transition readiness, 2014-2023 current assessment 80 Momentum System performance 6% 4% Advancing 60 00) 1 2% – 0 e ( Transition readiness 66.3 0% Scor Stabilizing Stabilizing 40 -2% -4% Country Peer group 20 -6% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Equitable Secure Sustainable a Note: Relevant World Economic Forum peer group: Advanced economies Source: World Economic Forum System performance Transition readiness Equitable Regulations and political commitment Finance and Infrastructure investment 0 0 20 20 40 40 60 60 80 80 100 100 Sustainable Secure Innovation Education and human capital Source: World Economic Forum Fostering Effective Energy Transition: 2023 Edition 45

Stated energy transition goals Energy policy priorities Reduce emissions by 40-45% below Cut building energy waste Price carbon pollution, increasing 2005 levels by 2030 through energy ef昀椀ciency and fuel the benchmark price by $15/ton/year, Achieve net-zero emissions by 2050 switching starting in 2023, rising to $170/ton Rapidly scale up existing and new in 2030 strategic clean technologies and Phase out coal-昀椀red power plants by the market for clean fuels 2030 extraction and processing. To reduce emissions, Country analysis the federal government implemented a carbon pricing scheme in 2019, targeting a range of Key progress on ETI emissions including fuel combustion, industrial processes and waste disposal. The carbon price Canada is the second-largest country in the world in May 2022 stood at CAD 50 per tonne of CO 2 by land area70 and ranks 19 out of 120 countries emitted and is set to increase to CAD 170 per on the ETI 2023. With an overall ETI score that has 73 Industry itself is also taking steps tonne by 2030. remained fairly stable over the past decade, Canada to reduce emissions, with oil and gas companies has consistently ranked among the top 25, with investing in carbon capture and storage technology. strong results on system performance. Speci昀椀cally, Furthermore, the federal government’s launching of Canada is a global leader on the equitable and funds, such as the Low Carbon Economy Fund (in secure aspects of energy transition, as it is a major which the government is investing another producer and exporter of oil, gas, hydroelectricity CAD 2.2 billion for seven years, beginning in 74 and the Canada Infrastructure Bank’s and uranium, and has a growing renewables 2022-2023) 75 sector. In recent years, however, Canada has strategy to invest CAD 35 billion, provides support fallen behind its peer group and challenges need for renewable energy projects, energy ef昀椀ciency to be addressed to accelerate the sustainability of measures, and research and development. its energy system. The country faces high energy intensity of its economy, high levels of energy Indigenous communities play a substantial role in consumption per capita and higher-than-average Canada’s energy transition. To foster collaboration carbon intensity. Within transition readiness, and partnership between those communities and Canada has shown increasing improvement on the energy sector, the government has established regulation and political commitment. In fact, the various programmes and initiatives, including the country is leading with bold measures which are Indigenous Off-Diesel Initiative, which was launched 76 and aims to transition remote indigenous critical for an effective energy transition, resulting in in 2018 strong scores within country commitments. communities from diesel-powered electricity to cleaner energy sources. It also seeks to enhance the Key imperatives and policies in place capacity of indigenous communities through training, technical support and other resources required to Canada’s vast geography poses challenges for develop and operate their energy projects. transitioning to renewable energy, as many of the country’s remote and northern communities rely on What’s next? diesel generators for electricity, which are expensive to operate and emit high levels of GHGs. Building Like other major oil- and gas-exporting nations, renewable energy infrastructure in these areas can Canada’s energy infrastructure was designed be costly and logistically challenging. To better to primarily support fossil fuel production and understand energy usage and engage with these distribution, making it challenging to integrate communities, the federal government launched renewable energy into the grid. One aspect the Remote Communities Energy Database in of Canada’s energy transition is its reliance on 71 By providing valuable insights into energy hydroelectricity, which also means its electricity is 2018. consumption patterns and opportunities for 83% non-emitting and among the cleanest in the renewable energy development, the database helps 77 Many of the hydroelectric facilities, however, world. to shape the development of effective energy policies are located on or near Indigenous lands, which and programmes as well as support the transition to could affect the expansion of hydropower in these a low-carbon, sustainable energy system. areas. Through careful planning, investment and community engagement, Canada could accelerate Energy production and use in Canada currently its transition towards a clean energy future and 72 accounts for over 80% of its GHGs. Production meet its GHG emissions goals. Other countries at from oil sands is highly emissions-intensive, similar levels of clean energy development could requiring large amounts of energy and water for learn from Canada’s trajectory. Fostering Effective Energy Transition: 2023 Edition 46

Japan ETI Score Rank 63.3 27/120 Key macroeconomic and ETI data Population (millions) 125.7 Energy consumption per capita (GJ/capita) 127.6 GDP ($ trillions) 4.94 Energy intensity (MJ/$2017 PPP GDP) 3.19 Net energy imports (% of energy use) 89.7 CO intensity (CO /TPES) 61.43 2 2 Note: GJ = gigajoule; MJ = megajoule; PPP = purchasing power parity; TPES = total primary energy supply a Country and peer group system performance Energy transition and transition readiness, 2014-2023 current assessment 80 Momentum System performance 6% 4% Advancing 60 00) 1 2% – Transition readiness 0 Leading e ( 66.3 0% Scor At risk 40 -2% -4% Country Peer group 20 -6% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Equitable Secure Sustainable a Note: Relevant World Economic Forum peer group: Advanced economies Source: World Economic Forum System performance Transition readiness Equitable Regulations and political commitment Finance and Infrastructure investment 0 0 20 20 40 40 60 60 80 80 100 100 Sustainable Secure Innovation Education and human capital Source: World Economic Forum Fostering Effective Energy Transition: 2023 Edition 47

Stated energy transition goals Energy policy priorities Reduce GHG emissions by 46% by Achieve 36-38% energy generation Impose energy-saving measures to 2030 compared to 2013 from renewables by 2030 improve the actual energy ef昀椀ciency Achieve carbon neutrality by 2050 Decrease nuclear energy by 35% dependence to 20% and fossil fuel Promote hydrogen/energy storage energy generation to 56% by 2030 and decentralized energy systems Feed-in tariffs were introduced in 2012 to promote Country analysis the development of solar, wind and biomass. The tariffs for solar started at more than JPY 40/ Key progress on ETI kilowatt-hour (kWh) in 2013 and were reduced steadily to JPY21/kWh for 2020-2021 to Japan ranks 27 out of 120 countries on the ETI encourage greater cost competitiveness while also 2023, with relatively stable overall ETI, system reducing the 昀椀nancial burden on consumers.81 In performance and transition readiness scores addition, an auction system for renewable energy over the past 10 years. At a natural disadvantage projects was introduced to further promote cost due to its high dependence on energy imports, ef昀椀ciency and competitiveness. Japan’s grid Japan maintains high scores on the secure infrastructure, which was traditionally designed dimension within system performance through the for centralized power generation from large power diversi昀椀cation of energy sources as well as import plants, requires signi昀椀cant upgrades (transmission counterparts. The country has notably accelerated and distribution losses have increased 16% since within the sustainable dimension, primarily by 2014).82 As a result, the government is focused on reducing the energy intensity of its economy, developing a more distributed and diverse energy a result of sustained efforts to enhance energy system, which includes microgrids, energy ef昀椀ciency and productivity across different demand storage systems and demand response sectors. The enabling environment for energy technologies, while also providing subsidies and transition in Japan has steadily improved, evidenced other incentives to support the development of by strong regulation and political commitment, energy storage projects. infrastructure, and investments in human capital and education. The recent announcement of net- To encourage energy ef昀椀ciency and conservation, zero targets provides further momentum to the the Top Runner Programme was implemented to energy transition but will require sector-speci昀椀c set energy ef昀椀ciency standards and encourage roadmaps, including for hard-to-abate sectors, with manufacturers to develop more ef昀椀cient products, interim milestones to ensure timely progress. reducing Japan’s reliance on imports and improving its energy security. To further limit its emissions, Key imperatives and policies in place Japan also imposes a carbon tax on fossil fuels used by power companies and industrial facilities, Following the 2011 Fukushima disaster and the and a carbon emissions trading system for large country’s heavy reliance on imported fossil fuels emitters, with a commitment to increase the carbon at a huge cost, several policies were introduced tax rate over time and expand the emissions trading to increase Japan’s use of renewable energy system to cover more industries and facilities. sources, while also promoting energy ef昀椀ciency and conservation to secure its energy transition. What’s next? This is re昀氀ected in the country’s high ETI scores on regulation and political commitment. The Sixth Japan’s energy transition differs from other Strategic Energy Plan, released in October 2021, countries due to its lack of natural resources set a target for renewables to account for 36-38% and space for renewables as well as its historical 78 of Japan’s energy mix by 2030. This decision reliance on nuclear power. While the country has accelerated the deployment of solar, wind, and become a global pioneer in hydrogen and has 79 To meet the target, the total installed hydropower. made important progress towards developing an capacity would need to increase by 94 GW, with the ef昀椀cient, resilient and sustainable energy system, majority coming from solar photovoltaic. Japan is 83 examines Japan’s energy a report by the IEA a densely populated country, however, with limited issues and recommends solutions to help the available land for large-scale renewable projects. To country attain a secure, affordable and sustainable overcome these challenges, Japan established itself energy future. The solutions cover accelerating as a leader in 昀氀oating solar power, utilizing its inland the use of low-carbon technologies, removing 80 In December regulatory barriers to encourage investments in lakes and reservoirs for this purpose. 2022, the country announced its plan to restart zero-emissions electricity and improve power nuclear power plants to help address its shortage of system 昀氀exibility, and increasing competition in energy and pursue low-carbon development. its energy markets. Fostering Effective Energy Transition: 2023 Edition 48

Indonesia ETI Score Rank 55.8 55/120 Key macroeconomic and ETI data Population (millions) 273.8 Energy consumption per capita (GJ/capita) 35.94 GDP ($ trillions) 1.19 Energy intensity (MJ/$2017 PPP GDP) 3.12 Net energy imports (% of energy use) -86.0 CO intensity (CO /TPES) 54.47 2 2 Note: GJ = gigajoule; MJ = megajoule; PPP = purchasing power parity; TPES = total primary energy supply a Country and peer group system performance Energy transition and transition readiness, 2014-2023 current assessment 80 Momentum System performance 6% 4% 60 00) Advancing 1 2% – 0 e ( Leading Transition readiness 0% Scor Stabilizing 40 -2% -4% Country Peer group 20 -6% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Equitable Secure Sustainable a Note: Relevant World Economic Forum peer group: Emerging and developing Asia Source: World Economic Forum System performance Transition readiness Equitable Regulations and political commitment Finance and Infrastructure investment 0 0 20 20 40 40 60 60 80 80 100 100 Sustainable Secure Innovation Education and human capital Source: World Economic Forum Fostering Effective Energy Transition: 2023 Edition 49

Stated energy transition goals Energy policy priorities Reduce emissions by 31.9% Peak emissions at 290 metric tonnes Retire coal-昀椀red power plants (unconditional) and 43.2% (conditional) CO2 and renewable energy share of early and restrict the development by 2030 compared to business as usual power generation at 34% by 2030 of captive coal-昀椀red plants Achieve net-zero emissions by 2060 Deploy energy ef昀椀ciency measures Develop local industry in or sooner and electri昀椀cation tools, technologies renewable energy and energy and reforms ef昀椀ciency Quickening the deployment of renewable energy Country analysis capacity will be an important step for Indonesia to boost its energy security and reduce its reliance on Key progress on ETI fossil fuel imports. Presidential decree no.112/2022 of September 2022 highlights measures to Indonesia, as the largest energy consumer in promote renewable energy, including establishing 84 and a source of rising energy South-East Asia a competent pricing regime for renewable energy demand, holds the key to effective energy transition sources, tax incentives for renewable energy in the region and ranks 55 out of 120 countries projects and changing the negotiation process 88 on the ETI 2023. The country has improved its to reach a pricing agreement. Based on the ETI score by almost 14% since 2014, with the success of its G-20 presidency and as chair of the biggest improvement in transition readiness (55%), Association of Southeast Asian Nations (ASEAN) supported by infrastructure and regulation and in 2023, Indonesia aims to implement several political commitment, which remain critical enablers energy sector measures, including strengthening of the energy transition. Within system performance, the ASEAN power grid to support the energy Indonesia’s scores on the equitable dimension have transition and ensure energy security in the region; shown the most improvement, with the biggest developing an ASEAN energy security roadmap; push coming from access to electricity. Though stimulating sustainable energy 昀椀nancing; building Indonesia is still one of the largest producers of coal regional ecosystems for electric vehicles; exploring 85 the country has the potential of emerging clean energy innovations and the 昀椀fth-largest GHG emitter, been shifting actively towards scaling up renewable to improve energy access in islands and remote energy in recent years and, with continued grids, as well as emissions trading schemes and momentum, is well positioned to set priorities to carbon offset platforms; assessing bioenergy limit global warming to 1.5°C. potential; and promoting smart and integrated digital energy management in industrial, commercial Key imperatives and policies in place 89 and building sectors. Sustainable energy transition was one of the main What’s next? themes of Indonesia’s G-20 presidency in 2022, including the recognition that without energy access Though Indonesia has taken signi昀椀cant steps it would be impossible to achieve an economy- internationally and regionally to accelerate the wide energy transition. Indonesia championed a energy transition, achieving its raised ambitions will new target for a modern energy minimum that not be easy. In the absence of direct subsidies, the aims to better capture the link between energy current tariff mechanism does not allow renewable consumption and economic growth. The new energy projects to compete fairly with fossil fuel- threshold raises the bar for minimal energy to 1,000 based infrastructure, limiting their 昀椀nancial viability. kilowatt/hour (kWh) per person per year, with at Furthermore, discrepancies in planning and policy least 300 kWh at home and 700 kWh consumed considerations and a lack of transparency, add in the wider economy, ensuring that international a layer of complexity for investors. The World efforts to end energy poverty ultimately result in Economic Forum policy paper, “Policy Opportunities 86 In addition, a to Advance Clean Energy Investment in Indonesia”, meaningful development outcomes. JETP for Indonesia was launched to mobilize $20 outlines recommendations that could help unlock billion in public- and private-sector 昀椀nancing over a Indonesia’s clean energy future. These include three- to 昀椀ve-year period to facilitate the country’s creating a renewable energy tariff regime; removing transition from coal to renewable energy, reduce regulatory barriers and implementing stable power-sector emissions and achieve net zero by frameworks to facilitate the uptake of corporate 2050. It lays out a strategy for the country based on renewable electricity sourcing; working with utilities the expansion of renewables in the energy mix (34% or electricity suppliers to accelerate the growth by 2030), the reduction of on- and off-grid coal-昀椀red of renewable energy infrastructure; implementing electricity generation, and additional commitments legislative and incentive mechanisms; and to regulatory reforms and energy ef昀椀ciency while enhancing the transparency, sustainability and implementing tangible actions to attain an equitable additionality of renewable energy certi昀椀cates to 87 90 energy transition for workers and communities. 昀椀nance new renewable energy capacity. Fostering Effective Energy Transition: 2023 Edition 50

Saudi Arabia ETI Score Rank 55.3 57/120 Key macroeconomic and ETI data Population (millions) 35.95 Energy consumption per capita (GJ/capita) 267.4 GDP ($ trillions) 0.83 Energy intensity (MJ/$2017 PPP GDP) 6.23 Net energy imports (% of energy use) -164.0 CO intensity (CO /TPES) 50.25 2 2 Note: GJ = gigajoule; MJ = megajoule; PPP = purchasing power parity; TPES = total primary energy supply a Country and peer group system performance Energy transition and transition readiness, 2014-2023 current assessment 80 Momentum Advancing System performance 6% 4% 60 00) 1 2% – 0 e ( Leading 66.3 0% Scor Stabilizing 40 -2% Transition readiness -4% Country Peer group 20 -6% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Equitable Secure Sustainable a Note: Relevant World Economic Forum peer group: Middle East, North Africa and Pakistan Source: World Economic Forum System performance Transition readiness Equitable Regulations and political commitment Finance and Infrastructure investment 0 0 20 20 40 40 60 60 80 80 100 100 Sustainable Secure Innovation Education and human capital Source: World Economic Forum Fostering Effective Energy Transition: 2023 Edition 51

Stated energy transition goals Energy policy priorities Reduce and avoid GHG emissions by Achieve 50% renewable energy in the Improve and raise the ef昀椀ciency 278 million tonnes of CO e annually energy mix by 2030 of energy consumption in by 2030 2 Transform Jubail and Yanbu into targeted sectors (Super Ef昀椀cient Achieve net-zero emissions by 2060 Equipment Programme by 2025) global hubs for carbon capture, usage and storage Reduce global methane emissions Achieve 50% electricity generation by 30% by 2030 relative to 2020 levels from natural gas by 2030 country’s shift towards renewables, with 11.4 Country analysis GW capacity under development,97 represents a signi昀椀cant departure from the traditional economic Key progress on ETI model and may have geopolitical implications. Saudi Arabia ranks 57 out of 120 countries on the Despite the objective of reducing fossil fuel subsidies ETI 2023. The country has long been a dominant under Vision 2030, Saudi Arabia still had the world’s player in the oil market, and in recent years third-largest subsidies in 2019 at nearly $30 billion, has undergone a signi昀椀cant energy transition, primarily directed towards oil, fossil-fuel electricity 98 recognizing the need to shift towards renewable production and natural gas. Cheap, available energy and reduce its carbon footprint. Over the fossil fuels reduce incentives for investments in past 10 years, Saudi Arabia has shown an 11% renewable energy technologies, as companies and improvement in its overall ETI score, including both investors may view them as less 昀椀nancially viable. system performance and transition readiness. It Launched in 2021, the Saudi Green Initiative (SGI) leads the Middle East, North Africa and Pakistan describes itself as “steering the implementation peer group and ranks highly in both the secure of a sustainable long-term climate action plan. and equitable dimensions. Although its sustainable Three overarching targets guide SGI’s work – ranking is making progress, there is still room for emissions reduction, afforestation, and land and sea improvement, particularly in reducing energy and protection.”99 By 2030, the Kingdom has promised carbon intensity. To achieve this, measures such as that 50% of its energy will come from renewable expanding renewable resources and using carbon sources, and SGI is leading several ambitious efforts capture technologies could be implemented. Within that will lower emissions and change the domestic transition readiness, signi昀椀cant progress has been power mix, including creating a programme for made on regulation and political commitment. carbon capture and storage (Carbon Circular Economy), increasing energy ef昀椀ciency (Saudi Key imperatives and policies in place Arabia Energy Ef昀椀ciency Programme) and investing in new energy sources. Saudi Arabia’s Vision 2030 was launched in 2016 and aims to diversify the country’s economic What’s next? resources and help it become more sustainable. Through the Vision, the Kingdom seeks to The Kingdom has been investing in research diversify non-oil exports and increase its share of and development to support new solar and 91 The wind technologies and improve the ef昀椀ciency non-oil GDP from 16% to 50% by 2030. King Abdullah Petroleum Studies and Research and cost-effectiveness of existing technologies. Center maintains that “non-oil exports are an The renewable power sector encounters various important component of Saudi Arabia’s economic challenges, however, including a shortage of skilled diversi昀椀cation, as they can play crucial roles in human resources. In addition, oil exports remain sustainable economic development and job central to the Kingdom’s economic development creation”.92 According to one analysis, “hydrogen and export portfolio; Saudi Arabia aims to expand its production would allow Saudi Arabia to become oil production capacity to 13 million barrels per day less reliant on domestic oil as a key source of 100 While this may maintain the country’s by 2027. 93 income” and would use its existing oil and gas position as a reliable and versatile global supplier in infrastructure and supply chain networks. Saudi 101 the additional production and a volatile market, Arabia’s National Hydrogen Strategy, targeting related revenues also provide an opportunity to 94 aims 4 million tonnes per year of clean hydrogen, invest in and develop technologies that can capture to make the country a leader in its production generated emissions to ensure the Kingdom and export. The Public Investment Fund (PIF) has meets its emission reduction targets. In addition, invested in several hydrogen-related projects, Saudi Arabia can become an even stronger including a joint venture with Air Products to build leader of the energy transition in the region by a $5 billion green hydrogen plant in the country.95 developing joint investments, research programmes, In October 2022, PIF also successfully auctioned training and education, as well as incentives 1.4 million tons of carbon credits, making it the that help accelerate the move to electri昀椀cation, 96 昀椀rst voluntary carbon market in the region. The energy ef昀椀ciency and use of hydrogen. Fostering Effective Energy Transition: 2023 Edition 52

United Arab Emirates ETI Score Rank 54.6 63/120 Key macroeconomic and ETI data Population (millions) 9.36 Energy consumption per capita (GJ/capita) 370.9 GDP ($ trillions) 0.42 Energy intensity (MJ/$2017 PPP GDP) 5.48 Net energy imports (% of energy use) -148.0 CO intensity (CO /TPES) 52.48 2 2 Note: GJ = gigajoule; MJ = megajoule; PPP = purchasing power parity; TPES = total primary energy supply a Country and peer group system performance Energy transition and transition readiness, 2014-2023 current assessment 80 Momentum 6% System performance 4% 60 00) 1 2% – Leading 0 e ( 0% Scor At risk 40 -2% Stabilizing Transition readiness -4% Country Peer group 20 -6% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Equitable Secure Sustainable a Note: Relevant World Economic Forum peer group: Middle East, North Africa and Pakistan Source: World Economic Forum System performance Transition readiness Equitable Regulations and political commitment Finance and Infrastructure investment 0 0 20 20 40 40 60 60 80 80 100 100 Sustainable Secure Innovation Education and human capital Source: World Economic Forum Fostering Effective Energy Transition: 2023 Edition 53

Stated energy transition goals Energy policy priorities Reduce emissions by 31% by 2030 Achieve 50% share of clean energy Create a conducive environment compared to business as usual (renewables and nuclear) in the for industries of the future, Achieve net-zero emissions by 2050 installed power capacity mix by 2050 including hydrogen Reduce energy demand in the transport, building and industrial sectors by 40% by 2050 The UAE launched the National Water and Energy Country analysis Demand Management Programme in 2022 “to improve the energy ef昀椀ciency of the three most Key progress on ETI energy-intensive sectors in the country, namely transport, industry and construction, by 40% in The United Arab Emirates (UAE), a major oil and 2050. It will launch several initiatives to cut energy gas producer and exporter, ranks 63 out of 120 demand by 40%, to raise the share of renewables countries on the ETI 2023. Over the last 10 years, in the energy mix to 50% and to boost water reuse 109 the UAE’s ETI score has 昀氀uctuated, mainly due to by 95%”. Newly implemented building codes and the transition readiness dimension, but the overall regulations require certain energy standards to be trend suggests a gradual strengthening of the met, such as the use of energy-ef昀椀cient appliances enabling environment for the energy transition. The and equipment. The Emirates Energy Ef昀椀ciency UAE performs strongly on regulation and political Strategy will retro昀椀t 30,000 existing buildings in Dubai 110 commitment, which remains a critical enabler of the by 2030, abating 1 million tonnes of CO . The UAE 2 energy transition. In addition, progress on system is also promoting public transport, alternative fuels performance remains strong, although progress and electric vehicles, with the intention of having 111 within the sustainable dimension is slowing. Further 42,000 electric vehicles by 2030. A carbon trading improvements can be unlocked by targeting a exchange and carbon clearing house was announced reduction in energy intensity as well as carbon in Abu Dhabi in 2022 to attract investment in carbon intensity of the energy mix. emissions reduction by allowing companies to trade and 昀椀nance carbon credits. The revenue generated Key imperatives and policies in place from the carbon pricing system will be used to support renewable energy and energy ef昀椀ciency The UAE has invested $40 billion in clean energy in projects. The UAE has also invested $2 billion in 102 112 the past 15 years, which translates into signi昀椀cant new desalination plants; these are highly energy strides to promote renewable sources of energy. intensive, however, and contribute to GHG emissions, More than $160 billion is expected to be invested which in turn drives the need for more clean energy. 103 to achieve net zero by 2050, which will see the UAE continue to shift its energy mix towards What’s next? renewables, reduce GHG emissions and improve energy ef昀椀ciency across sectors. The national The energy sector has been an important enabler Renewable Energy Strategy 2050 was launched of economic development and growth in the UAE, in 2017 to increase the share of renewables in the accounting for approximately a third of its GDP. 104 The country total energy mix to 50% by 2050. Like other major exporting nations, the UAE has has made signi昀椀cant progress towards achieving traditionally relied on its oil and gas resources to fuel this target by investing heavily in renewable energy its economy, but as the world transitions towards projects and is home to one of the world’s largest cleaner energy sources, demand for fossil fuels will single-site solar power plants, the Mohammed decline over time. The cost of UAE’s renewables bin Rashid Al Maktoum Solar Park, covering 76 has been decreasing rapidly in recent years, making 2 km.The solar park currently generates 1.63 GW them increasingly competitive with fossil fuels. This and offsets roughly 1.4 million tonnes of CO provides an opportunity for the UAE to diversify 2 emissions every year, and its capacity will expand its energy exports to include cheap renewable to 5 GW by 2030.105,106 The Abu Dhabi National Oil energy, clean technology and services to ensure it Company also announced a $3.1 billion investment maintains its position as a leading energy exporter to explore and implement carbon capture and while also supporting its own energy transition storage technology in its operations, seeking to goals. The UAE’s natural resource endowment, 107 capture 5 million tonnes of CO annually by 2030. legacy energy infrastructure and availability of 2 While the net results of these efforts are re昀氀ected skilled labour, due to investment in education and in UAE’s high ETI scores on regulation and political training programmes (up 30% over the decade), commitment and decarbonized energy, much position it favourably in the new energy landscape more remains to be done to reduce the UAE’s high and provide a reference point for countries at 108 emissions per capita globally. similar levels of clean energy development. Fostering Effective Energy Transition: 2023 Edition 54

India ETI Score Rank 54.3 67/120 Key macroeconomic and ETI data Population (millions) 1407 Energy consumption per capita (GJ/capita) 26.15 GDP ($ trillions) 3.18 Energy intensity (MJ/$2017 PPP GDP) 4.27 Net energy imports (% of energy use) 37.4 CO intensity (CO /TPES) 56.82 2 2 Note: GJ = gigajoule; MJ = megajoule; PPP = purchasing power parity; TPES = total primary energy supply a Country and peer group system performance Energy transition and transition readiness, 2014-2023 current assessment 80 Momentum 6% System performance 4% Advancing 60 00) 1 2% – Advancing 0 e ( Advancing 0% Scor 40 -2% Transition readiness -4% Country Peer group 20 -6% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Equitable Secure Sustainable a Note: Relevant World Economic Forum peer group: Emerging and developing Asia Source: World Economic Forum System performance Transition readiness Equitable Regulations and political commitment Finance and Infrastructure investment 0 0 20 20 40 40 60 60 80 80 100 100 Sustainable Secure Innovation Education and human capital Source: World Economic Forum Fostering Effective Energy Transition: 2023 Edition 55

Stated energy transition goals Energy policy priorities Reduce emission intensity of GDP by Develop low-carbon electricity systems Decouple growth from 45% by 2030 from the 2005 level Develop an integrated, ef昀椀cient and emissions economy-wide Achieve net-zero emissions by 2070 inclusive low-carbon transport system Employ CO removal and 2 Achieve 50% cumulative electric power Promote adaptation in urban design, related engineering solutions installed capacity from non-fossil fuel- energy and material ef昀椀ciency in based energy resources by 2030 buildings, and sustainable urbanization will require a substantial increase in investments Country analysis and the modernization of the grid infrastructure. The 昀椀nancial sustainability and operational ef昀椀ciency Key progress on ETI of the distribution sector is key to unlocking faster growth. India is implementing the world’s largest India ranks 67 out of 120 countries on the smart metering programme, with the target to ETI 2023, steadily improving across the three replace 250 million conventional meters with dimensions of the energy triangle over the past smart meters. Strengthening 昀椀nancial performance decade. Achieving universal access to electricity, and improving competitiveness of distribution replacing solid fuels with clean cooking options companies is the focus of the proposed Electricity 116 Interregional transmission (primarily lique昀椀ed petroleum gas) and increasing (Amendment) Bill 2022. 117 renewable energy deployment have been primary capacity, which increased recently to 112 GW, contributors to the improvement of India’s ETI will enable better use of the unevenly distributed performance. India also emerged relatively less renewable energy potential. Grid losses amount to affected from the recent energy crisis, largely due more than 15% of generated electricity, which can to the low share of natural gas in power generation be a barrier for growth of renewable energy. and increased use of existing generation capacities. With rising energy demand, India’s energy imports Beyond supply, India has initiated programmes have increased in tandem. Although the country for energy ef昀椀ciency and the decarbonization of maintains a well-diversi昀椀ed mix of energy trade key demand sectors. The Energy Conservation partners, rising import dependence represents (Amendment) Bill 2022 introduces renewable energy a risk amid global energy market volatilities. The mandates for large energy-intensive consumers and energy sector’s sustainability pro昀椀le has improved, proposes a carbon credits trading scheme. Through due to the reduced energy intensity and the the National Green Hydrogen Mission, India aims increasing share of renewable energy. The energy to facilitate demand, production and distribution of mix, however, remains predominantly carbon green hydrogen, and establish a competitive Green intensive, with a low share of clean energy in 昀椀nal Hydrogen ecosystem. Furthermore, India has also demand. Improvements in the enabling environment announced the Lifestyle for Environment (LiFE) have been driven by political commitment, an initiative to nudge individual and collective action ambitious reform agenda, infrastructure investments towards sustainable consumption. and a competitive renewable energy landscape. What’s next? Key imperatives and policies in place India is the only major economy with energy Since 2000, India’s energy consumption has transition momentum accelerating across the ETI’s more than doubled. As the fastest-growing major equitable, secure and sustainable dimensions. economy, this trend is expected to continue. At The pace of thermal power plant expansion has COP26, India committed to achieving net-zero considerably slowed, though strategies for early emissions by 2070 and raised its ambition in its retirement or repurposing of the existing 昀氀eet will be revised nationally determined contribution to reduce crucial. Continued progress will be challenged by two emission intensity by 45% from 2005 levels and key macro trends: strong economic growth, and the attain 50% of cumulative non-fossil fuel power urgency to create quality jobs for a growing working- 113 generation capacity by 2030. Decarbonization of age population. Manufacturing exports are playing an power generation and electri昀椀cation of 昀椀nal demand increasing role in the economy, although the share of are key levers of India’s energy transition. low-carbon products in domestic manufacturing and exports remains low. Developing globally competitive The share of renewable energy in power generation manufacturing expertise in emerging low-carbon has steadily increased to more than 30%, with niche technologies could be a strong vehicle of solar and onshore wind accounting for 92% of future growth. A skilled workforce, public-private 114 incremental capacity in 2022. India’s commitment collaboration in innovation, and investment in research to install 500 GW of non-fossil fuel power and development in low-carbon technologies are 115 generation capacity by 2030, however, necessary to enable India’s energy transition. Fostering Effective Energy Transition: 2023 Edition 56

South Africa ETI Score Rank 52.2 82/120 Key macroeconomic and ETI data Population (millions) 59.39 Energy consumption per capita (GJ/capita) 88.75 GDP ($ trillions) 0.42 Energy intensity (MJ/$2017 PPP GDP) 6.92 Net energy imports (% of energy use) -18.8 CO intensity (CO /TPES) 74.37 2 2 Note: GJ = gigajoule; MJ = megajoule; PPP = purchasing power parity; TPES = total primary energy supply a Country and peer group system performance Energy transition and transition readiness, 2014-2023 current assessment 80 Momentum 6% System performance 4% 60 Advancing 00) Leading 1 2% – 0 e ( 0% Scor At risk 40 -2% Transition readiness -4% Country Peer group 20 -6% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Equitable Secure Sustainable a Note: Relevant World Economic Forum peer group: Sub-Saharan Africa Source: World Economic Forum System performance Transition readiness Equitable Regulations and political commitment Finance and Infrastructure investment 0 0 20 20 40 40 60 60 80 80 100 100 Sustainable Secure Innovation Education and human capital Source: World Economic Forum Fostering Effective Energy Transition: 2023 Edition 57

Stated energy transition goals Energy policy priorities Reduce GHG emissions to 398-510 Decommission the retiring coal generation Build new-energy vehicle metric tonnes CO e by 2025, and to 昀氀eet, in line with a revised Integrated Resource supply chain localization and 2 350-420 metric tonnes CO2e by 2030 Plan and in tandem with the development of set the base for new-energy Achieve net-zero emissions by 2050 renewable energy generation at scale vehicle manufacturing Strengthen transmission grid infrastructure to Become a world-leading accommodate the shift to renewable energy exporter of green hydrogen White Paper all outline the country’s policy Country analysis foundation for energy transition, “an increased focus on a diversi昀椀ed energy mix that includes Key progress on ETI renewable energy, distributed generation and 120 and a move away from battery storage” South Africa, the second-largest economy in Africa, carbon-fuelled energy. The Renewable Energy has a large energy sector and ranks 82 out of Independent Power Producer Procurement 120 countries on the ETI 2023. The country has Programme, introduced in 2011, was a competitive improved its overall ETI score by 6% since 2014. tender process designed to facilitate private- South Africa’s system performance scores have sector investment into grid-connected renewable improved, supported by better performance in energy generation. The programme’s sixth round energy access, electricity and clean cooking fuels. got under way in 2022, in line with the 2019 While scores in the sustainable dimension are Integrated Resources Plan, aiming to procure 2.6 121 accelerating due to the reduced energy intensity, GW of solar and wind power. To encourage signi昀椀cant challenges remain. The energy transition the self-generation of renewable energy, the in South Africa has historically been an uphill battle, government scrapped the 100 MW licence- even though the share of renewable energy has exemption threshold for distributed generators increased over the past 10 years. The country still and proposed a feed-in tariff for self-generating 122 Moreover, the South derives about 70% of its electricity from coal, the households and businesses. carbon intensity of the energy mix remains high, Africa Hydrogen Society Roadmap, published and clean energy sources only constitute around in February 2022 and focusing on national 118 ambitions, sector prioritization, the overarching 13% of the total energy mix. policy framework and the macroeconomic Key imperatives and policies in place effect of the hydrogen economy throughout South Africa, is an important milestone for the Recent announcements for net-zero emissions 123 country as it navigates its energy transition. by 2050 constitute steps in the right direction and indicate the increase in political commitment and What’s next? strengthening regulatory environment. Several policy developments and measures have been put in Debt and mismanagement have rendered Eskom, place to help the country accelerate its clean energy a public electricity utility, vulnerable and caused transition. As reported by Global Compliance capacity gaps resulting in load-shedding, frequent News: “At COP 27 in November 2022, South Africa electricity blackouts and a lack of affordable launched its new Just Energy Transition Investment and secure power. In the immediate term, the Plan (JET IP) and announced a 昀椀ve-year investment government has put amendments in place to plan for the $8.5 billion 昀椀nancing package, address the electricity supply de昀椀cit. South Africa’s which was announced as part of the country’s energy transition nevertheless faces challenges Just Energy Transition Partnership with France, in the medium to long term, including key players Germany, the United Kingdom, the United States in昀氀uencing policy formulation and having an and the European Union at COP26. The JET IP is incentive to support coal, as well as economic and aligned with the Cabinet-approved National Just social fallout from the loss of jobs and livelihoods Transition Framework and outlines the investments in the coal industry. Room exists to speed up required to achieve the country’s decarbonization actions to decarbonize the energy mix through commitments, while promoting sustainable energy ef昀椀ciency measures, the development of development, and ensuring a just transition for renewables, electri昀椀cation, and the use of carbon affected workers and communities. … The JET IP capture technologies. Still, given the importance covers electricity, new energy vehicles (NEVs) and of extractive industries in South Africa, additional green hydrogen, and identi昀椀es $98 billion in 昀椀nancial opportunities exist to ensure an equitable transition requirements over the next 昀椀ve years, to come from by creating a high-level centralized body to manage both the public and private sectors.”119 the process, engaging all stakeholders early and often, promoting transparency and accessibility South Africa’s National Development Plan, draft in the policy process and forming a supportive Integrated Energy Plan and Renewable Energy legislative framework. Fostering Effective Energy Transition: 2023 Edition 58

Nigeria ETI Score Rank 46.0 108/120 Key macroeconomic and ETI data Population (millions) 213.4 Energy consumption per capita (GJ/capita) 31.90 GDP ($ trillions) 0.44 Energy intensity (MJ/$2017 PPP GDP) 6.55 Net energy imports (% of energy use) -48.0 CO intensity (CO /TPES) 13.26 2 2 Note: GJ = gigajoule; MJ = megajoule; PPP = purchasing power parity; TPES = total primary energy supply a Country and peer group system performance Energy transition and transition readiness, 2014-2023 current assessment 80 Momentum Country Peer group 6% System performance 4% 60 00) 1 2% – 0 Advancing Advancing e ( 0% Scor At risk 40 -2% Transition readiness -4% 20 -6% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Equitable Secure Sustainable a Note: Relevant World Economic Forum peer group: Sub-Saharan Africa Source: World Economic Forum System performance Transition readiness Equitable Regulations and political commitment Finance and Infrastructure investment 0 0 20 20 40 40 60 60 80 80 100 100 Sustainable Secure Innovation Education and human capital Source: World Economic Forum Fostering Effective Energy Transition: 2023 Edition 59

Stated energy transition goals Energy policy priorities Reduce GHG emissions by 20% Ensure 48% of the population use Achieve 30% on-grid electricity (unconditional) and 47% (conditional) by lique昀椀ed petroleum gas and 13% use from renewables, 13 GW off-grid 2030 compared to business as usual improved cookstoves by 2030 renewable energy, and reduction Reduce emissions by 50% from current Achieve 2.5% annual reduction in of grid transmission and levels by 2050 and achieve net-zero distribution losses to 8% of 昀椀nal energy intensity in all sectors energy consumption by 2030 emissions between 2050 and 2070 Achieve zero gas 昀氀aring by 2030 highest rates of energy poverty in the world. The Country analysis electricity access rate stands at 25% for rural populations for whom biomass and waste are the Key progress on ETI primary source of energy for cooking. Conversely, Nigeria has one of the highest costs of electricity Nigeria ranks 108 out of 120 countries on the ETI 127 in the world at an average of $0.52/kWh. 2023 and is the largest economy and richest oil “Development 昀椀nance institutions and other resource centre of the African continent, as well as donors, wealthier, high-emitting countries, and the largest gas consumer and producer of West international NGOs are well-placed to support this 124 Africa. Over the last 10 years, Nigeria’s overall agenda through 昀椀nancing and research, and by ETI score has improved (3%), while its system encouraging constructive engagement on subsidy performance scores have fallen slightly (1%). The reform and justice and social responsibility in energy country’s growing population and array of socio- 128 transition more broadly.” economic issues mean it needs sustainable energy sources to meet the increasing needs for all sectors Nigeria’s energy transition creates signi昀椀cant of the economy. High scores on regulation and investment opportunities, including establishing political commitment, relative to other enabling and expanding industries for solar, hydrogen dimensions, are evidenced by the country’s notable and electric vehicles, and using its vast natural power-sector reforms and plans to accelerate its gas resources for economic development. A clean energy transition and meet key development Renewable Energy Roadmap was produced goals, including achieving net zero by 2060. with the International Renewable Energy Agency and the Energy Commission of Nigeria Key imperatives and policies in place in January 2023 that “encompasses all key sectors of the Nigerian energy system to Nigeria’s Climate Change Act, which was signed provide additional context for energy policy into law in November 2021, “provides the legal discussions on how increased ambition in terms framework and a bold institutional arrangement of renewable energy – beyond current government 129 for action on climate change. The Act established policy and targets – can be realised”. a National Council on Climate Change, chaired by the President, to lead work under the Act and help What’s next? mainstream climate change action into the country’s development agenda. … The vital next step is Overall, the energy transition in Nigeria still requires for the Council to publish Nigeria’s 昀椀rst carbon signi昀椀cant investment from the government and budget as requested by law and put in place support from its citizens. Prioritizing economic efforts to monitor implementation and compliance”, development, along with proper planning and 125 according to global think tank ODI In addition, strengthening institutional and 昀椀scal frameworks, the launch of the country’s Energy Transition Plan can help Nigeria accelerate its transition. Based in August 2021 sets out a timeline and framework on lessons learned from other countries, the for achieving reduction in emissions across 昀椀ve key government could identify (and support) low- sectors: power, cooking, oil and gas, transport, and carbon energy solutions, especially in the rural industry. These two important steps and a revised and peri-urban areas of Nigeria; place greater nationally determined contribution are reliable signs emphasis on innovation in new energy infrastructure of Nigeria’s future. Nevertheless, challenges remain development; improve energy ef昀椀ciency in small and to turn these commitments into action. medium-sized enterprises; explore the effective use of domestic funding; and harmonize different energy As ODI points out, a “major obstacle to Nigeria’s policy frameworks. Together with the Renewable transition away from fossil fuels is the high levels Energy and Energy Ef昀椀ciency Associations-Alliance, of government subsidies for their production and the World Economic Forum is engaging key consumption. Progress on reforming fossil fuel public- and private-sector stakeholders to further subsidies has been challenging, as consumers understand Nigeria’s energy transition policy plans, expect accessible energy and affordable pricing associated investment barriers to accelerate the from the government as a bene昀椀t of being a major clean energy transition, and practical solutions to 126 Nigeria currently has one of the oil producer”. address those barriers. Fostering Effective Energy Transition: 2023 Edition 60

Appendices A1 Methodology FIGURE 14 Methodology The ETI framework analyses countries’ current energy system performance and enabling environment for energy transition in 昀椀ve equally weighted components: equity and inclusion, security, sustainability, regulatory framework and investment, and enabling factors. Energy access Equitable Energy affordability 33% Economic development Supply security System Secure Resilience performance 33% Reliability Energy efficiency Sustainable GHG mitigation 60% 33% Clean energy ETI score Regulations and political commitment Regulatory framework Finance and investment and investment 50% Transition readiness Education and human capital Enabling factors Innovation 40% 50% Infrastructure Source: World Economic Forum Fostering Effective Energy Transition: 2023 Edition 61

A2 Country ETI score evolution, 2014-2023 TABLE 3 Change in ETI scores over the last decade 2014-2023 Country 2014–15 2015–16 2016–17 2017–18 2018–19 2019–20 2020–21 2021–22 2022–23 score change Albania Albania 9.28 Algeria Algeria 2.79 Angola Angola 0.44 Argentina Argentina 2.49 Armenia Armenia 3.84 Australia Australia 6.12 Austria Austria 6.82 Azerbaijan Azerbaijan 10.27 Bahrain Bahrain 0.09 Bangladesh Bangladesh 4.63 Belgium Belgium 4.04 Bolivia Bolivia 3.83 Bosnia and Herzegovina 9.09 Bosnia and Herzegovina Botswana Botswana -1.15 Brazil Brazil 4.61 Brunei Darussalam Brunei Darussalam -0.37 Bulgaria Bulgaria 3.33 Cambodia Cambodia 7.79 Cameroon Cameroon 6.13 Canada Canada 2.07 Chile Chile 5.26 China China 12.78 Colombia Colombia 4.4 Congo, Dem. Rep. 1.27 Congo, Dem. Rep. Costa Rica Costa Rica 2.94 Cote d'Ivoire Cote d’Ivoire 16.68 Croatia Croatia 7.08 Cyprus Cyprus 8.06 Czech Republic 5.79 Czech Republic Denmark Denmark 3.68 Dominican Republic 8.68 Dominican Republic Ecuador Ecuador 3.43 Egypt, Arab Rep. Egypt, Arab Rep. 1.01 El Salvador El Salvador -1.27 Estonia Estonia 10.58 Ethiopia Ethiopia 1.93 Finland Finland 9.7 France France 6.34 Gabon Gabon 0.14 Georgia Georgia 4.45 Germany Germany 3.86 Ghana Ghana 3.8 Greece Greece 7.51 Guatemala Guatemala 4.56 Honduras Honduras 0.62 Hungary Hungary 12.1 Iceland Iceland 7.18 India India 7.97 Indonesia Indonesia 6.87 Iran, Islamic Rep. Iran, Islamic Rep. 1.19 Ireland Ireland 5.44 Israel Israel 7.58 Italy Italy 6.31 Jamaica Jamaica 2.31 Japan Japan 3.71 Jordan Jordan 10.49 Kazakhstan Kazakhstan 7.94 Kenya Kenya 10.56 Korea, Rep. Korea, Rep. 8.88 Kuwait Kuwait 3.62 Year-on-year decline No change Year-on-year improvement Fostering Effective Energy Transition: 2023 Edition 62

2014-2023 Country 2014–15 2015–16 2016–17 2017–18 2018–19 2019–20 2020–21 2021–22 2022–23 score change Kyrgyz Republic Kyrgyz Republic 3.74 Lao PDR Lao PDR 2.47 Latvia Latvia 8.22 Lebanon Lebanon 2.44 Lithuania Lithuania 10.88 Luxembourg Luxembourg 7.66 Macedonia, FYR 4.15 Macedonia, FYR Malaysia Malaysia 5.11 Malta Malta 9.93 Mauritius Mauritius 0.65 Mexico Mexico 1.99 Mongolia Mongolia 6.9 Montenegro Montenegro 1.53 Morocco Morocco 5.64 Mozambique Mozambique 3.22 Namibia Namibia 5.4 Nepal Nepal 4.02 Netherlands Netherlands 9.4 New Zealand New Zealand 2.6 Nicaragua Nicaragua -0.16 Nigeria Nigeria 1.3 Norway Norway 2.99 Oman Oman 4.79 Pakistan Pakistan 5.13 Panama Panama 1.33 Paraguay Paraguay 5.63 Peru Peru -1.72 Philippines Philippines 2.13 Poland Poland 10.52 Portugal Portugal 8.01 Qatar Qatar 2.58 Republic of Moldova Republic of Moldova 8.55 Romania Romania 1.65 Saudi Arabia Saudi Arabia 5.33 Senegal Senegal 12.18 Serbia Serbia 4.71 Singapore Singapore 3.24 Slovak Republic 7.82 Slovak Republic Slovenia Slovenia 6.57 South Africa South Africa 3.01 Spain Spain 8.96 Sri Lanka Sri Lanka 2.41 Sweden Sweden 6.47 Switzerland Switzerland 6.21 Tajikistan Tajikistan -1.99 Tanzania Tanzania 10.15 Thailand Thailand 5.75 Trinidad and Tobago -1.3 Trinidad and Tobago Tunisia Tunisia 3.79 Turkey Turkey 3 Ukraine Ukraine 8.06 United Arab Emirates 6.4 United Arab Emirates United Kingdom 6.68 United Kingdom United StatesUnited States 6.3 Uruguay Uruguay 3.58 Venezuela Venezuela 1.56 Viet Nam Viet Nam 6.5 Yemen, Rep. Yemen, Rep. 1.86 Zambia Zambia 1.29 Zimbabwe Zimbabwe 12.28 Year-on-year decline No change Year-on-year improvement Source: World Economic Forum Fostering Effective Energy Transition: 2023 Edition 63

Contributors Data sources Fridtjof Unander Chief Economist, Aker Horizons BloombergNEF, Climate Policy Initiative, David Victor ClimateWatch, Ember, Enerdata, Fitch ratings, Professor of Innovation and Public Policy, Heritage Foundation, INSEAD, International Energy University of California, San Diego (UCSD) Agency, International Gas Union, International Institute for Sustainable Development, International Rigoberto Ariel Yepez-Garcia Monetary Fund, International Renewable Energy Manager, Infrastructure and Energy Sector, Agency, Moody’s ratings, Organisation for Inter-American Development Bank (IDB) Economic Co-operation and Development (OECD) Statistics, Portulans Institute, S&P ratings, UN Environment Programme (UNEP), United Nations Project team Conference on Trade and Development (UNCTAD) Stats, Wood Mackenzie Limited, World Bank Group, World Economic Forum, World Health Accenture Organization, World Trade Organization. Muqsit Ashraf Chief expert advisers Global Strategy Lead David Rabley The World Economic Forum acknowledges and Managing Director and Global Energy thanks the individuals and experts without whose Transition Lead, Energy support the Fostering Effective Energy Transition 2023 Edition would not have been possible: Samiksha Srivastava Consultant, Strategy and Consulting, Energy Morgan Bazilian Professor of Public Policy, and Director of Payne Francesca Tate Institute, Colorado School of Mines Manager, Strategy and Consulting, Energy Lin Boqiang Dean, China Institute for Studies in Energy Policy, World Economic Forum Xiamen University Michaela Campanelli Mohammed Algeer Head, Climate Strategy, Risk Mitigation, Project Fellow, Centre for Energy and Materials and Disclosure, Eni Roberto Bocca Lucy Craig Head, Centre for Energy and Materials; Director, Innovation and Digitalization, DNV Member of the Executive Committee Rabia Ferroukhi Espen Mehlum Director, Knowledge, Policy and Finance Centre, Head, Energy Transition Intelligence and Regional International Renewable Energy Agency (IRENA) Acceleration, Centre for Energy and Materials Bertrand Magne Sarah Moin Senior Economist, Programme Analyst, European Investment Bank (EIB) Centre for Energy and Materials Davide Puglielli Harsh Vijay Singh Head, Scenario Planning and Group Strategic Manager, Energy and Industry Transition Positioning, Enel Intelligence, Centre for Energy and Materials John Scott Head, Sustainability Risk, Zurich Insurance Group Fostering Effective Energy Transition: 2023 Edition 64

Production Laurence Denmark Fabienne Stassen Creative Director, Studio Miko Editor, EditOr Proof Sophie Ebbage Oliver Turner Designer, Studio Miko Designer, Studio Miko George Messer Designer, Studio Miko Fostering Effective Energy Transition: 2023 Edition 65

Endnotes 1. International Energy Agency (IEA), Fossil Fuels Consumption Subsidies 2022, February 2023, https://www.iea.org/reports/fossil-fuels-consumption-subsidies-2022 (accessed 17 May 2023). 2. BloombergNEF, “Global Low-Carbon Energy Technology Investment Surges Past $1 Trillion for the First Time”, 26 January 2023, https://about.bnef.com/blog/global-low-carbon-energy-technology-investment-surges-past-1-trillion-for- the-昀椀rst-time (accessed 19 May 2023). 3. Net Zero Insights, “The State of Climate Tech ‘22”, 18 January 2023, https://netzeroinsights.com/state-of-climate-tech-2022 (accessed 17 May 2023). 4. IEA, Global EV Outlook 2023: Catching up with climate ambitions, 2023, https://iea.blob.core.windows.net/assets/ dacf14d2-eabc-498a-8263-9f97fd5dc327/GEVO2023.pdf (accessed 17 May 2023). 5. NewClimate Institute, Net Zero Stocktake 2022: Assessing the status and trends of net zero target setting, June 2022, https://ca1-nzt.edcdn.com/Net-Zero-Tracker/Net-Zero-Stocktake-Report-2022.pdf?v=1655074300 (accessed 23 May 2023). 6. Fleck, Anna, “Fewer coal power plants closed in 2022 than in recent years”, World Economic Forum, 17 April 2023, https://www.weforum.org/agenda/2023/04/fewer-coal-power-plants-close-in-2022-than-in-recent-years (accessed 19 May 2023). 7. Intergovernmental Panel on Climate Change (IPCC), “Urgent climate action can secure a liveable future for all”, Press Release, 20 March 2023, https://www.ipcc.ch/2023/03/20/press-release-ar6-synthesis-report/#:~:text=Meanwhile%2C%20 keeping%20warming%20to%201.5,limited%20to%201.5%C2%B0C (accessed 17 May 2023). 8. IEA, “Energy access: Achieving modern energy for all by 2030 seems unlikely”, 2022, https://www.iea.org/topics/energy-access (accessed 17 May 2023). 9. Muta, Toru, and Musa Erdogan, “The global energy crisis pushed fossil fuel consumption subsidies to an all-time high in 2022”, IEA, 16 February 2023, https://www.iea.org/commentaries/the-global-energy-crisis-pushed-fossil-fuel-consumption- subsidies-to-an-all-time-high-in-2022 (accessed 17 May 2023). 10. Kammer, Alfred, “Europe, And the World, Should Use Green Subsidies Cooperatively”, IMF Blog, 11 May 2023, https://www.imf.org/en/Blogs/Articles/2023/05/11/europe-and-the-world-should-use-green-subsidies-cooperatively (accessed 22 May 2023). 11. World Economic Forum, “Securing the Energy Transition”, White Paper, January 2023, https://www3.weforum.org/docs/WEF_Securing_the_Energy_Transition_2023.pdf (accessed 17 May 2023). 12. Ibid. 13. CBS News, “Winter storm causes power outages, hits Americans with snow and freezing temperatures before Christmas”, 25 December 2022 update, https://www.cbsnews.com/news/winter-storm-power-outages-snow-us-christmas (accessed 17 May 2023). 14. Liang, Annabelle, “Japan urges 37 million people to switch off lights”, BBC News, 27 June 2022, https://www.bbc.com/news/business-61947315 (accessed 22 May 2023). 15. Novinite.com, “Turkey’s Energy Infrastructure after the Earthquakes: Huge Fire, Stopped Gas and Oil Pipelines”, 7 February 2023, https://www.novinite.com/articles/218748/Tu rkey%27s+Energy+Infrastructure+after+the+ Earthquakes%3A+Huge+Fire%2C+Stopped+Gas+and+Oil+Pipelineshttps://www.novinite.com/articles/218748/ Turkey%27s+Energy+Infrastructure+after+the+Earthquakes%3A+Huge+Fire%2C+Stopped+Gas+and+Oil+Pipelines (accessed 22 May 2023). 16. Bundesverband WindEnergie, “Numbers and facts”, https://www.wind-energie.de/english/statistics/statistics-germany (accessed 22 May 2023). 17. IEA, “Energy Ef昀椀ciency 2022 Executive summary: Energy ef昀椀ciency spending tops USD 1 trillion, equal to two-thirds of all clean energy recovery packages”, 2022, https://www.iea.org/reports/energy-ef昀椀ciency-2022/executive-summary (accessed 17 May 2023). 18. Motherway, Brian, and Kristina Klimovich, Vida Rozite and Edith Bayer, “Accelerating energy ef昀椀ciency: What governments can do now to deliver energy savings”, IEA, 17 March 2022, https://www.iea.org/commentaries/accelerating-energy- ef昀椀ciency-what-governments-can-do-now-to-deliver-energy-savings (accessed 17 May 2023). 19. NITI Aayog, “Lifestyle for Environment”, https://www.niti.gov.in/life (accessed 22 May 2023). 20. IEA, Coal 2022: Analysis and forecast to 2025, “Global coal demand is set to rise in 2022 amid the upheaval of the energy crisis”, Executive Summary, December 2022, https://www.iea.org/reports/coal-2022/executive-summary (accessed 23 May 2023). 21. World Economic Forum, Fostering Effective Energy Transition 2020 Edition, Insight Report, May 2020, https://www3.weforum.org/docs/WEF_Fostering_Effective_Energy_Transition_2020_Edition.pdf (accessed 17 May 2023). 22. BloombergNEF, “Global Energy Storage Market to Grow 15-Fold by 2030”, 12 October 2022, https://about.bnef.com/blog/global-energy-storage-market-to-grow-15-fold-by-2030 (accessed 25 May 2023). Fostering Effective Energy Transition: 2023 Edition 66

23. IEA, Net Zero by 2050: A Roadmap for the Global Energy Sector, October 2021, https://iea.blob.core.windows.net/assets/ deebef5d-0c34-4539-9d0c-10b13d840027/NetZeroby2050-ARoadmapfortheGlobalEnergySector_CORR.pdf (accessed 25 May 2023). 24. Global Market Insights, Green Hydrogen Market Size – By Technology (Alkaline, PEM, Solid Oxide), By Source (Solar, Wind), By Application (Power Generation, Transportation, Industry Energy, Industry Feedstock, Building Heat & Power) & Forecast, 2022-2030, September 2022, https://www.gminsights.com/industry-analysis/green-hydrogen-market?gclid=CjwKCAiAuaKf BhBtEiwAht6H7-zUFDds4uXiKDQ19EYWBA6NmBTy4Wa--bOo2HbRVHhrFQvBvIv8MhoC7ksQAvD_BwE (accessed 25 May 2023). 25. Net Zero by 2050, op. cit. Calculated for $80/bbl. 26. Ibid. 27. Climate Bonds Initiative, “Record $269.5bn green issuance for 2020: Late surge sees pandemic year pip 2019 total by $3bn”, 24 January 2021, https://www.climatebonds.net/2021/01/record-2695bn-green-issuance-2020-late-surge-sees- pandemic-year-pip-2019-total-3bn (accessed 29 May 2023). 28. IEA, World Energy Outlook 2022, 2022, https://iea.blob.core.windows.net/assets/c282400e-00b0-4edf-9a8e- 6f2ca6536ec8/WorldEnergyOutlook2022.pdf (accessed 17 May 2023). 29. World Economic Forum in collaboration with Accenture, “Securing the Energy Transition”, White Paper, January 2023, https://www3.weforum.org/docs/WEF_Securing_the_Energy_Transition_2023.pdf (accessed 17 May 2023). 30. Ibid. 31. World Economic Forum, Fostering Effective Energy Transition 2021 Edition, Insight Report, April 2021, https://www3.weforum.org/docs/WEF_Fostering_Effective_Energy_Transition_2021.pdf (accessed 17 May 2023). 32. 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116. Lok Sabha Secretariat, New Delhi, “The Electricity (Amendment) Bill, 2022”, Legislative Note, August 2022, https://loksabhadocs.nic.in/Re昀椀nput/New_Reference_Notes/English/08082022_123415_1021205203.pdf (accessed 25 May 2023). 117. Government of India, Ministry of Power, “Transmission”, 22 May 2023, https://powermin.gov.in/en/content/overview-0 (accessed 25 May 2023). 118. Ziady, Hanna, “South Africa’s energy crisis deepens as blackouts hit 12 hours a day”, CNN, 18 January 2023, https://edition.cnn.com/2023/01/18/energy/ramaphosa-davos-south-africa-blackouts/index.html (accessed 25 May 2023). 119. Whyte, Kieran, “South Africa: The latest developments in Just Energy Transition”, Global Compliance News, 22 November 2022, https://www.globalcompliancenews.com/2022/11/22/https-insightplus-bakermckenzie-com-bm-energy-mining- infrastructure_1-south-africa-the-latest-developments-in-just-energy-transition_11102022 (accessed 18 May 2023). 120. Ibid. 121. Ibid. 122. Creamer, Terence, “Ramaphosa doubles next renewables round, scraps 100 MW cap on distributed plant and moots feed- in tariff as he unveils load-shedding crisis response”, Engineering News, 25 July 2022, https://www.engineeringnews.co.za/ article/ramaphosa-doubles-next-renewables-round-to-5-200-mw-scraps-100-mw-cap-on-distributed-plant-and-moots- feed-in-tariff-as-he-unveils-load-shedding-crisis-response-2022-07-25 (accessed 18 May 2023). 123. Whyte, Kieran, and Zahra Omar, “South Africa: Hydrogen Roadmap – A crucial step in the energy transition journey”, Global Compliance News, 20 June 2022, https://www.globalcompliancenews.com/2022/06/20/south-africa-hydrogen-roadmap- a-crucial-step-in-the-energy-transition-journey080622 (accessed 18 May 2023). 124. IEA, “Nigeria”, 2020, https://www.iea.org/countries/nigeria (accessed 18 May 2023). 125. Okereke, Chukwumerije, et al., “Five opportunities for Nigeria to lead a clean and just energy transition at COP27 and beyond”, ODI, 2 November 2022, https://odi.org/en/insights/昀椀ve-opportunities-for-nigeria-to-lead-a-clean-and-just-energy- transition-at-cop27-and-beyond (accessed 18 May 2023). 126. Ibid. 127. Ashurst, “Oil and Gas Update: Nigeria’s Energy Transition”, 2 March 2022, https://www.ashurst.com/en/news-and-insights/ legal-updates/nigerias-energy-transition (accessed 26 May 2023). 128. Okereke, Chukwumerije, et al., op. cit. 129. Izuora, Chika, “Accelerating Energy Transition With Best Technology”, Leadership Media Group, February 2023, https://leadership.ng/accelerating-energy-transition-with-best-technology (accessed 18 May 2023). Fostering Effective Energy Transition: 2023 Edition 71

The World Economic Forum, committed to improving the state of the world, is the International Organization for Public-Private Cooperation. The Forum engages the foremost political, business and other leaders of society to shape global, regional and industry agendas. World Economic Forum 91–93 route de la Capite CH-1223 Cologny/Geneva Switzerland Tel.: +41 (0) 22 869 1212 Fax: +41 (0) 22 786 2744 [email protected] www.weforum.org