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The Global
Energy Architecture
Performance Index
Report 2013
Prepared in collaboration with Accenture
December 2012
© World Economic Forum
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REF 271112
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Contents Preface
3 Preface Over the past century, affordable energy has been a significant
4 The Energy Architecture Performance component of global economic growth and development. Now a
Index 2013 in Numbers 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
6 The Expert Panel’s View: The Use completely distinct conditions on both supply and demand sides.
Case for the Energy Architecture
Performance Index
The transition pathway from the current energy architecture to
8 Executive Summary the new will look different for each country, with energy system
10 1. The New Energy Architecture objectives planned according to the trade-offs and complementarities
Challenge – Balancing the Energy surrounding the core imperatives of every energy system: managing
Triangle risk to energy supplies while ensuring a country’s economic, social and
environmental well-being.
11 Defining Energy Architecture and
Roberto Bocca
the Energy Triangle
Senior Director, Head The World Economic Forum is pleased to present this report
13 The Challenges Associated with of Energy Industries, examining the factors for effective global transition to a new energy
the Transition to a New Energy World Economic architecture, framed through the outputs of the Energy Architecture
Architecture Forum Performance Index (EAPI) a tool designed to help countries monitor
14 A Tool for Transition – The Energy and benchmark the progress of their transition against a series of
Architecture Performance Index indicators. The report considers what the new energy architecture
might look like and how best-in-class enabling environments have
16 2. Understanding Performance on the
Energy Architecture Performance
already helped some high-ranking countries begin their transitions
Index 2013 to better performing energy systems. The varying demands of each
country’s energy architecture – the sometimes competing goals of
17 The EAPI 2013 Rankings economic growth and development, environmental sustainability,
18 Top Ten – Key Takeaways and energy access and security – form the crux of the index and this
analysis.
21 Economic and Regional Clusters
Analysis
The New Energy Architecture project is conducted under the Forum’s
24 3. Economic Growth and Energy Industry Partnership with support from the authors of The
Development Global Competitiveness Report and involves a range of business,
25 Top Ten Economic Growth and Espen Mehlum government and civil society constituents from the energy industry and
Development Performers – Key Associate Director, other related sectors. The project uses a methodology that identifies
Takeaways Head of Knowledge the key performance indicators that can impact the effectiveness
32 4. Environmental Sustainability Management and of the transition to a new energy architecture and more effectively
Integration, Energy underpin economic growth and development, environmental
33 Top Ten Environmental sustainability, and energy access and security.
Sustainability Performers – Key Industries, World
Takeaway Economic Forum
The World Economic Forum partnered with Accenture and
38 5. Energy Access and Security collaborated with Forum Industry Partners and other expert
39 Top Ten Energy Access and
constituents to drive the dialogue and research. Representatives
Security Performers– Key from 28 global companies, government agencies and civil society
Takeaways are actively involved, including the Akio Morita School of Business,
Bloomberg New Energy Finance, Chevron, the China Center for
44 6. Key Takeaways and Focus Areas Energy Economics Research at Xiamen University, the Department
45 Key Takeaways of Energy and Environmental Protection in Connecticut, the
Environmental Defense Fund, Hewlett-Packard, the International
46 Focus Areas for Selected Regional
and Economic Clusters Electrotechnical Commission, the International Energy Agency,
the Joint Institute for Strategic Energy Analysis, the US National
48 7. Definitions Renewable Energy Laboratory, Maplecroft, Royal Dutch Shell, Solar
50 8. Methodological Addendum Century, Suzlon Energy, the UK Energy Research Centre and the
United Nations Industrial Development Organization.
50 Methodology
50 EAPI 2013 Indicators: Selection Representatives from these organizations contributed strategic
Criteria and Profiles direction and thought leadership through an Expert Panel; its members
51 Weighting: Approach and are listed at the end of the report. Through events in Austria, Brazil,
Rationale France, India, Indonesia, Japan, Myanmar, the People’s Republic of
China, South Africa, Turkey and the United Kingdom, the project has
56 Indicator Metadata
engaged additional business, government and civil society leaders.
62 EAPI Data Limitations – A Global
Rallying Call The EAPI 2013 will prove to be a useful addition to the global dialogue
66 Contributors and Data Partners 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.
64 0.75 /1
countries assessed with a fossil-fuel subsidy in place highest score achieved on the EAPI 2013 compared
with a 0.55 / 1 EAPI 2013 sample average
36% 89
the average total primary energy supply from alternative countries in the EAPI sample have renewable energy
or renewable energy sources (including biomass and support policies in place, in the form of regulation, fiscal
large-scale hydropower) of the top 10 performers incentives or public financing
compared with a 29% Energy Architecture Performance
Index (EAPI) 2013 sample average
66%
of countries assessed are net energy importers
US$ 46,000
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
9%
the average total primary energy supply from
hydropower of the top 10 performers compared with a
5% EAPI 2013 sample average
04
The Expert Panel’s View:
The Use Case for the
Energy Architecture
Performance Index
The transition to a new energy paradigm The Expert Panel advising this project
will not be feasible without a suite of brings together senior representatives
strategic tools that help the understanding from various sectors across the energy
of different pathways to the future. This value chain. The panel is acutely aware of We are sure that the EAPI
is the primary motivation for working with the importance of the provision of quality
the World Economic Forum to develop data in supporting informed decision-
will be an invaluable tool for
an innovative new tool – the Energy making. Governments, industry and civil policy-makers and
Architecture Performance Index (EAPI). society cannot hope to fully understand the
functions and idiosyncrasies of their energy
researchers alike. With this
The EAPI is a global initiative with the aim systems without it. Across some metrics, tool we hope that policy-
of creating a set of indicators that help there are excellent data resources available.
to highlight the performance of various But data paucity means that several
makers can benchmark their
countries across each facet of their energy aspects of the global energy system cannot policies with the end
systems. In doing so, it attempts to meet be adequately evaluated. Nevertheless,
two interlinked goals. First, it aims to assess the EAPI will be a useful tool for policy-
objective of achieving a
energy systems across their three primary makers, investors and other stakeholders transition to the new energy
objectives: delivering economic growth, as they assess energy systems and as they
doing so in an environmentally sustainable consider the design and implementation of architecture.
manner, and ensuring security of supply strategies to improve them.
and access for all. Second, it aims to create
a “one-stop shop” for stakeholders where The Expert Panel has contributed to and
they can easily access transparent and stress-tested the methodology. It has done Ishwar V. Hegde, Chief Economist, Suzlon
robust datasets and the resulting analysis. its utmost to ensure that the team leading Energy
The EAPI thus combines an innovative the exercise has been rigorous, and that
blend of indicators to this end. Of course, the EAPI is firmly grounded in “reality on the
the EAPI is highly abstracted and not ground”. The product is thus strong and
meant as a comprehensive treatment or credible, and can be further augmented
classification of an energy system. Rather, and refined in subsequent years. The
it is one way to present and consider online data platform provides an intuitive
the complex information and the highly user interface that allows for many types of
interdependent issues that prevail in the custom research, including “deep-dives” in
energy sector. specific areas of interest.
Over the past century, affordable energy The Energy Architecture The assessment has highlighted a number
has been a significant driver of global Performance Index – A Tool to of key trends that are common to the
development. Humankind’s continued majority of countries analysed:
evolution towards a modern energy system Assist Decision-makers
from the adoption of coal-powered energy 1. Rich, high GDP per capita countries
generation technology in the 1800s The Energy Architecture Performance are more likely to be able to score well
through to widespread electrification in the Index (EAPI) is a tool that can help against one or more objectives of the
1900s has helped to shape and develop decision-makers manage and monitor energy triangle. Such countries have
societies. this changing landscape, enabling the economic flexibility to engage in
a more effective transition to a new concerted action on environmental
The world is again in a period of transition energy architecture. The EAPI measures sustainability and the adoption of more
for the global energy system. Now 16 indicators aggregated into three efficient, cleaner technologies involving
more than ever, decision-makers must baskets relating to the three imperatives
legacy infrastructure upgrading across
understand the core objectives of energy of the energy triangle to which energy
the energy system and incorporation
architecture – generating economic growth architecture should contribute: economic
of renewables into the energy mix.
and development in an environmentally growth and development, environmental
sustainable way while providing energy sustainability, and access and security of 2. Europe dominates the leader board
access and security for all – and how they supply. The EAPI both scores and ranks
due to concerted regional action on
are being impacted by changing dynamics. each country’s current energy architecture
environmental sustainability and better
based on how well it contributes to these
energy efficiency across the value
Responding to these often competing imperatives.
chain.
objectives is challenging, as actions to
tackle issues such as resource scarcity and 3. Fast-growing, industrial countries
climate change must be delivered against and regions find it harder to perform
the background of difficult economic well on sustainability and security
conditions following the global financial indicators than their richer, more
crisis. Difficult trade-offs need to be made, deindustrialized counterparts. With
but sometimes complementarities between The EAPI provides informed, large energy requirements to be met,
the imperatives of the energy triangle can
be realized. Overall, flux in the system is
rigorous and actionable scoring well across these imperatives
of the energy triangle becomes harder
generating uncertainty for industries and support for policy and with fast-growing, industrialized
investors.
investment decision-making economies generally relying on
cheaper or subsidized fossil fuels,
across the energy sector. such as coal, petroleum and natural
gas, to meet demand.
EAPI 2013
Country/economy Economic growth Environmental Energy access Overall rank Overall score
and development sustainability and security
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
1
World Economic Forum, Energy Vision Update, 2012.
2
International Energy Agency (IEA), Topic: Climate Change;
see www.iea.org/topics/climatechange. 5
Yergin, Daniel, The Quest: Energy, Security and the
3
450 Scenario is a scenario presented in the World Energy Remaking of the Modern World, 2011.
Outlook that sets out an energy pathway consistent with 6
Mitchell, John V., More for Asia: Rebalancing world oil and
the goal of limiting the global increase in temperature to gas, Chatham House, 2010.
2°C by limiting the concentration of greenhouse gases in 7
UN Secretary-General’s Advisory Group on Energy and
the atmosphere to around 450 parts per million of CO2 Climate Change, Energy for a Sustainable Future, 2010.
equivalent. 8
United Nations Department of Economic and Social Affairs
4
International Energy Agency (IEA), World Energy Outlook, and International Atomic Energy Agency, Energy Indicators
2011, Chapter 6, “Climate Change and the 450 Scenario”. for Sustainable Development, 2007.
Associated with
the Transition to 800
Architecture 600
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/.
13
For a detailed technical description of the methodology, please see the Methodological Addendum at the end of this report.
Rankings
Belgium 0.51 0.55 0.77 29 0.61
Estonia 0.56 0.59 0.67 30 0.61
Chile 0.57 0.51 0.73 31 0.61
Finland 0.53 0.47 0.81 32 0.60
Greece 0.63 0.48 0.70 33 0.60
Israel 0.61 0.47 0.73 34 0.60
Table 2 shows the rankings for each Paraguay
Argentina
0.60
0.65
0.66
0.48
0.54
0.66
35
36
0.60
0.60
of the separate components of the Poland 0.60 0.48 0.71 37 0.60
energy triangle (economic growth and Korea, Rep.
Mexico
0.59
0.61
0.43
0.50
0.76
0.67
38
39
0.59
0.59
development, environmental sustainability, Singapore 0.70 0.41 0.67 40 0.59
Netherlands 0.50 0.50 0.77 41 0.59
and energy access and security) and the Azerbaijan 0.47 0.51 0.78 42 0.59
EAPI 2013 overall ranking. All scores are Iceland 0.30 0.70 0.75 43 0.58
Turkey 0.51 0.53 0.70 44 0.58
between 0 and 1. Thailand 0.54 0.49 0.70 45 0.58
Italy 0.48 0.53 0.72 46 0.58
Panama 0.60 0.54 0.58 47 0.57
No country achieves top scores against Bulgaria 0.56 0.55 0.62 48 0.57
any basket. This reflects the fact that, El Salvador
Tunisia
0.48
0.43
0.60
0.54
0.64
0.73
49
50
0.57
0.57
although some countries score relatively Kazakhstan 0.55 0.45 0.70 51 0.57
Dominican Republic 0.53 0.61 0.55 52 0.56
high and balance the requirements of Czech Republic 0.50 0.40 0.78 53 0.56
the energy triangle well in comparison to Ecuador 0.56 0.52 0.59 54 0.56
United States 0.56 0.34 0.77 55 0.56
other countries, not one has managed to Cyprus 0.57 0.51 0.57 56 0.55
do all that can be done. This is especially Georgia
Algeria
0.37
0.37
0.61
0.52
0.66
0.75
57
58
0.55
0.54
true of the scores in the environmental South Africa 0.60 0.49 0.54 59 0.54
1st 6th
Norway 6 Colombia
0.75 0.69
2nd 7th 7
Sweden Latvia
0.71 0.69
3rd 8th 8
France Denmark
0.70 0.67
4th 9th 9
Switzerland Spain
0.70 0.67
5th 10th
New Zealand United Kingdom
0.70 0.67
1. High GDP correlates with high 3. Other factors also contribute. Spotlight on 1st Place: Norway
performing energy systems. Top quartile scores for low energy
The top ten EAPI 2013 performers intensity, diverse energy supply and Norway owes much of its excellent
enjoy an average GDP per capita of low emissions rates also contribute. score to its geological resources – and
over US$ 46,000 and all, bar Latvia, The top ten have an average energy its efficient management of them.
are within the top 25 countries globally intensity score of US$ 9.93 GDP per Norway provides much of the oil and gas
on this metric. The link between higher unit of energy use (2005 PPP US$ per consumed in Europe and, in 2011, was
GDP and better EAPI performance is kilogram of oil equivalent), above the the 2nd largest exporter of natural gas in
also replicated in the overall economic EAPI sample average of US$ 7.14. the world after the Russian Federation, and
and regional cluster analysis (see They score an average 0.90 / 1 for the 7th largest exporter of oil.14 This drives
section 2. Economic and Regional diversity of TPES and an average of GDP: in 2010, crude oil, natural gas and
Clusters Analysis for further detail). 0.64 / 1 for environmental sustainability pipeline transport services accounted for
– above the EAPI sample average of almost 50% of Norway’s exports revenues,
2. Having a low-carbon fuel mix is a 0.54. 21% of GDP, and 26% of government
performance factor. revenues according to the Norwegian
The top ten performers source on 4. Two success stories are surprises. Petroleum Directorate.
average 36% of their total primary Latvia’s affordable energy (no fuel
energy supply (TPES) from alternative subsidy and marginal taxes) and Strong policy has met with resource wealth
or renewable energy sources, including excellent energy intensity score, and to see Norway rank 1st in the EAPI 2013.
biomass and nuclear. Sweden, France New Zealand’s supply diversity (39%
and Switzerland all source over 26% of alternative or nuclear sources and A strong policy vision has had an obvious
their TPES from nuclear (France 42%), 3rd most diverse TPES) boost their impact on Norway’s score across
with an average nuclear TPES of 12% performance significantly. the efficiency metrics. The Enova SF
for the top ten compared to 4% for the programme promotes energy savings, new
EAPI 2013 sample. Large-scale hydro 5. Europe dominates the leader board. renewables and natural gas solutions and
power use also drives performance, This is due to concerted regional action is owned by the government of Norway.
with an average hydro TPES of 9% for on environmental sustainability, better It promotes environmentally sound energy
the top 10, 5% for the rest of the EAPI energy efficiency across the value chain use and production, relying on financial
2013 sample. and the adoption of clean technologies. 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.
efficiency of Norwegian industry and Figure 6: Norway’s performance on the EAPI 2013
mitigate its environmental impact. Projects
with energy requirements of more than Economic growth and
0.1 gigawatt-hour (GWh) can apply for development
investment support for efficiency initiatives Norway 1.00
(i.e. measures for energy recovery or
waste heat conversions to renewable
energy) from a managed energy fund of 0.67
over € 874 million. Under the programme,
publically funded research, development 0.50
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 0.00
16
International Energy Agency (IEA), Norway Review, 2011.
17
International Energy Agency (IEA), World Energy Outlook,
EU27 1.31%
2011.
18
International Energy Agency (IEA), Norway Review, 2011.
19
Thomson Reuters Point Carbon, Point Carbon Research;
available at www.pointcarbon.com. *The Odyssee ODEX is a European energy efficiency index combining Industry, Transport and Household energy efficiency indicators
EU15 0.67
Figure 9: Energy access and security and environmental sustainability scores BRIC economies are growing. GDP
levels per capita are not fully realized and
Economic growth and
development
are showing growth despite the global
economic crisis (BRIC real GDP grew
1.00
6.53% in 2011 alone36). Yet the demands
Nordic economies that they are putting on the engine rooms
of their growth – their energy systems –
EU15 means these engines are being stressed.
0.50
BRICs
MIST
0.00
36
CME Group, BRIC Country Update, July 2012; available at
Energy access and Environmental www.cmegroup.com/education/files/ed133-market-insights-
security sustainability bric-2012-8-1.pdf.
Figure 10: Regional Clusters – Comparison of 2013 EAPI score by average GDP per capita37
0.80 $45,000
0.20 $0
Sub-Saharan Middle East and ASEAN and Commonwealth Latin America Central and Advanced
Africa North Africa Developing Asia of Independent and the Eastern Europe Economies
States Caribbean
Economic Cluster
Average GDP per capita (current US$, 2011) Linear (Median)
37
See Definitions section for explanation of the graph structure and economic/regional clusters.
Figure 10 shows the higher levels of GDP They have the economic flexibility and Index. Developing, largely industrial
per capita generally indicating a higher clout to engage in concerted action economies all show lower performance on
spread of scores on the EAPI 2013 on environmental sustainability and an aggregate level than developed, largely
globally. How might this be the case? And the adoption of more efficient, cleaner diversified economies. Unsurprisingly, the
what would explain the exception to this technologies involving legacy infrastructure energy intensity scores dip or flat-line with
rule – the Middle East and North Africa’s upgrading across the energy system the tumultuous first years of the global
performance – and the less than stellar and the incorporation of renewables financial crisis between 2008 and 2010 as
performance of the Advanced Economies, into the energy mix. With diversified or cheaper energy flooded world markets in
given their proportionally higher GDP per large service-based economies and the wake of the slowdown, and this effect
capita? a deindustrialized GDP base, energy is most noticeable in the intensity scores
efficiency is easier to achieve. Figure 11 of the relatively more deindustrialized
Simply framed, rich countries are more shows average energy intensity for a economies.
likely to be able to score well against one selection of regional/economic clusters
or more objectives of the energy triangle. against the World Bank’s Energy Price
Geology also plays a part in performance; Figure 12: Comparison of US greenhouse gas emissions 1990 - 2010
in the case of many of the Advanced Source: United States Environmental Protection Agency; World Economic Forum analysis
Economies, natural resources such
as hydro, geothermal and oil and gas 6,000
resources are blended into their energy 42
224
systems and economies to enable strong 28 340
performance across each aspect of 5,000 219
778
the energy triangle. A strong degree of 338
1st 6th
Peru Uruguay
0.78 0.70
2nd 7th
Colombia 0.65 Norway
0.76 0.67
3rd 8th
Switzerland Australia
0.73 1 0.66
0.66
4th 9th
Spain Croatia
0.71 0.70
5th 10th
Singapore Romania
0.70 0.69
– Energy intensity for the top ten – All of the top performers have a clearly – Excluding Singapore, fuel imports
performers is, on average, far defined energy efficiency programme represent an average of 0.03% of
lower than the Energy Architecture or policy measures in place, with GDP for the top ten, below the EAPI
Performance Index (EAPI) sample, with examples in Uruguay, Romania and sample average of 0.10%; when
an average GDP per unit of energy use Croatia receiving funding from external including Singapore in the analysis, the
of US$ 11.37 compared with the full parties such as the World Bank. figure raises to 0.07%. The inclusion
EAPI sample average of US$ 7.14. of Singapore in the result may be
– Generally, pump gasoline and diesel misleading, however, owing to its
– Cheap electricity for industry is a driver prices reflect the cost of production status as one of the world’s top three
of top ten performance, with a US more accurately, with a 0.86 / 1 oil trading hubs (with approximately
$0.09 US / kWh average for the top average score for (lack of) gasoline and US$ 500 billion in trade channelled
ten, compared with a US$ 0.11 US / diesel price distortion across the top through Singapore annually) and the
kWh average for the full EAPI sample ten compared with 0.67 / 1 across the world’s biggest shipping fuel industry,
(the EAPI indicator represents available full EAPI sample. with 26 million tonnes of bunker (fuel to
data that cannot take into account the refuel a ship) delivered last year.40
potential subsidizing of this price).
40
Singapore Economic Development Board/Reuters,
Factbox: Singapore, 2012; available at uk.reuters.
com/article/2007/06/12/singapore-economy-oil-
idUKSIN19966120070612.
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
43
of hydropower infrastructure vulnerability to climate change Although Colombia consumed 298,000 barrels of oil per
risks; develop a Strategic Environmental Assessment; boost day in 2011, it currently produces over 951,000 barrels per
environmental standards through regulations training and day and can export most of its oil. It can also export most of
46
support for municipal eco-efficiency plans; issue guidelines its coal – Colombia was the 4th largest coal producer in the Emissions per unit of GDP decreased twice as fast as the
on minimum standards and energy efficiency labelling; and world in 2010. Source: US Energy Information Administration, total energy intensity over the period 1990 to 2009 (1.2% per
help set up an energy efficiency agency. According to the Colombia Country Analysis, 2012. year) thanks to substitutions of oil with gas and biomass. This
44 switch out explains around 70% of the reduction in the CO2
Asia Pacific Energy Research Centre, Peru has developed 42 US Energy Information Administration, Colombia Country
appliance standards since 1996, with 29 of them referring to Analysis, 2012. intensity since 2000. Source: Sachs, J. D. and A.M. Warner,
45 Centre for International Development and Harvard Institute for
energy efficiency. Energici, Switzerland Renewable Energy – Annual, 2011;
42 available at www.energici.com/energy-profiles/by-country/ International Development, Natural resource abundance and
World Bank, Peru: Country Overview, September 2012;
available at www.worldbank.org/en/country/peru/overview. europe-m-z/switzerland. economic growth, 1997.
Norway 656.2
Kuwait 296
Russia 149.7
Qatar 115
Libya 65
Kazakhstan 61.8
Algeria 56.7
The expert panel and World Economic manufacturing sector productivity due to crude oil produced daily48 have been used
Forum team frequently debated the the currency-strengthening effect of natural to help millions of Brazilians out of poverty
inclusion of a fuel exports (% GDP) resource exploitation. and drive down the country’s net debt to
indicator. The effects of indirect- 37.2% of GDP from a high of 60.4%.49
deindustrialization, or the “resource What might be the impact of the “resource But in a world of weak European and US
curse”, are well understood. Many studies curse” on the various economies assessed currencies, the historical boom and bust
have reported on the inverse correlation by the EAPI? pattern of Brazil’s economy may be hard to
between resource abundance and the avoid. How concerned should Brazil be?
economic development of a country.47 The Brazil must carefully manage its revenues
symptoms include a decline in national from hydrocarbon production. 48
US Energy Information Administration, Brazil Country
Analysis, February 2012.
Taking Brazil as an example, the case is 49
Bristow, Matthew and Juan Pablo Spinetto, “Brazil Faces
47
Sachs, J. D. and A.M. Warner, Centre for International complex. The benefits of the exploitation of New Oil Boom Curse as the World’s Resource Engine”,
Development and Harvard Institute for International its hydrocarbon reserves are undeniable. Bloomberg, 13 March 2012; available at www.bloomberg.
Development, Natural resource abundance and economic com/news/2012-03-13/brazil-faces-new-oil-boom-curse-as-
Revenues from the 2.6 million barrels of
growth, 1997. the-world-s-resource-engine.html.
50
Imperial College London Business School, Can Dutch
disease harm the export performance of Brazilian Industry?, 53
In “Does Oil Abundance Harm Growth?”, Applied
2010. Economics Letters, 2011, Cavalcanti et al challenge whether
51
Royal Norwegian Embassy / Thor Englund; available at natural resource abundance is a curse, citing analysis that
www.norway.org/ARCHIVE/business/businessnews/ethicoil. shows oil abundance having a positive effect on both long-
52
World Economic Forum and IHS CERA, Energy for run income levels and short-run economic growth, as well as
Economic Growth Energy Vision Update, 2012. social and human capital.
Any analysis of the economics of global Figure 15 shows energy prices growing at reducing consumer prices for fossil
energy architecture must consider at an exponential rate. Should continuous fuels and electricity generated from fossil
subsidies, which affect prices, public upward pressure persist, many developing fuels.55 This is a staggering potential
sector budgets and the signals to energy countries will reach an untenable situation saving. The declaration of the G20 Cannes
consumers. The EAPI’s take on the as many of them commit upwards of 5% Summit in 2011 reaffirmed commitments
issue is upfront: fossil fuels subsidies of their GDP to fossil energy subsidies to “rationalise and phase-out over the
are detrimental to every angle of the (an aggregate total of between US$ 300 medium term inefficient fossil-fuel subsidies
energy triangle. But this position needs billion to US$ 550 billion depending on that encourage wasteful consumption,
justification. current oil prices).54 The IEA’s 2011 World while providing targeted support for the
Energy Outlook report estimates a potential poorest,”56 demonstrating that there is a
Consider the trajectory of the World Bank’s reduction in global energy demand of recognized political will to end fossil-fuel
global energy index (see figure 15). 4.8% or some 900 million tonnes of oil subsidies on a global basis.
equivalent by 2035 from the removal of
all supply-side subsidies that are targeted
55
International Energy Agency (IEA), World Energy Outlook,
2011.
54 56
McKinsey Global Institute, Resource Revolution: Meeting G20 Declaration; available at www.g20-g8.com/g8-g20/
the world’s energy, materials, food, and water needs, g20/english/for-the-press/news-releases/cannes-summit-
November 2011. final-declaration.1557.html.
180
"Super-cycle"
World Bank Energy Price Index (2005 = 100)
140
120
100
1970s Recession
80 oil shock
60
40
20
0
1960 1970 1980 1990 2000 2010
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
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 fossil-
fuel 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.
1st 6th
Sweden Mozambique
0.76 0.71
2nd 7th
France Zambia
0.75 0.71
3rd 8th
Latvia Nigeria
0.74 0.70
4th 9th
Ethiopia Iceland
0.72 0.70
5th 10th
Tanzania Slovak Rep.
0.72 0.69
– On average 72% of the top ten – Energy-related emissions are generally – The average fuel economy for
countries’ total primary energy supply lower and average out at 0.58 metric passenger cars is slightly lower than
comes from alternative energy sources tonnes of CO2 per capita, against an the EAPI 2013 sample average at 8.2
including nuclear and biomass. EAPI 2013 sample average of 2.89 litres/100 kilometres for the top ten
This compares to the EAPI 2013 metric tonnes of CO2 per capita. compared with an overall average of
sample average of 29%. Biomass Particulate matter (PM10) emissions 9.46 litres/100 kilometres. To put this
considerations67 in this indicator average at 22.8 micrograms per cubic in perspective, the Middle East North
mean countries sometimes have an metre, against an EAPI 2013 sample Africa region averages 13.69 litres/100
overwhelming dependence on biomass average of 37.7 micrograms per cubic kilometres while European countries
energy consisting of wood, charcoal metre. average at 7.18 litres/100 kilometres
and agricultural residues. This ranking – some of the developing countries
therefore needs to account for the poor in the top ten still have work to do
contexts of many of the top-scoring around the adoption of fuel economy
countries. 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: France has framed up a series of policies71 litres/100 kilometres), this is a problem that
Sweden, France and Latvia to support its plan to see a 75% reduction will likely impact further down the line, as
in CO2 emissions by 2050 and a reduction further development encourages expansion
Some geological advantages allow Sweden in greenhouse gas emissions in the in transport networks.75
to exploit hydro resources. Both Sweden transport sector to 1990 levels by 2020.
and France use a large component of France already has an average passenger Spotlight: Iceland’s Remarkable
nuclear in their total primary energy supply vehicle fuel efficiency of 7.36 litres/100 Environmental Sustainability
(TPES) with low carbon impact, driving kilometres, ranking it 20th overall and in
line with the European trend. France may Journey
performance in this section. Low PM10 and
CO2 emissions are also key performance yet take advantage of the low-carbon
electrical generation mix by enlarging Iceland, 9th in the rankings for
factors for the top three. environmental sustainability, now sources
its electrically powered transportation
sector (including the TGV high speed train 100% of its electricity from alternative
Sweden is the EU’s great success story for
network). The relatively large solar PV sources. The country generates 73% of
clean energy production.
capacity (1.7 GW72) should grow over the electricity from hydro installations using
In 1970, oil accounted for over 75% of short-term as France’s current government the vast array of rivers and glacial melt
Swedish TPES; then followed the oil shocks has advocated support for the technology waters, while underground heated springs
of that decade, forcing a rebalancing of approving more than 200 large solar drive 27% of geothermal generation,
the energy mix. Now the figure is 27%, projects totalling 541 MW in July, shortly according to the International Energy
mainly attributable to the use of residential after it took office. Agency. Iceland’s geothermal power and
heating oil. A further 65% of TPES comes heat sector is one of the largest in the
from alternative or nuclear energy sources In Latvia, renewable energy initiatives are world: geothermal heated water provides
(the highest in the EU according to IEA well incorporated into national climate residential buildings with approximately
data). Sweden generates 43% of electricity change policy. 90% of their heating requirements.76
from hydropower and 39% from nuclear, “Geothermal utilisation has reduced CO2
meaning carbon emissions from the Latvia’s energy policy has a clear renewable emissions in Iceland by some 2-4 million
electricity and heat sector are the third energy remit with targets to reach 40% tonnes annually compared to the burning
lowest in the EU, when broken down by energy sourced from renewables by 2020 of fossil fuels.”77 This is more remarkable
population. already underway. Currently, 37% of given the country’s dependency, across
Latvia’s TPES is from renewable sources sectors, on fossil fuels up to the 1970s.
With most of today’s energy demands including biomass (none of Latvia’s TPES is Like Sweden, Iceland was forced by the
easily met domestically, Sweden has nuclear), based on exploiting the country’s decade’s price shocks to reconsider this
been able to pursue a strong series of natural hydro and biomass resources. position.
sustainable energy policy objectives. The Latvia’s electricity produced by renewable
Oil Free Society initiative and a green sources is higher, at about 55% of total The country is not first in this basket,
energy certification programme, where electricity production, according to IEA however. Fossil fuels still represent a
producers are granted one electricity data, of which hydro accounts for 54% significant portion of TPES, with 2% of
certificate for every megawatt-hour (MWh) from a cascade of dams on the Daugava the mix attributable to coal and 16%
of renewable electricity generated (and river. But the use of biomass in Latvia for attributable to oil. The fossil fuel-dependent
often obliged to buy them in proportion to power production is growing. Wood is sectors such as transport and the large
their supply or consumption profile) coupled a common local energy source used for fishing boat fleet still run mainly on
with a carbon taxation system implemented heat generation, currently accounting for petroleum products.
in 1991,68 means Sweden has made approximately 22% to 29% of primary
significant progress around its CO2 and energy consumption in the country. From a policy perspective, Iceland is
PM10 emissions, driving high scores across Electricity generation from coal and oil pushing towards a zero carbon impact
these emissions indicators. stopped in 2004, and various initiatives, like – Iceland’s recent climate change
the 2010 Law on End-use Energy Efficiency
France is low carbon, low intensity strategy sets out a vision of reducing net
and Energy Development Guidelines
greenhouse gas emissions by 50% to 75%
2007-2016, have been adopted in a bid
Due to its nuclear provision, France’s by 2050, from a 1990 emissions baseline.
to reduce the average heat consumption
CO2 intensity is one of the lowest in the This will involve reduction of the fossil fuel
in buildings by at least 11% by 2016
developed world, just behind Iceland component of the fuel mix and carbon
and to improve energy efficiency in heat
and Sweden, with a score of just 1.4 sequestration strategies (geothermal plants
production installations.73
kilograms per kilogram of oil equivalent emit small amounts of CO2 – the aim is
energy used. Of the 51% alternative energy Information campaigns to drive improved to capture and store them). With industry
that France uses for its TPES, 42% is literacy and energy audits have improved taking advantage of the cheap, abundant
attributable to nuclear, according to the energy efficiency in the residential and and clean geothermal energy resource
International Energy Agency. The nuclear services sectors, the largest energy (new data storage centres are being built78
sector generates a nuclear capacity of consumer groups in Latvia, using 54% and the large aluminium manufacturing
63 gigawatts (GW)69 using 58 reactors, of total supply.74 Increasing final energy sector uses geothermal energy to power its
and France is a large user and exporter of consumption in the transport sector, smelting rigs) the future of Iceland’s energy
low-carbon electricity, with exports heading especially motor transport, is a current sector is looking very sustainable indeed.
mainly to Italy and Switzerland. France is issue, but given Latvia’s excellent average
also using its nuclear experience to pioneer fuel economy for passenger cars (slightly
new reactor designs and is at the cutting- better than the EU27 average of 7.18 75
Government of Latvia, National reform programme of
edge of nuclear fuel recycling programmes,
Latvia for implementation of the “Europe 2020” strategy,
with reprocessed fuel generating about 71
These policies include The Energy Law (July 2005); 2011.
10% of the country’s electricity per year Grennelle de l’Environnement policy stipulates a 75% 76
Bjornsson, Sveinbjorn, Geothermal Development and
while saving up to 25% of the uranium reduction in emissions between 1990 and 2050 while also Research in Iceland, 2006.
content of used fuel.70 setting specific targets for energy efficiency and renewable 77
Gunnlaugsson, Einar, Orkuveita Reykjavikur, CO2 Saving
energy sources. by Using Geothermal Energy for House Heating in Iceland,
72
68 PBL Netherlands Environmental Assessment Agency / Workshop for Decision Makers on Direct Heating Use of
Widegren, Karin, Renewable Energy Support in Europe:
EC Joint Research Centre, Trends in Global CO2 Emissions, Geothermal Resources in Asia, United Nations University,
The Swedish Experience, Energy Markets Inspectorate, 2011.
69 2012. TBLRREM and TBGMED, Tianjin, China, 11-18 May 2008.
Nuclear Energy Agency, Country Profile: France, 2010. 73 78
70 ABB, Latvia: Energy efficiency report, 2011. IT World, Iceland’s carbon-neutral data centre opens for
Areva Group, company website: http://www.areva.com/. 74
ABB, Latvia: Energy efficiency report, 2011. business, 2012.
$300,000
$250,000
$200,000
$ US million
$150,000
$100,000
$50,000
$0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
The financing of renewable energy projects Uncertainty in the sector greenhouse gas emissions cuts from 1990
is growing (see figure 17). Total global levels by 40% by 2020 and by 80% by
investment in renewable energy grew to The US was the big spender in 2011, 2050, even without nuclear. One of the
around US$ 250 billion in 2011 according with US$ 51 billion worth of investment in few rich countries to still be aggressively
to Bloomberg New Energy Finance data. clean energy. The Obama administration pursuing a “staggering transformation of
This was up 18% from 2010, and is almost has encouraged renewables investment the energy infrastructure”, Germany must
three times the level of investment in though various means – tax incentives, still build or upgrade 8,300 kilometres
2006.79 Yet the increasing numbers belie loan guarantees and other subsidies – and (5,157 miles) of transmission infrastructure
a drop in the overall growth rate; between launched new efficiency standards targets and numerous backup generators to
2010 and 2011, growth was only 18%, for vehicles, with plans to double average counter the intermittency of its envisaged
below the 39% rise in investment from fuel efficiency by 2025 through a targeted wind and solar supply.81 The subsidies
2009 to 2010.80 federal loan scheme. But a proposed cap required to fund renewables rebates will
and trade scheme to limit CO2 emissions ultimately lie with Germany’s consumers,
79
was scrapped in 2009.
Liebreich, Michael, Bloomberg New Energy Finance, “Total
new investment in clean energy ($m)” chart for the Bloomberg 81
New Energy Finance Summit, 2011.
Germany has its bold Energiewende The Economist, “Energiewende”, July 2012; available at
80 (energy transformation) plan to meet www.economist.com/node/21559667.
Ibid.
Every country must make its own choices Nuclear waste emits ionizing radiation Ultimately, the EAPI does not penalize or
around its fuel mix. However, as figure 19 that is harmful to humans and ecological reward nuclear, nor any fuel type, based
shows, countries that have low-carbon systems if not processed and stored on its perceived economic efficiency – it
fuel mixes score better in the EAPI 2013 properly. Temporary safe storage methods captures this component of a country’s
due to the reduction in fossil fuel-related air exist, but currently there is no universally energy systems in the end prices of the
pollution and reduced CO2 emissions they accepted long-term storage method. fuels measured. Each country must make
entail. Data for waste processing techniques its own choices regarding the acceptability
and volumes was not available for the of and investment in different fuel sources,
As nuclear generation is low carbon,89 it 105 countries assessed by the EAPI, and nuclear included. Many countries are
contributes positively to environmental accurate estimation of volumes and types reassessing the role of nuclear post
sustainability scores on the index. We of waste treated by country is limited due Fukushima, with countries such as
wished to include an indicator that spoke to the large amount of contracted waste Germany and Japan gradually replacing
to the storage implications of spent fuel disposal and the different types of disposal nuclear with other fuel sources and other
deposits generated by nuclear facilities. strategies employed by different countries. countries moving ahead with nuclear as
The next iteration of the EAPI will aim to part of the fuel mix.
89
access better, more detailed data around
This definition is consistent with the International Energy
Agency (IEA) Energy Technology Perspectives 2010 BLUE
nuclear waste.
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.
0.76 18,000
16,599
0.74 16,000
14,000
0.72
Thousand tonnes oil equivalent (ktoe)
12,000
0.70
EAPI 2013 score
10,000
0.68
6,744
8,000
0.66
6,000
0.64
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)
90
United Nations Foundation, Achieving Universal Energy
Access; available at www.unfoundation.org/news-and-media/ 92
United Nations Foundation, Achieving Universal Energy
multimedia/videocasts/achieving-universal-energy.html. Access; available at www.unfoundation.org/news-and-media/
91
World Bank, Modern cooking solutions: status and multimedia/videocasts/achieving-universal-energy.html.
challenges, 2011.
1st 6th
Norway Oman
0.95 0.80
2nd 7th
Canada Sweden
0.82 0.80
3rd 8th
Denmark Germany
0.82 0.79
4th 9th
Australia Switzerland
0.81 0.79
5th 10th
Finland Austria
0.81 0.79
A common observation is that the world’s 50 years for the proportion of coal and in However, these changes need to be put
energy infrastructure changes slowly. global total primary energy supply (TPES) into context in order to be interpreted
As Simon Henry, Chief Financial Officer to increase from 2% to around 10% in correctly. Long lead times (of between
of Royal Dutch Shell, commented in the the mid-1850s. It was the same journey 50 to 70 years) in terms of technology
World Economic Forum’s 2011 New for nuclear generation. In the US, nuclear shifts are mostly characteristic of energy
Energy Architecture: Enabling an effective delivered 10% of all electricity after 23 systems in which the entire infrastructure is
transition report, “once a new energy years of operation, taking 38 years to reach reworked (see figure 21). Existing networks
technology is proven, it takes about 30 a 20% share in 1995. Electricity generation lock-in their technology of choice, creating
years for it to achieve 1% of the overall by natural gas turbines in the US followed a price and compatibility barriers to new
market… New energy sources take time similar trajectory; it took 45 years to reach technologies that slow the rate of diffusion.
to develop because of the massive scale 20% of the US TPES mix.97
of our modern energy system, which has
been more than a century in the making.
And because of the need to build industrial 97
Smil, Vaclav, “A Sceptic Looks at Alternative Energy”,
capacity and learn by doing.” Frequently, Spectrum, Institute of Electrical and Electronics Engineers,
statistics bear out this judgement; it took 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
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.
50%
40%
10%
0% 1%
1950 1960 1970 1980 1990 2000 2010
Coal Petroleum Gas
When technology diffusion takes place emissions.”101 Technological diversification Administration (EIA), due to further
within an existing network, the rates of of energy supply improves energy security regulation like the Energy Independence
change can be much faster.98 An example and drives economic benefits: countries and Security Act (EISA).105
of this would be the significant switch could save a total of 450 exajoules (EJ) in
This effect is not just limited to the
around the world from coal and oil-based fossil fuel purchases by 2020 equating to
US; the International Council on Clean
electric generation to natural gas, a the last six years of total fossil fuel imports
Transportation (ICCT) estimates that the
process accelerated by existing networks among OECD countries through the
global car fleet, though expected to double
of large electric grids. Accordingly, the adoption of new technologies. According
over the next 20 years, will see improving
world may see a far greater rate of to the IEA 2DS scenario,102 “by 2050, the
fuel efficiency (see figure 23).106 Indeed,
change as electric power systems start cumulative fossil fuel savings in the 2DS
global demand for transport is almost
to decarbonize. In the US, the expansion are almost 9,000 EJ – the equivalent of
certain to balloon over the near-term – the
of gas production from shale has pushed more than 15 years of current world energy
IEA projects that transport fuel demand will
gas prices down 69% over the past four primary demand.”103 From a security point
grow by about 40% by 2035.107 This has
years, and seen natural gas-fired plants of view, this represents an opportunity.
security implications. To manage them,
expand to absorb 34% of the generation How new technologies in transport may policy-makers will need to encourage the
mix (see figure 22).99 This shift will probably improve security of supply. behavioural shifts required to improve
impact positively on EAPI results for the US vehicle efficiency and bolster the regulations
moving forward, as CO2 emissions from Transportation is one sector that looks set
that force manufacturers to improve vehicle
heat and electricity generation fall. for significant technological change over
efficiency metrics, as the European Union
the near-term, and this will revolve around
While macro-systemic changes in energy has done by strengthening the bind of its
efficiency. The sector is energy hungry;
architectures may be slow to unfold, intra- preliminary voluntary agreements.108 This is
demand has doubled since the 1970s and
grid network changes can be more within especially true of medium- and heavy-duty
the share of overall final oil consumption
the 25-35 year range. This faster transition vehicles used to transport goods, which
attributable to transport has increased by
time has benefits. Lower carbon fuels can account for most emissions.
46% (53% between 1990 and 2010).104 In
replace legacy infrastructures to yield more the US, fuel economy (a measure of the
energy per unit of carbon pollution, thus productivity of each vehicle mile travelled in
potentially decarbonizing the global primary the US economy) continues to improve and
energy supply by 0.3% per year.100 is likely to do so over the near to mid-term
Energy security and technology according to the US Energy Information
development are inextricable. As the IEA
has suggested, increased energy efficiency
though the accelerated deployment 101
International Energy Agency (IEA), Energy Technology
of low-carbon technologies can help, Perspectives, 2012.
“cut government expenditure, reduce 102
The International Energy Agency’s (IEA) Energy
energy import dependency and lower 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
98 lower emissions. Its emissions trajectory is consistent with the
Grubler, Arnulf, Nebojsa Nakichenovich, David G. Victor,
IEA World Energy Outlook’s 450 scenario through 2035. The
Dynamics of energy technologies and global change,
2DS identifies the technology options and policy pathways
Abstract, 1999. 105
99 that ensure an 80% chance of limiting the long-term global US Energy Information Administration (EIA), Fuel economy
Bloomberg, “Natural Gas Matches Coal as Top U.S. Power
temperature increase to 2°C - provided that non-energy standards have affected vehicle efficiency, August 2012;
Fuel”, 2012; available at www.bloomberg.com/news/2012-
related CO2 emissions, as well as other greenhouse gases, available at www.eia.gov/todayinenergy/detail.cfm?id=7390.
08-03/natural-gas-matches-coal-as-top-u-s-power-fuel- 106
are also reduced. International Council on Clean Transportation (ICCT),
bgov-barometer.html. 103
100 International Energy Agency (IEA), Energy Technology Global Passenger Car Fuel Economy and/or Greenhouse Gas
Grubler, Arnulf, Nebojsa Nakichenovich, David G. Victor,
Perspectives, 2012. Emissions Standards, 2010.
Dynamics of energy technologies and global change, 104 107
McKinsey Global Institute, Resource Revolution: Meeting International Energy Agency (IEA), CO2 Highlights, 2011.
Abstract, 1999. 108
the world’s energy, materials, food, and water needs, 2011. International Energy Agency (IEA), CO2 Highlights, 2011.
Figure 23: Projected passenger vehicle emissions fleet average performance and standards
by region
Source: International Council on Clean Transportation
300
250
200
grams CO2/km
150
100
50
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.
0.77
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/us-
europe-emissions-shale-idUKBRE88O0GC20120925.
of the energy triangle. 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 opportuni-
ties). 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).
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.
Sub-Saharan Africa Energy Efficiency: Critical factor, for different reasons: Russian energy sector
Average = quarter of GDP through energy / export earnings (Chatham House) but
Selected data Score ( 0-1 ) 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
EAPI 2013 0.44 intensity score ($8.40GDP / per unit) indicates transition stage of economy –
Economic Growth and Development 0.38 improved living standards and GDP growth may reduce score. India and
Environmental Sustainability 0.65 China relatively energy inefficient, but China building strong clean energy
sector and demand management solutions due to relatively modern grid.
Energy Access and Security 0.29
CO2 emissions: Critical focus for Russia and China –rank 93rd & 63rd
Improving Energy Access respectively) due to reliance on carbon intensive fossil fuels in TPES (in China
coal = 66% of TPES, in Russia 16% from coal, 20% from oil) and large
Access: Struggle to supply citizens with basic energy services. In demand (China uses most energy in world – 2438 mtoe - Russia 3rd most
15+ countries over 50% of population uses solid fuels for cooking (after U.S.) with a 703 mtoe TPES)
Quality of supply: 25 countries, mainly from SSA, receive a score Energy Access: Economies a blend of energy ‘haves’ and ‘have nots’ – India
< 3.5 / 7 for quality of electricity supply, indicating unreliable and scores poorly on access metrics (0.45 compared to EAPI average of 0.73).
insufficient supply Russia, Brazil and China highly electrified but suffer from quality of supply
issues, scoring an average 0.64 / 1 for this metric.
Energy system objective Measure (of) Indicator Name Indicator Indicator code
weight
Efficiency Energy intensity (GDP per unit of energy use (PPP US$ per kg of oil 0.25 ENINTENS
equivalent))
Degree of artificial distortion to gasoline pricing (index) 0.125 SUPGASPRICE
Lack of distortion/
Economic growth and affordability Degree of artificial distortion to diesel pricing (index) 0.125 DIESELPRICE
development
Electricity prices for industry (US$ per kilowatt-hour) 0.25 ELECPRICEIND
Supportive/detracts Cost of energy imports (% GDP) 0.125 FUELIMPORTSGDP
from growth
Value of energy exports (% GDP) 0.125 FUELEXPGDP
Share of low-carbon
fuel sources in the Alternative and nuclear energy (% of total energy use, incl. biomass) 0.2 ALTNUCENINCLBIO
energy mix
Environmental Nitrous oxide emissions in energy sector (thousand metric tonnes of 0.2 NO2
sustainability CO2 equivalent)/total population
Emissions impact CO2 emissions from electricity and heat production, total/total 0.2 CO2HEATELEC
population
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
Level and quality of
access Quality of electricity supply (1-7) 0.2 QUALELEC
Energy access Percentage of population using solid fuels for cooking (%) 0.2 POPSOLFUELS
and security
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
Weighting:
Approach and
Rationale
Within the aggregate score, each of the Each indicator is equally weighted within Where a country’s scores across two
three baskets receives equal priority and the three baskets, with the exception of similar indicators were likely to run
weighting. Fundamentally, the World the economic growth and development orthogonal to one another (for instance
Economic Forum believes that the basket. Here, indicators that correlated across the fuel imports and exports as a
imperatives of the energy triangle are of closely (due to their measuring similar, share of GDP indicators), the weights were
mutual importance and are interlinked. though not identical, aspects of energy again “diluted” so as to avoid a narrower
To bring greater balance to the energy architecture performance) had their statistical distribution of scores across the
triangle and enable an effective transition to weights “diluted” to prevent the double basket and to offset any double stacking
a new energy architecture, it is important stacking of scores, for example a country of scores. Similarly, the fuel imports and
that policy-makers look to the long term, receiving two high scores for subsidy/ exports as a share of GDP indicators are
providing a more stable policy environment high tax free pricing of both super gasoline combined to form a mini-index within
based upon an in-depth understanding and diesel. As such, the super gasoline the economic growth and development
of the trade-offs they are making. Where and diesel indicators combine to form a basket, and this mini-index is allocated
possible, decision-makers should aim mini-index within the economic growth and equal weighting with the other indicators.
to take actions that result in positive net development basket, and this mini-index
benefits for all three imperatives of the is allocated equal weighting with the other
energy triangle. indicators.
required
– Target/ceiling values
the source data (if available).
Title Rationale for inclusion Latest Sources Time Technical notes URL Additional comments*
data series
GDP per unit of Provides an indication of the country-level 2010 World Bank and 1980- Energy use per PPP GDP is the databank.worldbank. No specific global targets for energy
energy use (PPP efficiency of energy use, and whether International 2009 kilogram of oil equivalent of energy use org/ddp/home.do?S intensity. The Kyoto Protocol sets targets
tep=12&id=4&CNO=2
US$ per kg of oil there is an opportunity to improve energy Energy Agency per constant PPP GDP. Energy use for total greenhouse gas emissions
equiv.) availability by reducing energy intensity refers to use of primary energy before for Annex I (developed) countries. The
transformation to other end-use fuels, European Council for an Energy Efficient
which is equal to indigenous production Economy recommends 20% reductions
plus imports and stock changes, minus by 2020 in energy intensity across
exports and fuels supplied to ships and many different eurozone countries, but
aircraft engaged in international transport. not universally. The low performance
PPP GDP is gross domestic product distribution threshold is based on the
converted to 2005 constant international lowest performance value for 2010.
dollars using purchasing power parity
rates. An international dollar has the same The target value is based on the highest
purchasing power over GDP as a US performance value for 2010, with the
dollar has in the United States. 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.
Fuel imports Provides an indication of the extent to 2010 World Trade 1980- Fuel Imports, US$ at current prices. Fuel databank.worldbank. No data available for target setting. The
(% GDP) which the energy sector has a negative Organization and 2010 imports include mineral fuels, lubricants org/ddp/home. low performance distribution threshold is
do?Step=12&id=4&
impact on economic growth. Import bill World Bank and related materials as classified based on the lowest performance value
CNO=2
is calculated in US$ at current prices and under the Standard International Trade for 2010. The target value is 0%.
is based on the import of fuels (mineral Classification, Revision 3, Eurostat. GDP is
stat.wto.org/Home
fuels, lubricants and related materials) then the total market value of all final goods and /WSDBHome.aspx
divided by country GDP in US$ (current), services produced in a country in a given ?Language=E
the monetary value of all the finished year, equal to total consumer, investment
goods and services produced within a and government spending, plus the value
country’s borders on an annualized basis of exports, minus the value of imports,
calculated using today’s dollar value.
Super gasoline Fuel subsidies are a burden on economies 2010 GIZ (Gesellschaft 2004- Price per litre of super gasoline in US www.giz.de/ The low performance distribution
Level of price and encourage wasteful fuel use. Aligning für Internationale 2010 cents. All prices relate to November 2010 Themen threshold is based on the lowest
distortion through fossil fuel pricing with market prices Zusammenarbeit), data. Prices reflect Brent crude price of /en/29957.htm performance value for 2010: 0.
subsidy or tax would foster greater economic and the German US$ 81 per barrel (reference day 16 to 18 The target value is 1.
(index 0-1) energy efficiency. Fossil fuel taxation is a development November 2010). All pricing data related
powerful revenue tool for, most notably, agency to GIZ database. Score derived from
the transport sector. But very high taxation the level of a country’s deviation from
burdens the consumer and drives inflation a threshold price, set as the threshold
as costs rise for transporting goods point between high taxation and very
around a country, and revenue generated high taxation per fossil fuel, per year.
from taxation may be elastic over the These boundaries are defined by GIZ in
long-term as consumers adjust their their International Fuel Prices report. A
consumption in light of higher prices. The very high subsidy equates with a retail
EAPI therefore proposes that a high tax price of gasoline and diesel below price
rate is the optimal pricing mechanism, on of crude oil on world market. A subsidy
a global basis and excluding consideration is indicated by a price of gasoline and
of other externalities associated with fossil diesel above the price of crude oil on the
fuel consumption. A very high subsidy world market and below the price level
is therefore penalized, as is very high of the United States. Cost-covering retail
tax, though not equally – the EAPI uses prices incl. industry margin, VAT and
an offset bell-curve that measures the incl. approx. US$ 0.10. This fuel price
standard deviations from the target fuel without other specific fuel taxes may be
price (which is between the taxation and considered as the international minimum
very high taxation price bands). The price benchmark for a non-subsidized fuel.
differential between high subsidy and high Taxation is indicated by a price of
tax is greater than that between high tax gasoline and diesel above price level of
and very high tax. 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.
Diesel Level of As above 2010 GIZ (Gesellschaft 2004- Price per litre of diesel in US cents. All www.giz.de/ The low performance distribution
price distortion für Internationale 2010 prices relate to Nov. 2010 data. Prices Themen/en/29957. threshold is based on the lowest
through subsidy or Zusammenarbeit), reflect Brent crude price of US$ 81 per htm performance value for 2010: 0.
tax (index 0-1) the German barrel. All pricing data related to GIZ The target value is 1.
development database. Score derived from level of
agency 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.
Electricity Prices for Energy consumption is strongly correlated 2009 Energy 2001- Energy end-use prices including taxes, www.eia.gov/ No specific targets available. The low
industry (US$/kWh) to GDP, and lower energy prices are key Information 2009 converted using exchange rates. electricity performance distribution threshold is
drivers of economic growth, with electrical Administration, /data.cfm based on the lowest performance value
generation and other energy efficiencies Monthly Energy Price includes state and local taxes, for 2010. The target value is based on the
www.iea.org/stats/
good proxies for the Solow residual, Review, May energy or demand charges, customer prodresult. highest performance value for 2010, with
describing technological progress. The 2010, Table 9.9. service charges, environmental asp?PRODUCT the spread adjusted for Italy’s high and
EAPI therefore uses this data as an Other Countries surcharges, franchise fees, fuel =Electricity/Heat outlying result.
indicator of low energy prices having a -- International adjustments, and other miscellaneous
positive impact on growth. Subsidy data Energy Agency charges applied to end-use customers
is unavailable across this data point, (IEA), Energy during normal billing operations. Prices
meaning that electricity prices must be Prices & Taxes do not include deferred charges, credits
assumed to be the product of a liberal - Quarterly or other adjustments, such as fuel or
energy market pricing mechanism at Statistics, Fourth revenue from purchased power, from
an aggregate level, although in reality, a Quarter 2009, previous reporting periods.
larger portion of some countries’ bills may Part II, Section
be determined by political or regulatory D, Table 22, and NB: The International Energy Agency (IEA)
decisions warranting a subsidy, and a Part III, Section
Fuel exports Provides an indication of the extent to 2010 World Trade 1980- Fuel exports, US$ at current prices. Fuel databank.worldbank. No data available for target setting. The
(% GDP) which the energy sector has a positive Organization and 2010 exports include (mineral fuels, lubricants org/ddp/home.do? low performance distribution threshold is
contribution to economic growth. Export World Bank and related materials) as classified Step=12&id=4&CNO based on the lowest performance value
=2
bill is calculated in US$ at current prices under the Standard International Trade for 2010. The target value is fixed at
and is based on the export of fuels Classification, Revision 3, Eurostat. GDP the highest value for the 2010 dataset,
stat.wto.org/Home/
(mineral fuels, lubricants and related is the total market value of all final goods WSDBHome.aspx?
54%. The inclusion of this indicator was
materials) then divided by country GDP and services produced in a country in Language=E frequently debated by the team, given
in US$ (current), the monetary value a given year, equal to total consumer, the well understood effects of indirect-
of all the finished goods and services investment and government spending, deindustrialization, the symptoms of
produced within a country’s borders on an plus the value of exports, minus the value which include the decline in productivity
annualized basis. of imports, calculated using today’s dollar of national manufacturing sectors due
value. to the currency strengthening effect
of natural resource endowment and
exploitation, and the following shift of
labour resources away from the non-
tradable 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.
Alternative and Alternative and nuclear energy production 2011 International 1980- Alternative energy includes hydropower www.worldenergy The low performance distribution
nuclear energy reduces reliance on fossil fuels, which Energy Agency 2010 and nuclear, geothermal, biomass and outlook.org/ threshold is based on the lowest
(% of total energy produce greenhouse gases and pollute solar power, among others. performance value for 2010. The target
use, incl. biomass) the atmosphere. Inclusion of this indicator value is based on expert opinion,
supposes that nuclear energy is also stipulating that an energy system 100%
environmentally preferable to fossil fuel reliant on alternative and nuclear energy
usage given the higher volume of negative represents the ideal.
environmental externalities associated with
fossil fuel mining, power production and
emissions.
Nitrous oxide Nitrous oxide is both an ozone-depleting 2005 World Bank and 1990- Energy processes produce nitrous oxide databank.world No universal targets applicable. The low
emissions in energy compound and greenhouse gas, and International 2005 emissions through the combustion of bank.org/ddp/ performance distribution threshold is
sector (thousand is now the largest ozone-depleting Energy Agency fossil fuels and biofuels. home.do?Step= based on the lowest performance value
12&id=4&CNO=2
metric tonnes of substance emitted through human for 2010, with outliers above 53% of
CO2 equivalent)/total activities. It is one of a group of highly total emissions automatically earning a
population reactive nitrogen oxides (NOx). NO2 forms score of 0. The target value is 0% of total
quickly from emissions from cars, trucks emissions.
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.
CO2 emissions from Carbon dioxide emissions from electricity 2008 World Bank and 1980- CO2 emissions from electricity and heat databank.worldbank. The target value of 0% represents
electricity and heat and energy production contribute to International 2008 production equal the sum of the IEA’s org/ddp/home.do? the ideal state of CO2 emissions from
Step=12&id=4&CNO
production, total/ climate change and ensuing environmental Energy Agency categories of CO2 emissions: main electricity and heat. The low performance
=2
total population degradation. activity producer electricity and heat, distribution threshold is 0.000016 metric
which contains the sum of emissions tonnes per capita.
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.
PM10, country level Suspended particulates contribute 2009 World Bank 1990- Particulate matter concentrations refer databank.worldbank. The target value of 0 represents the ideal
(micrograms per to acute lower respiratory infections (World Bank, 2009 to fine suspended particulates less than org/ddp/home.o?Step state of PM10 country-level particulate
cubic metre) and other diseases such as cancer. Development 10 microns in diameter (PM10) that are =12&id=4&CNO=2 emissions. The low performance
Finer particulates lodge deep in lung Research Group capable of penetrating deep into the distribution threshold is based on the
tissue, causing greater damage than and Environment respiratory tract and causing significant 20 μg/m3 annual mean stipulated
coarser particulates. Annual average Department) health damage. Data for countries and by the World Health Organization’s
concentrations of greater than 10 aggregates for regions and income recommendations – scores over this
micrograms per cubic metre (μg/m3) are groups are urban-population weighted. threshold score 0.
known to be injurious to human health. The estimates represent the average
annual exposure level of the average
urban resident to outdoor PM10. The
59
8. Methodological Addendum
60
Title Rationale for inclusion Latest Sources Time Technical notes URL Additional comments*
data series
Average fuel The transport sector is one of the most 2010 International 1990- Measure of the average litres of gasoline www.worldenergy In its 2007 review of the EU CO2 and
economy for important areas requiring attention in Energy Agency, 2010 equivalent used per hundred kilometres outlook.org/ cars strategy, the European Commission
passenger cars improving environmental sustainability. by special driven, indicating the efficiency of a announced that the EU objective of 120
(l/100 km) Over 50% of oil use around the world is arrangement country’s transport system. Passenger g CO2/km (5.2 l/100 km or 45.6 mpg)
for transport, and nearly all the recent with the World cars in this instance need to stand as by 2012 must be met. A resolution was
and future expected growth in that use Economic proxy for the entire transport sector, given formally adopted to enforce mandatory
comes from increased transport activity Forum the paucity of global data across this fuel efficiency standards of 120 g/km (5.2
(source: International Energy Agency). indicator for both light-duty and heavy- l/100 km or 45.6 mpg), with carmakers
Fuel efficiency directly affects emissions duty vehicle fleets. achieving 130 g/km (5.6 l/100 km or 42
causing pollution by affecting the amount mpg) through technical improvements
of fuel used. 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
Electrification Over the last few years, there has been 2009 International 2007- The IEA data reflects urban and en.openei.org/wiki/ United Nations Secretary-General Ban
rate (%) international focus on the issue of access Energy Agency, 2009 rural electrification levels collected IEA-Electricity_ Ki-moon’s Advisory Group on Energy
to energy. High global energy and food Electricity from industry, national surveys and Access_Database and Climate Change stipulated a target
prices have shown the impact on both Access international sources, assessed in to achieve universal access to modern
the global economy and the world’s poor. Database assistance with World Population energy services by 2030. The EAPI has
In addition to the UN General Assembly Prospects - The 2011 Revision, published therefore set a target of 100% for this
adopting “sustainable energy for all” as an by the United Nations (UN). Additionally, indicator. The target value represents the
annual theme, the UN Advisory Group on UN data has been adjusted with data ideal state of country-level electrification
Energy and Climate Change has called from the IEA Statistics Division in order rates. The low performance distribution
for universal access to modern energy to get the most accurate demographic threshold is based on the lowest
services by 2030. estimate for 2009. performance values from the 2010 data
range.
Quality of electricity Survey participant responses to: “How 2011 World Economic 2005- Survey response to: “How would you www.weforum. No specific targets available due to
supply (1-7) would you assess the quality of the Forum, Global 2011 assess the quality of the electricity supply org/issues/global- qualitative nature of data range. The low
electricity supply in your country (lack Competitiveness in your country (lack of interruptions and competitiveness performance distribution threshold is
of interruptions and lack of voltage Index lack of voltage fluctuations)?” based on the lowest performance value
fluctuations)?” [1 = insufficient and suffers for 2010. The target value is based on the
frequent interruptions; 7 = sufficient & [1 = insufficient and suffers frequent highest performance value for 2010.
reliable] | 2009-10 weighted avg. interruptions; 7 = sufficient and reliable] |
2009–10 weighted average
% of population The number of people who use traditional 2007 United Nations 1990- Solid fuel information is either mdgs.un.org/unsd/ This indicator correlates highly with GDP
using solid fuels for biomass, such as wood and manure, is Statistics 2007 extrapolated (single year data point), mdg/SeriesDetail. levels. For literature relating to targets, the
cooking projected to rise from 2.7 billion today, to Division, The averaged (two or more years that are aspx?srid=712 EAPI focussed its analysis on developing
2.8 billion in 2030. According to estimates Millennium spaced four or fewer years apart) or a country policy targets in order to reflect
from the World Health Organization (WHO) Development linear regression is performed when solid the status quo. The Forum of Energy
and International Energy Agency (IEA) it Goals Database fuel use information is available for two Ministers of Africa has committed to
is estimated that household air pollution or more years that are spaced at least providing access to modern cooking
from the use of these traditional sources of five years apart. All countries with a gross energy to 50% of the rural poor. In 2005,
biomass in stoves with inadequate national income (GNI) per capita above the Economic Community of West African
ventilation would lead to over 1.5 million US$ 10,500 and for which no survey data States (ECOWAS) committed to providing
premature deaths per year in 2030. A is available are assumed to have made modern cooking energy to 100% of the
high percentage score reflects a poor a complete transition to using non-solid rural population (corresponding to more
level of energy access across a country fuels as the primary source of domestic than 300 million people). The UN pledge
demographic. energy for cooking and heating. 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.
Energy imports, net he security of a country’s primary energy 2010 World Bank 1980- Net energy imports are estimated databank.worldbank. No specific targets available. The low
(% of energy use) supplies may be threatened if it is reliant (International 2010 as energy use less production, both org/ddp/home.o?Step performance distribution threshold is
on a high proportion of imports (especially Energy Agency measured in oil equivalents. A negative =12&id=4&CNO=2 based on the lowest performance value
if these are concentrated among relatively and United value indicates that the country is a net for 2010. The target value is based on the
few trade partners). A high import ratio Nations, Energy exporter. Energy use refers to use of highest performance value for 2010.
within a country’s total percentage of Statistics primary energy before transformation to
energy used indicates an exposure Yearbook) other end-use fuels, which is equal to
to supply shocks and price spikes in indigenous production plus imports and
commodities, and risks stemming from stock changes, minus exports and fuels
political decisions that might restrict trade supplied to ships and aircraft engaged in
with energy suppliers. international transport.
Diversity of total Energy resilience rather than 2011 International 1980- Total primary energy supply represents www.worldenergy No target data available. The low
primary energy independence is more aligned with this Energy Agency, 2010 domestic supply only and is broken outlook.org/ performance distribution threshold is
supply (Herfindahl report’s definition of energy security. “The World Energy down into energy type. It represents based on the lowest performance value
index) foundation of a secure energy system is Outlook, 2011 inland demand only and, except for world for 2010. The target value is based on the
to need less energy in the first place, then energy supply, excludes international highest performance value for 2010.
to get it from sources that are inherently marine and aviation bunkers.
invulnerable because they’re diverse NB: The diversity score was worked
[and] dispersed…” (Source: Teich, Albert The Herfindahl index is used here out using a wide array of countries, not
H., Technology and the Future, Ninth as a measure of the size of fuel-type all of which could be included in the
edition, Thomson, 2003, p. 169). A highly consumption in relation to a country’s final version of the EAPI due to data
centralized energy system that is reliant total energy industry. The score paucity. This means the target and
on a homogenous fuel type is inherently represents the sum of the squares of the threshold scores do not equate to 0 and
vulnerable to supply shocks and price total primary energy supply types of the 1 respectively, but 0.09 and 0.88, in
volatility. A diverse supply portfolio can different country’s being analysed within line with the performance of the various
mitigate these potential risks. Please the energy industry, where the energy countries included in the Index relative to
note, data of import counterpart diversity shares are expressed as fractions. The
all countries analysed (217 in total).
was sought but was not available across result can range from 0 to 1.0, moving
the country range required. Counterpart from a large number of individual energy
sources to a single-source supply. In this
diversity is a critical measure of a country’s
case, increases in the score indicate a
energy market access. The EAPI has
decrease in diversity and vice versa. The
sourced import counterpart data for formula is as follows:
Organisation for Economic Co-operation
and Development (OECD) countries, and
H = N ∑ si 2
is using this for a special pull-out in the
report.
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)
61
8. Methodological Addendum
EAPI Data
Limitations – A
Global Rallying Call
The EAPI team wishes to flag to the As part of this effort, the EAPI is reaching
international energy community the stark out to international organizations that may
gaps it has found in global energy-related have data sources that could be used
data banks in a bid to raise awareness and to create these indicators and would
take action. like to request that readers and partner
companies also contribute, wherever
The EAPI is missing critical facets of energy possible. Please review table 7 carefully. If
system performance due to lack of data. you might be able to contribute any data or
A means to build these data for on-going advice that could go towards the creation
analysis and improve future iterations of the of one or more of the indicators listed,
tool is suggested here. The next version of please contact
the Index should focus on building out the espen.mehlum@weforum.org.
indicators that have been missed in this
version and that are recorded in table 7. Excluded indicators
Of special interest would be the creation
of an indicator that accurately reflects the Table 7 shows exactly where there were
impact of the energy sector on a country’s issues sourcing data or sufficient temporal
domestic water resources (see Pull-out: and geographic coverage, or an indicator’s
The Criticality of Better Understanding the inclusion was rejected due to contravention
Water/Energy Nexus), an indicator that of the methodology.
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).
Table 7: Indicators excluded or missing from the EAPI 2013 and rationale
Element of the Excluded or missing Initial rationale for inclusion in the EAPI Reason for exclusion
energy triangle indicators
Wholesale and retail gas Energy consumption is strongly correlated with GDP, and Data not available on global scale
prices, by country lower energy prices are key drivers of economic growth. The
EAPI therefore uses this data as an indicator of low energy
Retail electricity prices, by
prices having a positive impact on growth.
country
Energy use per unit of Energy use per unit of industrial output, per capita by country Data not available on global scale
industrial output, per capita provides an indication of the country-level industrial efficiency
by country of energy use, and whether there is an opportunity to improve
energy availability by reducing energy intensity.
R&D spend (energy specific) R&D combines with human capital to drive economic growth Data not available on global scale.
Economic by country and development. A large volume of literature proposes a Also, where data was available, it
growth and solid rate of return to R&D investment as multiplied by the was only as direct funding of R&D –
development share of its percentage in output, though the social rates of other elements including investment
return (i.e. of net societal benefit) may sometimes be greater in human capital and talent, patent
than private rates of return (i.e. to business). protection and research linked tax
benefits could not be accounted for.
Energy industry-related With an average permanent staff salary of more than Data not available on global scale
employees (per country) 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.
Water impact of energy Energy production is, more often than not, highly reliant on Data not available on global scale
sector 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.
Toxic waste deposits (incl. Nuclear energy in a country’s energy mix is an alternative Selected countries covered by the
Environmental radiation waste) by country energy source that avoids fossil fuel related air pollution and International Atomic Energy Agency,
sustainability reduces CO2 emissions. But nuclear waste, for which no but no data on global scale
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.
Average building efficiency Across the globe, residential and commercial buildings are Data not available on global scale
(Btu per sq. foot-hour significant users of primary energy (accounting for 10.6% of
potentially) by country 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
Average building efficiency Across the globe, residential and commercial buildings are Data not available on global scale
(Btu per sq. foot-hour significant users of primary energy (accounting for 10.6% of
potentially) by country 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
Average electrical grid Utilities should retain reserve margins of extra generating Data not available on global scale
reserve capacity by country 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.
Energy access Spend on grid infrastructure A 3-year rolling average of annual investment in grid Data not available on global scale
and security as % of GDP by country 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.
Diversification of import Having a variety of import counterparts means market risk Data not available on global scale
counterparts by country 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.
Number of energy-specific Development of free market fundamentals strengthens an Data not available on global scale
free trade agreements signed energy sector, enabling energy security through increased
trade and growth while ensuring that domestic resources can
be developed and extracted.
Energy production is often highly reliant Over-abstraction of water for energy in its 2011 report Water for Energy, the
on the ample provision of water. Climatic production is a critical issue for water- local nature of water (and the resulting
changes in rainfall and intensified stressed countries. lack of the ability to match water demands
water use could have profound supply with needs) is a critical concern in a world
security implications for water-intensive From an economic perspective, water for where “less than ten countries hold 60% of
methods of energy generation116 such energy use has historically been cheap, Earth’s available freshwater: Brazil, Russia,
as hydropower, which currently supplies with almost a complete absence of price the People’s Republic of China, Canada,
17% of global electricity and is a potential signals reflecting the true cost implication Indonesia, the United States, India,
carbon-free energy source for much of of abstraction, trade and supply. This has Colombia, and the Democratic Republic of
Sub-Saharan Africa. The provision of had environmental implications. Over- Congo.”
energy to households and industry is abstraction relating to resource extraction
becoming steadily more water intensive on activities and energy production is a critical
a global scale (see figure 25). A case for issue in places where water scarcity is
consideration is the Arabian Gulf. With only a problem, such as Australia, India and
1% of the world’s renewable freshwater MENA. As the World Energy Council notes
available for exploitation, countries in this
region – collectively large energy producers
rely heavily on desalinated seawater,
accounting for more than half the world’s Figure 26: Global water consumption rates for electric power generation plants
desalination capacity.117
Source: World Energy Council, 2011; US Department of Energy - National Energy Technology Laboratory (NETL) 2008
120
100
Water consumption (billion m3)
Thermal
116
McKinsey Global Institute, Resource Revolution: Meeting 20
the world’s energy, materials, food, and water needs,
November 2011.
117
Arab Forum for Environment and Development, Water: 0
Sustainable Management of a Scarce Resource, 2010. 2005 2020 2035 2050
The goal in building the EAPI was to Performance Index (Yale) though with the plant technology steam turbine (gas/
calculate an average water requirement caveat that extraction rates are notoriously coal/biomass), steam turbine (nuclear),
per power generation technology (gallons/ difficult to accurately assess due to the combined cycle gas turbine, integrated
MWh) and then divide against the power local nature of water resources and the gasification combined cycle (coal) and,
generation profile for each country. A lack of data around their location and type. within those, different cooling technologies:
final score in terms of an energy system’s closed loop/once through/dry – and this is
impact on a country’s water resources Power generation technology profiling was in the US alone.
could be derived via comparison with difficult. As figure 26 shows, there is an
the water scarcity or stress score enormous difference (in gallon withdrawn
for that country, as detailed by the or consumed per MWh generated terms)
Aquastat database or the Environmental between the different types of power
800
Max
700
600
Average
500
gallons/MWh
400 Min
300
200
100
0
Once-through
Once-through
Once-through
Dry
Dry
Dry
Closed-loop
Closed-loop
Closed-loop
Closed-loop
Steam turbine (coal, gas, biomass) Steam turbine (nuclear) Combined-cycle gas turbine IGCC* (coal)
Vastly different water requirements per The EAPI team advocates the formation an example of a successful data sharing
technology and lack of precise data on of a database that records the power model based on mutual benefit for all
the type of technologies used (or plant generation sector’s impact on country parties. Models such as the Global Water
size) per country make an aggregate water stress. Tool for Power Utilities (developed by the
analysis based on the approximate power World Business Council for Sustainable
generation technology profile of a country An understanding of the power generation Development120) could be built as online
too speculative, given that these factors sector’s impact on country water stress portals and harnessed to collect the
are often determined by the location is a priority indicator, and the EAPI is required data from power generators while
of plant (i.e. next to water or not) and significantly weakened by its absence. providing a useful benchmarking tool for
size, not to mention cost restrictions. The solution? This data does not appear businesses.
Though comprehensive data for electricity to exist in any collated form, but there
generation by fuel and technology type are many examples from within the Managing the water/energy nexus is critical
for a selection of Advanced Economies energy context that can be looked to for to meeting the three imperatives of the
was sourced from the International Energy models to assemble and disseminate energy triangle. The formation of a global
Agency, the EAPI team could not find data such information. Institutions such as database would be highly beneficial and
for the vast majority of countries in the Carbon Manufacturing for Action118 retain allow for an accurate assessment of the
EAPI 2013. global data on power plant outputs, energy sector’s contribution to water stress
energy intensity and CO2 emissions. The for a comprehensive set of countries.
Joint Organisations Data Initiative119 is
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
120
worldwide. The World Business Council for Sustainable
119
The Joint Organisations Data Initiative (JODI) oil database Development’s Global Water Tool for Power Utilities enables
collates oil market data from its member countries by means generators to calculate water consumption, efficiency
of a harmonized questionnaire on 42 key oil data points, and and intensity metrics for benchmarking and performance
was born out of a perceived lack of transparency relating to improvement, and establishes relative water risks in a
critical oil market statistics. company’s portfolio to prioritize action.
World Economic Forum The World Economic Forum’s Energy The EAPI was developed with an Expert
Industries Team is pleased to Panel of advisers, including:
– Roberto Bocca, Senior Director, Head
acknowledge and thank the following
of Energy Industries
organizations as its valued Data Partners, – Manpreet Anand, Senior Policy
– Espen Mehlum, Associate Director, without which the realization of the Energy Adviser, Chevron Corporation
Head of Knowledge Management and Architecture Performance Index 2013
Integration, Energy Industries – Juergen Arnold, Chief Technology
would not have been feasible:
Officer, ESSN, EMEA, Hewlett-
– Thierry Geiger, Associate Director,
Packard Company
Competitiveness Team France
– Gabriel Barta, Head of Technical
– Roberto Crotti, Quantitative – The International Energy Agency, Paris Coordination, International
Economist, Competitiveness Team
– Dr Fatih Birol, Chief Economist and Electrotechnical Commission
Project Advisers: Accenture Director, Global Energy Economics – Morgan Bazilian, Deputy Director,
– Arthur Hanna, Managing Director, Directorate Joint Institute for Strategic Energy
Energy Industry – Pawel Olejarnik, Senior Energy Analysis (JISEA), US National
– James Collins, Senior Manager, Analyst, Global Energy Economics Renewable Energy Laboratory - NREL
Energy Strategy Directorate – Mauricio Bermudez Neubauer, Head
– Mauricio Bermudez-Neubauer, Head of Carbon Markets, Accenture
of Carbon Markets United Kingdom – Suman Bery, Chief Economist, Royal
– Mike Moore, Project Manager, New – Bloomberg New Energy Finance, Dutch Shell
Energy Architecture, Accenture; London – Lin Boqiang, Director, China Center for
seconded to the World Economic – Michael Liebreich, Chief Executive Energy Economics Research, Xiamen
Forum University
– William Young, Chief of Staff
– Freddie Darbyshire, Lead Author, – Daniel Esty, Commissioner,
Accenture; seconded to the World Connecticut Department of Energy
Economic Forum 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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foundation in 1971 and
headquartered in Geneva,
Switzerland, the Forum is
tied to no political, partisan
or national interests.