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Industry Agenda
The Global
Energy Architecture
Performance Index
Report 2013
Prepared in collaboration with Accenture
December 2012
© World Economic Forum
2012 - All rights reserved.
No part of this publication may be reproduced or transmitted in any form or by any means,
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The views expressed are those of certain participants in the discussion and do not
necessarily reflect the views of all participants or of the World Economic Forum.
REF 271112
This publication has been prepared for general guidance on matters of interest only, and the
views expressed do not necessarily reflect those of the World Economic Forum, the World
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Contents
3
Preface
4
The Energy Architecture Performance Index 2013 in Numbers
6
The Expert Panel’s View: The Use Case for the Energy Architecture Performance Index
8
Executive Summary
Preface
Over the past century, affordable energy has been a significant
component of global economic growth and development. Now a
transition is occurring across the global energy system to a degree and
order of magnitude seen only a few times in human history and under
completely distinct conditions on both supply and demand sides.
The transition pathway from the current energy architecture to
the new will look different for each country, with energy system
objectives planned according to the trade-offs and complementarities
surrounding the core imperatives of every energy system: managing
risk to energy supplies while ensuring a country’s economic, social and
environmental well-being.
10
1. The New Energy Architecture Challenge – Balancing the Energy Triangle
11 Defining Energy Architecture and
the Energy Triangle
13 The Challenges Associated with
the Transition to a New Energy
Architecture
Roberto Bocca
Senior Director, Head
of Energy Industries,
World Economic
Forum
14 A Tool for Transition – The Energy
Architecture Performance Index
16
2. Understanding Performance on the Energy Architecture Performance Index 2013
17 The EAPI 2013 Rankings
18 Top Ten – Key Takeaways
21 Economic and Regional Clusters
Analysis
24
3. Economic Growth and Development
25 Top Ten Economic Growth and
Development Performers – Key
Takeaways
32
4. Environmental Sustainability
33 Top Ten Environmental
Sustainability Performers – Key
Takeaway
38
5. Energy Access and Security
39 Top Ten Energy Access and
Security Performers– Key
Takeaways
44
6. Key Takeaways and Focus Areas
45 Key Takeaways
46 Focus Areas for Selected Regional
and Economic Clusters
48
7. Definitions
50
8. Methodological Addendum
50 Methodology
50 EAPI 2013 Indicators: Selection
Criteria and Profiles
51 Weighting: Approach and
Rationale
56 Indicator Metadata
62 EAPI Data Limitations – A Global
Rallying Call
66
Contributors and Data Partners
Espen Mehlum
Associate Director,
Head of Knowledge
Management and
Integration, Energy
Industries, World
Economic Forum
The World Economic Forum is pleased to present this report
examining the factors for effective global transition to a new energy
architecture, framed through the outputs of the Energy Architecture
Performance Index (EAPI) a tool designed to help countries monitor
and benchmark the progress of their transition against a series of
indicators. The report considers what the new energy architecture
might look like and how best-in-class enabling environments have
already helped some high-ranking countries begin their transitions
to better performing energy systems. The varying demands of each
country’s energy architecture – the sometimes competing goals of
economic growth and development, environmental sustainability,
and energy access and security – form the crux of the index and this
analysis.
The New Energy Architecture project is conducted under the Forum’s
Energy Industry Partnership with support from the authors of The
Global Competitiveness Report and involves a range of business,
government and civil society constituents from the energy industry and
other related sectors. The project uses a methodology that identifies
the key performance indicators that can impact the effectiveness
of the transition to a new energy architecture and more effectively
underpin economic growth and development, environmental
sustainability, and energy access and security.
The World Economic Forum partnered with Accenture and
collaborated with Forum Industry Partners and other expert
constituents to drive the dialogue and research. Representatives
from 28 global companies, government agencies and civil society
are actively involved, including the Akio Morita School of Business,
Bloomberg New Energy Finance, Chevron, the China Center for
Energy Economics Research at Xiamen University, the Department
of Energy and Environmental Protection in Connecticut, the
Environmental Defense Fund, Hewlett-Packard, the International
Electrotechnical Commission, the International Energy Agency,
the Joint Institute for Strategic Energy Analysis, the US National
Renewable Energy Laboratory, Maplecroft, Royal Dutch Shell, Solar
Century, Suzlon Energy, the UK Energy Research Centre and the
United Nations Industrial Development Organization.
Representatives from these organizations contributed strategic
direction and thought leadership through an Expert Panel; its members
are listed at the end of the report. Through events in Austria, Brazil,
France, India, Indonesia, Japan, Myanmar, the People’s Republic of
China, South Africa, Turkey and the United Kingdom, the project has
engaged additional business, government and civil society leaders.
The EAPI 2013 will prove to be a useful addition to the global dialogue
around the transition to a new energy architecture and a practical tool
for energy decision-makers. This version should be seen as an initial
effort, and the team behind it will look to expand the EAPI over future
iterations to include better data, where available, and other relevant
indicators.
The Global Energy Architecture Performance Index Report 2013
3
The Energy Architecture
Performance Index 2013
in Numbers
105
16
64
0.75 /1
36%
89
66%
US$ 46,000
12%
US$ 7.14
countries’ energy systems assessed
countries assessed with a fossil-fuel subsidy in place
the average total primary energy supply from alternative
or renewable energy sources (including biomass and
large-scale hydropower) of the top 10 performers
compared with a 29% Energy Architecture Performance
Index (EAPI) 2013 sample average
of countries assessed are net energy importers
the average nuclear total primary energy supply of the
top 10 performers compared with a 6% EAPI 2013
sample average
9%
the average total primary energy supply from
hydropower of the top 10 performers compared with a
5% EAPI 2013 sample average
4
The Global Energy Architecture Performance Index Report 2013
indicators used
highest score achieved on the EAPI 2013 compared
with a 0.55 / 1 EAPI 2013 sample average
countries in the EAPI sample have renewable energy
support policies in place, in the form of regulation, fiscal
incentives or public financing
the average GDP per capita of the top 10 EAPI 2013
performers, bar Latvia. An average GDP per capita
of US$46,000 puts these countries within the top 25
countries globally on this metric
the average EAPI 2013 sample score for energy
intensity (GDP per unit of energy use) compared with
an EU15 average score of US$ 9.77
06
04
The Expert Panel’s View:
The Use Case for the
Energy Architecture
Performance Index
The transition to a new energy paradigm
will not be feasible without a suite of
strategic tools that help the understanding
of different pathways to the future. This
is the primary motivation for working with
the World Economic Forum to develop
an innovative new tool – the Energy
Architecture Performance Index (EAPI).
The EAPI is a global initiative with the aim
of creating a set of indicators that help
to highlight the performance of various
countries across each facet of their energy
systems. In doing so, it attempts to meet
two interlinked goals. First, it aims to assess
energy systems across their three primary
objectives: delivering economic growth,
doing so in an environmentally sustainable
manner, and ensuring security of supply
and access for all. Second, it aims to create
a “one-stop shop” for stakeholders where
they can easily access transparent and
robust datasets and the resulting analysis.
The EAPI thus combines an innovative
blend of indicators to this end. Of course,
the EAPI is highly abstracted and not
meant as a comprehensive treatment or
classification of an energy system. Rather,
it is one way to present and consider
the complex information and the highly
interdependent issues that prevail in the
energy sector.
The Expert Panel advising this project
brings together senior representatives
from various sectors across the energy
value chain. The panel is acutely aware of
the importance of the provision of quality
data in supporting informed decisionmaking. Governments, industry and civil
society cannot hope to fully understand the
functions and idiosyncrasies of their energy
systems without it. Across some metrics,
there are excellent data resources available.
But data paucity means that several
aspects of the global energy system cannot
be adequately evaluated. Nevertheless,
the EAPI will be a useful tool for policymakers, investors and other stakeholders
as they assess energy systems and as they
consider the design and implementation of
strategies to improve them.
The Expert Panel has contributed to and
stress-tested the methodology. It has done
its utmost to ensure that the team leading
the exercise has been rigorous, and that
the EAPI is firmly grounded in “reality on the
ground”. The product is thus strong and
credible, and can be further augmented
and refined in subsequent years. The
online data platform provides an intuitive
user interface that allows for many types of
custom research, including “deep-dives” in
specific areas of interest.
But the finish line remains distant. Next
year, the panel will work closely with the
Forum team to address some of the critical
data sets that are still missing from the
EAPI. It will also drive further dialogue with
key institutions connected to the energy
sector to ensure that the work remains
vibrant and continues to evolve.
Morgan Bazilian, Deputy Director, Joint
Institute for Strategic Energy Analysis, US
National Renewable Energy Laboratory,
on behalf of the Energy Architecture
Performance Index 2013 Expert Panel
6
The Global Energy Architecture Performance Index Report 2013
We are sure that the EAPI
will be an invaluable tool for
policy-makers and
researchers alike. With this
tool we hope that policymakers can benchmark their
policies with the end
objective of achieving a
transition to the new energy
architecture.
Ishwar V. Hegde, Chief Economist, Suzlon
Energy
The Global Energy Architecture Performance Index Report 2013
7
Executive Summary
Over the past century, affordable energy
has been a significant driver of global
development. Humankind’s continued
evolution towards a modern energy system
from the adoption of coal-powered energy
generation technology in the 1800s
through to widespread electrification in the
1900s has helped to shape and develop
societies.
The world is again in a period of transition
for the global energy system. Now
more than ever, decision-makers must
understand the core objectives of energy
architecture – generating economic growth
and development in an environmentally
sustainable way while providing energy
access and security for all – and how they
are being impacted by changing dynamics.
Responding to these often competing
objectives is challenging, as actions to
tackle issues such as resource scarcity and
climate change must be delivered against
the background of difficult economic
conditions following the global financial
crisis. Difficult trade-offs need to be made,
but sometimes complementarities between
the imperatives of the energy triangle can
be realized. Overall, flux in the system is
generating uncertainty for industries and
investors.
The Energy Architecture
Performance Index – A Tool to
Assist Decision-makers
The Energy Architecture Performance
Index (EAPI) is a tool that can help
decision-makers manage and monitor
this changing landscape, enabling
a more effective transition to a new
energy architecture. The EAPI measures
16 indicators aggregated into three
baskets relating to the three imperatives
of the energy triangle to which energy
architecture should contribute: economic
growth and development, environmental
sustainability, and access and security of
supply. The EAPI both scores and ranks
each country’s current energy architecture
based on how well it contributes to these
imperatives.
The EAPI provides informed,
rigorous and actionable
support for policy and
investment decision-making
across the energy sector.
Morgan Bazilian, Deputy Director, Joint
Institute for Strategic Energy Analysis, US
National Renewable Energy Laboratory
The assessment has highlighted a number
of key trends that are common to the
majority of countries analysed:
1. Rich, high GDP per capita countries
are more likely to be able to score well
against one or more objectives of the
energy triangle. Such countries have
the economic flexibility to engage in
concerted action on environmental
sustainability and the adoption of more
efficient, cleaner technologies involving
legacy infrastructure upgrading across
the energy system and incorporation
of renewables into the energy mix.
2. Europe dominates the leader board
due to concerted regional action on
environmental sustainability and better
energy efficiency across the value
chain.
3. Fast-growing, industrial countries
and regions find it harder to perform
well on sustainability and security
indicators than their richer, more
deindustrialized counterparts. With
large energy requirements to be met,
scoring well across these imperatives
of the energy triangle becomes harder
with fast-growing, industrialized
economies generally relying on
cheaper or subsidized fossil fuels,
such as coal, petroleum and natural
gas, to meet demand.
4. In some regions, much basic
work is still to be done to improve
performance on the EAPI. The lowest
scorers, as might be expected, face
challenges around energy access,
efficiency and sustainability, and tend
to be located in Sub-Saharan Africa,
developing countries in Asia or the
highly resource-endowed countries of
the Middle East.
8
The Global Energy Architecture Performance Index Report 2013
Considerations for managing an effective
transition:
1. Improvements in environmental
sustainability should be a priority for
high-income and rapidly growing
economies. For high-income
economies – with the highest
impact energy sectors – combined
performance against this imperative of
the energy triangle is far lower than the
other two. Progress must be made on
this front to meet targets considered
and set by experts in the field of
pollution mitigation and climate policy.
2. No country achieves top scores
against any dimension of the energy
triangle. This reflects the EAPI panel’s
belief that, although some countries
score relatively highly and balance the
requirements of the energy triangle
well, not one has managed to do all
that can be done. This is especially
true of the scores in the environmental
sustainability basket.
3. A large natural energy resource
endowment is not a critical
performance factor. Many of the
countries under analysis achieve high
performance because they have a
large provision of exploitable natural
resources. However, the prevalence of
countries without large endowments in
the upper quartile of results indicates
the importance of efficiency and
sustainability measures, as well as
effective access to energy markets.
These aspects are largely linked to the
vision and efficacy of each country’s
energy policy.
4. Managing the trade-offs and
complementarities of the energy
triangle is critical. The imperatives
of the energy triangle may reinforce
or act in tension with one another,
forcing difficult trade-offs to be
made and meaning that, in some
cases, decisions have unintended
consequences. Sometimes, mutually
beneficial complementarities can be
realized. In response, decision-makers
must ensure that they carefully weigh
their choices, creating a portfolio of
policies to build an energy mix that
best balances the challenges and
opportunities presented.
5. Globally, policy-makers need to
address some big issues around fossilfuel subsidies, water use for energy
production and effective resource
wealth management. A concerted
global effort is needed to gather
more data around the application
of fossil-fuel subsidies, water use
per type of energy generation and
extraction technology (and the impact
this has on a country’s overall water
resources), and the best models for
the development of energy resources.
Against each of these energy priorities,
a paucity of detailed global data is
limiting action. Neither the EAPI nor
any index can paint the full picture of a
country’s energy situation and priorities
without a more detailed view of these
factors and their impact on a country’s
energy architecture.
Table 1: EAPI 2013 Top 10 Performers
All scores rounded to two decimal places
EAPI 2013
Country/economy
Economic growth
and development
Environmental
sustainability
Energy access
and security
Overall rank
Overall score
Norway
0.67
0.63
0.95
1
0.75
Sweden
0.58
0.76
0.80
2
0.71
France
0.58
0.75
0.78
3
0.70
Switzerland
0.73
0.58
0.79
4
0.70
New Zealand
0.63
0.69
0.77
5
0.70
Colombia
0.76
0.54
0.78
6
0.69
Latvia
0.62
0.74
0.71
7
0.69
Denmark
0.64
0.56
0.82
8
0.67
Spain
0.71
0.55
0.75
9
0.67
United Kingdom
0.59
0.63
0.78
10
0.67
The Global Energy Architecture Performance Index Report 2013
9
1. The New Energy Architecture Challenge
– Balancing the Energy
Triangle
Defining Energy
Architecture and
the Energy Triangle
The World Economic Forum defines
energy architecture as the integrated
physical system of energy sources, carriers
and demand sectors that are shaped by
government, industry and civil society.
The “energy triangle” – sometimes known
as the “energy pyramid” or “energy trilemma” – frames the inherent objectives
central to every energy system: the
ability to provide a secure, affordable and
environmentally sustainable energy supply.
The Energy Architecture Performance
Index (EAPI) conceptualization of energy
architecture can be seen in figure 1. While
this is a greatly simplified view, it highlights
the complex interactions and systems that
will need to be factored into the transition
process.
Figure 1: Energy architecture conceptual framework
The Global Energy Architecture Performance Index Report 2013
11
Energy architecture should promote
economic growth and development…
…while providing universal energy access
and security.
Energy architecture underpins economic
growth. Given energy’s importance for
industrialization and infrastructure building,
energy prices strongly correlate with the
global business cycle. As an industrial
sector, it is often a critical value creator. In
2009, the US energy sector contributed
4% of GDP. In countries that are net
energy exporters, the share is even higher:
30% in Nigeria, 35% in Venezuela and
57% in Kuwait.1 Energy is a prerequisite for
all sectors of an economy so its cost is
critical – price volatility and supply
interruptions can destabilize economies.
Reliable energy promotes economic
and social development by boosting
productivity and facilitating income
generation, and so it follows that energy
availability should affect job availability
and national productivity. However, price
signals must reflect the true associated
costs of energy production to ensure
consumption is economically viable and
producers remain lean and responsive to
an undistorted market.
What constitutes “energy security” is
much debated. Physical supply of energy
is subject to a number of risks and
disruptions. Principal concerns relate to the
reliability of networks for the transmission
and distribution of energy, and vulnerability
to interruptions of supply, particularly for
countries dependent on a limited range of
energy sources. But energy security is also
about relations among nations, how they
interact with one another, and how energy
impacts their overall national security.5
Chatham House research suggests that
the Asia-Pacific and European regions may
need imports to meet about 80% of their
respective oil demand by 2030.6 So the
security of supply from trade partners, risks
of energy autarky (prompting disintegration
of energy markets) and uncertainty over
prices creating volatility are critical
concerns that must be managed.
…in an environmentally sustainable way…
The production, transformation and
consumption of energy are associated
with significant negative environmental
externalities. The most critical are
global energy-related emissions: energy
architecture remains the main contributor
to global warming.2 The International
Energy Agency’s (IEA) 450 scenario3
suggests that a global warming of
more than 3.5°C would have, “severe
consequences: a sea level rise of up to
2 metres, causing dislocation of human
settlements and changes to rainfall
patterns, drought, flood, and heat-wave
incidence that would severely affect food
production, human disease and mortality.”4
A range of further issues relating to
environmental degradation (for instance
particulate matter pollution and land-use
impact) remain of continuing concern
and the energy sector’s reliance on other
constrained resources – water and metals
to name but two – highlight sustainability
as a critical transition priority.
Security of supply is immaterial without
access to that supply. Universal energy
access is a United Nations (UN) Millennium
Development Goal.7 According to the
UN, the level of access to energy services
has “implications in terms of poverty,
employment opportunities, education,
community development and culture,
demographic transition, indoor pollution
and health, as well as gender- and agerelated implications.”8 The degree of
impact links to economic development;
wealthy countries enjoy modern, clean,
affordable and efficient energy services
(for lighting, heat, cooking uses) almost
universally. In low-income economies,
energy is responsible for a larger portion
of monthly household income, and the
use of basic equipment often means fuels
such as kerosene and charcoal are burned
inside houses, impacting human health
and contributing to disease through air
pollution.
1
World Economic Forum, Energy Vision Update, 2012.
International Energy Agency (IEA), Topic: Climate Change;
see www.iea.org/topics/climatechange.
3
450 Scenario is a scenario presented in the World Energy
Outlook that sets out an energy pathway consistent with
the goal of limiting the global increase in temperature to
2°C by limiting the concentration of greenhouse gases in
the atmosphere to around 450 parts per million of CO2
equivalent.
4
International Energy Agency (IEA), World Energy Outlook,
2011, Chapter 6, “Climate Change and the 450 Scenario”.
2
12
5
Yergin, Daniel, The Quest: Energy, Security and the
Remaking of the Modern World, 2011.
Mitchell, John V., More for Asia: Rebalancing world oil and
gas, Chatham House, 2010.
7
UN Secretary-General’s Advisory Group on Energy and
Climate Change, Energy for a Sustainable Future, 2010.
8
United Nations Department of Economic and Social Affairs
and International Atomic Energy Agency, Energy Indicators
for Sustainable Development, 2007.
6
The Global Energy Architecture Performance Index Report 2013
1. The New Energy Architecture Challenge – Balancing the Energy Triangle
Over the past century, affordable energy
has been a significant component of global
economic growth and development. But
the past decade alone has seen a series
of significant changes impact the global
energy system.
The Challenges – Charting the
Transition Course
Achieving the imperatives of the
energy triangle has become particularly
challenging as security and environmental
pressures – including tackling resource
scarcity and climate change – must be
delivered against the background of
difficult economic conditions following the
global financial crisis.
Due to the economic slowdown, countries
are changing legislation and exercising
caution around the deployment of
new energy projects with large upfront
capital costs. Some countries have been
reconsidering their renewables obligations
and CO2 targets9 while others have been
reaffirming them. Consumers, concerned
by bills, are less willing to carry the cost
of greener technologies as part of their
utilities spend. With the recovery of coal
and oil prices since 2008,10 a squeeze on
OECD industrial production can be felt,
with energy costs absorbing an increasing
slice of revenue.
Figure 2: World energy consumption projections, 1990-2035
Source: US Energy Information Agency data
800
700
600
Quadrillion Btu (qBtu)
The Challenges
Associated with
the Transition to
a New Energy
Architecture
500
400
300
200
100
0
1990
2000
2008
2015
2020
2025
2030
2035
Non-Organisation for Economic Co-operation and Development countries
Organisation for Economic Co-operation and Development countries
In this context, governments are trying to reshape their energy systems to meet the
objectives of the energy triangle. This process will be enabled by new technologies
across the value chain.
This is a time of change for the global energy architecture.
Figure 3: Advances expected across the energy value chain to help meet transition challenges
With global energy demand expected
to increase 53% by 2035 (see figure 2)
and the People’s Republic of China and
India accounting for half of that growth,
increased scarcity may herald an era of
sustained high prices for traditional energy
sources.11
9
Germany has instigated solar tariff cuts, India has removed
a fiscal support structure for the wind sector, and Italy
has issued more cuts to the preferential rates awarded to
renewables projects. Source: Ernst & Young, Renewable
energy country attractiveness indices, 2012.
10
The price of the front-month futures contract for Brent
crude oil averaged US$ 114.77 in August 2012. Source: US
Energy Information Administration (EIA), The Availability and
Price of Petroleum and Petroleum Products Produced in
Countries other than Iran, August 2012.
11
US Energy Information Administration (EIA), International
Energy Outlook, 2011 (no release for 2012); available at www.
eia.gov/forecasts/ieo/.
The Global Energy Architecture Performance Index Report 2013
13
A Tool for
Transition – The
Energy Architecture
Performance Index
The Energy Architecture Performance
Index (EAPI) is a tool that will help
decision-makers manage and monitor
these challenges. By creating more
transparency and a basis for assessing
overall energy system performance, it can
inform decisions to enable a more effective
transition to a new energy architecture. It
builds on the beta version used in the New
Energy Architecture: Enabling an Effective
Transition report released in April 2012.
The EAPI measures an energy system’s
specific contribution to the three
imperatives of the energy triangle:
economic growth and development,
environmental sustainability, and access
and security of supply. It comprises 16
indicators aggregated into three baskets
relating to these three imperatives. It
both scores and ranks the performance
of a country’s energy architecture (see
figure 4). The EAPI helps stakeholders
as they look for performance areas to
improve and balance the imperatives of
the energy triangle over the long term.
By measuring and reporting on a various
14
set of indicators, the EAPI provides a
transparent and holistic set of insights
into energy architecture successes and
challenges, acting as a base from which to
make policy and investment decisions and
prioritize opportunities for improvement
across the energy value chain.
Indicators were selected against the
following criteria:
– Output data only: The measurement
of output-oriented observational data
(with a specific, definable relationship
to the sub-index in question) or a best
available proxy, rather than estimates
– Reliability: The use of reliable source
data from renowned institutions
– Reusability: Data sourced from
providers that the EAPI team can work
with on an annual basis and that can
therefore be updated with ease
– Quality: The data selected represents
the best measure available given
constraints; with this in mind, the
The Global Energy Architecture Performance Index Report 2013
Expert Panel reviewed all potential
datasets for quality and verifiability and
those that did not meet these basic
quality standards were discarded12
– Completeness: Data is of adequate
global and temporal coverage; it has
been consistently treated and checked
for periodicity to ensure the EAPI’s
future sustainability.
The EAPI team also wished to include
other indicators than those listed in
figure 4 but could not due to a lack of
compliance with the criteria or, more
often, a lack of data availability. In the
Methodological Addendum, the team flags
to the international energy community the
stark gaps found in global energy-related
data banks in a bid to raise awareness
and take action. A pull-out focused on the
water/energy nexus can also be found
in the Methodological Addendum as this
is an important topic around which later
iterations of the EAPI should include data.
12
Please see the “Data Paucity & Country Exclusions”
section of the Methodological Addendum for further detail
around these criteria.
1. The New Energy Architecture Challenge – Balancing the Energy Triangle
Figure 4: Structure of the Energy Architecture Performance Index 201313
13
For a detailed technical description of the methodology, please see the Methodological Addendum at the end of this report.
The Global Energy Architecture Performance Index Report 2013
15
2. Understanding
Performance on the
Energy Architecture
Performance Index
2013
The Energy Architecture Performance
Index (EAPI) uses a universal set of
indicators to assess different countries’
performances. Accepting the very different
set of circumstances each country is in,
all countries are heading for the same end
goal of a high performing and balanced
energy system across each aspect of the
energy triangle, but each has a unique
starting position on that journey.
Within this context, certain countries are
demonstrating that they can achieve the
transition to a new energy architecture
more in line with the imperatives of the
energy triangle. The analysis in this section
studies a selection of EAPI 2013 top
performers and the drivers of their high
scores and ranks.
The EAPI 2013
Rankings
Table 2 shows the rankings for each
of the separate components of the
energy triangle (economic growth and
development, environmental sustainability,
and energy access and security) and the
EAPI 2013 overall ranking. All scores are
between 0 and 1.
No country achieves top scores against
any basket. This reflects the fact that,
although some countries score relatively
high and balance the requirements of
the energy triangle well in comparison to
other countries, not one has managed to
do all that can be done. This is especially
true of the scores in the environmental
sustainability basket. Here, country
results are often compared with targets or
policy directives. For example, particulate
matter (PM10) country-level emissions are
assessed against compliance with the 20
microgram per cubic metre (µg/m3) annual
mean that the World Health Organization
stipulates in its air quality guidelines, while
the target value of 5.2 l/100 kilometres
for average fuel economy for passenger
cars represents the European Union
objective. This sets a higher threshold for
performance in this basket and reflects
how much work is still to be done to
address the global challenges associated
with sustainable energy production and
consumption.
Table 2: EAPI 2013 rankings
Country/
economy
Norway
Sweden
France
Switzerland
New Zealand
Colombia
Latvia
Denmark
Spain
United Kingdom
Romania
Uruguay
Ireland
Germany
Peru
Hungary
Slovak Republic
Portugal
Costa Rica
Austria
Brazil
Lithuania
Canada
Slovenia
Japan
Croatia
Russian Federation
Australia
Belgium
Estonia
Chile
Finland
Greece
Israel
Paraguay
Argentina
Poland
Korea, Rep.
Mexico
Singapore
Netherlands
Azerbaijan
Iceland
Turkey
Thailand
Italy
Panama
Bulgaria
El Salvador
Tunisia
Kazakhstan
Dominican Republic
Czech Republic
Ecuador
United States
Cyprus
Georgia
Algeria
South Africa
Armenia
Philippines
India
Indonesia
Morocco
Malaysia
Libya
Bolivia
Brunei Darussalam
Sri Lanka
Tajikistan
Botswana
Ukraine
Egypt, Arab Rep.
China, People’s Rep.
Trinidad and Tobago
Oman
Nicaragua
Vietnam
Namibia
Cameroon
Senegal
Saudi Arabia
Kyrgyz Republic
Cote d’Ivoire
Ghana
Jamaica
United Arab Emirates
Pakistan
Nigeria
Syrian Arab Republic
Jordan
Qatar
Kenya
Haiti
Kuwait
Iran, Islamic Rep.
Zambia
Cambodia
Bahrain
Mongolia
Nepal
Mozambique
Lebanon
Tanzania
Ethiopia
Economic
growth and
development
0.67
0.58
0.58
0.73
0.63
0.76
0.62
0.64
0.71
0.59
0.65
0.69
0.61
0.60
0.78
0.53
0.48
0.64
0.62
0.61
0.59
0.53
0.61
0.55
0.60
0.66
0.58
0.66
0.51
0.56
0.57
0.53
0.63
0.61
0.60
0.65
0.60
0.59
0.61
0.70
0.50
0.47
0.30
0.51
0.54
0.48
0.60
0.56
0.48
0.43
0.55
0.53
0.50
0.56
0.56
0.57
0.37
0.37
0.60
0.36
0.41
0.54
0.48
0.41
0.30
0.35
0.37
0.40
0.43
0.29
0.48
0.22
0.27
0.34
0.46
0.34
0.37
0.29
0.43
0.40
0.42
0.30
0.20
0.36
0.34
0.32
0.38
0.31
0.36
0.31
0.25
0.35
0.34
0.44
0.35
0.22
0.33
0.37
0.29
0.29
0.31
0.27
0.35
0.30
0.25
Environmental Energy access
sustainability and security
0.63
0.76
0.75
0.58
0.69
0.54
0.74
0.56
0.55
0.63
0.63
0.58
0.63
0.58
0.55
0.67
0.69
0.56
0.61
0.52
0.60
0.64
0.47
0.56
0.48
0.47
0.54
0.36
0.55
0.59
0.51
0.47
0.48
0.47
0.66
0.48
0.48
0.43
0.50
0.41
0.50
0.51
0.70
0.53
0.49
0.53
0.54
0.55
0.60
0.54
0.45
0.61
0.40
0.52
0.34
0.51
0.61
0.52
0.49
0.61
0.62
0.59
0.56
0.54
0.48
0.47
0.55
0.35
0.63
0.66
0.57
0.56
0.52
0.53
0.37
0.29
0.60
0.55
0.57
0.66
0.63
0.28
0.58
0.68
0.66
0.50
0.22
0.59
0.70
0.38
0.38
0.15
0.69
0.64
0.16
0.36
0.71
0.64
0.23
0.48
0.69
0.71
0.37
0.72
0.72
0.95
0.80
0.78
0.79
0.77
0.78
0.71
0.82
0.75
0.78
0.73
0.72
0.74
0.79
0.63
0.76
0.78
0.75
0.72
0.79
0.73
0.73
0.82
0.77
0.77
0.71
0.71
0.81
0.77
0.67
0.73
0.81
0.70
0.73
0.54
0.66
0.71
0.76
0.67
0.67
0.77
0.78
0.75
0.70
0.70
0.72
0.58
0.62
0.64
0.73
0.70
0.55
0.78
0.59
0.77
0.57
0.66
0.75
0.54
0.64
0.58
0.47
0.53
0.61
0.77
0.73
0.62
0.79
0.48
0.58
0.45
0.70
0.68
0.60
0.62
0.80
0.45
0.57
0.39
0.33
0.33
0.78
0.58
0.31
0.34
0.52
0.73
0.42
0.25
0.62
0.66
0.78
0.26
0.20
0.76
0.68
0.22
0.22
0.68
0.41
0.18
0.19
0.44
0.11
0.11
EAPI 2013
Overall rank
Overall score
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
0.75
0.71
0.70
0.70
0.70
0.69
0.69
0.67
0.67
0.67
0.67
0.67
0.66
0.66
0.65
0.65
0.65
0.65
0.65
0.64
0.64
0.63
0.63
0.63
0.61
0.61
0.61
0.61
0.61
0.61
0.61
0.60
0.60
0.60
0.60
0.60
0.60
0.59
0.59
0.59
0.59
0.59
0.58
0.58
0.58
0.58
0.57
0.57
0.57
0.57
0.57
0.56
0.56
0.56
0.56
0.55
0.55
0.54
0.54
0.54
0.53
0.53
0.52
0.52
0.52
0.52
0.51
0.51
0.51
0.51
0.50
0.49
0.49
0.49
0.48
0.48
0.48
0.47
0.47
0.46
0.46
0.46
0.45
0.45
0.45
0.45
0.44
0.44
0.44
0.44
0.43
0.43
0.43
0.43
0.42
0.42
0.42
0.41
0.40
0.39
0.39
0.39
0.39
0.37
0.36
The Global Energy Architecture Performance Index Report 2013
17
Top Ten – Key Takeaways
Figure 5: Map of top performers overall
1st
6th
Norway
6
0.75
2nd
0.69
7th
Sweden
7
0.71
3rd
France
8th
8
9th
9
Switzerland
10th
0.70
2. Having a low-carbon fuel mix is a
performance factor.
The top ten performers source on
average 36% of their total primary
energy supply (TPES) from alternative
or renewable energy sources, including
biomass and nuclear. Sweden, France
and Switzerland all source over 26% of
their TPES from nuclear (France 42%),
with an average nuclear TPES of 12%
for the top ten compared to 4% for the
EAPI 2013 sample. Large-scale hydro
power use also drives performance,
with an average hydro TPES of 9% for
the top 10, 5% for the rest of the EAPI
2013 sample.
Spain
0.67
New Zealand
1. High GDP correlates with high
performing energy systems.
The top ten EAPI 2013 performers
enjoy an average GDP per capita of
over US$ 46,000 and all, bar Latvia,
are within the top 25 countries globally
on this metric. The link between higher
GDP and better EAPI performance is
also replicated in the overall economic
and regional cluster analysis (see
section 2. Economic and Regional
Clusters Analysis for further detail).
Denmark
0.67
0.70
5th
Latvia
0.69
0.70
4th
Colombia
United Kingdom
0.67
3. Other factors also contribute.
Top quartile scores for low energy
intensity, diverse energy supply and
low emissions rates also contribute.
The top ten have an average energy
intensity score of US$ 9.93 GDP per
unit of energy use (2005 PPP US$ per
kilogram of oil equivalent), above the
EAPI sample average of US$ 7.14.
They score an average 0.90 / 1 for
diversity of TPES and an average of
0.64 / 1 for environmental sustainability
– above the EAPI sample average of
0.54.
4. Two success stories are surprises.
Latvia’s affordable energy (no fuel
subsidy and marginal taxes) and
excellent energy intensity score, and
New Zealand’s supply diversity (39%
alternative or nuclear sources and
3rd most diverse TPES) boost their
performance significantly.
5. Europe dominates the leader board.
This is due to concerted regional action
on environmental sustainability, better
energy efficiency across the value chain
and the adoption of clean technologies.
Spotlight on 1st Place: Norway
Norway owes much of its excellent
score to its geological resources – and
its efficient management of them.
Norway provides much of the oil and gas
consumed in Europe and, in 2011, was
the 2nd largest exporter of natural gas in
the world after the Russian Federation, and
the 7th largest exporter of oil.14 This drives
GDP: in 2010, crude oil, natural gas and
pipeline transport services accounted for
almost 50% of Norway’s exports revenues,
21% of GDP, and 26% of government
revenues according to the Norwegian
Petroleum Directorate.
Strong policy has met with resource wealth
to see Norway rank 1st in the EAPI 2013.
A strong policy vision has had an obvious
impact on Norway’s score across
the efficiency metrics. The Enova SF
programme promotes energy savings, new
renewables and natural gas solutions and
is owned by the government of Norway.
It promotes environmentally sound energy
use and production, relying on financial
instruments and incentives to stimulate
market actors15 to boost the energy
14
US Energy Information Administration (EIA), Norway
Country Report, August 2012; available at www.eia.gov/
countries/cab.cfm?fips=NO.
15
Norden, Nordic Council of Ministers, Nordic Energy
Solutions; available at www.norden.org.
18
The Global Energy Architecture Performance Index Report 2013
2. Understanding Energy Architecture Performance Index Performance
efficiency of Norwegian industry and
mitigate its environmental impact. Projects
with energy requirements of more than
0.1 gigawatt-hour (GWh) can apply for
investment support for efficiency initiatives
(i.e. measures for energy recovery or
waste heat conversions to renewable
energy) from a managed energy fund of
over € 874 million. Under the programme,
publically funded research, development
and deployment (RD&D) for clean energy
initiatives has more than tripled from 2007
to 2009 public funding for energy RD&D
is now the 3rd highest among IEA member
countries.16
Figure 6: Norway’s performance on the EAPI 2013
Economic growth and
development
Norway
0.67
0.50
0.00
Hydropower delivers clean and cheap
electricity to Norway’s consumers.
From an environmental sustainability
perspective, Norway scores fairly well at
25th overall. Hydropower is the principal
source of Norway’s electricity supply
at 95%, while only 4% comes from
conventional thermal sources, followed
by 1% from other renewables, namely
biomass and waste and wind according
to IEA data.17 Norway hosts two of the
world’s five large-scale carbon capture
and sequestration (CCS) projects and,
according to the IEA, the government is
strongly committed to significant support
of further CCS technology development.
The building code, introduced in 2007,
means long-term improvements in energy
efficiency in buildings are guaranteed.
In the transport sector, Norway has a
supportive incentive package to encourage
uptake of electric vehicles, including
exemptions from toll road charges, parking
fees and certain taxes. The government
also plans to substantially increase public
transport and the use of rail in freight
transport.18
However, the slightly lower score
compared to the other two sides of the
triangle (see figure 6) can be explained
by Norway’s carbon-intensive industry
base. The oil and gas sector is a heavy
CO2 emitter, with refineries representing
three-quarters of the country’s emissions
according to the EU Emissions Trading
Scheme. The energy sector emitted 19.2
million tonnes of carbon dioxide in 201119
and, although Norway sources almost all
of its power needs from its hydro plants,
the transport sector is a large emitter with
relatively poor vehicle efficiency (8.65 l/100
km) compared to the European average.
1.00
0.95
0.63
Energy access
and security
Environmental sustainability
Bard Vegar Solhjell, the Environment
Minister, has recently pledged over US$
8.2 billion to drive industry CO2 cuts to
meet the nation’s target of 30% emissions
reduction by 2020,20 with the transport,
manufacturing and oil and gas sectors
likely to have to meet the majority of these.
Overall, only 37% of total primary energy
supply (TPES) is from alternative and
nuclear energy – this sees Norway rank
31st in the overall rankings for this indicator,
pulling down this basket’s overall score.
That said, industrial energy efficiency is
improving ahead of the EU curve, as figure
7 shows.
Cost efficiency is also seen as essential
in regulating the environmental impact of
transport, so duties on petrol and diesel
are high, as is the registration tax on
vehicles. From an economic growth and
development perspective, this reflects as
a relatively low score for the level of price
distortion for pumped super gasoline and
diesel indicators, but these taxes are also
used to finance road infrastructure and/
or to reduce traffic in cities, thus reducing
air pollution. The Transnova initiative
was established in 2009 to encourage
more environmentally friendly transport
technologies and manages some of these
tax revenues.
Although Norway’s oil production peaked
in 2001 at 3.4 million barrels per day
(bbl/d) and declined to 2 million bbl/d in
2011, natural gas production has been
steadily increasing since 1993, reaching
3.6 trillion cubic feet (TCF) in 2011. And
in terms of its resource management,
Norway’s sovereign wealth fund, the
Government Pension Fund, exemplifies
the correct resource “model” with the
International Monetary Fund (IMF) citing it
as “an exemplary sovereign wealth fund”.21
This is an important point. The effects of
indirect-deindustrialization on resource
wealth are well understood (see Pull-out:
Accounting for the Resource Curse for
further detail). Yet the Government Pension
Fund’s obvious contribution to GDP
shows a successful “boom minimization
structure” at work, stabilizing the powerful
revenue stream to reduce the risk of Dutch
disease and drive competitiveness through
investment in education and infrastructure
programmes.
21
20
Norwegian Ministry of the Environment, Roadmap for a
Low Carbon Economy – Review, 2011.
International Monetary Fund (IMF), “Norway’s Oil Fund
Shows the Way for Wealth Funds”, www.imf.org/external/
pubs/ft/survey/so/2008/pol070908a.htm.
Figure 7: Norway’s compound annual change in the ODEX* energy efficiency index for industry,
2000-2009
Source: ODYSSEE
2.35%
Norway
16
International Energy Agency (IEA), Norway Review, 2011.
International Energy Agency (IEA), World Energy Outlook,
2011.
18
International Energy Agency (IEA), Norway Review, 2011.
19
Thomson Reuters Point Carbon, Point Carbon Research;
available at www.pointcarbon.com.
17
EU27
1.31%
*The Odyssee ODEX is a European energy efficiency index combining Industry, Transport and Household energy efficiency indicators
The Global Energy Architecture Performance Index Report 2013
19
Norway’s energy future
looks bright
In June 2012 the Norwegian government
confirmed plans to partner in the
construction of a subsea electric power
interconnector with the United Kingdom
and Germany, due for completion in 2020.
The purpose is to strengthen the northern
European electricity grid and increase
supply security. Measures to promote
energy efficiency, given that the electricity
supply is already practically carbon-free,
means the government should also avoid
a possible energy intensity increase.
And, as a result of a recent agreement
with the Russian Federation, Norway has
gained 54,000 square miles (139,859
square kilometres) of continental shelf for
the development of oil and gas deposits
that cross between the two countries’
economic zones in the Barents Sea and
Arctic Ocean.22
With strong policy in place to support the
improvement of scores across each of
the three elements of the energy triangle,
Norway looks likely to continue its strong
performance over the near-term.
Spotlight on New Zealand and
Latvia
New Zealand and Latvia break the top
quartile GDP per capita/high performance
trend, although they are very small in
terms of total population23 – together
they represent just 3% of the top ten’s
combined population. So what are the
drivers of their performance?
In New Zealand, the adoption of the 2009
electricity market reform, the Resource
Management Act, the 2009 Petroleum
Action Plan and the Energy Research
Roadmap have helped drive energy
market and infrastructure improvements.24
Government policy statements on gas
governance and land transport funding and
a National Policy Statement on Electricity
Transmission have encouraged the move
towards a liberalized market. And geology
has helped: hydroelectric power stations
generate the majority of New Zealand’s
electricity, with 24,831 gigawatt-hour
(GWh) total generated by hydroelectricity
in 2011 – equal to 57.6% of total electricity
generation.25 This translates to cheap
industrial power, a driver of economic
growth and development, with prices
averaging US$ 0.07 per kilowatt-hour
(kWh), ranking New Zealand 14th overall
for this indicator.
New Zealand enjoys abundant natural
resources. Therefore, although New
Zealand is currently a net importer of
energy (it imports 10.6% of energy when
imports are defined as energy use less
production ), oil and gas production could
be substantially increased – potentially to
the point where New Zealand becomes
a net exporter of oil by 2030, according
to the New Zealand government’s Energy
Strategy Document 2012.
Latvia’s energy efficiency has largely
improved following its devolution from
the former Soviet Union – with GDP per
unit of energy use (at purchasing power
parity, PPP) leaping from a 1990 level of
US$ 2.66 per kilogram of oil equivalent
(kgoe) to US$ 8.50 per kgoe in 2011, just
below the EU27 average of US$ 8.75
per kgoe for 2011. This has been the
defining story for Latvia. It is the result of
structural reforms to the energy sector and
liberalization of the electricity market, as
well as separate energy efficiency initiatives
focused on improving heat supply systems
and reducing consumption in buildings.27
Latvia also scores well due to affordable
fuel pricing without subsidy distortion
(and marginal tax) on pumped gasoline
and diesel, leading to a rank of 4th and
12th respectively on these products’ price
indicators.
New Zealand and Latvia’s geological
advantages drive good environmental
sustainability scores.
From an environmental sustainability
perspective, New Zealand scores very
well relative to the other economies
assessed. In 2010, approximately 39%
of total primary energy supply was from
renewable sources. Renewables will likely
play a more significant role in the future
energy mix. In 2005, geothermal and wind
generated 9% of New Zealand electricity,
whereas in 2010 the proportion generated
from these sources increased to 17%, and
overall 74% of electricity was generated
from renewable sources. The large share
of renewable energy sources makes New
Zealand one of the most sustainable
countries in terms of energy generation,
though electricity demand is also still
growing, by an average of 2.1% per year
since 1974.28 The government goal is to
increase the proportion of renewables to
90% of electricity generation by 2025 (in
an average hydrological year), providing
this does not affect security of supply.29 In
2008, the government introduced a New
Zealand Emissions Trading Scheme (NZ
ETS). By 2015, this will cover all sectors
and all gases. And given the excellent,
though currently underused, wind and
20
(For an in-depth analysis of Latvia’s
environmental sustainability score, see
the Spotlight on top three performers:
Sweden, France and Latvia in section 4.
Environmental Sustainability.)
Both New Zealand and Latvia have a
diverse total primary energy supply.
Although New Zealand uses more energy
per capita than most OECD countries, it
has improved its energy intensity by 21%
between 1990 and 2011. The growth of
relatively less energy-intensive service
industries is a factor. Total consumed
energy dropped by 0.2% between 2007
and 2011, although the impact of the
financial crisis on energy use must not
be overlooked when considering this
drop. Oil still dominates New Zealand’s
TPES. In 2011 it accounted for 34% of
TPES, geothermal energy for 19% and
gas for 19%. As a net importer of energy,
the predominant slice of which is crude
(in 2011 98% of refinery input was from
imported crude and feed stocks30), New
Zealand needs to manage this trend.
The real success story for New Zealand
relating to energy access and security
is its diversity of supply. With a score
of 0.98 on the Herfindahl31 index, New
Zealand’s TPES portfolio is almost perfectly
balanced, as is reflected in its rank of 3rd
for this indicator.
Latvia’s supply profile sees a good diversity
score (0.89 on the Herfindahl index) and
sustainability of the energy mix, averaging
a normalized score of 0.62 (out of a
possible 1.00) for all specific emissionsrelated indicators.32 However, unlike New
Zealand, it does relatively poorly in terms
of energy access, with median scores
across the quality of electricity supply
(4.9 out of 7) and a significant proportion
of the population still using solid fuels for
cooking (10%), contributing to Latvia’s
estimated 235,658 deaths per year due
to indoor air pollution, as estimated by the
Global Alliance for Clean Cookstoves. With
little evidence that these indicators are
the subject of any policy initiatives, it may
be an area for the Latvian government to
consider focusing on in order to improve its
EAPI ranking moving forwards.
30
22
US Energy Information Administration (EIA), Norway
Country Report, August 2012; available at www.eia.gov/
countries/cab.cfm?fips=NO.
23
World Bank, Databank, Population (Total), 2011.
24
International Energy Agency (IEA), New Zealand Energy
Policy, 2010.
25
Government of New Zealand, Energy Data File, 2011.
geothermal energy resources available,
New Zealand could be a world leader in
renewable energy generation very soon.
26
World Bank, Energy imports, net (% of energy use), 2010.
27
Energy Charter Secretariat, In-depth Review of Energy
Efficiency policies and Programmes, Latvia, 2007.
28
New Zealand Government, Energy Data File, 2012.
29
International Energy Agency (IEA), New Zealand Energy
Policy, p. 7-8.
The Global Energy Architecture Performance Index Report 2013
New Zealand Government, Energy Data File, 2012.
See section 7. Definitions for a description of the Herfindahl
calculation.
32
These include: nitrous oxide emissions in the energy sector
(tmte CO2)/total population, CO2 emissions from electricity
and heat production (total)/total population, PM10 country
level (micrograms per cubic metre).
31
2. Understanding Energy Architecture Performance Index Performance
Economic and
Regional Clusters
Analysis
This section considers some of the macro
trends from the analysis of the EAPI results
and the factors at play for different regions
and economic clusters as they look to
manage the transition to new energy
architectures.
Fast-growing, industrial clusters find it
harder to perform well on sustainability
and security indicators than richer, more
deindustrialized counterparts.
The need to meet large energy
requirements makes it harder for
countries to score well across each of the
imperatives of the energy triangle.
Comparing four economic clusters – the
BRIC (Brazil, the Russian Federation,
India and the People’s Republic of
China), MIST (Mexico, Indonesia, South
Korea and Turkey), EU1533 and Nordic
economies34 – though with very different
requirements of their energy systems,
they show similar scores in terms of how
their energy systems drive economic
growth. The average economic growth
and development score for the BRIC
countries is 0.51, 0.54 for the Nordic
countries and 0.55 for the MIST grouping.
The EU15 cluster scores highest with an
average score of 0.59. It is worth noting
that energy intensity scores were highly
dispersed (see figure 8). However, it was
the environmental sustainability and energy
access and security scores that showed
a greater divergence (see figure 9). This
aligns with the clusters’ different situations
and energy priorities. The BRIC (and to a
lesser degree MIST) countries are driving
global energy demand. Total primary
energy supply among BRIC countries
was 1,024 million tonnes of oil equivalent
(mtoe) in 2010, up 28% from 2005.
Comparatively, the EU15’s TPES was 103
mtoe in 2010, down 4% from 2005. The
BRIC economies are generally relying on
cheaper or subsidized fossil fuels, such as
coal, petroleum and natural gas, to meet
demand. In the People’s Republic of China
alone, coal-fired electricity generators
represented 78% of the 1 billion kilowatts
of installed capacity in 2011 and demand
for coal will likely exceed 4 billion metric
tonnes in 2015 – more than half of the
world’s total demand for coal.35
33
The EU15 comprises Austria, Belgium, Denmark, Finland,
France, Germany, Greece, Ireland, Italy, Luxembourg,
Netherlands, Portugal, Spain, Sweden, and the United
Kingdom. This report excludes data for Luxembourg, which
should be discounted from the grouping.
34
The Nordic designation encompasses the economies of:
Denmark, Finland, Iceland, Norway and Sweden.
35
World Economic Forum and IHS CERA, Energy for
Economic Growth Energy Vision Update, 2012.
Figure 8: Regional energy intensity scores
Source: World Bank
EU15
0.67
MIST - Mexico, Indonesia, South Korea and
Turkey
0.50
Nordic Countries - Denmark, Finland, Iceland,
Norway and Sweden
0.44
BRICs - Brazil, Russia, India and People's
Republic of China
0.32
GDP per unit of energy use - EAPI Normalised Score (0 - 1)
Figure 9: Energy access and security and environmental sustainability scores
Economic growth and
development
1.00
Nordic economies
EU15
0.50
BRIC economies are growing. GDP
levels per capita are not fully realized and
are showing growth despite the global
economic crisis (BRIC real GDP grew
6.53% in 2011 alone36). Yet the demands
that they are putting on the engine rooms
of their growth – their energy systems –
means these engines are being stressed.
BRICs
MIST
0.00
36
Energy access and
security
Environmental
sustainability
CME Group, BRIC Country Update, July 2012; available at
www.cmegroup.com/education/files/ed133-market-insightsbric-2012-8-1.pdf.
The Global Energy Architecture Performance Index Report 2013
21
How does GDP correlate with EAPI performance?
Figure 10: Regional Clusters – Comparison of 2013 EAPI score by average GDP per capita37
0.80
$45,000
$35,000
Max
0.60
$30,000
EAPI 2013 score
UQ
$25,000
LQ
$20,000
0.40
$15,000
Min
$10,000
$5,000
0.20
Average GDP per capita (current US$, 2011)
$40,000
Figure 10 is a ‘box’ or ‘spread’ chart
Spread charts show the distribution of a
dataset in this case the different economic /
regional clusters' average Energy Architecture
Performance scores
The silver bars are the spread of data from
minimum, median to the maximum value
The blue boxes show the quartiles
Quartiles are a set of values that divide the
data set into four equal groups, each
representing a fourth of the sample
The upper quartile represents the split of the
highest 25% of data the top performers
The lower quartile represents the split of the
lowest 25% of data the bottom performers
These spreads are charted against average
GDP per capita for the cluster
$0
Sub-Saharan
Africa
Middle East and ASEAN and Commonwealth
North Africa Developing Asia of Independent
States
Latin America
and the
Caribbean
Central and
Eastern Europe
Advanced
Economies
Economic Cluster
Average GDP per capita (current US$, 2011)
37
Linear (Median)
See Definitions section for explanation of the graph structure and economic/regional clusters.
Figure 10 shows the higher levels of GDP
per capita generally indicating a higher
spread of scores on the EAPI 2013
globally. How might this be the case? And
what would explain the exception to this
rule – the Middle East and North Africa’s
performance – and the less than stellar
performance of the Advanced Economies,
given their proportionally higher GDP per
capita?
Simply framed, rich countries are more
likely to be able to score well against one
or more objectives of the energy triangle.
They have the economic flexibility and
clout to engage in concerted action
on environmental sustainability and
the adoption of more efficient, cleaner
technologies involving legacy infrastructure
upgrading across the energy system
and the incorporation of renewables
into the energy mix. With diversified or
large service-based economies and
a deindustrialized GDP base, energy
efficiency is easier to achieve. Figure 11
shows average energy intensity for a
selection of regional/economic clusters
against the World Bank’s Energy Price
Index. Developing, largely industrial
economies all show lower performance on
an aggregate level than developed, largely
diversified economies. Unsurprisingly, the
energy intensity scores dip or flat-line with
the tumultuous first years of the global
financial crisis between 2008 and 2010 as
cheaper energy flooded world markets in
the wake of the slowdown, and this effect
is most noticeable in the intensity scores
of the relatively more deindustrialized
economies.
Figure 11: Energy intensity performance
Source: World Economic Forum analysis, World Bank, World Bank Commodity Price Data. For more information about country cluster definitions, please see the Definitions section.
22
The Global Energy Architecture Performance Index Report 2013
2. Understanding Energy Architecture Performance Index Performance
Performance at the top end, among
the Advanced Economies, is lower than
might be expected proportional to the
level of GDP per capita. The average
rank for Advanced Economies is 25th,
and the average score 0.63 / 1, but a
few economies score particularly badly
on certain indicators, drawing down the
cluster’s performance overall. The US,
which ranks 55th overall, is an example of
an Advanced Economy that faces some
key energy architecture challenges, most
specifically around emissions intensity.
Globally, the US accounts for about
18% of fossil fuel combustion-related
emissions. By OECD standards, the US
reliance on fossil fuels is relatively high at
approximately 85% of TPES, according to
IEA data. These fossil fuels are combusted
to generate energy and contribute to
the increase in CO2 emissions over the
decade from 1990 to 2010 (see figure 12).
If Cyprus (56th), Czech Republic (53rd)
and Italy (46th) the lowest ranked of the
Advanced Economy cluster – were also to
improve their environmental sustainability
scores, the group would likely see large
improvement in EAPI scores overall – the
four countries average just 0.44 / 1 on
environmental sustainability as opposed to
0.56 / 1 for all other Advanced Economies.
The Middle East and North Africa’s
performance bucks the trend toward
higher GDP levels and higher EAPI
performance. From a production point
of view, resource wealth in this area has
translated into enormous sovereign wealth
for many of the (mainly) Middle Eastern
economies, but these countries’ energy
systems often struggle to maximize
performance against all three objectives of
the triangle.
From a consumption perspective, fossil
fuel products are heavily subsidized,
creating economic drag; a glut of energy
availability has discouraged the adoption
of efficiency measures impacting on both
economic and sustainability metrics;
economies have been (historically)
Figure 12: Comparison of US greenhouse gas emissions 1990 - 2010
Source: United States Environmental Protection Agency; World Economic Forum analysis
6,000
42
224
340
28
219
338
5,000
Million metric tonnes CO2
Geology also plays a part in performance;
in the case of many of the Advanced
Economies, natural resources such
as hydro, geothermal and oil and gas
resources are blended into their energy
systems and economies to enable strong
performance across each aspect of
the energy triangle. A strong degree of
development often indicates a successful
management strategy for the distribution
of resource revenue within an economy,
and the establishment of suitable security
measures to maintain low reliance on
imports and strong, transparent trade
networks.
4,000
846
3,000
1,486
778
1,746
2,000
2,258
1,821
1,000
0
Other
362
319
1990
2010
Electricity generation
Transportation
undiversified38 and susceptible to oil price
volatility; and access rates and quality of
energy supply are below the leader board’s
standards as grids have sagged under
pressure to cater to soaring demand.39
A comfortable degree of energy security
has been achieved by taking advantage
of domestic resources as generation
feedstock, but even this success has been
vulnerable to the dangerous combination
of sharply increasing demand from both
supply partners and consumers.
In some regions, there’s much
work still to do…
The lowest scorers, as might be expected,
face challenges around energy access,
efficiency and sustainability, and tend to be
located in Sub-Saharan Africa, developing
Asia or the highly resource-endowed
countries of the Middle East.
The small, resource-strapped economies
of Sub-Saharan Africa exhibit low
electrification rates and patchy electricity
supplies. They often have limited fuel
source diversity (in the case of the
bottom ten performers, oil – which is
38
Growth has been below potential in the Middle East and
North Africa (and not labour absorbing) because of the lack
of economic diversification, low private investment (averaging
15% of GDP relative to over double this level in East Asia) in
the wake of barriers to entry and an incentive framework that
promotes privileges rather than competition. These countries
have undertaken a range of economic reforms over the past
years, but the quality of implementation of reforms has been
low. Source: World Bank, MENA: Emerging Developments
and Challenges, 2011.
39
Up to 2020, electricity demand will rise by 7% to 8%
per year on average in Gulf Cooperation Council member
countries. Source: Economist Intelligence Unit, The GCC in
2020: Resources for the future, 2010.
Industrial
Residential
Commercial
US territories
mainly imported – and biomass are the
primary components of TPES). The high
sustainability scores (in relation to their
economic growth and energy access
and security scores) that these countries
sometimes exhibit an overwhelming
dependence on biomass energy consisting
of wood, charcoal and agricultural
residues. This ranking therefore needs to
account for the high-poverty contexts of
many of these countries.
Many resource-rich Middle Eastern fuel
exporters score poorly due to high energy
intensity and a low-diversity fuel mix.
With a dominance of hydrocarbons in the
energy supply and the attendant negative
environmental impact, these countries
also score poorly against environmental
sustainability metrics, especially CO2
and nitrogen oxide (NOx) emissions
relating to energy. This plays out the
message inherent in the structure of the
index – inefficient, intensive energy use is
problematic for a secure and sustainable
energy supply, regardless of the resource
endowment enjoyed by a country.
The bottom ten performers average a
score of 0.39 out of a possible 1 overall,
compared to the top ten, which enjoy an
average score of 0.70 per country, and
the mid-range performers, which average
0.55.
The Global Energy Architecture Performance Index Report 2013
23
3. Economic Growth
and Development
The relationship between energy and
economic growth has always been close.
Since the industrial revolution, and even
before, fossil and other sources of energy
have been the engines of economic
growth, replacing physical labour and
changing the shape of the world’s work
forces and work patterns. Increasing
efficiency has kept fuel prices low during
the 20th century, even as efficiency gains
have driven growth. Can these efficiency
gains continue in the future?
Here, economic growth and development
can be broken down across three core
components:
1. How affordable the energy provided is
– taking into account price distortions
as the result of subsidy and tax
2. How efficiently it is used
3. Whether the provision of this energy
adds to or detracts from a country’s
accounts.
Top Ten Economic Growth and Development Performers –
Key Takeaways
Figure 13: Map of top economic growth and development performers
1st
6th
Peru
0.78
2nd
0.70
7th
Colombia
0.65
0.76
3rd
Switzerland
1
Australia
0.66
0.66
9th
Spain
0.71
5th
Norway
0.67
8th
0.73
4th
Uruguay
Croatia
0.70
10th
Singapore
0.70
Romania
0.69
1
– Energy intensity for the top ten
performers is, on average, far
lower than the Energy Architecture
Performance Index (EAPI) sample, with
an average GDP per unit of energy use
of US$ 11.37 compared with the full
EAPI sample average of US$ 7.14.
– Cheap electricity for industry is a driver
of top ten performance, with a US
$0.09 US / kWh average for the top
ten, compared with a US$ 0.11 US /
kWh average for the full EAPI sample
(the EAPI indicator represents available
data that cannot take into account the
potential subsidizing of this price).
– All of the top performers have a clearly
defined energy efficiency programme
or policy measures in place, with
examples in Uruguay, Romania and
Croatia receiving funding from external
parties such as the World Bank.
– Generally, pump gasoline and diesel
prices reflect the cost of production
more accurately, with a 0.86 / 1
average score for (lack of) gasoline and
diesel price distortion across the top
ten compared with 0.67 / 1 across the
full EAPI sample.
– Excluding Singapore, fuel imports
represent an average of 0.03% of
GDP for the top ten, below the EAPI
sample average of 0.10%; when
including Singapore in the analysis, the
figure raises to 0.07%. The inclusion
of Singapore in the result may be
misleading, however, owing to its
status as one of the world’s top three
oil trading hubs (with approximately
US$ 500 billion in trade channelled
through Singapore annually) and the
world’s biggest shipping fuel industry,
with 26 million tonnes of bunker (fuel to
refuel a ship) delivered last year.40
40
Singapore Economic Development Board/Reuters,
Factbox: Singapore, 2012; available at uk.reuters.
com/article/2007/06/12/singapore-economy-oilidUKSIN19966120070612.
The Global Energy Architecture Performance Index Report 2013
25
Spotlight on the Top Three
Performers: Peru, Colombia and
Switzerland
Peru, Colombia and Switzerland head
up the table for economic growth and
development, with an average EAPI score
of 0.76 against a global average of 0.45.
Peru and Colombia have reformed energy
markets and taken advantage of natural
resource endowments to drive economic
growth and development.
Peru’s results speak for themselves. It is
one of the best performing Latin American
economies, with an average GDP growth
rate of 6.5% between 2002 and 2011,
contributing to an excellent energy intensity
score (1st in the EAPI this year) that is
also the result of various campaigns
promoting energy efficiency.41 The past
5 years have seen much progress on
many fiscal fronts, with high growth rates
coupled with low inflation. From a market
structure perspective, a distinct move
towards “trade openness, exchange rate
flexibility, financial liberalization, higher
reliance on market signals and prudent
monetary policy, including strong build-up
of reserves” has been the strong suit of a
series of reforms that have seen income
per capita rise over 50% over the past
decade.42
The wider country trend for fiscal reform
has been reflected in the energy sector;
laws such as the Ley de Concensiones
Electricas (electrical concessions act)
have seen the generation, transmission
and distribution divisions of generators
split and have opened the door for private
companies to own these operations,
increasing competition and efficiency.
Overall exports averaged US$ 28.8 billion
US between 2007 and 2009, a five-fold
increase over a single decade, with the
rising production of natural gas liquids
contributing significantly to this revenue.
Electricity comes from the abundant
natural gas (52%) and hydropower
resources (48%) enjoyed by the country,
and which contribute to the low cost
of electricity (just US$ 0.079 US / kWh
according to IEA data). According to the
US Energy Information Administration (EIA),
Peru is seeing increased production of
both natural gas and petroleum, with new
reserves (Peru has added 50 million barrels
of reserves in each of the past two years)
generating a stream of investments from
international oil companies. New policies
have been focused on attracting foreign
direct investment towards the development
of these resources for both export and
domestic customers.
Colombia’s story is very similar. An
improved regulatory framework and
security situation has boosted investment
in the country by international business and
international oil companies. Markdowns to
the royalties that the government requires
from smaller (less than 125,000 barrels
per day) hydrocarbon discoveries have
encouraged this process. Hydropower
provides for almost all of Colombia’s
electricity needs (more than 70%
according to IEA data) and so it is able to
export many of the energy commodities
that it produces.43
The future is bright too; according to the
EIA, production is expected to reach
1 million barrels per day by the end of
2012 and 1.5 million barrels per day by
2020.44 Colombia’s liberalized market and
resource-rich geology means the energy
sector provides a strong revenue stream
for the country.
Switzerland’s excellent energy intensity
score (3rd overall) is partially a result of the
predominance of hydro in the electricity
generation mix, as well as the lower
reliance on industrial output to drive GDP.
Several targets have been implemented
to reduce the consumption of fossil fuels
by 10% before 2020 compared with 2010
levels and to cap electricity consumption
growth at 5% over the same period.
These include: energy labels for household
appliances and lamps; building codes
(MINERGIE label); voluntary efficiency
agreements with industry; and a tax fund,
which deducts up to US$ 0.83 cents per
kWh (US$ 1.25 cents per kWh as from
2013), to finance further energy efficiency
projects.
The government has also funded a district
heating scheme worth US$ 28 million as
part of a strategy to replace electric heating
systems. And although it is dependent on
fossil fuels for 52% of total primary energy
supply according to the IEA, Switzerland’s
good overall score can be further explained
by its small expenditure on fuel imports
(just 2% of GDP), cheap electricity for
industry (hydro generates 70.9% of total
installed energy capacity) and low CO2
emissions.46
Lacking the resource wealth of Peru
and Colombia, Switzerland represents a
different model of success to that of its
Latin American counterparts.
The SwissEnergy programme has been
running for more than 30 years under
various incarnations and is solely focused
on projects relating to energy efficiency
and the development of renewable energy
sources. It has pursued a successful
strategy. According to an Energici report,
Switzerland had a total installed renewable
capacity (biomass + geothermal +
hydroelectricity + solar + wind) of 14,189
megawatts in 2011, an increase of 158
megawatts (or 1.13%) on 2010,45 putting
the Swiss renewable energy market at
17th globally for total installed renewable
capacity.
41
A US$ 25 million loan from the Inter-American
Development Bank to Peru was authorized in 2010 to: study
the potential for mitigating emissions; make an assessment
of hydropower infrastructure vulnerability to climate change
risks; develop a Strategic Environmental Assessment; boost
environmental standards through regulations training and
support for municipal eco-efficiency plans; issue guidelines
on minimum standards and energy efficiency labelling; and
help set up an energy efficiency agency. According to the
Asia Pacific Energy Research Centre, Peru has developed 42
appliance standards since 1996, with 29 of them referring to
energy efficiency.
42
World Bank, Peru: Country Overview, September 2012;
available at www.worldbank.org/en/country/peru/overview.
26
43
Although Colombia consumed 298,000 barrels of oil per
day in 2011, it currently produces over 951,000 barrels per
day and can export most of its oil. It can also export most of
its coal – Colombia was the 4th largest coal producer in the
world in 2010. Source: US Energy Information Administration,
Colombia Country Analysis, 2012.
44
US Energy Information Administration, Colombia Country
Analysis, 2012.
45
Energici, Switzerland Renewable Energy – Annual, 2011;
available at www.energici.com/energy-profiles/by-country/
europe-m-z/switzerland.
The Global Energy Architecture Performance Index Report 2013
46
Emissions per unit of GDP decreased twice as fast as the
total energy intensity over the period 1990 to 2009 (1.2% per
year) thanks to substitutions of oil with gas and biomass. This
switch out explains around 70% of the reduction in the CO2
intensity since 2000. Source: Sachs, J. D. and A.M. Warner,
Centre for International Development and Harvard Institute for
International Development, Natural resource abundance and
economic growth, 1997.
3. Economic Growth and Development
Pull-out: Accounting for the Resource Curse
Figure 14: Oil- and gas-related sovereign wealth funds
Source: Sovereign ealth Fund Institute. October 2012
United Arab Emirates
Abu Dhabi
740.5
Norway
656.2
Saudi Arabia
538.1
Kuwait
296
Russia
149.7
Qatar
United Arab Emirates
115
Dubai
70
Libya
65
Kazakhstan
61.8
Algeria
56.7
0
100
200
300
400
500
600
700
800
Billion US$
The expert panel and World Economic
Forum team frequently debated the
inclusion of a fuel exports (% GDP)
indicator. The effects of indirectdeindustrialization, or the “resource
curse”, are well understood. Many studies
have reported on the inverse correlation
between resource abundance and the
economic development of a country.47 The
symptoms include a decline in national
47
Sachs, J. D. and A.M. Warner, Centre for International
Development and Harvard Institute for International
Development, Natural resource abundance and economic
growth, 1997.
manufacturing sector productivity due to
the currency-strengthening effect of natural
resource exploitation.
What might be the impact of the “resource
curse” on the various economies assessed
by the EAPI?
Brazil must carefully manage its revenues
from hydrocarbon production.
crude oil produced daily48 have been used
to help millions of Brazilians out of poverty
and drive down the country’s net debt to
37.2% of GDP from a high of 60.4%.49
But in a world of weak European and US
currencies, the historical boom and bust
pattern of Brazil’s economy may be hard to
avoid. How concerned should Brazil be?
48
Taking Brazil as an example, the case is
complex. The benefits of the exploitation of
its hydrocarbon reserves are undeniable.
Revenues from the 2.6 million barrels of
US Energy Information Administration, Brazil Country
Analysis, February 2012.
Bristow, Matthew and Juan Pablo Spinetto, “Brazil Faces
New Oil Boom Curse as the World’s Resource Engine”,
Bloomberg, 13 March 2012; available at www.bloomberg.
com/news/2012-03-13/brazil-faces-new-oil-boom-curse-asthe-world-s-resource-engine.html.
49
The Global Energy Architecture Performance Index Report 2013
27
The answer might be “vigilant”. Brazil’s
economy is well-positioned to avoid
the long-term pitfalls that might follow
large resource discoveries. From a wider
economic perspective, the relatively stable
currency, low inflation, positive trade
balances and a growing service sector
coupled with a reduction of the number
of people employed in agriculture can be
seen as signals of a developing economy
that is well-positioned to counterbalance
the potentially destabilizing injection of
resource revenue into the economy.50 The
government’s legislation in this area should
prove effective too; oil-field operators often
use domestic technology and must use
local content for up to 65% of the goods
and services required. They also attract
a vast amount of FDI in terms of the R&D
spend stipulated. Therefore, Brazil is not
just an exporter, but is growing as a talent
and technology hub.
Norway offers a best practice example of
how to manage resource wealth effectively.
Norway’s Government Pension Fund
(established by the Norwegian government
to manage resource revenues) is valued
at over US$ 600 billion. Through the
fund, Norway is actively avoiding a
situation in which oil money is poured
into the Norwegian economy, resulting in
overheating and inflation.51 Instead, the
focus has remained on the development
of oil and gas sub-sectors like platform
construction (which has had a positive
spill-over effect into other engineering
and information and communications
technologies industries) and considered
investment initiatives in rural regions with
no access to the revenues accrued by the
extraction industry.52
50
Imperial College London Business School, Can Dutch
disease harm the export performance of Brazilian Industry?,
2010.
51
Royal Norwegian Embassy / Thor Englund; available at
www.norway.org/ARCHIVE/business/businessnews/ethicoil.
52
World Economic Forum and IHS CERA, Energy for
Economic Growth Energy Vision Update, 2012.
28
Given the EAPI’s strict focus on country
energy architecture and, within this
basket, the contribution of energy
to GDP, it was felt that on an overall
global basis, revenues from fossil fuel
endowments contributed positively to
country GDP, especially when successful
boom minimization structures (e.g.
investment into sovereign wealth
funds, stabilizing the powerful revenue
stream) were used to reduce the risk
of indirect-deindustrialization and drive
competitiveness through investment in
education and infrastructure programmes.
This is a point of view reflected in recent
studies into resource curse theory.53 An
obvious caveat would be that this is true
if the economy remains diversified and
productive in other areas of its operation,
not restructuring solely to exploit natural
resources. Due to the lack of data
around the dispersal of fuel export related
revenues for the majority of countries in
scope, the EAPI has had to assume a
positive net outcome from the fuel export
process.
53
In “Does Oil Abundance Harm Growth?”, Applied
Economics Letters, 2011, Cavalcanti et al challenge whether
natural resource abundance is a curse, citing analysis that
shows oil abundance having a positive effect on both longrun income levels and short-run economic growth, as well as
social and human capital.
The Global Energy Architecture Performance Index Report 2013
3. Economic Growth and Development
Pull-out: The Case for Reform of Fossil-Fuel Subsidies
Any analysis of the economics of global
energy architecture must consider
subsidies, which affect prices, public
sector budgets and the signals to energy
consumers. The EAPI’s take on the
issue is upfront: fossil fuels subsidies
are detrimental to every angle of the
energy triangle. But this position needs
justification.
Consider the trajectory of the World Bank’s
global energy index (see figure 15).
Figure 15 shows energy prices growing
at an exponential rate. Should continuous
upward pressure persist, many developing
countries will reach an untenable situation
as many of them commit upwards of 5%
of their GDP to fossil energy subsidies
(an aggregate total of between US$ 300
billion to US$ 550 billion depending on
current oil prices).54 The IEA’s 2011 World
Energy Outlook report estimates a potential
reduction in global energy demand of
4.8% or some 900 million tonnes of oil
equivalent by 2035 from the removal of
all supply-side subsidies that are targeted
54
McKinsey Global Institute, Resource Revolution: Meeting
the world’s energy, materials, food, and water needs,
November 2011.
at reducing consumer prices for fossil
fuels and electricity generated from fossil
fuels.55 This is a staggering potential
saving. The declaration of the G20 Cannes
Summit in 2011 reaffirmed commitments
to “rationalise and phase-out over the
medium term inefficient fossil-fuel subsidies
that encourage wasteful consumption,
while providing targeted support for the
poorest,”56 demonstrating that there is a
recognized political will to end fossil-fuel
subsidies on a global basis.
55
International Energy Agency (IEA), World Energy Outlook,
2011.
56
G20 Declaration; available at www.g20-g8.com/g8-g20/
g20/english/for-the-press/news-releases/cannes-summitfinal-declaration.1557.html.
Figure 15: World Bank Energy Price Index, 1960 to present
World Bank Energy Price Index (2005 = 100)
180
"Super-cycle"
of developing world growth
160
140
120
100
Recession
1970s
oil shock
80
60
40
20
0
1960
1970
1980
1990
2000
2010
The Global Energy Architecture Performance Index Report 2013
29
Why aren’t subsidies working?
Table 3: Estimated energy subsidies, 2007-2010 (US$ billion, nominal)
Fossil-fuel subsidies have a wide array
of proponents. Frequently, improving
social equity, boosting employment and
ensuring energy security are advocated
as reasons for fossil-fuel subsidies. But
this type of subsidy often has an array of
damaging side effects. Fossil-fuel subsidies
divert investment from other potentially
more needful government departments.
They reduce fuel consumption efficiency
by industry and domestic consumers
and encourage rent-seeking by limiting
the capital flow available to new energy
infrastructure projects. Subsidies are
difficult to target accurately. According
to Fatih Birol, Chief Economist of the
International Energy Agency, fossil fuel
“subsidies mainly benefit middle-income
and higher-earning urban types; the
rural poor use little fossil fuel.”57 In 2010,
only 8% of the US$ 409 billion spent
on fossil-fuel subsidies was distributed
to the poorest 20% of the population.58
The level of energy infrastructure is also
a critical factor affecting the distribution
of fuel subsidies. For instance, subsidies
are more likely to reach poor households
in the People’s Republic of China, where
the electrification rate is 99%, than
poor consumers in India, where the
electrification rate is 66%.
Source: Source: International Energy Agency, World Energy Outlook, 2011
Fossil-fuel subsidies also have an
environmental cost - clean energy
investments suffer as a result of cheaper
fossil fuels and CO2 emissions are also
exacerbated. According to the IEA’s 2011
World Energy Outlook, global spending
on fossil subsidies, defined by the IEA as
initiatives that directly lower the cost of
consuming or producing oil, natural gas or
coal, totalled US$ 409 billion in 2010, with
the figure expected to grow to US$ 630
billion in 2012. Comparatively, renewable
energy subsidies totalled approximately
US$ 66 billion in 2010. Even clean energy
subsidies (most frequently applied via
tax reductions and feed-in tariffs, as with
Germany’s solar industry) have come under
fire for their high costs in regions where the
price of renewable energy sources is far
behind grid parity.
57
The Economist, “Fossilised policy”, October 2009.
International Energy Agency (IEA), World Energy Outlook,
2011.
58
30
Estimated energy subsidies
2007
2008
2009
2010
Fossil fuels (consumption), of which
342
554
300
409
Oil
186
285
122
193
Gas
74
135
85
91
Coal
0
4
5
3
122
Electricity*
81
130
88
Renewable energy, of which
39
44
60
66
Biofuels
13
18
21
22
Electricity
26
26
39
44
*Fossil-fuel consumption subsidies designated as electricity factor out the component of electricity subsidies attributable to nuclear
and renewable energy – they reflect the under-pricing of electricity generated by the combustion of fossil fuels
What is preventing the removal of
fossil-fuel subsidies?
The energy industry offers some major
opportunities for fossil-fuel subsidy
reform, but the lobbying sector on behalf
of subsidies is often powerful and public
opposition to rapid phase out can be
strong. Since 2007, about 80% of fossil
fuel consumption subsidies have been
in net oil and gas exporting countries.59
Many producers propose that a subsidy
be seen as an opportunity cost for the
supply of energy below international prices.
The Russian Federation spends US$ 17
billion on natural gas subsidies while Iran,
a producer of both oil and gas, subsidizes
both fuels, spending US$ 66 billion in
total plus an additional US$ 14.4 billion
on electricity consumption subsidies.60
Industry and consumers enjoy the resultant
cheaper fuel prices. Many countries also
support fossil energy production in an
indirect fashion. For instance, energy is
taxed at a relatively low level in the United
59
International Energy Agency (IEA), “Fossil-fuel consumption
subsidy rates as a proportion of the full cost of supply”, World
Energy Outlook, 2011; available at www.iea.org/subsidy/
index.html.
60
International Energy Agency (IEA), World Energy Outlook,
2011
The Global Energy Architecture Performance Index Report 2013
States. According to the OECD, there are
federal tax breaks available for some types
of offshore oil and gas production.61 Tax
breaks can help refiners benefit from a
rebate of up to 50% on the cost of capital
equipment62 and a shortened depreciation
period for natural gas distribution pipelines
from 20 years to 15 years.
There are also social ramifications
associated with subsidy removal. Subsidy
cuts are often blinkered and neglect some
realities of infrastructural and institutional
deficiencies in the countries in which they
are enforced.63 When the fuel subsidy in
Nigeria was removed overnight in early
2012, many businesses, already impaired
by the relatively high cost of power supply,
become even less competitive, leading
to social unrest and nationwide strikes
headed up by labour and trade unions.
Of course a more nuanced and gradual
programme to remove subsidies may
make sound, practical sense. Nigeria is
61
Organisation for Economic Co-operation and
Development, Inventory of estimated budgetary support and
tax expenditures for fossil fuels, 2011; available at www.oecd.
org/site/tadffss/48805150.pdf.
62
US Department of Energy, Energy Policy Act (EPAct),
2005.
63
Bazilian, Morgan and Ijeoma Onyeji, Fossil fuel subsidy
removal and inadequate public power supply: Implications for
businesses, 2012.
3. Economic Growth and Development
currently an oil exporter that reimports
refined crude products, generating
value and employment externally, while
shouldering the burden of the cost of
its fossil-fuel subsidy. With spend on
subsidy approximately at 30% of total
federal government expenditure and 4%
of national income, this is an economically
inefficient situation.
How distortion is measured
The EAPI uses a “price gap” approach
to measure the impact of distortions
such as subsidy and tax on fuel prices,
a method with clear strengths and
weaknesses. Using Deutsche Gesellschaft
für Internationale Zusammenarbeit (GIZ,
the German agency for international
cooperation) data, the EAPI evaluates the
positive or negative difference between
a country’s domestic energy price and
the delivered price of crude imported
or exported, which can be translated
into the cost of supply by an efficient
market. This allows for the estimation
of price distortions with relatively little
data – a useful facet for a multi-country
index. However, it means the analysis is
sensitive to assumptions regarding what an
efficient market price is at any given time
and misses the full picture of support and
taxation mechanisms. And the approach
cannot account for non-cash transfers that
do not directly affect prices; for example,
an inefficient producer may still charge at
import parity, but be subsidized regardless.
Again, the EAPI cannot tell the full story
without a more detailed data set.
Action is required
Subsidies are failing their moral obligation.
The majority of the world’s high income
households have electricity, and the
world’s poorest, mostly rural households
do not.64 Subsidies are also harming
the wider economies of many different
countries. As the World Bank highlights,
India’s 25% fuel subsidy for liquefied
petroleum gas (LPG) for cooking has
survived only by importing LPG to meet
consumer demand. To keep the subsidies
under control, “India has limited imports
of LPG and limited retailers to distributing
LPG in urban areas.”65
On a global basis, the removal of fossil-fuel
subsidies could save the US$ 400 billion66
currently spent on the subsidies annually.
64
Of the US$ 409 billion total in consumption subsidies in
2010, only US$ 35 billion, or just 8%, reached the poorest
20% of income groups. A survey of 11 developing economies
comprising 3.4 billion people found that only 2% to 11% of
the poorest populations were actually benefitting from fossilfuel subsidies. Source: International Energy Agency (IEA),
World Energy Outlook, 2011.
65
World Bank, Energy Services for the World’s Poor, 2000.
66
International Energy Agency (IEA), World Energy Outlook,
2011.
The Global Energy Architecture Performance Index Report 2013
31
4. Environmental
Sustainability
From an EAPI perspective, environmental
sustainability is of equal importance to
both of the other imperatives of the energy
triangle.
The EAPI measures how countries’ energy
systems impact the environment across
two main areas:
1. Greenhouse gas and particulate matter
emissions from energy generation
activities
2. The ratio of low-carbon energy sources
in the fuel mix.
For high-income non-OECD and
high-income OECD economies – with
the highest impact energy sectors
performance against this imperative is
significantly lower than the other two. This
low performance is a function of three
factors:
1. The economic cost of building a truly
sustainable energy system
2. The high performance targets (based
predominantly on existing legislation
or official recommendations) used to
assess performance
3. The fact that environmental
sustainability was not a priority
component of the energy discourse
until recently, meaning countries
are naturally further behind on
environmental sustainability metrics
than against the other aspects of the
triangle (which have been the historic
concern of global energy systems).
This chapter explores the top performers
and some of the key issues relating to
environmental sustainability for the energy
sector.
Top Ten Environmental Sustainability Performers –
Key Takeaways
Figure 16: Map of top environmental sustainability performers
1st
6th
Sweden
0.76
2nd
0.71
7th
France
0.75
3rd
8th
Latvia
Ethiopia
Iceland
0.70
10th
Tanzania
0.72
– On average 72% of the top ten
countries’ total primary energy supply
comes from alternative energy sources
including nuclear and biomass.
This compares to the EAPI 2013
sample average of 29%. Biomass
considerations67 in this indicator
mean countries sometimes have an
overwhelming dependence on biomass
energy consisting of wood, charcoal
and agricultural residues. This ranking
therefore needs to account for the poor
contexts of many of the top-scoring
countries.
Nigeria
0.70
9th
0.72
5th
Zambia
0.71
0.74
4th
Mozambique
Slovak Rep.
0.69
– Energy-related emissions are generally
lower and average out at 0.58 metric
tonnes of CO2 per capita, against an
EAPI 2013 sample average of 2.89
metric tonnes of CO2 per capita.
Particulate matter (PM10) emissions
average at 22.8 micrograms per cubic
metre, against an EAPI 2013 sample
average of 37.7 micrograms per cubic
metre.
– The average fuel economy for
passenger cars is slightly lower than
the EAPI 2013 sample average at 8.2
litres/100 kilometres for the top ten
compared with an overall average of
9.46 litres/100 kilometres. To put this
in perspective, the Middle East North
Africa region averages 13.69 litres/100
kilometres while European countries
average at 7.18 litres/100 kilometres
– some of the developing countries
in the top ten still have work to do
around the adoption of fuel economy
measures that European countries
have pioneered.
67
Biomass here aligns with the IEA definition to include:
biogases, liquid biofuels, industrial waste, municipal waste,
primary solid biofuels and charcoal. Source: International
Energy Agency website at www.iea.org/stats/defs/sources/
renew.asp.
The Global Energy Architecture Performance Index Report 2013
33
Spotlight on Top Three Performers:
Sweden, France and Latvia
Some geological advantages allow Sweden
to exploit hydro resources. Both Sweden
and France use a large component of
nuclear in their total primary energy supply
(TPES) with low carbon impact, driving
performance in this section. Low PM10 and
CO2 emissions are also key performance
factors for the top three.
Sweden is the EU’s great success story for
clean energy production.
In 1970, oil accounted for over 75% of
Swedish TPES; then followed the oil shocks
of that decade, forcing a rebalancing of
the energy mix. Now the figure is 27%,
mainly attributable to the use of residential
heating oil. A further 65% of TPES comes
from alternative or nuclear energy sources
(the highest in the EU according to IEA
data). Sweden generates 43% of electricity
from hydropower and 39% from nuclear,
meaning carbon emissions from the
electricity and heat sector are the third
lowest in the EU, when broken down by
population.
With most of today’s energy demands
easily met domestically, Sweden has
been able to pursue a strong series of
sustainable energy policy objectives. The
Oil Free Society initiative and a green
energy certification programme, where
producers are granted one electricity
certificate for every megawatt-hour (MWh)
of renewable electricity generated (and
often obliged to buy them in proportion to
their supply or consumption profile) coupled
with a carbon taxation system implemented
in 1991,68 means Sweden has made
significant progress around its CO2 and
PM10 emissions, driving high scores across
these emissions indicators.
France is low carbon, low intensity
Due to its nuclear provision, France’s
CO2 intensity is one of the lowest in the
developed world, just behind Iceland
and Sweden, with a score of just 1.4
kilograms per kilogram of oil equivalent
energy used. Of the 51% alternative energy
that France uses for its TPES, 42% is
attributable to nuclear, according to the
International Energy Agency. The nuclear
sector generates a nuclear capacity of
63 gigawatts (GW)69 using 58 reactors,
and France is a large user and exporter of
low-carbon electricity, with exports heading
mainly to Italy and Switzerland. France is
also using its nuclear experience to pioneer
new reactor designs and is at the cuttingedge of nuclear fuel recycling programmes,
with reprocessed fuel generating about
10% of the country’s electricity per year
while saving up to 25% of the uranium
content of used fuel.70
68
Widegren, Karin, Renewable Energy Support in Europe:
The Swedish Experience, Energy Markets Inspectorate, 2011.
Nuclear Energy Agency, Country Profile: France, 2010.
70
Areva Group, company website: http://www.areva.com/.
69
34
France has framed up a series of policies71
to support its plan to see a 75% reduction
in CO2 emissions by 2050 and a reduction
in greenhouse gas emissions in the
transport sector to 1990 levels by 2020.
France already has an average passenger
vehicle fuel efficiency of 7.36 litres/100
kilometres, ranking it 20th overall and in
line with the European trend. France may
yet take advantage of the low-carbon
electrical generation mix by enlarging
its electrically powered transportation
sector (including the TGV high speed train
network). The relatively large solar PV
capacity (1.7 GW72) should grow over the
short-term as France’s current government
has advocated support for the technology
approving more than 200 large solar
projects totalling 541 MW in July, shortly
after it took office.
In Latvia, renewable energy initiatives are
well incorporated into national climate
change policy.
Latvia’s energy policy has a clear renewable
energy remit with targets to reach 40%
energy sourced from renewables by 2020
already underway. Currently, 37% of
Latvia’s TPES is from renewable sources
including biomass (none of Latvia’s TPES is
nuclear), based on exploiting the country’s
natural hydro and biomass resources.
Latvia’s electricity produced by renewable
sources is higher, at about 55% of total
electricity production, according to IEA
data, of which hydro accounts for 54%
from a cascade of dams on the Daugava
river. But the use of biomass in Latvia for
power production is growing. Wood is
a common local energy source used for
heat generation, currently accounting for
approximately 22% to 29% of primary
energy consumption in the country.
Electricity generation from coal and oil
stopped in 2004, and various initiatives, like
the 2010 Law on End-use Energy Efficiency
and Energy Development Guidelines
2007-2016, have been adopted in a bid
to reduce the average heat consumption
in buildings by at least 11% by 2016
and to improve energy efficiency in heat
production installations.73
Information campaigns to drive improved
literacy and energy audits have improved
energy efficiency in the residential and
services sectors, the largest energy
consumer groups in Latvia, using 54%
of total supply.74 Increasing final energy
consumption in the transport sector,
especially motor transport, is a current
issue, but given Latvia’s excellent average
fuel economy for passenger cars (slightly
better than the EU27 average of 7.18
71
These policies include The Energy Law (July 2005);
Grennelle de l’Environnement policy stipulates a 75%
reduction in emissions between 1990 and 2050 while also
setting specific targets for energy efficiency and renewable
energy sources.
72
PBL Netherlands Environmental Assessment Agency /
EC Joint Research Centre, Trends in Global CO2 Emissions,
2012.
73
ABB, Latvia: Energy efficiency report, 2011.
74
ABB, Latvia: Energy efficiency report, 2011.
The Global Energy Architecture Performance Index Report 2013
litres/100 kilometres), this is a problem that
will likely impact further down the line, as
further development encourages expansion
in transport networks.75
Spotlight: Iceland’s Remarkable
Environmental Sustainability
Journey
Iceland, 9th in the rankings for
environmental sustainability, now sources
100% of its electricity from alternative
sources. The country generates 73% of
electricity from hydro installations using
the vast array of rivers and glacial melt
waters, while underground heated springs
drive 27% of geothermal generation,
according to the International Energy
Agency. Iceland’s geothermal power and
heat sector is one of the largest in the
world: geothermal heated water provides
residential buildings with approximately
90% of their heating requirements.76
“Geothermal utilisation has reduced CO2
emissions in Iceland by some 2-4 million
tonnes annually compared to the burning
of fossil fuels.”77 This is more remarkable
given the country’s dependency, across
sectors, on fossil fuels up to the 1970s.
Like Sweden, Iceland was forced by the
decade’s price shocks to reconsider this
position.
The country is not first in this basket,
however. Fossil fuels still represent a
significant portion of TPES, with 2% of
the mix attributable to coal and 16%
attributable to oil. The fossil fuel-dependent
sectors such as transport and the large
fishing boat fleet still run mainly on
petroleum products.
From a policy perspective, Iceland is
pushing towards a zero carbon impact
– Iceland’s recent climate change
strategy sets out a vision of reducing net
greenhouse gas emissions by 50% to 75%
by 2050, from a 1990 emissions baseline.
This will involve reduction of the fossil fuel
component of the fuel mix and carbon
sequestration strategies (geothermal plants
emit small amounts of CO2 – the aim is
to capture and store them). With industry
taking advantage of the cheap, abundant
and clean geothermal energy resource
(new data storage centres are being built78
and the large aluminium manufacturing
sector uses geothermal energy to power its
smelting rigs) the future of Iceland’s energy
sector is looking very sustainable indeed.
75
Government of Latvia, National reform programme of
Latvia for implementation of the “Europe 2020” strategy,
2011.
76
Bjornsson, Sveinbjorn, Geothermal Development and
Research in Iceland, 2006.
77
Gunnlaugsson, Einar, Orkuveita Reykjavikur, CO2 Saving
by Using Geothermal Energy for House Heating in Iceland,
Workshop for Decision Makers on Direct Heating Use of
Geothermal Resources in Asia, United Nations University,
TBLRREM and TBGMED, Tianjin, China, 11-18 May 2008.
78
IT World, Iceland’s carbon-neutral data centre opens for
business, 2012.
4. Environmental Sustainability
Pull-out: Financing Renewables
Prepared using Bloomberg New Energy Finance data
Figure 17: Total new investment in clean energy
Source: Bloomberg, Global Trends in Renewable Energy Investment, 2011
$300,000
$250,000
$ US million
$200,000
$150,000
$100,000
$50,000
$0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
World - Total new investment in clean energy
The financing of renewable energy projects
is growing (see figure 17). Total global
investment in renewable energy grew to
around US$ 250 billion in 2011 according
to Bloomberg New Energy Finance data.
This was up 18% from 2010, and is almost
three times the level of investment in
2006.79 Yet the increasing numbers belie
a drop in the overall growth rate; between
2010 and 2011, growth was only 18%,
below the 39% rise in investment from
2009 to 2010.80
79
Liebreich, Michael, Bloomberg New Energy Finance, “Total
new investment in clean energy ($m)” chart for the Bloomberg
New Energy Finance Summit, 2011.
80
Ibid.
Uncertainty in the sector
The US was the big spender in 2011,
with US$ 51 billion worth of investment in
clean energy. The Obama administration
has encouraged renewables investment
though various means – tax incentives,
loan guarantees and other subsidies – and
launched new efficiency standards targets
for vehicles, with plans to double average
fuel efficiency by 2025 through a targeted
federal loan scheme. But a proposed cap
and trade scheme to limit CO2 emissions
was scrapped in 2009.
Germany has its bold Energiewende
(energy transformation) plan to meet
greenhouse gas emissions cuts from 1990
levels by 40% by 2020 and by 80% by
2050, even without nuclear. One of the
few rich countries to still be aggressively
pursuing a “staggering transformation of
the energy infrastructure”, Germany must
still build or upgrade 8,300 kilometres
(5,157 miles) of transmission infrastructure
and numerous backup generators to
counter the intermittency of its envisaged
wind and solar supply.81 The subsidies
required to fund renewables rebates will
ultimately lie with Germany’s consumers,
81
The Economist, “Energiewende”, July 2012; available at
www.economist.com/node/21559667.
The Global Energy Architecture Performance Index Report 2013
35
driving wholesale electricity prices 70%
higher by 2025 according to some
predictions.82
In the UK, the offshore wind industry is
facing challenges. The UK has over 636
turbines in 18 wind farms, over 55% of the
global market share, but political pressure
to cut costs, regulatory uncertainty and
Europe’s financial woes have stalled the
funding cycle. The troubled utilities sector
accounts for 80% of investment, with
an estimated £ 48.6 billion more needed
to meet 2020 offshore wind capacity
targets.83
In India and the People’s Republic of
China, the wind sector has also faced
issues. In the People’s Republic of
China, insufficient grid access is stalling
development, while the end of a key
tax break incentive in India may hurt
the sector’s growth trajectory through
2012, according to Ernst & Young’s
2012 Renewable Energy Country
Attractiveness Indices report. Italy has also
cut the preferential rates incentive scheme
awarded to renewable projects.
Clean energy offers a transition opportunity
to India and the People’s Republic of
China.
In the People’s Republic of China’s 12th
five-year plan (2011-2015), energy is a
critical concern. As Lin Boqiang comments
in his contribution to the Energy for
Economic Growth Energy Vision Update
2012, “Energy security concerns, energy
scarcity, high energy costs and mitigation
of negative environmental externalities
may present challenges to the People’s
Republic of China’s ability to continue
along a path of sustainable economic
growth.”84 India faces similar challenges,
with only half of the generation capacity
expected realized over the last 15 years. Its
creaking, coal-dependent grid is coming
under ever increasing strain.
Both countries are looking to renewables
in light of their supply challenges. In 2010,
17% of India’s electricity generation was
attributable to alternative and nuclear
energy sources, 12% hydro, 2% solar, and
3% nuclear according to IEA data. The
same year, India added nearly 2.3 GW
of wind capacity, “reaping the benefits
of this trend [towards wind] as Indian
manufacturers of wind products expand
[to] capitalize on India’s currently favourable
regulatory regime for renewable energy.”85
India’s government has also approved
plans to boost solar capacity to 2 GW
sample of country scores for environmental
sustainability was selected for comparison
against the remaining sample.
in the next ten years – a growth plan of
unprecedented scale in this technology
(the US has just over 9 GW installed and
has developed this portfolio over a far
longer timeframe).
Figure 18 shows an average level of per
capita investment for the top quartile
performers 22% larger than the rest of the
sample for 2013. The results reflect more
generally the industrial and consumption
profiles of the two clusters; the top
quartile, though party to many developing
countries, contains a significant proportion
of diversified or large service-based
economies. These countries generally have
deindustrialized GDP bases, with increased
investment in renewable energy and
improved performance against emissions
targets that are potentially easier to achieve
than average. Although the rest of the
sample includes Australia, the US, the
United Arab Emirates, Canada, Singapore,
Italy and Germany – all large investors per
capita – the generally higher energy and
emissions intensity of the wider sample
sees an overall poorer performance against
the environmental sustainability metrics.
These plans have been aided by Chinese
solar enterprise. Panel makers are
constantly reducing the cost of silicon
panel technology – recently, prices have
declined by about 35% to less than US$
1 per watt.86 The People’s Republic of
China’s five-year plan includes targets
for reducing energy intensity and
increasing the share of non-fossil fuels
across industry and identifies industries
that should contribute up to 8% of
GDP by 2015, many of which are in the
field of sustainable energy. According
to Bloomberg New Energy Finance
figures, approximately US$ 51 billion
was invested in the People’s Republic of
China’s renewable energy sector in 2011,
fractionally below the US investment, but
roughly 20% of total global investment in
the sector during that year.87
The relationship between renewable
energy policy and environmental
sustainability performance
Using clean energy to mitigate climate
change
How do the varying clean energy
investment rates by country correlate with
the EAPI’s environmental sustainability
scores? Unsurprisingly, fairly well. Figure
18 compares Bloomberg’s investment data
against the average sustainability scores
awarded to different country samples.
The approach is intended to highlight
whether there is a meaningful correlation
between investment in clean energy and
improved performance on this aspect of
the energy triangle’s set of indicators. To
draw out the analysis, the upper quartile
86
Renewable Energy World, Investing in Dragons and Tigers:
The Allure of China and India, 2012.
87
Liebreich, Michael, Bloomberg New Energy Finance, “Total
new investment in clean energy ($m)” chart for the Bloomberg
New Energy Finance Summit, 2011.
As the IEA notes, the global economy-wide
costs of decarbonizing power networks
will likely result in only a small reduction
in overall economic growth rates.88
Given the often lower operating costs
and the genuine comparative advantage
alternative energy can offer, especially
in many developing countries, policymakers should not be too quick to forget
the implications of severe global warming
nor miss opportunities to shift to a more
environmentally sustainable energy model.
88
The low-carbon scenario referred to in the IEA’s Summing
up the Parts report shows a total investment requirement
between 2010 and 2050 US$ 46 trillion higher than that
of the baseline scenario. However, this cost is offset by
(undiscounted) fuel savings of US$ 112 trillion, so that the
increased investment results in overall net savings compared
to the baseline scenario. Source: International Energy Agency
(IEA), Summing up the Parts, 2011.
Figure 18: EAPI environmental sustainability scores vs total new investment in clean energy
per capita
Source: World Economic Forum Analysis; Bloomberg New Energy Finance
EAPI environmental sustainability score 2013
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
$86.33
Upper quartile
0.67
$70.62
Rest of EAPI sample
82
The Economist, “Energiewende”, July 2012; available at
www.economist.com/node/21559667.
83
The Financial Times, “Offshore wind: Financing woes pose
a threat to 2020 target date”, 1 June 2012.
84
World Economic Forum and IHS CERA, Energy for
Economic Growth Energy Vision Update, 2012.
85
World Economic Forum and IHS CERA, Energy for
Economic Growth Energy Vision Update, 2012.
36
The Global Energy Architecture Performance Index Report 2013
0.50
$-
$20
$40
$60
$80
Total new investment in clean energy ($) per capita
Average total new investment in clean energy (million US$), 2011
Average environmental sustainability score 2013
$100
4. Environmental Sustainability
Pull-out: How Does Nuclear Impact EAPI Performance?
Every country must make its own choices
around its fuel mix. However, as figure 19
shows, countries that have low-carbon
fuel mixes score better in the EAPI 2013
due to the reduction in fossil fuel-related air
pollution and reduced CO2 emissions they
entail.
As nuclear generation is low carbon,89 it
contributes positively to environmental
sustainability scores on the index. We
wished to include an indicator that spoke
to the storage implications of spent fuel
deposits generated by nuclear facilities.
89
This definition is consistent with the International Energy
Agency (IEA) Energy Technology Perspectives 2010 BLUE
Map scenario, which describes how annual CO2 emissions
can be reduced by 50% from 2005 levels, with nuclear power
providing 24% of global electricity production.
Nuclear waste emits ionizing radiation
that is harmful to humans and ecological
systems if not processed and stored
properly. Temporary safe storage methods
exist, but currently there is no universally
accepted long-term storage method.
Data for waste processing techniques
and volumes was not available for the
105 countries assessed by the EAPI, and
accurate estimation of volumes and types
of waste treated by country is limited due
to the large amount of contracted waste
disposal and the different types of disposal
strategies employed by different countries.
The next iteration of the EAPI will aim to
access better, more detailed data around
nuclear waste.
Ultimately, the EAPI does not penalize or
reward nuclear, nor any fuel type, based
on its perceived economic efficiency – it
captures this component of a country’s
energy systems in the end prices of the
fuels measured. Each country must make
its own choices regarding the acceptability
of and investment in different fuel sources,
nuclear included. Many countries are
reassessing the role of nuclear post
Fukushima, with countries such as
Germany and Japan gradually replacing
nuclear with other fuel sources and other
countries moving ahead with nuclear as
part of the fuel mix.
Figure 19: The contribution of nuclear to the low-carbon energy mix
Source: World Economic Forum analysis; IEA data
0.76
16,599
18,000
16,000
0.74
EAPI 2013 score
12,000
0.70
10,000
0.68
6,744
8,000
0.66
6,000
0.64
Thousand tonnes oil equivalent (ktoe)
14,000
0.72
4,000
0.62
2,000
0.60
0
Norway
Sweden
France
Switzerland
New Zealand
Colombia
Latvia
Denmark
Spain
United Kingdom
EAPI 2013 score
EAPI 2013 score (discounting low-carbon benefit of nuclear to environmental sustainability score)
Average nuclear in mix of top 10 countries (ktoe)
Average nuclear in mix of EAPI sample (ktoe)
The Global Energy Architecture Performance Index Report 2013
37
5. Energy Access
and Security
All countries need a few staple
components to ensure energy security.
These include reliable networks for
transmitting and distributing energy,
reducing vulnerability to supply shocks
(particularly for countries dependent on a
limited range of sources) and management
of relations among energy trading partners.
Consumers need ready access to energy,
but many nations are failing this remit.
Today, 1.5 billion people have no access
to electricity, while 3 billion people still
use cook stoves and traditional biomass
for domestic heating and cooking. With
the UN Secretary-General’s stated
goal to “achieve universal access to
modern energy services by 2030,”90
these numbers feel uncomfortably large.
Inefficient, antiquated energy supply stifles
productivity (foraging for biomass is not a
national revenue generator – the proportion
of households in developing countries
using biomass for cooking declines
approximately 0.16% for every 1.0% of
income growth91), impairs health (the
smoke from inefficient cooking, lighting,
and heating devices kills nearly 2 million
people a year and is responsible for a
range of chronic illnesses92) and makes first
priority services such as healthcare and
education harder to deliver.
In short, when it comes to assuring ready
access to secure energy, the world still has
plenty to do. This chapter will explore how
various countries have performed against
this aspect of the energy triangle, highlight
some best practices and consider some
of the behavioural changes that need to
occur in order to boost the aggregate
scores for energy access and security – on
both the supply and demand sides.
The Energy Architecture Performance
Index (EAPI) measures how secure each
country’s energy systems are and the level
of access to energy in three main areas:
1. Diversity of supply
2. Level and quality of access to energy
sources
3. Self-sufficiency
90
United Nations Foundation, Achieving Universal Energy
Access; available at www.unfoundation.org/news-and-media/
multimedia/videocasts/achieving-universal-energy.html.
91
World Bank, Modern cooking solutions: status and
challenges, 2011.
92
United Nations Foundation, Achieving Universal Energy
Access; available at www.unfoundation.org/news-and-media/
multimedia/videocasts/achieving-universal-energy.html.
Top Ten Energy Access and Security Performers –
Key Takeaways
Figure 20: Map of top energy access and security performers
1st
Norway
6th
0.95
2nd
Canada
7th
0.82
3rd
Denmark
Australia
8th
Finland
0.81
Germany
0.79
9th
0.81
5th
Sweden
0.80
0.82
4th
Oman
0.80
Switzerland
0.79
10th
Austria
0.79
The Global Energy Architecture Performance Index Report 2013
39
–
There is an exact split between net
energy importers and exporters in the
top ten, with the five net exporters
exporting an average of 228% of
the energy they consume and the
importers importing on average 53%
of the energy they consume.
– Whether the countries are exporters or
importers, they all (with the exception
of Oman) have a highly diversified total
primary energy supply with an average
score of 0.88 on the Herfindahl index
(which measures the concentration of
different fuel types in a country’s total
primary energy supply). The top ten are
thus able to capitalize on geological
advantages or a well-established
trade network to ensure supply is not
dependent on too few energy sources.
Excluding Oman (which relies overtly
on extracted hydrocarbons to power
itself), the average diversity score is
0.93 – far above the EAPI 2013 sample
average of 0.68.
– 96% of the top ten’s population enjoys
access to electricity and an average
quality of electricity supply of 6.61 / 7.
This compares to an average of 87%
electrification and score of 4.84 / 7 for
the entire EAPI 2013 sample. Less than
5% of the population of each country
uses solid fuels for cooking.
Spotlight on Top Performers:
Norway, Canada, Denmark and
Oman
Norway enjoys secure energy and provides
energy security to trade partners.
Norway has an excellent energy security
score. It is also a reliable and transparent
supplier. Its economy is largely fuelled by
its oil and gas production. The industry
generates enormous revenues for Norway.
This is reflected in the high score for net
energy imports, scoring -562.95% (as a
percentage of energy use) for 1st place,
which indicates that it is a well-established
supplier while speaking to the country’s
self-sufficiency as an energy producer with
zero (net) imports.
With demand for oil and gas likely to
rise over the near-term, Norway is
positioning itself well by aiming to increase
both production and recovery rates by
opening new acreage for exploration – for
example the recent maritime delimitation
treaty between Norway and the Russian
Federation, through which Norway has
gained 54,000 square miles (139,859
square kilometres) of continental shelf for
the development of oil and gas deposits.93
As part of the Nordic wholesale market,
Norway enjoys access to a liberalized
cross-border integrated electricity market.
Its plentiful hydropower and natural gas
allocations are ideally suited to variable
power generation back-up (e.g. wind)
93
International Energy Agency (IEA), Energy Policies of IEA
Countries (Norway), 2011.
40
and are strong drivers for further crossborder interconnections. There is capacity
for Norway’s hydro to balance supply
and demand peaks on a wider European
market, boosting Norway and Europe’s
security of supply. This is especially
important given Norway’s almost complete
reliance on hydropower for electrical
generation, as the score of 0.85 (rank
27th) for diversity of total primary energy
supply (TPES) reveals; expanding the grid
transnationally will mean less exposure to
supply constraints during periods of low
hydropower availability.
Norway’s access metrics display
strong scores on every measure, with
electrification rates at 99.8% and the
percentage of the population using solid
fuels for cooking at less than 5%. Norway’s
quality of electricity supply scores 6.5 out
of 7, indicating a supply that performs (in
terms of lack of interruptions and lack of
voltage fluctuations) near to the highest
standards in the world. Norway has little to
improve with regard to the level of access,
quality and modernity of its electricity
supply.
Canada’s diverse portfolio of energy
resources drives its high performance.
Canada is a diverse and varied set of
provinces, but its energy security policy is
centrally managed to deliver against some
clear national objectives. Canada is a net
exporter of both its oil and gas resources.
From an oil security perspective, Canada’s
oil sands have been a game changer –
they represent the majority share of the
173.6 billion barrels of proven oil reserves,
ranking Canada 3rd globally and the
majority (99%94) of production goes to a
long established and stable trade partner
– the United States. Canada’s excellent
score for net energy imports of -55.01%
(as a percentage of energy use) speaks
to its strong position as an exporter. Here,
geography plays a large role: Canadian oil
exports generally stem from the western
provinces, directed to refineries in the US
Midwest and following the established
network of pipelines.
Some of Canada’s urban and densely
populated eastern provinces import
a portion of the energy products they
consume, including crude oil from the
US. This is small in terms of the overall
import/export picture, but, even so, the
government would do well to consider
mitigating strategies for the risk of supply
disruptions, some of which have impacted
the central and eastern refineries over
recent years. As the main risk of supply
shortages revolves around refined products
rather than crude oil, plans to create
a strategic petroleum reserve (which,
surprisingly, Canada does not have) were
still under discussion as of mid-2012.
The picture for natural gas is rosy. Canada’s
market is deep, efficient, competitive and
secure and in the event of a physical supply
94
US Energy Information Administration, Canada Country
Analysis, 2012.
The Global Energy Architecture Performance Index Report 2013
disruption, the federal government or
provincial jurisdictions have clear authority
to control natural gas flows. High prices are
more of a threat than physical infrastructure
failure.
Denmark has a bold energy security
strategy.
Denmark’s approach to energy
security is considered and simple:
reduce consumption through efficiency
programmes, boost use of renewables and
collaborate closely with European markets.
It is also fairly bold; Denmark aims to be
independent of fossil fuel use by 2050.
These priorities are as set out in its Energy
Strategy 2050.95
Denmark has demonstrated a strong
historic track record of innovative and
inclusive policy-making measures. As
the International Energy Agency (IEA)
comments in its 2012 Energy Policy
Analysis of Denmark, the Energy Strategy
2050 is the outcome of a, “long and stable
process and is a continuation of previous
policies which commenced in the 1980s
and existing uniquely-Danish energy
agreements.” Denmark’s strong scores in
this section of the EAPI are proof; it scores
0.93 for TPES diversity (of which over 22%
is generated by renewable energy sources
made up predominantly of biomass and
wind – Denmark uses no nuclear) indicating
a balanced source of supply portfolio.
It is also a net energy exporter, scoring
-17.90% for net energy imports (as a
percentage of energy use). As with Norway,
its access metrics display strong scores
on every measure, with electrification
rates at 99.8% and the percentage of the
population using solid fuels for cooking at
less than 5%. It scores first for quality of
electricity supply with 6.9 out of 7.
Looking forward, Denmark’s energy
security strategy seems exciting and
innovative. Critically, its Energy Strategy
2050 shows prescience and an
understanding of the targets that it has set
itself and the stakeholders it must manage
to ensure security of supply, as well as
performance against economic growth
and development goals and environmental
sustainability. The document puts findings
by the Climate Commission into action by
clearly outlining the policy and principles
needed to enable a successful transition
to a fossil fuel-free energy system. The
strategy is technology neutral, and
stipulates a clear, time-banded roadmap
towards the realization of objectives around
energy efficiency, heating and electricity
production, transport, and connection to
a linked European energy system. It also
allows for variation in the operational life of
technologies and policies, technological
maturity and prices across the energy
system.96
95
In 2011, the government published its Energy Strategy 2050,
a detailed and ambitious policy document that contains a series
of new energy policy initiatives, the purpose of which is to build
on existing policies and transform Denmark into a low-carbon
society with a stable and affordable energy supply.
96
International Energy Agency (IEA), Denmark Energy Policy, 2012.
5. Energy Access and Security
Pull-out: Energy Security and the Rate of Technological Change
A common observation is that the world’s
energy infrastructure changes slowly.
As Simon Henry, Chief Financial Officer
of Royal Dutch Shell, commented in the
World Economic Forum’s 2011 New
Energy Architecture: Enabling an effective
transition report, “once a new energy
technology is proven, it takes about 30
years for it to achieve 1% of the overall
market… New energy sources take time
to develop because of the massive scale
of our modern energy system, which has
been more than a century in the making.
And because of the need to build industrial
capacity and learn by doing.” Frequently,
statistics bear out this judgement; it took
50 years for the proportion of coal and in
global total primary energy supply (TPES)
to increase from 2% to around 10% in
the mid-1850s. It was the same journey
for nuclear generation. In the US, nuclear
delivered 10% of all electricity after 23
years of operation, taking 38 years to reach
a 20% share in 1995. Electricity generation
by natural gas turbines in the US followed a
similar trajectory; it took 45 years to reach
20% of the US TPES mix.97
However, these changes need to be put
into context in order to be interpreted
correctly. Long lead times (of between
50 to 70 years) in terms of technology
shifts are mostly characteristic of energy
systems in which the entire infrastructure is
reworked (see figure 21). Existing networks
lock-in their technology of choice, creating
price and compatibility barriers to new
technologies that slow the rate of diffusion.
97
Smil, Vaclav, “A Sceptic Looks at Alternative Energy”,
Spectrum, Institute of Electrical and Electronics Engineers,
July 2012; available at spectrum.ieee.org/energy/renewables/
a-skeptic-looks-at-alternative-energy/0.
Figure 21: Rate of energy source market share growth in the United States
Source: Smil, Vaclav, “A skeptic looks at alternative energy”, Spectrum, Institute of Electrical and Electronics Engineers, July 2012
Wind
Years to supply 5%
of all primary energy
Nuclear & wind
have not reached
25%; solar PV is
negligible
Nuclear
Years to supply 25% of
the market share after
reaching 5%
Natural gas
Oil
Coal
1750
1775
1800
1825
1850
1875
1900
1925
1950
1975
2000
An energy technology takes a lifetime to mature. In the United States, for instance, it took coal 103 years to account for just
5% of the total energy consumed and an additional 26 years to reach 25%.
Succeeding technologies hit the 5% benchmark sooner, but the 25% benchmark as late or even later: in the United States,
nuclear power still has not gotten there.
The Global Energy Architecture Performance Index Report 2013
41
Figure 22: US share of total fossil fuel generation (all sectors)
Source: US Energy Information Administration
The more modular or
localized the change is, the
faster and more effective
the change process, all
other things being equal.
90%
Share of total fossil fuel generation (all sectors)
80%
Kwok Shum Professor of Sustainability, Akio
Morita School of Business, Anaheim
University
70%
65%
60%
50%
40%
34%
30%
20%
10%
0%
1950
1%
1960
1970
1980
Coal
When technology diffusion takes place
within an existing network, the rates of
change can be much faster.98 An example
of this would be the significant switch
around the world from coal and oil-based
electric generation to natural gas, a
process accelerated by existing networks
of large electric grids. Accordingly, the
world may see a far greater rate of
change as electric power systems start
to decarbonize. In the US, the expansion
of gas production from shale has pushed
gas prices down 69% over the past four
years, and seen natural gas-fired plants
expand to absorb 34% of the generation
mix (see figure 22).99 This shift will probably
impact positively on EAPI results for the US
moving forward, as CO2 emissions from
heat and electricity generation fall.
While macro-systemic changes in energy
architectures may be slow to unfold, intragrid network changes can be more within
the 25-35 year range. This faster transition
time has benefits. Lower carbon fuels can
replace legacy infrastructures to yield more
energy per unit of carbon pollution, thus
potentially decarbonizing the global primary
energy supply by 0.3% per year.100
Energy security and technology
development are inextricable. As the IEA
has suggested, increased energy efficiency
though the accelerated deployment
of low-carbon technologies can help,
“cut government expenditure, reduce
energy import dependency and lower
98
Grubler, Arnulf, Nebojsa Nakichenovich, David G. Victor,
Dynamics of energy technologies and global change,
Abstract, 1999.
99
Bloomberg, “Natural Gas Matches Coal as Top U.S. Power
Fuel”, 2012; available at www.bloomberg.com/news/201208-03/natural-gas-matches-coal-as-top-u-s-power-fuelbgov-barometer.html.
100
Grubler, Arnulf, Nebojsa Nakichenovich, David G. Victor,
Dynamics of energy technologies and global change,
Abstract, 1999.
42
emissions.”101 Technological diversification
of energy supply improves energy security
and drives economic benefits: countries
could save a total of 450 exajoules (EJ) in
fossil fuel purchases by 2020 equating to
the last six years of total fossil fuel imports
among OECD countries through the
adoption of new technologies. According
to the IEA 2DS scenario,102 “by 2050, the
cumulative fossil fuel savings in the 2DS
are almost 9,000 EJ – the equivalent of
more than 15 years of current world energy
primary demand.”103 From a security point
of view, this represents an opportunity.
How new technologies in transport may
improve security of supply.
Transportation is one sector that looks set
for significant technological change over
the near-term, and this will revolve around
efficiency. The sector is energy hungry;
demand has doubled since the 1970s and
the share of overall final oil consumption
attributable to transport has increased by
46% (53% between 1990 and 2010).104 In
the US, fuel economy (a measure of the
productivity of each vehicle mile travelled in
the US economy) continues to improve and
is likely to do so over the near to mid-term
according to the US Energy Information
Petroleum
1990
2000
2010
Gas
Administration (EIA), due to further
regulation like the Energy Independence
and Security Act (EISA).105
This effect is not just limited to the
US; the International Council on Clean
Transportation (ICCT) estimates that the
global car fleet, though expected to double
over the next 20 years, will see improving
fuel efficiency (see figure 23).106 Indeed,
global demand for transport is almost
certain to balloon over the near-term – the
IEA projects that transport fuel demand will
grow by about 40% by 2035.107 This has
security implications. To manage them,
policy-makers will need to encourage the
behavioural shifts required to improve
vehicle efficiency and bolster the regulations
that force manufacturers to improve vehicle
efficiency metrics, as the European Union
has done by strengthening the bind of its
preliminary voluntary agreements.108 This is
especially true of medium- and heavy-duty
vehicles used to transport goods, which
account for most emissions.
101
International Energy Agency (IEA), Energy Technology
Perspectives, 2012.
102
The International Energy Agency’s (IEA) Energy
Technology Perspectives 2012 2°C Scenario (2DS) explores
the technology options needed to realize a sustainable future
based on greater energy efficiency and a more balanced
energy system, featuring renewable energy sources and
lower emissions. Its emissions trajectory is consistent with the
IEA World Energy Outlook’s 450 scenario through 2035. The
2DS identifies the technology options and policy pathways
that ensure an 80% chance of limiting the long-term global
temperature increase to 2°C - provided that non-energy
related CO2 emissions, as well as other greenhouse gases,
are also reduced.
103
International Energy Agency (IEA), Energy Technology
Perspectives, 2012.
104
McKinsey Global Institute, Resource Revolution: Meeting
the world’s energy, materials, food, and water needs, 2011.
The Global Energy Architecture Performance Index Report 2013
105
US Energy Information Administration (EIA), Fuel economy
standards have affected vehicle efficiency, August 2012;
available at www.eia.gov/todayinenergy/detail.cfm?id=7390.
106
International Council on Clean Transportation (ICCT),
Global Passenger Car Fuel Economy and/or Greenhouse Gas
Emissions Standards, 2010.
107
International Energy Agency (IEA), CO2 Highlights, 2011.
108
International Energy Agency (IEA), CO2 Highlights, 2011.
5. Energy Access and Security
Figure 23: Projected passenger vehicle emissions fleet average performance and standards
by region
Source: International Council on Clean Transportation
300
grams CO2/km
250
200
150
100
50
0
US
EU
People's Republic of China
If major car manufacturers in the United
States, Europe, the People’s Republic of
China and Japan commit to tightened
fuel economy standards, the average fuel
economy of new light-duty vehicles could
improve from “7 litres per 100 kilometres
today to just below 5 litres per 100
kilometres in 2030.”109 Further technological
developments and reduced cost curves
could encourage a move to new, preferably
low-carbon fuels and technologies. As
noted by the National Petroleum Council
(NPC) in its 2012 paper Advancing
Technology for America’s Transportation
Future, many new technologies are
relatively unproven; but with technologyneutral policy designed to support
innovation in transport technologies, the US
(and the world) can expect to see electric
and plug-in hybrid vehicles, hydrogen
fuel-cells, ultra-light vehicle materials and
a greater use of biofuels blended with
traditional automotive fuels as the new
potential engines of change.110
When mature, these technologies (if
combined with effective fuel duties and
the removal of fossil-fuel subsidies) could
reduce the burden on domestic fuel
supplies, minimizing the threat of supply
disruptions. As a sector more susceptible
than most to the geopolitics of oil trade,
the world’s transport networks can act as
an efficient lever in the transition to a new
energy architecture.
109
McKinsey Global Institute, Resource Revolution: Meeting
the world’s energy, materials, food, and water needs, 2011.
110
National Petroleum Council (NPC), Advancing Technology
for America’s Transportation Future, 2012.
The Global Energy Architecture Performance Index Report 2013
43
6. Key Takeaways and
Focus Areas
While accepting that each and every
country has a distinct set of energy
priorities and opportunities, Energy
Architecture Performance Index (EAPI)
analysis has shown some key themes that
are developing across the various regions
and economic clusters. This section
will draw on some of the focus areas,
as derived from the results of the EAPI,
that countries within the cluster should
concentrate on targeting in order to drive
up their result on the EAPI and improve
their energy system performance moving
forwards.
Figure 24: High-income OECD and non-OECD cluster performance on the EAPI 2013
Economic growth
and development
0.58
High-income OECD
High-income non-OECD
0.44
0.31
0.72
0.55
0.77
Key Takeaways
Nobody’s perfect - and
improvements in environmental
sustainability especially should
be a global priority.
Not one country scores perfectly in the
2013 EAPI. That is reflective of the core
message behind the index: the global
energy architecture still has a long way to
go before it can claim to meet the three
imperatives of the triangle. Of these three
objectives, environmental sustainability is
an area that needs significant attention.
For advanced and high-income economies
– with the highest impact energy sectors
performance against this imperative is
lower than the other two (see figure 24).
This low performance is a function of three
factors:
1. The economic cost of building a truly
sustainable energy system
2. The high performance targets (based
predominantly on existing legislation
or official recommendations) used to
assess performance
3. The fact that environmental
sustainability was not a priority
component of the energy discourse
until recently, meaning countries
are naturally further behind on
environmental sustainability metrics
than against the other aspects of the
triangle (which have been the historic
concern of global energy systems).
Tough assessment is critical here; targets
considered and set by experts in the field
of pollution mitigation and climate policy
need to be met. Given the overall global
underperformance, it will be interesting to
see how the countries assessed by the
EAPI progress in this area most especially.
Energy access
and security
Environmental
sustainability
Globally, some big issues
around fossil-fuel subsidies,
water use for energy production
and effective management of
resource wealth need addressing.
A large natural energy resource
endowment is not a critical
performance factor.
Having a large provision of exploitable
natural resources has enabled high
performance for many of the countries
under analysis. But the prevalence of
countries without large endowments in
the upper quartile of results indicates the
importance of efficiency and sustainability
measures, largely linked to the degree
and efficacy of a country’s energy policy.
Hence countries like Switzerland, Latvia
and France are in the top ten performers
overall. Higher gross domestic product
(GDP) levels and a diversified economic
base allow the top performers to
manoeuvre policy in a way that meets the
three objectives of the energy triangle.
Many hydrocarbon-rich nations with high
to median GDP levels also score poorly
within the index. This reinforces how
resource wealth needs to be managed
effectively to drive economic growth as
well as development, and to mitigate
negative environmental externalities
due to reliance on hydrocarbons in total
primary energy supply (TPES). Resources,
particularly hydrocarbons, can be a boon
or a burden depending on the policies
employed to manage their development.
While helping on some security metrics,
they may impact especially badly on the
economic growth and development and
environmental sustainability performance of
an energy system if exploited without due
consideration.
A concerted global effort is needed to
gather more data around the application
of fossil-fuel subsidies, water use per
type of energy generation and extraction
technology (and the stress this places on a
country’s overall water resources), and the
best models for the development of energy
resources. Against each of these energy
priorities, a paucity of detailed global data
is limiting action – neither the EAPI nor
any index can paint the full picture of a
country’s energy situation and priorities
without a more detailed view of these
factors and their impact on a country’s
energy architecture.
Managing the trade-offs and
complementarities
Managing the transition to a new energy
architecture is not easy. The imperatives
of the energy triangle may reinforce or act
in tension with one another, forcing difficult
trade-offs to be made, and, in some cases,
meaning that decisions have unintended
consequences. Efforts to bolster energy
security through diversification may, for
example, have negative implications for
environmental sustainability. This can be
seen in practice as the European Union
(EU) takes advantage of cheaper coal
imports from the US. Data from Point
Carbon estimates that increased EU coal
use will drive a 2.2% rise in EU carbon
emissions in 2012, after a 1.8% drop in
2011.111
111
Lewis, Barbara and Karolin Schaps, “Coal exports make
U.S. cleaner, EU more polluted”, Reuters, 25 September
2012; available at uk.reuters.com/article/2012/09/25/useurope-emissions-shale-idUKBRE88O0GC20120925.
The Global Energy Architecture Performance Index Report 2013
45
In response, some utilities are attempting
to make coal clean as well as economical.
Coal gasification and carbon capture
technologies can reduce greenhouse
emissions from a conventional power
plant by 80% to 90%, but the trade-off
is the increased cost of facilities (up to
91% greater than a conventional plant).112
Policies that support diversification may
also come at a considerable cost, with the
expansion of technologies not yet at grid
parity requiring continued financial support
from feed-in tariffs and other financial
mechanisms.
Focus Areas for
Selected Regional
and Economic
Clusters
Figure 25: Focus areas for selected regional and economic clusters
In some instances, there are “silver bullets”.
An example is Iceland’s development
of profitable and clean data centres.
Iceland’s electricity is provided by 100%
renewable energy sources. This clean
and cheap electricity source (a local utility,
Landsvirkjun, offers a public rate of US$
43 per megawatt for 12 years113) coupled
with its cool climate means a data centre
can operate more energy efficiently and
with less carbon impact. In this example,
environmental advantages are realized with
total cost of ownership up to 60% lower
than a similar deployment in London.114
There is no easy formula for managing
these trade-offs and complementarities.
What is required is a conscious awareness
that such balances between the
imperatives of the triangle exist and that
they are nuanced. In response, decisionmakers must ensure that they carefully
weigh their choices, creating a portfolio of
policies to create an energy mix that best
balances the challenges and opportunities
of the energy triangle.
EU 27
Selected data
Average
Score ( 0-1 )
0.63
0.57
0.58
0.74
EAPI 2013
Economic Growth and Development
Environmental Sustainability
Energy Access and Security
Further work to do on sustainability
Environmental Sustainability: EU27 scores above EAPI average on
environmental sustainability - 0.58 - but score lags far behind
comparably developed Nordic economies with 0.62
CO2 prices: Have decreased with economic slowdown
dis-incentivising low carbon energy project development
Defining roadmap and regulations for regional interconnection: A
priority, to minimise reliance on imports external to the EU zone
(predominantly from Norway and Russia).
North America
Selected data
EAPI 2013
Economic Growth and Development
Environmental Sustainability
Energy Access and Security
Average
Score ( 0-1 )
0.60
0.58
0.40
0.80
Focus on energy intensity and emissions
Energy Intensity: Critical measure for both U.S ($6.53 GDP per unit) and
Canada ($5.22). Improving industrial / residential building stock
performance and average fuel economy for passenger cars (regional
average of just 9.26 l/100km) could help
CO2 emissions: Critical focus (U.S. ranks 96th for CO2 from electricity
and heat production / total population, Canada 88th). Reduced demand
for gasoline due to economic crisis and drops in coal-fired electricity
generation, but U.S. supplies just 16% of TPES from low carbon
technologies (Canada 26% - could be better given low carbon opportunities). Problem needs attention with shale gas’ role in power mix moving
forwards (global production likely to reach 30% by 2030 - 70% of this
from North America).
Latin America and the Caribbean
Selected data
EAPI 2013
Economic Growth and Development
Environmental Sustainability
Energy Access and Security
Average
Score ( 0-1 )
0.57
0.56
0.55
0.61
Each of the sub-indices offer focus areas for LAC
112
Intergovernmental Panel on Climate Change, Special
report on Carbon Dioxide Capture and Storage, 2005.
113
Pike Research, Iceland Bets on Green Data Centers, April
2012.
114
Pike Research, Iceland Bets on Green Data Centers, April
2012.
46
The Global Energy Architecture Performance Index Report 2013
Economic Growth and development: Subsidies across all fuel types
often used by LAC governments to try and improve social equity - could
lead to deteriorating price distortion score (current score for this indicator
aligns with EAPI sample)
Environmental Sustainability: LAC score (0.55) aligns with EAPI average
(0.54). Alternative energy sources relatively well utilised, 33% of LAC’s
total primary energy supply, but PM10 performance poor – could
potentially improve vehicle efficiency (LAC scores 0.55 for the Average
Fuel Economy for passenger cars (l/100km) indicator, below EAPI average
of 0.61
Energy Access: Priority to improve quality of electricity supply. New
energy wealth pouring into different parts of region could be managed to
translate into social development and prevent indirect de-industrialisation
6. Key Takeaways and Focus Areas
ASEAN & Developing Asia (DA)
Average
Score ( 0-1 )
Selected data
0.50
0.41
0.54
0.56
EAPI 2013
Economic Growth and Development
Environmental Sustainability
Energy Access and Security
Each of the sub-indices offer focus areas for Asia
Energy Intensity: $5.78 per unit for DA countries and $6.79 for ASEAN,
compared with $7.14 for EAPI sample. Better efficiency can mitigate
increasing energy demands from predominantly coal and nuclear sources
Environmental Sustainability: Average regional score of 0.54, comes in far
below top performers’ average of 0.72. Increased use of alternative fuel
sources would reduce emissions impact, improving scores
Energy Access: DA countries need to focus on lack of energy access
impeding economic growth and development. DA countries score only 0.47
across access metrics, ASEAN averages at 0.63.
Middle East and North Africa
Average
Score ( 0-1 )
Selected data
EAPI 2013
Economic Growth and Development
Environmental Sustainability
Energy Access and Security
0.46
0.33
0.36
0.70
Better energy efficiency / fewer emissions
High energy-related emissions: Net exporters often perform poorly
on the environmental sustainability sub-index due to high emissions
from hydrocarbon use / extraction. Fuel exports as % of GDP exhibits
strong negative correlation with sustainability score
Negative economic impacts: Energy intensity is $5.88 per unit of
energy, compared to $7.14 for EAPI overall sample.
Brazil, Russia, India and China (BRICs)
Average
Score ( 0-1 )
Selected data
EAPI 2013
Economic Growth and Development
Environmental Sustainability
Energy Access and Security
0.57
0.51
0.57
0.63
Each of the sub-indices offer focus areas for BRICs
Sub-Saharan Africa
Selected data
EAPI 2013
Economic Growth and Development
Environmental Sustainability
Energy Access and Security
Average
Score ( 0-1 )
0.44
0.38
0.65
0.29
Improving Energy Access
Access: Struggle to supply citizens with basic energy services. In
15+ countries over 50% of population uses solid fuels for cooking
Quality of supply: 25 countries, mainly from SSA, receive a score
< 3.5 / 7 for quality of electricity supply, indicating unreliable and
insufficient supply
Energy Efficiency: Critical factor, for different reasons: Russian energy sector
= quarter of GDP through energy / export earnings (Chatham House) but
efficiency half as good as the US. Efficiency savings could be recognised,
reducing CO2 p.c. (12mt - one of the highest in the world). Brazil’s good
intensity score ($8.40GDP / per unit) indicates transition stage of economy –
improved living standards and GDP growth may reduce score. India and
China relatively energy inefficient, but China building strong clean energy
sector and demand management solutions due to relatively modern grid.
CO2 emissions: Critical focus for Russia and China –rank 93rd & 63rd
respectively) due to reliance on carbon intensive fossil fuels in TPES (in China
coal = 66% of TPES, in Russia 16% from coal, 20% from oil) and large
demand (China uses most energy in world – 2438 mtoe - Russia 3rd most
(after U.S.) with a 703 mtoe TPES)
Energy Access: Economies a blend of energy ‘haves’ and ‘have nots’ – India
scores poorly on access metrics (0.45 compared to EAPI average of 0.73).
Russia, Brazil and China highly electrified but suffer from quality of supply
issues, scoring an average 0.64 / 1 for this metric.
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47
7. Definitions
Statistical
Economic/Regional Clusters
Herfindahl index – A normalized Herfindahl
index is used here as a measure of the size
of fuel-type consumption in relation to a
country’s total energy industry. The score
represents the sum of the squares of the
total primary energy supply types of the
different countries being analysed within
the energy industry, where the energy
shares are expressed as fractions. The
result can range from 0 to 1.0, moving
from a large number of individual energy
sources to a single-source supply. In this
case, increases in the score indicate a
decrease in diversity and vice versa.
In the context of this report, the
designations only cover the countries
available within the Energy Architecture
Performance Index 2013 sample.
The formula is as follows:
H = N ∑ si 2
where si is the fuel mix share of the fuel i
in the overall mix, and N is the number of
fuels. Then, to normalize:
H = (H-1/N) / (1-1/N)
The normalized result can range from 0 to 1.
spread charts – Spread charts show the
distribution of a dataset. The bar equals
the spread of data from minimum, through
the median to the maximum value of the
dataset. The quartiles are a set of values
that divide the data set into four equal
groups, each representing one-fourth
of the population being sampled. The
upper quartile represents the split of the
highest 25% of data – the top performers.
The lower quartile represents the split
of the lowest 25% of data – the bottom
performers.
Advanced Economies – A term used
by the International Monetary Fund
to describe the following developed
countries: Australia, Austria, Belgium,
Canada, Cyprus, Czech Republic,
Denmark, Estonia, Finland, France,
Germany, Greece, Iceland, Ireland,
Israel, Italy, Japan, Republic of Korea,
Netherlands, New Zealand, Norway,
Portugal, Singapore, Slovak Republic,
Slovenia, Spain, Sweden, Switzerland,
United Kingdom and United States.
APEC – The Asia-Pacific Economic
Cooperation’s primary goal is to support
sustainable economic growth and
prosperity in the Asia-Pacific region.
In the context of this report, the APEC
designation only covers the countries of
APEC within the EAPI 2013 sample, which
include: Australia, Brunei Darussalam,
Canada, Chile, Indonesia, Japan, Republic
of Korea, Malaysia, Mexico, New Zealand,
People’s Republic of China, Peru,
Philippines, Russian Federation, Singapore,
Thailand, United States and Vietnam.
ASEAN – The Association of Southeast
Asian Nations, or ASEAN, was established
on 8 August 1967 in Bangkok, Thailand,
and is made up of: Brunei Darussalam,
Cambodia, Indonesia, Malaysia,
Philippines, Thailand and Vietnam.
Singapore is included in the Advanced
Economies regional grouping. This report
excludes data for Laos and Myanmar,
which should be discounted from the
grouping.
BRIC – The BRIC designation comprises
the economies of Brazil, the Russian
Federation, India and the People’s
Republic of China.
48
The Global Energy Architecture Performance Index Report 2013
Central and Eastern Europe – This grouping
comprises Bulgaria, Croatia, Hungary,
Latvia, Lithuania, Poland, Romania and
Turkey.
Commonwealth of Independent States
– This grouping is made up of Armenia,
Azerbaijan, Georgia, Kazakhstan, Kyrgyz
Republic, Mongolia, Russian Federation,
Tajikistan and Ukraine.
Developing Asia – Developing Asia is an
International Monetary Fund definition for
countries in the Asia region that are less
developed than neighbouring counterparts.
These include Cambodia, India, Indonesia,
Malaysia, Nepal, Pakistan, People’s
Republic of China, Philippines, Sri Lanka,
Thailand and Vietnam.
EU15 – Fifteen was the number of Member
Countries in the European Union prior to
the accession of ten candidate countries
on 1 May 2004. The EU15 comprised the
following 15 countries: Austria, Belgium,
Denmark, Finland, France, Germany,
Greece, Ireland, Italy, Luxembourg,
Netherlands, Portugal, Spain, Sweden
and United Kingdom. This report excludes
data for Luxembourg, which should be
discounted from the grouping.
G20 – The Group of Twenty, or G20,
is a forum for international cooperation
that brings together the world’s major
advanced and emerging economies. In the
context of this report, the G20 designation
only covers the G20 countries within the
EAPI 2013 sample: Argentina, Australia,
Brazil, Canada, France, Germany, India,
Indonesia, Italy, Japan, Republic of Korea,
Mexico, People’s Republic of China,
Russian Federation, Saudi Arabia, South
Africa, Turkey, United Kingdom and United
States.
High-Income (OECD) – A World Bank
classification encompassing: Australia,
Austria, Belgium, Canada, Czech Republic,
Denmark, Estonia, Finland, France,
Germany, Greece, Hungary, Iceland,
Ireland, Israel, Italy, Japan, Republic
of Korea, Netherlands, New Zealand,
Norway, Poland, Portugal, Slovak Republic,
Slovenia, Spain, Sweden, Switzerland,
United Kingdom and United States.
High-Income (non-OECD) – A World Bank
classification encompassing: Bahrain,
Brunei Darussalam, Croatia, Cyprus,
Kuwait, Oman, Qatar, Saudi Arabia,
Singapore, Trinidad and Tobago, and
United Arab Emirates.
Latin America and the Caribbean – The
Latin America and the Caribbean (LAC)
region encompasses Argentina, Bolivia,
Brazil, Chile, Colombia, Costa Rica,
Dominican Republic, Ecuador, El Salvador,
Haiti, Jamaica, Mexico, Nicaragua,
Panama, Paraguay, Peru, Trinidad and
Tobago, and Uruguay
MENA – The Middle East and North Africa
(MENA) is an economically diverse region
that includes both the oil-rich economies
in the Gulf and countries that are
resource-scarce in relation to population.
In the context of this report, the MENA
designation only covers the countries
of MENA within the EAPI 2013 sample:
Algeria, Bahrain, Egypt, Iran, Jordan,
Kuwait, Lebanon, Libya, Morocco, Oman,
Qatar, Saudi Arabia, Syrian Arab Republic,
Tunisia and United Arab Emirates.
MIST – The MIST designation
encompasses Mexico, Indonesia, South
Korea and Turkey.
NORD – The NORD designation
encompasses the economies of Denmark,
Finland, Iceland, Norway and Sweden.
SSA – The designation Sub-Saharan
Africa (SSA) is used to indicate all of Africa
except northern Africa and ex Sudan,
which is included in Sub-Saharan Africa.
SSA comprises: Botswana, Cameroon,
Cote d’Ivoire, Ethiopia, Ghana, Kenya,
Mozambique, Namibia, Nigeria, Senegal,
South Africa, Tanzania and Zambia.
The Global Energy Architecture Performance Index Report 2013
49
8. Methodological
Addendum
This section describes the methodology
behind the Energy Architecture
Performance Index (EAPI) 2013. The
EAPI is a composite index that measures
a global energy systems’ performance
across three imperatives: economic
growth and development, environmental
sustainability, and energy access and
security.
Methodology
The EAPI focuses on tracking specific and
output oriented indicators to measure the
energy system performance of a variety
of countries. These include 16 indicators
aggregated into three baskets relating to
the three imperatives of the energy triangle
economic growth and development,
environmental sustainability, and access
and security of supply to both score and
rank the performance of each country’s
energy architecture.
The EAPI is split into three sub-indices.
The score attained on each sub-index is
averaged to generate an overall score. The
three sub-indices are:
1. Economic growth and development
the extent to which energy architecture
supports, rather than detracts from,
economic growth and development
2. Environmental sustainability the extent
to which energy architecture has been
constructed to minimize negative
environmental externalities
3. Energy access and security the extent
to which energy architecture is at risk
to an energy security impact, and
whether adequate access to energy is
provided to all parts of the population.
How the Energy Architecture Performance
Index functions
An index is a statistical measure of the
changes across a portfolio of indicators
reflective of an entity – in this case, energy
systems. Indices serve the purpose of
reducing complexity by tracking specific
indicators representative of a whole system
so that, ideally, a change in the index
is reflective of a proportional change in
the real world. In this context, the term
50
“indicator” provides empirical evidence
that a certain desired outcome has been
achieved or not, and that decision-makers
within energy systems can use to assess
progress towards their set objectives.
The distinction here between “input” and
“output” indicators is critical; the EAPI
grades as “inputs” indicators that measure
resources (human or financial) specifically
deployed to a particular energy project or
programme, whereas “output” indicators
measure the quantity of energy-related
goods or services produced and the
efficiency of energy production.
Reality and its statistical representation
cannot be assumed to converge in perfect
harmony, and the statistical results of the
analysis need to be set in context in an
understanding of the real world situation.
Furthermore, as an initial effort, the set
of indicators the EAPI measures is by no
means definitive. The EAPI team has had
to exclude data it wished to include, striven
after data that was not available in suitable
quality or coverage, and had to make
assumptions relating to how indicators
should be measured to reflect a high or
low score within the EAPI.
Any targets used are derived from
accepted policy documentation or expert
judgments to ensure the Index produces
policy-relevant insights and rankings.
The team also collected historic indicator
data and calculated an EAPI 2009 score
against the same indicators and thresholds
as the EAPI 2013 sample. It provides a
view of how energy system performance
has changed over time. While scores of
individual countries do change over time,
the average change in rank between
2009 and 2013 is 0 and the correlation
coefficient between the 2009 and 2013
scores is 0.93. The relative similarity of
scores across the 5 year window speaks
to the long lead times involved in most
energy architectural changes. For more
detail around the rate of change, please
see the Energy Security and the Rate of
Technological Change pull-out. A more
detailed time-series analysis of EAPI 2009
scores can be accessed on the online
Spotfire data platform, where results can
also be modelled dynamically.
The Global Energy Architecture Performance Index Report 2013
EAPI 2013
Indicators:
Selection Criteria
and Profiles
The EAPI team is grateful to the Expert
Panel for each individual’s specific
feedback and recommendations around
data sourcing and the data selection
criteria. Where possible, the EAPI team
aimed to select indicators against the
following criteria:
– Output data only – measuring outputoriented observational data (with
a specific, definable relationship to
the sub-index in question) or a best
available proxy, rather than estimates
–Reliability – using reliable source data
from renowned institutions
–Reusability – data sourced from
providers with which the EAPI can
work on an annual basis and that can
therefore be updated with ease
–Quality – selected data represents
the best measure available given
constraints; with this in mind, all
potential datasets were reviewed
by the Expert Panel for quality and
verifiability and those that did not meet
these basic quality standards were
discarded115
–Completeness – data of adequate
global and temporal coverage and
consistently treated and checked for
periodicity to ensure the EAPI’s future
sustainability.
Where data is missing for a particular year
within an indicator, the latest available data
point is extrapolated forwards until a more
recent result is obtained. No single data
point has been extrapolated forwards for
more than three years in any one instance,
excepting for the “nitrous oxide emissions
in industrial and energy processes (% of
total nitrous oxide emissions)” indicator,
for which the latest data available ends in
2005.
115
Please see the “Data Paucity & Country Exclusions”
section of the Methodological Addendum for further detail
around these criteria.
Indicator profiles
The table below details each of the
indicators selected, the weight attributed
to it within its basket (or sub-index),
what it measures and the energy system
objective it contributes to, either positively
or negatively.
Table 4: Indicator profiles
Energy system objective
Economic growth and
development
Measure (of)
Indicator Name
Efficiency
Energy intensity (GDP per unit of energy use (PPP US$ per kg of oil
equivalent))
0.25
ENINTENS
Degree of artificial distortion to gasoline pricing (index)
0.125
SUPGASPRICE
Degree of artificial distortion to diesel pricing (index)
0.125
DIESELPRICE
Electricity prices for industry (US$ per kilowatt-hour)
0.25
ELECPRICEIND
Cost of energy imports (% GDP)
0.125
FUELIMPORTSGDP
Value of energy exports (% GDP)
0.125
FUELEXPGDP
Lack of distortion/
affordability
Supportive/detracts
from growth
Share of low-carbon
fuel sources in the
energy mix
Indicator code
Alternative and nuclear energy (% of total energy use, incl. biomass)
0.2
ALTNUCENINCLBIO
Nitrous oxide emissions in energy sector (thousand metric tonnes of
CO2 equivalent)/total population
0.2
NO2
CO2 emissions from electricity and heat production, total/total
population
0.2
CO2HEATELEC
PM10, country level (micrograms per cubic metre)
0.2
PM10
Average fuel economy for passenger cars (l/100 km)
0.2
AVCARLPKM
Electrification rate (% of population)
0.2
ELECRATE
Quality of electricity supply (1-7)
0.2
QUALELEC
Percentage of population using solid fuels for cooking (%)
0.2
POPSOLFUELS
Self-sufficiency
Import dependence (energy imports, net % energy use)
0.2
ENIMPORTS
Diversity of supply
Diversity of total primary energy supply (Herfindahl index)
0.2
DIVTPES
Environmental
sustainability
Emissions impact
Energy access
and security
Indicator
weight
Level and quality of
access
Weighting:
Approach and
Rationale
Within the aggregate score, each of the
three baskets receives equal priority and
weighting. Fundamentally, the World
Economic Forum believes that the
imperatives of the energy triangle are of
mutual importance and are interlinked.
To bring greater balance to the energy
triangle and enable an effective transition to
a new energy architecture, it is important
that policy-makers look to the long term,
providing a more stable policy environment
based upon an in-depth understanding
of the trade-offs they are making. Where
possible, decision-makers should aim
to take actions that result in positive net
benefits for all three imperatives of the
energy triangle.
Each indicator is equally weighted within
the three baskets, with the exception of
the economic growth and development
basket. Here, indicators that correlated
closely (due to their measuring similar,
though not identical, aspects of energy
architecture performance) had their
weights “diluted” to prevent the double
stacking of scores, for example a country
receiving two high scores for subsidy/
high tax free pricing of both super gasoline
and diesel. As such, the super gasoline
and diesel indicators combine to form a
mini-index within the economic growth and
development basket, and this mini-index
is allocated equal weighting with the other
indicators.
Where a country’s scores across two
similar indicators were likely to run
orthogonal to one another (for instance
across the fuel imports and exports as a
share of GDP indicators), the weights were
again “diluted” so as to avoid a narrower
statistical distribution of scores across the
basket and to offset any double stacking
of scores. Similarly, the fuel imports and
exports as a share of GDP indicators are
combined to form a mini-index within
the economic growth and development
basket, and this mini-index is allocated
equal weighting with the other indicators.
The Global Energy Architecture Performance Index Report 2013
51
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The Global Energy Architecture Performance Index Report 2013
* “C” in this column designates confidential information sourced from the International Energy Agency (IEA) that cannot be distributed publically.
Table 5: Raw scores per indicator
8. Methodological Addendum
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8. Methodological Addendum
The Global Energy Architecture Performance Index Report 2013
55
56
The Global Energy Architecture Performance Index Report 2013
2010
2010
Provides an indication of the country-level
efficiency of energy use, and whether
there is an opportunity to improve energy
availability by reducing energy intensity
Provides an indication of the extent to
which the energy sector has a negative
impact on economic growth. Import bill
is calculated in US$ at current prices and
is based on the import of fuels (mineral
fuels, lubricants and related materials) then
divided by country GDP in US$ (current),
the monetary value of all the finished
goods and services produced within a
country’s borders on an annualized basis
GDP per unit of
energy use (PPP
US$ per kg of oil
equiv.)
Fuel imports
(% GDP)
World Trade
Organization and
World Bank
19802010
Fuel Imports, US$ at current prices. Fuel
imports include mineral fuels, lubricants
and related materials as classified
under the Standard International Trade
Classification, Revision 3, Eurostat. GDP is
the total market value of all final goods and
services produced in a country in a given
year, equal to total consumer, investment
and government spending, plus the value
of exports, minus the value of imports,
calculated using today’s dollar value.
Energy use per PPP GDP is the
kilogram of oil equivalent of energy use
per constant PPP GDP. Energy use
refers to use of primary energy before
transformation to other end-use fuels,
which is equal to indigenous production
plus imports and stock changes, minus
exports and fuels supplied to ships and
aircraft engaged in international transport.
PPP GDP is gross domestic product
converted to 2005 constant international
dollars using purchasing power parity
rates. An international dollar has the same
purchasing power over GDP as a US
dollar has in the United States.
19802009
– Any transformation to raw data
required
Technical notes
– Rationale for threshold and ceiling
values
Time
series
stat.wto.org/Home
/WSDBHome.aspx
?Language=E
databank.worldbank.
org/ddp/home.
do?Step=12&id=4&
CNO=2
databank.worldbank.
org/ddp/home.do?S
tep=12&id=4&CNO=2
URL
– Low performance thresholds
World Bank and
International
Energy Agency
Sources
– Target/ceiling values
Latest
data
No data available for target setting. The
low performance distribution threshold is
based on the lowest performance value
for 2010. The target value is 0%.
The target value is based on the highest
performance value for 2010, with the
spread adjusted for Lesotho’s high
outlying result. Lesotho features a large
concentration of South African industry,
population and agriculture, and diamonds
are major export contributors, distorting
this country’s result.
No specific global targets for energy
intensity. The Kyoto Protocol sets targets
for total greenhouse gas emissions
for Annex I (developed) countries. The
European Council for an Energy Efficient
Economy recommends 20% reductions
by 2020 in energy intensity across
many different eurozone countries, but
not universally. The low performance
distribution threshold is based on the
lowest performance value for 2010.
Additional comments*
The additional notes column includes
further detail (as necessary) regarding the
normalization of indicator data, including:
Rationale for inclusion
Table 6 provides the metadata for each
of the selected indicators. This includes
the title, the rationale for each indicator’s
inclusion in the EAPI, the year for which
the latest data is available, the source of
the data, the time series it covers, any
technical notes relating to the construction
of the indicator including nominators,
denominators and unit; and the URL for
the source data (if available).
Title
Table 6: Indicator metadata
Indicator Metadata
Diesel Level of
price distortion
through subsidy or
tax (index 0-1)
Super gasoline
Level of price
distortion through
subsidy or tax
(index 0-1)
As above
Fuel subsidies are a burden on economies
and encourage wasteful fuel use. Aligning
fossil fuel pricing with market prices
would foster greater economic and
energy efficiency. Fossil fuel taxation is a
powerful revenue tool for, most notably,
the transport sector. But very high taxation
burdens the consumer and drives inflation
as costs rise for transporting goods
around a country, and revenue generated
from taxation may be elastic over the
long-term as consumers adjust their
consumption in light of higher prices. The
EAPI therefore proposes that a high tax
rate is the optimal pricing mechanism, on
a global basis and excluding consideration
of other externalities associated with fossil
fuel consumption. A very high subsidy
is therefore penalized, as is very high
tax, though not equally – the EAPI uses
an offset bell-curve that measures the
standard deviations from the target fuel
price (which is between the taxation and
very high taxation price bands). The price
differential between high subsidy and high
tax is greater than that between high tax
and very high tax.
2010
2010
GIZ (Gesellschaft
für Internationale
Zusammenarbeit),
the German
development
agency
GIZ (Gesellschaft
für Internationale
Zusammenarbeit),
the German
development
agency
20042010
20042010
Price per litre of diesel in US cents. All
prices relate to Nov. 2010 data. Prices
reflect Brent crude price of US$ 81 per
barrel. All pricing data related to GIZ
database. Score derived from level of
a country’s deviation from a threshold
price, set as the median point in the very
high taxation boundary per fossil fuel,
per year. For more information regarding
thresholds and median point calculations,
see above.
Price per litre of super gasoline in US
cents. All prices relate to November 2010
data. Prices reflect Brent crude price of
US$ 81 per barrel (reference day 16 to 18
November 2010). All pricing data related
to GIZ database. Score derived from
the level of a country’s deviation from
a threshold price, set as the threshold
point between high taxation and very
high taxation per fossil fuel, per year.
These boundaries are defined by GIZ in
their International Fuel Prices report. A
very high subsidy equates with a retail
price of gasoline and diesel below price
of crude oil on world market. A subsidy
is indicated by a price of gasoline and
diesel above the price of crude oil on the
world market and below the price level
of the United States. Cost-covering retail
prices incl. industry margin, VAT and
incl. approx. US$ 0.10. This fuel price
without other specific fuel taxes may be
considered as the international minimum
benchmark for a non-subsidized fuel.
Taxation is indicated by a price of
gasoline and diesel above price level of
the United States and below price level
of Romania/Luxembourg (in November
2010, fuel prices were the lowest in
EU15). Prices in EU countries are subject
to VAT, specific fuel taxes as well as other
country-specific duties and taxes. Very
high taxation is indicated by a retail price
of gasoline and diesel above the price
level of Romania/Luxembourg. At these
levels, countries are effectively using taxes
to generate revenues and to encourage
energy efficiency in the transport sector.
www.giz.de/
Themen/en/29957.
htm
www.giz.de/
Themen
/en/29957.htm
The low performance distribution
threshold is based on the lowest
performance value for 2010: 0.
The target value is 1.
The low performance distribution
threshold is based on the lowest
performance value for 2010: 0.
The target value is 1.
8. Methodological Addendum
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Latest
data
2009
2010
Rationale for inclusion
Energy consumption is strongly correlated
to GDP, and lower energy prices are key
drivers of economic growth, with electrical
generation and other energy efficiencies
good proxies for the Solow residual,
describing technological progress. The
EAPI therefore uses this data as an
indicator of low energy prices having a
positive impact on growth. Subsidy data
is unavailable across this data point,
meaning that electricity prices must be
assumed to be the product of a liberal
energy market pricing mechanism at
an aggregate level, although in reality, a
larger portion of some countries’ bills may
be determined by political or regulatory
decisions warranting a subsidy, and a
smaller share depending on the actual
supply and demand conditions
Provides an indication of the extent to
which the energy sector has a positive
contribution to economic growth. Export
bill is calculated in US$ at current prices
and is based on the export of fuels
(mineral fuels, lubricants and related
materials) then divided by country GDP
in US$ (current), the monetary value
of all the finished goods and services
produced within a country’s borders on an
annualized basis.
Electricity Prices for
industry (US$/kWh)
Fuel exports
(% GDP)
Title
World Trade
Organization and
World Bank
Energy
Information
Administration,
Monthly Energy
Review, May
2010, Table 9.9.
Other Countries
-- International
Energy Agency
(IEA), Energy
Prices & Taxes
- Quarterly
Statistics, Fourth
Quarter 2009,
Part II, Section
D, Table 22, and
Part III, Section
B, Table 19,
2008.
Sources
19802010
20012009
Time
series
Fuel exports, US$ at current prices. Fuel
exports include (mineral fuels, lubricants
and related materials) as classified
under the Standard International Trade
Classification, Revision 3, Eurostat. GDP
is the total market value of all final goods
and services produced in a country in
a given year, equal to total consumer,
investment and government spending,
plus the value of exports, minus the value
of imports, calculated using today’s dollar
value.
NB: The International Energy Agency (IEA)
maintains annual and quarterly time series
of this price data that begin in 1978, and
that also include the most recent quarterly
prices. Information on purchasing this
data online from the IEA is available at:
data.iea.org/ieastore/default.asp
Price includes state and local taxes,
energy or demand charges, customer
service charges, environmental
surcharges, franchise fees, fuel
adjustments, and other miscellaneous
charges applied to end-use customers
during normal billing operations. Prices
do not include deferred charges, credits
or other adjustments, such as fuel or
revenue from purchased power, from
previous reporting periods.
Energy end-use prices including taxes,
converted using exchange rates.
Technical notes
stat.wto.org/Home/
WSDBHome.aspx?
Language=E
databank.worldbank.
org/ddp/home.do?
Step=12&id=4&CNO
=2
www.iea.org/stats/
prodresult.
asp?PRODUCT
=Electricity/Heat
www.eia.gov/
electricity
/data.cfm
URL
No data available for target setting. The
low performance distribution threshold is
based on the lowest performance value
for 2010. The target value is fixed at
the highest value for the 2010 dataset,
54%. The inclusion of this indicator was
frequently debated by the team, given
the well understood effects of indirectdeindustrialization, the symptoms of
which include the decline in productivity
of national manufacturing sectors due
to the currency strengthening effect
of natural resource endowment and
exploitation, and the following shift of
labour resources away from the nontradable goods sectors. However, given
the EAPI’s strict focus on country energy
architecture and, within this basket, the
contribution of energy to GDP, it was felt
that on an overall global basis, revenues
from fossil fuel endowments contributed
to country GDP, especially when
successful boom minimization structures
(e.g. investment into sovereign wealth
funds, stabilizing the powerful revenue
stream) were used to reduce the risk of
Dutch disease and drive competitiveness
through investment in education and
infrastructure programmes.
No specific targets available. The low
performance distribution threshold is
based on the lowest performance value
for 2010. The target value is based on the
highest performance value for 2010, with
the spread adjusted for Italy’s high and
outlying result.
Additional comments*
2009
2008
Carbon dioxide emissions from electricity
and energy production contribute to
climate change and ensuing environmental
degradation.
CO2 emissions from
electricity and heat
production, total/
total population
Suspended particulates contribute
to acute lower respiratory infections
and other diseases such as cancer.
Finer particulates lodge deep in lung
tissue, causing greater damage than
coarser particulates. Annual average
concentrations of greater than 10
micrograms per cubic metre (μg/m3) are
known to be injurious to human health.
2005
Nitrous oxide is both an ozone-depleting
compound and greenhouse gas, and
is now the largest ozone-depleting
substance emitted through human
activities. It is one of a group of highly
reactive nitrogen oxides (NOx). NO2 forms
quickly from emissions from cars, trucks
and buses, power plants, and off-road
equipment. In addition to contributing
to the formation of ground-level ozone,
and fine particle pollution, NO2 is linked
with a number of adverse effects on the
respiratory system.
Nitrous oxide
emissions in energy
sector (thousand
metric tonnes of
CO2 equivalent)/total
population
PM10, country level
(micrograms per
cubic metre)
2011
Alternative and nuclear energy production
reduces reliance on fossil fuels, which
produce greenhouse gases and pollute
the atmosphere. Inclusion of this indicator
supposes that nuclear energy is also
environmentally preferable to fossil fuel
usage given the higher volume of negative
environmental externalities associated with
fossil fuel mining, power production and
emissions.
Alternative and
nuclear energy
(% of total energy
use, incl. biomass)
World Bank
(World Bank,
Development
Research Group
and Environment
Department)
World Bank and
International
Energy Agency
World Bank and
International
Energy Agency
International
Energy Agency
19902009
19802008
19902005
19802010
Particulate matter concentrations refer
to fine suspended particulates less than
10 microns in diameter (PM10) that are
capable of penetrating deep into the
respiratory tract and causing significant
health damage. Data for countries and
aggregates for regions and income
groups are urban-population weighted.
The estimates represent the average
annual exposure level of the average
urban resident to outdoor PM10. The
state of a country’s energy technology
and pollution controls is an important
determinant of PM10 concentrations.
CO2 emissions from electricity and heat
production equal the sum of the IEA’s
categories of CO2 emissions: main
activity producer electricity and heat,
which contains the sum of emissions
from main activity producer electricity
generation, combined heat and power
generation, and heat plants. Main
activity producers (formerly known as
public utilities) are defined as those
undertakings whose primary activity is to
supply the public. They may be publicly
or privately owned. This corresponds to
the Intergovernmental Panel on Climate
Change Source/Sink Category 1 A
1 a. For the CO2 emissions from fuel
combustion, emissions from own on-site
use of fuel in power plants (EPOWERPLT)
are also included.
Energy processes produce nitrous oxide
emissions through the combustion of
fossil fuels and biofuels.
Alternative energy includes hydropower
and nuclear, geothermal, biomass and
solar power, among others.
databank.worldbank.
org/ddp/home.o?Step
=12&id=4&CNO=2
databank.worldbank.
org/ddp/home.do?
Step=12&id=4&CNO
=2
databank.world
bank.org/ddp/
home.do?Step=
12&id=4&CNO=2
www.worldenergy
outlook.org/
The target value of 0 represents the ideal
state of PM10 country-level particulate
emissions. The low performance
distribution threshold is based on the
20 μg/m3 annual mean stipulated
by the World Health Organization’s
recommendations – scores over this
threshold score 0.
The target value of 0% represents
the ideal state of CO2 emissions from
electricity and heat. The low performance
distribution threshold is 0.000016 metric
tonnes per capita.
No universal targets applicable. The low
performance distribution threshold is
based on the lowest performance value
for 2010, with outliers above 53% of
total emissions automatically earning a
score of 0. The target value is 0% of total
emissions.
The low performance distribution
threshold is based on the lowest
performance value for 2010. The target
value is based on expert opinion,
stipulating that an energy system 100%
reliant on alternative and nuclear energy
represents the ideal.
8. Methodological Addendum
The Global Energy Architecture Performance Index Report 2013
59
60
The Global Energy Architecture Performance Index Report 2013
Latest
data
2010
2009
2011
2007
Rationale for inclusion
The transport sector is one of the most
important areas requiring attention in
improving environmental sustainability.
Over 50% of oil use around the world is
for transport, and nearly all the recent
and future expected growth in that use
comes from increased transport activity
(source: International Energy Agency).
Fuel efficiency directly affects emissions
causing pollution by affecting the amount
of fuel used.
Over the last few years, there has been
international focus on the issue of access
to energy. High global energy and food
prices have shown the impact on both
the global economy and the world’s poor.
In addition to the UN General Assembly
adopting “sustainable energy for all” as an
annual theme, the UN Advisory Group on
Energy and Climate Change has called
for universal access to modern energy
services by 2030.
Survey participant responses to: “How
would you assess the quality of the
electricity supply in your country (lack
of interruptions and lack of voltage
fluctuations)?” [1 = insufficient and suffers
frequent interruptions; 7 = sufficient &
reliable] | 2009-10 weighted avg.
The number of people who use traditional
biomass, such as wood and manure, is
projected to rise from 2.7 billion today, to
2.8 billion in 2030. According to estimates
from the World Health Organization (WHO)
and International Energy Agency (IEA) it
is estimated that household air pollution
from the use of these traditional sources of
biomass in stoves with inadequate
Average fuel
economy for
passenger cars
(l/100 km)
Electrification
rate (%)
Quality of electricity
supply (1-7)
% of population
using solid fuels for
cooking
Title
United Nations
Statistics
Division, The
Millennium
Development
Goals Database
World Economic
Forum, Global
Competitiveness
Index
International
Energy Agency,
Electricity
Access
Database
International
Energy Agency,
by special
arrangement
with the World
Economic
Forum
Sources
19902007
20052011
20072009
19902010
Time
series
Solid fuel information is either
extrapolated (single year data point),
averaged (two or more years that are
spaced four or fewer years apart) or a
linear regression is performed when solid
fuel use information is available for two
or more years that are spaced at least
five years apart. All countries with a gross
national income (GNI) per capita above
[1 = insufficient and suffers frequent
interruptions; 7 = sufficient and reliable] |
2009–10 weighted average
Survey response to: “How would you
assess the quality of the electricity supply
in your country (lack of interruptions and
lack of voltage fluctuations)?”
The IEA data reflects urban and
rural electrification levels collected
from industry, national surveys and
international sources, assessed in
assistance with World Population
Prospects - The 2011 Revision, published
by the United Nations (UN). Additionally,
UN data has been adjusted with data
from the IEA Statistics Division in order
to get the most accurate demographic
estimate for 2009.
Measure of the average litres of gasoline
equivalent used per hundred kilometres
driven, indicating the efficiency of a
country’s transport system. Passenger
cars in this instance need to stand as
proxy for the entire transport sector, given
the paucity of global data across this
indicator for both light-duty and heavyduty vehicle fleets.
Technical notes
mdgs.un.org/unsd/
mdg/SeriesDetail.
aspx?srid=712
www.weforum.
org/issues/globalcompetitiveness
en.openei.org/wiki/
IEA-Electricity_
Access_Database
www.worldenergy
outlook.org/
URL
This indicator correlates highly with GDP
levels. For literature relating to targets, the
EAPI focussed its analysis on developing
country policy targets in order to reflect
the status quo. The Forum of Energy
Ministers of Africa has committed to
providing access to modern cooking
energy to 50% of the rural poor. In 2005,
the Economic Community of West African
No specific targets available due to
qualitative nature of data range. The low
performance distribution threshold is
based on the lowest performance value
for 2010. The target value is based on the
highest performance value for 2010.
United Nations Secretary-General Ban
Ki-moon’s Advisory Group on Energy
and Climate Change stipulated a target
to achieve universal access to modern
energy services by 2030. The EAPI has
therefore set a target of 100% for this
indicator. The target value represents the
ideal state of country-level electrification
rates. The low performance distribution
threshold is based on the lowest
performance values from the 2010 data
range.
In its 2007 review of the EU CO2 and
cars strategy, the European Commission
announced that the EU objective of 120
g CO2/km (5.2 l/100 km or 45.6 mpg)
by 2012 must be met. A resolution was
formally adopted to enforce mandatory
fuel efficiency standards of 120 g/km (5.2
l/100 km or 45.6 mpg), with carmakers
achieving 130 g/km (5.6 l/100 km or 42
mpg) through technical improvements
and the remaining 10 g/km coming from
complementary measures (e.g. efficient
tires and air conditioners, tire pressure
monitoring systems, gear shift indicators,
improvements in light-duty vehicles, and
increased use of biofuels). Thus, the
target value of 5.2 l/100 km represents
the EU target. The low performance
distribution threshold is based on the
lowest performance values from the 2010
data range.
Additional comments*
19802010
The normalized result can range from 0
to 1.0
H = (H-1/N)/(1-1/N)
where si is the fuel mix share of the fuel i
in the overall mix and N is the number of
fuels. Then, to normalize:
H = N ∑ si 2
The Herfindahl index is used here
as a measure of the size of fuel-type
consumption in relation to a country’s
total energy industry. The score
represents the sum of the squares of the
total primary energy supply types of the
different country’s being analysed within
the energy industry, where the energy
shares are expressed as fractions. The
result can range from 0 to 1.0, moving
from a large number of individual energy
sources to a single-source supply. In this
case, increases in the score indicate a
decrease in diversity and vice versa. The
formula is as follows:
Total primary energy supply represents
domestic supply only and is broken
down into energy type. It represents
inland demand only and, except for world
energy supply, excludes international
marine and aviation bunkers.
2011
Energy resilience rather than
independence is more aligned with this
report’s definition of energy security. “The
foundation of a secure energy system is
to need less energy in the first place, then
to get it from sources that are inherently
invulnerable because they’re diverse
[and] dispersed…” (Source: Teich, Albert
H., Technology and the Future, Ninth
edition, Thomson, 2003, p. 169). A highly
centralized energy system that is reliant
on a homogenous fuel type is inherently
vulnerable to supply shocks and price
volatility. A diverse supply portfolio can
mitigate these potential risks. Please
note, data of import counterpart diversity
was sought but was not available across
the country range required. Counterpart
diversity is a critical measure of a country’s
energy market access. The EAPI has
sourced import counterpart data for
Organisation for Economic Co-operation
and Development (OECD) countries, and
is using this for a special pull-out in the
report.
Diversity of total
primary energy
supply (Herfindahl
index)
International
Energy Agency,
World Energy
Outlook, 2011
Net energy imports are estimated
as energy use less production, both
measured in oil equivalents. A negative
value indicates that the country is a net
exporter. Energy use refers to use of
primary energy before transformation to
other end-use fuels, which is equal to
indigenous production plus imports and
stock changes, minus exports and fuels
supplied to ships and aircraft engaged in
international transport.
19802010
2010
he security of a country’s primary energy
supplies may be threatened if it is reliant
on a high proportion of imports (especially
if these are concentrated among relatively
few trade partners). A high import ratio
within a country’s total percentage of
energy used indicates an exposure
to supply shocks and price spikes in
commodities, and risks stemming from
political decisions that might restrict trade
with energy suppliers.
Energy imports, net
(% of energy use)
World Bank
(International
Energy Agency
and United
Nations, Energy
Statistics
Yearbook)
US$ 10,500 and for which no survey data
is available are assumed to have made
a complete transition to using non-solid
fuels as the primary source of domestic
energy for cooking and heating.
ventilation would lead to over 1.5 million
premature deaths per year in 2030. A
high percentage score reflects a poor
level of energy access across a country
demographic.
www.worldenergy
outlook.org/
databank.worldbank.
org/ddp/home.o?Step
=12&id=4&CNO=2
NB: The diversity score was worked
out using a wide array of countries, not
all of which could be included in the
final version of the EAPI due to data
paucity. This means the target and
threshold scores do not equate to 0 and
1 respectively, but 0.09 and 0.88, in
line with the performance of the various
countries included in the Index relative to
all countries analysed (217 in total).
No target data available. The low
performance distribution threshold is
based on the lowest performance value
for 2010. The target value is based on the
highest performance value for 2010.
No specific targets available. The low
performance distribution threshold is
based on the lowest performance value
for 2010. The target value is based on the
highest performance value for 2010.
States (ECOWAS) committed to providing
modern cooking energy to 100% of the
rural population (corresponding to more
than 300 million people). The UN pledge
is “sustainable energy for all”. The EAPI
has therefore set a target of less than
5% for this indicator. The target value
represents the ideal state of country
level electrification rates (a score of <5%
being the highest score historically). The
low performance distribution threshold is
based on the lowest performance values
from the 2010 data range.
8. Methodological Addendum
The Global Energy Architecture Performance Index Report 2013
61
EAPI Data
Limitations – A
Global Rallying Call
The EAPI team wishes to flag to the
international energy community the stark
gaps it has found in global energy-related
data banks in a bid to raise awareness and
take action.
The EAPI is missing critical facets of energy
system performance due to lack of data.
A means to build these data for on-going
analysis and improve future iterations of the
tool is suggested here. The next version of
the Index should focus on building out the
indicators that have been missed in this
version and that are recorded in table 7.
Of special interest would be the creation
of an indicator that accurately reflects the
impact of the energy sector on a country’s
domestic water resources (see Pull-out:
The Criticality of Better Understanding the
Water/Energy Nexus), an indicator that
accounts for the processing of the waste
products produced by nuclear energy
generation, and an indicator that measures
the diversity of free-trade agreements with
import counterparts (to describe security
of supply).
62
As part of this effort, the EAPI is reaching
out to international organizations that may
have data sources that could be used
to create these indicators and would
like to request that readers and partner
companies also contribute, wherever
possible. Please review table 7 carefully. If
you might be able to contribute any data or
advice that could go towards the creation
of one or more of the indicators listed,
please contact
[email protected].
Excluded indicators
Table 7 shows exactly where there were
issues sourcing data or sufficient temporal
and geographic coverage, or an indicator’s
inclusion was rejected due to contravention
of the methodology.
The Global Energy Architecture Performance Index Report 2013
8. Methodological Addendum
Table 7: Indicators excluded or missing from the EAPI 2013 and rationale
Element of the
energy triangle
Excluded or missing
indicators
Initial rationale for inclusion in the EAPI
Reason for exclusion
Wholesale and retail gas
prices, by country
Energy consumption is strongly correlated with GDP, and
lower energy prices are key drivers of economic growth. The
EAPI therefore uses this data as an indicator of low energy
prices having a positive impact on growth.
Data not available on global scale
Energy use per unit of
industrial output, per capita
by country
Energy use per unit of industrial output, per capita by country
provides an indication of the country-level industrial efficiency
of energy use, and whether there is an opportunity to improve
energy availability by reducing energy intensity.
Data not available on global scale
R&D spend (energy specific)
by country
R&D combines with human capital to drive economic growth
and development. A large volume of literature proposes a
solid rate of return to R&D investment as multiplied by the
share of its percentage in output, though the social rates of
return (i.e. of net societal benefit) may sometimes be greater
than private rates of return (i.e. to business).
Data not available on global scale.
Also, where data was available, it
was only as direct funding of R&D –
other elements including investment
in human capital and talent, patent
protection and research linked tax
benefits could not be accounted for.
Energy industry-related
employees (per country)
With an average permanent staff salary of more than
US$ 75,000 globally, the oil and gas industry (and energy
industry more generally) provides direct jobs with higher than
average pay. The EAPI wished to assess the number of jobs
attributable to each country economy and the “employment
multiplier effect” that measures the contribution the industry
makes via indirect and induced jobs it creates.
Data not available on global scale
Water impact of energy
sector
Energy production is, more often than not, highly reliant on
the ample provision of water. And the provision of water to
households and industry is becoming steadily more energy
intensive on a global scale. The EAPI wished to calculate an
average water requirement per power generation technology
(gallons/megawatt-hour) and then divide against the power
generation profile for each country. For more detail, see the
pull-out on the criticality of better understanding the water/
energy nexus.
Data not available on global scale
Toxic waste deposits (incl.
radiation waste) by country
Nuclear energy in a country’s energy mix is an alternative
energy source that avoids fossil fuel related air pollution and
reduces CO2 emissions. But nuclear waste, for which no
universally accepted processing method exists, emits ionizing
radiation, which can be harm both humans and ecological
systems. The EAPI wished to account for this by the inclusion
of this indicator.
Selected countries covered by the
International Atomic Energy Agency,
but no data on global scale
Average building efficiency
(Btu per sq. foot-hour
potentially) by country
Across the globe, residential and commercial buildings are
significant users of primary energy (accounting for 10.6% of
energy consumption in the US alone in 2011) – this metric
would provide an indication of the country-level efficiency of
building energy use, and whether there is an opportunity to
improve energy availability by reducing energy intensity
Data not available on global scale
Average building efficiency
(Btu per sq. foot-hour
potentially) by country
Across the globe, residential and commercial buildings are
significant users of primary energy (accounting for 10.6% of
energy consumption in the US alone in 2011) – this metric
would provide an indication of the country-level efficiency of
building energy use, and whether there is an opportunity to
improve energy availability by reducing energy intensity
Data not available on global scale
Average electrical grid
reserve capacity by country
Utilities should retain reserve margins of extra generating
power to manage peaks or unanticipated power plant shut
downs, protecting against brownouts and blackouts. By
comparing reserve margins against national targets, the EAPI
could assess a country’s approximate ability to manage the
uninterrupted flow of supply.
Data not available on global scale
Spend on grid infrastructure
as % of GDP by country
A 3-year rolling average of annual investment in grid
infrastructure and IT would likely indicate to some degree the
efficiency of the network and renewable integration potential.
Denominating this by GDP to provide a percentage share
would balance the comparison.
Data not available on global scale
Diversification of import
counterparts by country
Having a variety of import counterparts means market risk
diversification including exposure to supply shocks, tariffs and
price spikes in commodities, and risk stemming from political
decisions that might restrict trade with energy suppliers. A
diverse import portfolio can mitigate these potential risks.
Data not available on global scale
Number of energy-specific
free trade agreements signed
Development of free market fundamentals strengthens an
energy sector, enabling energy security through increased
trade and growth while ensuring that domestic resources can
be developed and extracted.
Data not available on global scale
Retail electricity prices, by
country
Economic
growth and
development
Environmental
sustainability
Energy access
and security
The Global Energy Architecture Performance Index Report 2013
63
Pull-out: The Criticality of Better Understanding the Water/Energy Nexus
Energy production is often highly reliant
on the ample provision of water. Climatic
changes in rainfall and intensified
water use could have profound supply
security implications for water-intensive
methods of energy generation116 such
as hydropower, which currently supplies
17% of global electricity and is a potential
carbon-free energy source for much of
Sub-Saharan Africa. The provision of
energy to households and industry is
becoming steadily more water intensive on
a global scale (see figure 25). A case for
consideration is the Arabian Gulf. With only
1% of the world’s renewable freshwater
available for exploitation, countries in this
region – collectively large energy producers
rely heavily on desalinated seawater,
accounting for more than half the world’s
desalination capacity.117
Over-abstraction of water for energy
production is a critical issue for waterstressed countries.
From an economic perspective, water for
energy use has historically been cheap,
with almost a complete absence of price
signals reflecting the true cost implication
of abstraction, trade and supply. This has
had environmental implications. Overabstraction relating to resource extraction
activities and energy production is a critical
issue in places where water scarcity is
a problem, such as Australia, India and
MENA. As the World Energy Council notes
in its 2011 report Water for Energy, the
local nature of water (and the resulting
lack of the ability to match water demands
with needs) is a critical concern in a world
where “less than ten countries hold 60% of
Earth’s available freshwater: Brazil, Russia,
the People’s Republic of China, Canada,
Indonesia, the United States, India,
Colombia, and the Democratic Republic of
Congo.”
Figure 26: Global water consumption rates for electric power generation plants
Source: World Energy Council, 2011; US Department of Energy - National Energy Technology Laboratory (NETL) 2008
120
Water consumption (billion m3)
100
Hydro and geothermal
60
Nuclear
Biomass and wastes
40
Thermal
116
McKinsey Global Institute, Resource Revolution: Meeting
the world’s energy, materials, food, and water needs,
November 2011.
117
Arab Forum for Environment and Development, Water:
Sustainable Management of a Scarce Resource, 2010.
64
Wind and solar
80
The Global Energy Architecture Performance Index Report 2013
20
0
2005
2020
2035
2050
8. Methodological Addendum
The goal in building the EAPI was to
calculate an average water requirement
per power generation technology (gallons/
MWh) and then divide against the power
generation profile for each country. A
final score in terms of an energy system’s
impact on a country’s water resources
could be derived via comparison with
the water scarcity or stress score
for that country, as detailed by the
Aquastat database or the Environmental
Performance Index (Yale) though with the
caveat that extraction rates are notoriously
difficult to accurately assess due to the
local nature of water resources and the
lack of data around their location and type.
Power generation technology profiling was
difficult. As figure 26 shows, there is an
enormous difference (in gallon withdrawn
or consumed per MWh generated terms)
between the different types of power
plant technology steam turbine (gas/
coal/biomass), steam turbine (nuclear),
combined cycle gas turbine, integrated
gasification combined cycle (coal) and,
within those, different cooling technologies:
closed loop/once through/dry – and this is
in the US alone.
Figure 27: Water intensity of US electricity generation by plant technology
Source: Source: Harvard Energy Technology Innovation Policy Research Group, 2010
*IGCC: integrated gasification combined cycle.
800
Max
700
600
Average
gallons/MWh
500
400
Min
300
200
100
Steam turbine (coal, gas, biomass)
Vastly different water requirements per
technology and lack of precise data on
the type of technologies used (or plant
size) per country make an aggregate
analysis based on the approximate power
generation technology profile of a country
too speculative, given that these factors
are often determined by the location
of plant (i.e. next to water or not) and
size, not to mention cost restrictions.
Though comprehensive data for electricity
generation by fuel and technology type
for a selection of Advanced Economies
was sourced from the International Energy
Agency, the EAPI team could not find data
for the vast majority of countries in the
EAPI 2013.
Steam turbine (nuclear)
Closed-loop
Dry
Closed-loop
Once-through
Dry
Closed-loop
Once-through
Dry
Closed-loop
Once-through
0
Combined-cycle gas turbine
The EAPI team advocates the formation
of a database that records the power
generation sector’s impact on country
water stress.
An understanding of the power generation
sector’s impact on country water stress
is a priority indicator, and the EAPI is
significantly weakened by its absence.
The solution? This data does not appear
to exist in any collated form, but there
are many examples from within the
energy context that can be looked to for
models to assemble and disseminate
such information. Institutions such as
Carbon Manufacturing for Action118 retain
global data on power plant outputs,
energy intensity and CO2 emissions. The
Joint Organisations Data Initiative119 is
IGCC* (coal)
an example of a successful data sharing
model based on mutual benefit for all
parties. Models such as the Global Water
Tool for Power Utilities (developed by the
World Business Council for Sustainable
Development120) could be built as online
portals and harnessed to collect the
required data from power generators while
providing a useful benchmarking tool for
businesses.
Managing the water/energy nexus is critical
to meeting the three imperatives of the
energy triangle. The formation of a global
database would be highly beneficial and
allow for an accurate assessment of the
energy sector’s contribution to water stress
for a comprehensive set of countries.
118
Carbon Monitoring for Action (CARMA) is a database
containing information about the carbon emissions of
over 60,000 power plants and 20,000 power companies
worldwide.
119
The Joint Organisations Data Initiative (JODI) oil database
collates oil market data from its member countries by means
of a harmonized questionnaire on 42 key oil data points, and
was born out of a perceived lack of transparency relating to
critical oil market statistics.
120
The World Business Council for Sustainable
Development’s Global Water Tool for Power Utilities enables
generators to calculate water consumption, efficiency
and intensity metrics for benchmarking and performance
improvement, and establishes relative water risks in a
company’s portfolio to prioritize action.
The Global Energy Architecture Performance Index Report 2013
65
Contributors and
Data Partners
Contributors
Data Partners
Expert Panel
World Economic Forum
– Roberto Bocca, Senior Director, Head
of Energy Industries
– Espen Mehlum, Associate Director,
Head of Knowledge Management and
Integration, Energy Industries
– Thierry Geiger, Associate Director,
Competitiveness Team
– Roberto Crotti, Quantitative
Economist, Competitiveness Team
Project Advisers: Accenture
– Arthur Hanna, Managing Director,
Energy Industry
– James Collins, Senior Manager,
Energy Strategy
– Mauricio Bermudez-Neubauer, Head
of Carbon Markets
– Mike Moore, Project Manager, New
Energy Architecture, Accenture;
seconded to the World Economic
Forum
– Freddie Darbyshire, Lead Author,
Accenture; seconded to the World
Economic Forum
The World Economic Forum’s Energy
Industries Team is pleased to
acknowledge and thank the following
organizations as its valued Data Partners,
without which the realization of the Energy
Architecture Performance Index 2013
would not have been feasible:
The EAPI was developed with an Expert
Panel of advisers, including:
66
France
– The International Energy Agency, Paris
– Dr Fatih Birol, Chief Economist and
Director, Global Energy Economics
Directorate
– Pawel Olejarnik, Senior Energy
Analyst, Global Energy Economics
Directorate
United Kingdom
– Bloomberg New Energy Finance,
London
– Michael Liebreich, Chief Executive
– William Young, Chief of Staff
The Global Energy Architecture Performance Index Report 2013
– Manpreet Anand, Senior Policy
Adviser, Chevron Corporation
– Juergen Arnold, Chief Technology
Officer, ESSN, EMEA, HewlettPackard Company
– Gabriel Barta, Head of Technical
Coordination, International
Electrotechnical Commission
– Morgan Bazilian, Deputy Director,
Joint Institute for Strategic Energy
Analysis (JISEA), US National
Renewable Energy Laboratory - NREL
– Mauricio Bermudez Neubauer, Head
of Carbon Markets, Accenture
– Suman Bery, Chief Economist, Royal
Dutch Shell
– Lin Boqiang, Director, China Center for
Energy Economics Research, Xiamen
University
– Daniel Esty, Commissioner,
Connecticut Department of Energy
and Environmental Protection
– Arthur Hanna, Managing Director,
Energy Industry, Accenture
– Ishwar Hegde, Chief Economist,
Suzlon Energy
– Jeremy Leggett, Chairman,
Solarcentury
– Michael Liebreich, Chief Executive,
Bloomberg New Energy Finance
– Patrick Nussbaumer, Industrial
Development Officer, United Nations
Industrial Development Organization
– Paweł Olejarnik, Senior Energy
Analyst, International Energy Agency
– Kwok Shum, Professor of
Sustainability, Akio Morita School of
Business, Anaheim University
– Jim Skea, Research Director, UK
Energy Research Centre
– Thomas Sterner, Chief Economist,
Environmental Defense Fund
– Alyson Warhurst, Chief Executive
Officer and Founder, Maplecroft
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