These 4 countries are leading the way in the energy transition

Countries across the world have reached record highs in their Energy Transition Index scores, the World Economic Forum’s Fostering Effective Energy Transition report for 2024 says. However, economic volatility, heightened geopolitical tensions and technological shifts have led to a slowdown in the pace of the transition.

The annual report produced by the Forum, in collaboration with Accenture, says 107 of the 120 countries surveyed have demonstrated progress on their energy transition journeys in the past decade.

Advanced economies are generally the top performers in the Energy Transition Index (ETI), with Sweden, Denmark, Finland and Switzerland leading the rankings. France, meanwhile, has entered the top five performers due to its effective energy efficiency policies, resulting in a 12% reduction in energy intensity.

The top 10 countries collectively only represent 2% of the global population and contribute just 1% of energy-related CO2 emissions, but major emerging economies like China and Brazil have also made significant progress, according to the report. It highlights that China commissioned as much solar photovoltaic (PV) capacity in 2023 as the entire world did in 2022. Meanwhile, Brazil’s long-term plan for hydropower and biofuels has been key in attracting investment.

Common characteristics of the top performers include: enhanced energy security through a diverse mix of sources, improved energy intensity, an increasing share of clean energy, a carbon pricing mechanism and a supportive regulatory environment.

Estonia, Ethiopia and Lebanon have seen the fastest improvements in the past five years, the report says. This is thanks to their prioritizing of off-grid renewable energy to enhance access and sustainability.

The developing countries leading the way for momentum in their energy transition are Lebanon, Ethiopia, Tanzania, Zimbabwe, and South Africa. The report spotlights these countries and in particular their commitment to reducing fossil fuel subsidies, decentralizing renewable energy and boosting the number of clean energy jobs.

Despite scores on the ETI continuing their progress to a record high, transition momentum did slow in the 2024 report, with the three-year compound annual growth rate (CAGR) slowing to 0.22%.

The report says that, beyond the increased adoption of wind and solar, the take-up of clean energy investment has not been at the pace needed to reach net zero by 2050, particularly in regard to energy efficiency, system electrification and adoption of low-carbon energy sources and fuels.

On top of this, inflation and high interest rates have led to tighter energy markets and higher prices, making it difficult for lower-income communities and developing nations to invest in sustainable energy solutions.

Furthermore, geopolitical tensions have impacted the pace of transition for some countries, with some nations addressing security shocks at the expense of equity and sustainability. For example, Germany increased its coal-based production by 35% in 2022, compared to 2020, to compensate for its reduced reliance on Russian gas.

While the US has seen robust growth in its score for the index, thanks to legislation like the Inflation Reduction Act, the pace of transition has been hampered by a delay in connecting clean energy projects to the grid.

Ultimately, despite the progress made by some emerging economies, the report says there are wide gaps in transition momentum. With almost 85% of clean energy infrastructure investment taking place in advanced economies, there is a need for greater international support.

Every country is in a unique situation – whether that is economic status, energy mix or geographic location – meaning that there is no single universal answer for expediting the energy transition, the report adds. However, achieving a balance of equity, sustainability and security is a universal imperative, despite only 20 countries improving their scores across all three of these metrics in the past year.

Nonetheless, digital innovations like generative AI present a huge opportunity for governments and energy companies, the report says. According to Accenture research, these innovations can generate over $500 billion in savings annually. While these technologies will also require increased electricity demand, they can enhance global energy and security through new investment opportunities, despite the increasingly complex macroeconomic and geopolitical landscape.