The global energy industry must play a greater role in the transition to sustainable energy systems if United Nations development goals are to be met, warns a report launched today by the World Energy Council (WEC).
The WEC’s 2013 World Energy Trilemma report, “Time to get real – the case for sustainable energy investment”, was produced with global management consulting firm Oliver Wyman. The findings are based on interviews with more than 50 policymakers, including energy and environment ministers, leaders in development banks, governments, IGOs and NGOs, plus experts from more than 25 countries.
The policymakers interviewed expressed concern that the lack of global consensus on climate change and a future energy system framework, coupled with dramatic disruptions caused by emerging technologies and rapidly shifting patterns of energy use and supply, make it difficult to develop and implement long-term energy policies. This results in increased risk for industry and investors, which must be addressed if the much-needed energy transition is to be delivered in the future.
The report also reveals the results of the 2013 Energy Sustainability Index. The Energy Sustainability Index within the report is the world’s most comprehensive ranking of countries energy policies and evaluates how well 129 countries balance the three conflicting agendas involved in achieving energy sustainability – what the WEC has called the ‘energy trilemma’; energy security, energy equity and environmental sustainability.The Energy Sustainability Index is based on an analysis of 60 data sets that were used to develop 23 indicators across 129 countries. The Index provides a comparative ranking and a ‘balance score’ for how countries manage the three core elements of sustainable energy systems – energy security, energy equity, and environmental sustainability. The ranking measures overall performance on the Index while the balance score - for the first time – highlights how well a country manages the trade-offs between the three dimensions.
The Index shows that developed countries with higher shares of energy coming from low- and zero-carbon energy sources supported by well-established energy-efficiency programmes, such as Switzerland, Denmark and Sweden, outperform most countries across all three dimensions of the energy trilemma. Nevertheless, it is clear that all countries still struggle to balance all three aspects of the trilemma's currently conflicting agendas. Only five countries in the top 10 have been awarded a ‘AAA’ score with Switzerland, Denmark, Sweden, the United Kingdom and Spain being the only countries that historically demonstrate their ability to manage the trade-offs between the three competing dimensions equally.
Their recommendations include:
- Be more proactive in improving energy policies
To make sustainable energy systems a reality, energy leaders must take the initiative in sharing their knowledge, insights and experiences with policymakers, regulators and other stakeholders.
- Be less risk-averse regarding energy investments.
Cash-strapped governments with limited funds look to the energy and financial sectors to take the lead in energy infrastructure and technology investments. The report recommends a better alignment of risk with those best able to bear it and urges the private sector to engage with other stakeholders to identify suitable approaches and mechanisms to achieve a better balance of risk. The crucial role of both the public and private sectors in encouraging the research, development and demonstration (RD&D) of new energy technologies and innovations is also recognised.
- Help developing countries chart a new energy course
The energy industry and other investors must work with public sector stakeholders to identify and lower the barriers that are holding up investment in least-developed, developing and emerging economies. The industry also needs to be more proactive in helping developing countries adopt proven technologies, working with them to reduce the cost of technology transfer and identifying suitable projects that can attract investment.