Benchmarking a country’s energy performance

In a series of blog posts leading up to the launch of the World Economic Forum’s Global Energy Architecture Performance Index Report 2013 on 11 December 2012, Jeroen van der Veer, a Board Member of Royal Dutch Shell, explains why benchmarking energy system performance is critical.

During my years with Shell, I really pushed benchmarking as it is a fundamental aspect of assessing business performance, especially as no business leader likes to come home with the message – “This year we have ranked below average (or worse) compared to peers”.

It is often a real source of pride to be within the top quartile of your industry for any aspect of performance. Businesses become determined to stay there. As they say, “success breeds success”. It feels good to be a role model for others.

Countries aren’t dissimilar to businesses, and need the same feedback mechanisms in place. This is exactly what the World Economic Forum’s Global Energy Architecture Performance Index (EAPI) 2013 provides. It scores and ranks 105 countries globally on how well their energy system promotes economic growth and development, environmental sustainability and energy security and access – the three elements of the energy triangle. In essence, it benchmarks country energy system performance.

Here are four reasons I believe this process is critical:

1. Benchmarks help set waypoints for the transition to a better energy architecture. No matter where you are on the transition journey, designing a country-level energy strategy without using benchmarks means you are pursuing objectives without knowing whether the outcome is impactful. By using EAPI results and scores, you have a starting place from which to consider the waypoints your country needs to navigate towards.
2. Specific benchmarks can be used to help achieve specific goals. A benchmark should reflect each individual country’s goals, needs and context – no one size fits all. The EAPI can help countries continue to monitor specific aspects of energy system performance and try to understand how to improve and refine it based on specific goals and objectives.
3. Benchmarking against the EAPI can help countries peer review their progress towards a new energy architecture. The EAPI can tell you how a representative group of countries is performing. A benchmark can help indicate where other countries are concentrating their efforts, and active management of particular indicators will keep performance in line with peers. Benchmarking can also help make it clear what you shouldn’t prioritize.
4. Benchmarks can help countries understand the speed and effectiveness of their transition to a new energy architecture. Consider a country asking itself: What is the level and rate of improvement I want to see against my set of objectives? Benchmarks provided by the EAPI should help countries calibrate that question, setting their targets in line with the realities on the ground, and looking to countries in similar contexts to understand what realistic progress looks like, and where quick wins have been possible.

There are endless debates around benchmarking. Many questions ask whether indices are fair; do they assess the right indicators? Is it right to assess so many different countries on similar criteria? My answer is: yes. The EAPI is fully transparent, helps countries to take corrective action and will be improved yet further as it develops over time.

In my experience, the real underlying improvements count for more than arguing the method of an index and – with no country achieving the highest possible score – every country does well to realize that its performance on the EAPI can be improved.

Author: Jeroen van der Veer is currently a Board Member of Royal Dutch Shell. He previously served as the company’s Chairman.

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