How well is your country’s energy system performing?

In a series of blog posts around the recent launch of the World Economic Forum’s Global Energy Architecture Performance Index Report 2013, Espen Mehlum, Associate Director of the World Economic Forum’s Energy Industries Team, explains how countries performed on the index.

What makes a country’s energy system perform well? This is a critical concern as nations around the world adapt to a new energy reality. Rising energy demand, costs and sustainability concerns are increasing the pressure for change, while technology developments and policy innovations are bringing about new opportunities. At this turning point in energy history, policy-makers need tools to inform decisions and monitor progress as they manage transition in the energy systems.

The Energy Architecture Performance Index launched by the World Economic Forum on 12 December 2012 benchmarks 105 countries on 16 key indicators, which relate to the core functions of energy systems – to support economic growth and development, and deliver energy security and access for all, with a minimal environmental footprint.

Norway tops the global ranking, followed by Sweden, France and Switzerland. In Norway, resource wealth has been matched with good energy policy over time to deliver leading results. Norway has also interconnected its power and gas network with neighbouring countries, boosting its own energy security and contributing to the security of other countries.

Nevertheless, resource wealth does not come out as a core performance factor in the study when we look at global results. Many countries with large hydrocarbon resources score in the lower tier of results (none of the OPEC countries are among the top 50) and many without a strong natural resource base achieve good results. European countries dominate the top 10, but also Colombia and New Zealand have found a place in that group. Having a fairly low-carbon fuel mix and low energy intensity of the economy are among the common factors in the group of top 10 countries.

Overall, Latin American countries scored fairly well on the index, with Brazil being the first among the BRIC nations ranking 21st. The US ranks 55th and China 74th. Even for the countries making headway, the finish line for a perfect energy system remains distant; all countries have room for improvement, Norway included.

A major energy transformation is needed globally to put us on a more sustainable track. The sustainability dimension comes out as the weakest within the triangle of imperatives potentially because it has not, historically, been as important a factor as energy security and the cost of energy. It also takes time to change energy systems.

On the sustainability dimension (where we measure emissions intensity, including CO₂, NO_x and particulate matter) and the share of low-carbon fuels in the energy mix, Sweden, France and Latvia score the highest. Peru, Colombia and Switzerland score within the top three for their energy system’s contribution to economic growth and development. This dimension measures factors such as energy intensity of the economy, energy costs and level of price distortion for fuels, as well as net value of energy imports and exports. When it comes to energy security and access, Norway, Canada and Denmark are the top performers. Here, the index measures diversity of energy supplies, level of energy access and self-sufficiency amongst other indicators.

The Energy Architecture Performance Index is a tool for decision-makers to monitor the performance of their energy system and assess areas to improve as part of their country’s transition. In doing so, they must take an integrated-system approach, balance the trade-offs inherent in energy policy decisions and operate within an ever changing global energy context.

Author: Espen Mehlum is Associate Director of the Energy Industries Team, World Economic Forum.

Image: A traditional light bulb with carbon filament REUTERS/Ina Fassbender