Fundamental transitions across global energy systems are underway, characterized by unprecedented complexity – technology advances and discoveries have opened the doors to a range of energy sources and are changing the way energy is consumed. Markets are increasingly affected by shifts in global demand and supply patterns; all the while energy decisions are being underlined by the urgency of addressing the climate debate. As demand for energy is surging worldwide, the requirement to adopt new approaches and strategies to fundamentally change the energy architecture is a top global priority. The importance of securing a sustainable future is clear, and this goal has to be set against the more than one billion people around the world who have no reliable access to power, and the continued growth and industrialization of economies transforming global energy markets and creating new challenges for supply and demand management.
In this dynamic global context, the challenges of developing an energy architecture that delivers a secure, affordable and environmentally sustainable energy supply are many and complex. In assessing the performance of countries across a number of key indicators, this study confirms just how various and sizeable those challenges are: no country achieves the full score of 1/1 overall, and no country achieves top performance on each measure. While there is considerable variation in performance between different countries, all face obstacles on the way to achieving lasting balance in their management of the three sides of the energy triangle: economic growth and development; environmental sustainability; and energy access and security.
Diverse Challenges, Unique Contexts
This study highlights the complex trade-offs and dependencies that beset attempts to secure an energy system that performs well across all key objectives. Different countries are of course variously endowed with natural resources and are pursuing economic development from very different starting places. Balance is hard to achieve in the face of directly competing claims and policies. For example, an emphasis on securing economic growth often means that environmental considerations receive less attention. The push to secure environmental sustainability in developed countries is now experiencing something of a backlash as consumers baulk at the additional costs and demand lower energy prices. Plentiful natural resources in net-exporting countries often mean that fossil fuel costs for domestic consumption are subsidized, thereby reducing incentives to pursue energy efficiency measures and invest in renewables.
The top performers for the Energy Architecture Performance Index highlight that there is no single pathway to achieving a balanced energy system; the results do, however, underline the bearing economic development has over performance. Norway tops the rankings for the EAPI 2014, followed by France and Sweden. All of the top 10 performing countries are European Union (EU) and/or Organisation for Economic Co-operation and Development (OECD) economies, with the exception of Costa Rica and Colombia.
Table 1: Top 10 EAPI 2014 Rankings
|Country / Economy||Energy Architecture Performance Index (EAPI) 2014||Economic Growth and Development Basket||Environmental Sustainability Basket||Energy Access and Security Basket|
A Strategic Tool
To move beyond the tensions inherent in pursuing these and other competing aims, governments need a new set of strategic tools to help them map out their journeys to a new energy architecture consistent with the overriding goals of security, affordability and sustainability. These tools should be expressly designed to provide information and analysis that will support a greater balance between policy objectives. The creation of the Energy Architecture Performance Index is one such response to that requirement. The EAPI employs a set of indicators to assess and rank the energy architectures of 124 countries. The indicators highlight the performance of each country across the key dimensions of the energy triangle, measuring the extent to which a country’s energy architecture adds or detracts from the economy; the environmental impact of energy supply and consumption; and how secure, accessible and diversified the energy supply is.
Using the EAPI can help governments and others along the energy value chain to identify and prioritize areas for improvement. By using consistent data from reliable sources, the EAPI provides a transparent and easily compared set of measures that can help track progress and open new perspectives on the specific challenges faced by every country in each region.
A Regional Approach
This year’s report uses the EAPI research findings to highlight some of the specific challenges that individual countries and regions face in developing their responses to creating successful new energy architectures. By describing the best performing countries overall, the report aims to shed some light on the policy decisions and frameworks that have helped to secure their progress.
The structure of this year’s report explores the results of the index at a regional/economic cluster level as well as at a national level, drawing out some of the main challenges that groups of countries face. Deeper analysis of the common challenges often highlights the importance of cooperation and knowledge sharing in addressing them. The key highlights from the regions analysed in this report underscore the following:
- EU28, OECD and Nordic economies are the top performing regions/economic clusters across the index, with average scores of 0.62/1, 0.63/1 and 0.68/1 respectively. This result underlines the bearing that economic development has on the performance of an energy system. Scores in EU28 bring to bear the focus on transitioning towards a low-carbon economy as set out by the European Union’s 20/20/20 Strategy. Carbon-abatement measures, renewable energy deployment and efficiency measures have, in part, contributed to lowering the overall contribution of the region to greenhouse gas (GHG) emissions, and are improving energy security in the region. However, further analysis highlights the extent to which Eastern European member states continue to struggle with fossil fuel and import dependence.
- Industrializing clusters such as BRICS, ASEAN and Developing Asia are, for the most part, characterized by more energy- and emission-intensive economies, as highlighted by the lower average scores for these regions in the relative indicators. The overall average scores of these clusters are 0.55/1, 0.48/1 and 0.45/1 respectively – highlighting the performance gap with the top performing clusters. The performance of BRICS, ASEAN and Developing Asia clusters across the energy triangle dimension underline the different priorities of these emerging and industrializing economies.
- Performances across the North American continent vary widely, highlighting the difference stages of economic development and resource wealth between the US and Canada and the Central and Caribbean states. While the resource wealth and investments in renewables are driving high scores for Canada and the United States in energy security, low performance in environmental indicators of both countries remains a key challenge. The North American continent also includes high performers such as Costa Rica – one of the top 10 performers globally – and Haiti, which in 116th place is ranked one of the lowest. Overall, this variance highlights the disparity beween import- dependent countries of the Caribbean and Central American countries, and the Canada, U.S and Mexico.
- The relationship between performance on the EAPI and GDP is reversed in the case of the Middle East and North Africa (MENA) region. MENA achieves the lowest average performance at 0.42/1 across all the regions/economic clusters, although the average GDP per capita of US$ 15,0001 is significantly higher than the next best performer, sub-Saharan Africa. As the region with the world’s greatest endowment of natural resources, MENA performs significantly above average for net energy exports; however, the overall score is impacted by lower performance in environmental sustainability and economic growth and development, driven by the pervasiveness of fossil fuel subsidies which weighs on the regions’ economy, brings about inefficient energy use and hinders investment in renewable energy sources.
The report explores regional performances in more detail, drawing key insights from the EAPI results, and displaying external perspectives on key topics from relevant industry stakeholders.
“Understanding how countries’ energy systems perform against each other can send a powerful message to policy-makers, industry stakeholders and NGOs. Thanks to its transparency and granularity, the Energy Architecture Performance Index is a valuable tool in creating a common framework for debate, and draws out opportunities for improvement.”
– Jeroen van der Veer
Executive Member, Governing Board,
European Institute of Innovation and Technology;
Chair, Global Agenda Council on Energy Security