As mentioned in Fostering Effective Energy Transition 2020 Edition, “the energy system’s ability to deliver on the imperatives … depends on the presence of an enabling environment for the energy transition, measured in the ETI framework by the transition readiness sub-index. Energy transition readiness is captured by the stability of the policy environment and the level of political commitment, the investment climate and access to capital, the level of consumer engagement, the development and adoption of new technologies, etc. Some of these factors are beyond the scope of the energy system”, such as skills or quality of transport infrastructure, “but nevertheless determine the effectiveness and future trajectory of energy transition in a country. ”²¹

Similar to the progress achieved on global system performance imperatives, transition readiness enablers sustained a growing global average performance over the past 10 years (Figure 12). The direct enablers have been fuelling countries’ transition readiness and showcase the effect of recent global focus on the policy and investment transition choke points. On the other hand, human capital and innovation transition enablers did not make substantial progress over the same period, underscoring the importance of paying more attention to these blind spots to unlock further transition momentum. In addition to a set of leading advanced European economies, South Korea, China and Japan are among the leading 20 countries regarding the enabling transition environment in 2023.

Figure 12: ETI transition readiness trend, 2014-2023

Financial investment in clean energy continues to be a key enabler for transitioning economies. It nurtures other enablers of transition, such as technology development and deployment, while actively facilitating the scale-up of renewables capacity and associated infrastructure. Despite the progress achieved, investments in clean energy supply remain a challenge. Only six countries managed to direct more than 1% of their GDP in 2022 towards investments in renewables. China had the largest share of GDP investments, investing more than 1.5% of GDP in renewables, followed by Viet Nam, Azerbaijan, and Bosnia and Herzegovina.

Country commitments to their transition targets that were set as part of the Paris Agreement have been translating into transition strategies. The level of granularity and maturity of these strategies varies significantly. As of 2023, only 17 out of 120 countries have managed to reflect their net-zero targets into their respective laws, in a manner that targets all GHG emissions and delivers in 2050 or earlier.

An effective country policy for energy transition provides the necessary framework to accelerate the transition to a cleaner energy system and address the associated challenges of equity and security. While most countries have a strong enabling policy environment regarding energy access, that environment is not as strong for policies that enable scaling of renewable capacity or inducing energy efficiency. Aside from a set of leading advanced European economies, South Korea, India, Mexico and Hungary have recently exhibited a strong enabling regulatory environment to accelerate a balanced transition.