Every year the World Economic Forum benchmarks countries on their current energy system performance and measures their readiness for the energy transition. According to their most recent study, the world’s energy transition has made slow and steady progress over the past five years, but the COVID-19 crisis risks derailing long-term progress. The list of the top 10 countries remains unchanged, but Central Eastern Europe also shows signs of progress in the energy transition.
Sweden leads the rankings table for the third consecutive year, followed by Switzerland and Finland. Countries with the highest Energy Transition Index are all from Western Europe highlighting the robustness of their energy transition roadmaps. Although adopted policies diverge, the report notes that 82 per cent of the countries that improved their scores over the past six years also reduced pre‑tax energy subsidies.
From Central Eastern Europe, the Baltic countries and Slovenia made it to the top quartile, with Hungary, Slovakia, Romania and Croatia following closely. The report also considered the path that each country follows in their energy transition noting that Bulgaria, the Czech Republic, Slovakia and Ukraine have made consistent and measurable progress on their energy transition over the past six years.
The report shows that energy transition readiness improved across countries, mainly due to an increased level of political commitment and better access to capital and investment. However, sustained progress requires a similar momentum along with other enablers, such as human capital preparedness, robust institutional frameworks and innovative business environments. From the CEE region, the Czech Republic and Hungary achieved substantial gains on their transition readiness, by targeting improvements along with multiple enablers.
The World Economic Forum warns that the rhythm and momentum of the energy transition will potentially be impeded by the cascading effects of the COVID‑19 pandemic, which have already led to unprecedented energy demand and price shocks, and the reallocation of public fund. However allocating stimulus money towards large‑scale new energy infrastructures, such as carbon capture, utilization and storage, clean hydrogen and grid modernization, can create multiplier effects in economic growth and employment.
“Low fuel prices and falling consumer demand in advanced economies offer opportunities to initiate structural economic transformation and diversification in emerging economies and fuel exporting countries, which could prove challenging otherwise in normal circumstances,” – concludes the report.