The Global Energy Architecture Performance Index Report 2013 ...

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The Global Energy Architecture Performance Index Report 2013 ...

Industry Agenda

The Global

Energy Architecture

Performance Index

Report 2013

Prepared in collaboration with Accenture

December 2012


© World Economic Forum

2012 - All rights reserved.

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including photocopying and recording, or by any information storage and retrieval system.

The views expressed are those of certain participants in the discussion and do not

necessarily reflect the views of all participants or of the World Economic Forum.

REF 271112

This publication has been prepared for general guidance on matters of interest only, and the

views expressed do not necessarily reflect those of the World Economic Forum, the World

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Contents Preface

3 Preface

4 The Energy Architecture Performance

Index 2013 in Numbers

6 The Expert Panel’s View: The Use

Case for the Energy Architecture

Performance Index

8 Executive Summary

10 1. The New Energy Architecture

Challenge – Balancing the Energy

Triangle

11 Defining Energy Architecture and

the Energy Triangle

13 The Challenges Associated with

the Transition to a New Energy

Architecture

14 A Tool for Transition – The Energy

Architecture Performance Index

16 2. Understanding Performance on the

Energy Architecture Performance

Index 2013

17 The EAPI 2013 Rankings

18 Top Ten – Key Takeaways

21 Economic and Regional Clusters

Analysis

24 3. Economic Growth and

Development

25 Top Ten Economic Growth and

Development Performers – Key

Takeaways

32 4. Environmental Sustainability

33 Top Ten Environmental

Sustainability Performers – Key

Takeaway

38 5. Energy Access and Security

39 Top Ten Energy Access and

Security Performers– Key

Takeaways

44 6. Key Takeaways and Focus Areas

45 Key Takeaways

46 Focus Areas for Selected Regional

and Economic Clusters

48 7. Definitions

50 8. Methodological Addendum

50 Methodology

50 EAPI 2013 Indicators: Selection

Criteria and Profiles

51 Weighting: Approach and

Rationale

56 Indicator Metadata

62 EAPI Data Limitations – A Global

Rallying Call

66 Contributors and Data Partners

Roberto Bocca

Senior Director, Head

of Energy Industries,

World Economic

Forum

Espen Mehlum

Associate Director,

Head of Knowledge

Management and

Integration, Energy

Industries, World

Economic Forum

Over the past century, affordable energy has been a significant

component of global economic growth and development. Now a

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

completely distinct conditions on both supply and demand sides.

The transition pathway from the current energy architecture to

the new will look different for each country, with energy system

objectives planned according to the trade-offs and complementarities

surrounding the core imperatives of every energy system: managing

risk to energy supplies while ensuring a country’s economic, social and

environmental well-being.

The World Economic Forum is pleased to present this report

examining the factors for effective global transition to a new energy

architecture, framed through the outputs of the Energy Architecture

Performance Index (EAPI) a tool designed to help countries monitor

and benchmark the progress of their transition against a series of

indicators. The report considers what the new energy architecture

might look like and how best-in-class enabling environments have

already helped some high-ranking countries begin their transitions

to better performing energy systems. The varying demands of each

country’s energy architecture – the sometimes competing goals of

economic growth and development, environmental sustainability,

and energy access and security – form the crux of the index and this

analysis.

The New Energy Architecture project is conducted under the Forum’s

Energy Industry Partnership with support from the authors of The

Global Competitiveness Report and involves a range of business,

government and civil society constituents from the energy industry and

other related sectors. The project uses a methodology that identifies

the key performance indicators that can impact the effectiveness

of the transition to a new energy architecture and more effectively

underpin economic growth and development, environmental

sustainability, and energy access and security.

The World Economic Forum partnered with Accenture and

collaborated with Forum Industry Partners and other expert

constituents to drive the dialogue and research. Representatives

from 28 global companies, government agencies and civil society

are actively involved, including the Akio Morita School of Business,

Bloomberg New Energy Finance, Chevron, the China Center for

Energy Economics Research at Xiamen University, the Department

of Energy and Environmental Protection in Connecticut, the

Environmental Defense Fund, Hewlett-Packard, the International

Electrotechnical Commission, the International Energy Agency,

the Joint Institute for Strategic Energy Analysis, the US National

Renewable Energy Laboratory, Maplecroft, Royal Dutch Shell, Solar

Century, Suzlon Energy, the UK Energy Research Centre and the

United Nations Industrial Development Organization.

Representatives from these organizations contributed strategic

direction and thought leadership through an Expert Panel; its members

are listed at the end of the report. Through events in Austria, Brazil,

France, India, Indonesia, Japan, Myanmar, the People’s Republic of

China, South Africa, Turkey and the United Kingdom, the project has

engaged additional business, government and civil society leaders.

The EAPI 2013 will prove to be a useful addition to the global dialogue

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.

The Global Energy Architecture Performance Index Report 2013

3


The Energy Architecture

Performance Index 2013

in Numbers

105

countries’ energy systems assessed

64

countries assessed with a fossil-fuel subsidy in place

36%

the average total primary energy supply from alternative

or renewable energy sources (including biomass and

large-scale hydropower) of the top 10 performers

compared with a 29% Energy Architecture Performance

Index (EAPI) 2013 sample average

66%

of countries assessed are net energy importers

12%

the average nuclear total primary energy supply of the

top 10 performers compared with a 6% EAPI 2013

sample average

9%

the average total primary energy supply from

hydropower of the top 10 performers compared with a

5% EAPI 2013 sample average

4 The Global Energy Architecture Performance Index Report 2013

16

indicators used

0.75 / 1

highest score achieved on the EAPI 2013 compared

with a 0.55 / 1 EAPI 2013 sample average

89

countries in the EAPI sample have renewable energy

support policies in place, in the form of regulation, fiscal

incentives or public financing

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

US$ 7.14

the average EAPI 2013 sample score for energy

intensity (GDP per unit of energy use) compared with

an EU15 average score of US$ 9.77


06

04


The Expert Panel’s View:

The Use Case for the

Energy Architecture

Performance Index

The transition to a new energy paradigm

will not be feasible without a suite of

strategic tools that help the understanding

of different pathways to the future. This

is the primary motivation for working with

the World Economic Forum to develop

an innovative new tool – the Energy

Architecture Performance Index (EAPI).

The EAPI is a global initiative with the aim

of creating a set of indicators that help

to highlight the performance of various

countries across each facet of their energy

systems. In doing so, it attempts to meet

two interlinked goals. First, it aims to assess

energy systems across their three primary

objectives: delivering economic growth,

doing so in an environmentally sustainable

manner, and ensuring security of supply

and access for all. Second, it aims to create

a “one-stop shop” for stakeholders where

they can easily access transparent and

robust datasets and the resulting analysis.

The EAPI thus combines an innovative

blend of indicators to this end. Of course,

the EAPI is highly abstracted and not

meant as a comprehensive treatment or

classification of an energy system. Rather,

it is one way to present and consider

the complex information and the highly

interdependent issues that prevail in the

energy sector.

6

The Global Energy Architecture Performance Index Report 2013

The Expert Panel advising this project

brings together senior representatives

from various sectors across the energy

value chain. The panel is acutely aware of

the importance of the provision of quality

data in supporting informed decisionmaking.

Governments, industry and civil

society cannot hope to fully understand the

functions and idiosyncrasies of their energy

systems without it. Across some metrics,

there are excellent data resources available.

But data paucity means that several

aspects of the global energy system cannot

be adequately evaluated. Nevertheless,

the EAPI will be a useful tool for policymakers,

investors and other stakeholders

as they assess energy systems and as they

consider the design and implementation of

strategies to improve them.

The Expert Panel has contributed to and

stress-tested the methodology. It has done

its utmost to ensure that the team leading

the exercise has been rigorous, and that

the EAPI is firmly grounded in “reality on the

ground”. The product is thus strong and

credible, and can be further augmented

and refined in subsequent years. The

online data platform provides an intuitive

user interface that allows for many types of

custom research, including “deep-dives” in

specific areas of interest.

But the finish line remains distant. Next

year, the panel will work closely with the

Forum team to address some of the critical

data sets that are still missing from the

EAPI. It will also drive further dialogue with

key institutions connected to the energy

sector to ensure that the work remains

vibrant and continues to evolve.

Morgan Bazilian, Deputy Director, Joint

Institute for Strategic Energy Analysis, US

National Renewable Energy Laboratory,

on behalf of the Energy Architecture

Performance Index 2013 Expert Panel

We are sure that the EAPI

will be an invaluable tool for

policy-makers and

researchers alike. With this

tool we hope that policymakers

can benchmark their

policies with the end

objective of achieving a

transition to the new energy

architecture.

Ishwar V. Hegde, Chief Economist, Suzlon

Energy


The Global Energy Architecture Performance Index Report 2013

7


Executive Summary

Over the past century, affordable energy

has been a significant driver of global

development. Humankind’s continued

evolution towards a modern energy system

from the adoption of coal-powered energy

generation technology in the 1800s

through to widespread electrification in the

1900s has helped to shape and develop

societies.

The world is again in a period of transition

for the global energy system. Now

more than ever, decision-makers must

understand the core objectives of energy

architecture – generating economic growth

and development in an environmentally

sustainable way while providing energy

access and security for all – and how they

are being impacted by changing dynamics.

Responding to these often competing

objectives is challenging, as actions to

tackle issues such as resource scarcity and

climate change must be delivered against

the background of difficult economic

conditions following the global financial

crisis. Difficult trade-offs need to be made,

but sometimes complementarities between

the imperatives of the energy triangle can

be realized. Overall, flux in the system is

generating uncertainty for industries and

investors.

8

The Global Energy Architecture Performance Index Report 2013

The Energy Architecture

Performance Index – A Tool to

Assist Decision-makers

The Energy Architecture Performance

Index (EAPI) is a tool that can help

decision-makers manage and monitor

this changing landscape, enabling

a more effective transition to a new

energy architecture. The EAPI measures

16 indicators aggregated into three

baskets relating to the three imperatives

of the energy triangle to which energy

architecture should contribute: economic

growth and development, environmental

sustainability, and access and security of

supply. The EAPI both scores and ranks

each country’s current energy architecture

based on how well it contributes to these

imperatives.

The EAPI provides informed,

rigorous and actionable

support for policy and

investment decision-making

across the energy sector.

Morgan Bazilian, Deputy Director, Joint

Institute for Strategic Energy Analysis, US

National Renewable Energy Laboratory

The assessment has highlighted a number

of key trends that are common to the

majority of countries analysed:

1. Rich, high GDP per capita countries

are more likely to be able to score well

against one or more objectives of the

energy triangle. Such countries have

the economic flexibility to engage in

concerted action on environmental

sustainability and the adoption of more

efficient, cleaner technologies involving

legacy infrastructure upgrading across

the energy system and incorporation

of renewables into the energy mix.

2. Europe dominates the leader board

due to concerted regional action on

environmental sustainability and better

energy efficiency across the value

chain.

3. Fast-growing, industrial countries

and regions find it harder to perform

well on sustainability and security

indicators than their richer, more

deindustrialized counterparts. With

large energy requirements to be met,

scoring well across these imperatives

of the energy triangle becomes harder

with fast-growing, industrialized

economies generally relying on

cheaper or subsidized fossil fuels,

such as coal, petroleum and natural

gas, to meet demand.

4. In some regions, much basic

work is still to be done to improve

performance on the EAPI. The lowest

scorers, as might be expected, face

challenges around energy access,

efficiency and sustainability, and tend

to be located in Sub-Saharan Africa,

developing countries in Asia or the

highly resource-endowed countries of

the Middle East.


Considerations for managing an effective

transition:

1. Improvements in environmental

sustainability should be a priority for

high-income and rapidly growing

economies. For high-income

economies – with the highest

impact energy sectors – combined

performance against this imperative of

the energy triangle is far lower than the

other two. Progress must be made on

this front to meet targets considered

and set by experts in the field of

pollution mitigation and climate policy.

2. No country achieves top scores

against any dimension of the energy

triangle. This reflects the EAPI panel’s

belief that, although some countries

score relatively highly and balance the

requirements of the energy triangle

well, not one has managed to do all

that can be done. This is especially

true of the scores in the environmental

sustainability basket.

Table 1: EAPI 2013 Top 10 Performers

All scores rounded to two decimal places

Country/economy Economic growth

and development

3. A large natural energy resource

endowment is not a critical

performance factor. Many of the

countries under analysis achieve high

performance because they have a

large provision of exploitable natural

resources. However, the prevalence of

countries without large endowments in

the upper quartile of results indicates

the importance of efficiency and

sustainability measures, as well as

effective access to energy markets.

These aspects are largely linked to the

vision and efficacy of each country’s

energy policy.

4. Managing the trade-offs and

complementarities of the energy

triangle is critical. The imperatives

of the energy triangle may reinforce

or act in tension with one another,

forcing difficult trade-offs to be

made and meaning that, in some

cases, decisions have unintended

consequences. Sometimes, mutually

beneficial complementarities can be

realized. In response, decision-makers

Environmental

sustainability

Energy access

and security

must ensure that they carefully weigh

their choices, creating a portfolio of

policies to build an energy mix that

best balances the challenges and

opportunities presented.

5. Globally, policy-makers need to

address some big issues around fossilfuel

subsidies, water use for energy

production and effective resource

wealth management. A concerted

global effort is needed to gather

more data around the application

of fossil-fuel subsidies, water use

per type of energy generation and

extraction technology (and the impact

this has on a country’s overall water

resources), and the best models for

the development of energy resources.

Against each of these energy priorities,

a paucity of detailed global data is

limiting action. Neither the EAPI nor

any index can paint the full picture of a

country’s energy situation and priorities

without a more detailed view of these

factors and their impact on a country’s

energy architecture.

EAPI 2013

Overall rank Overall score

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

The Global Energy Architecture Performance Index Report 2013

9


1. The New Energy

Architecture Challenge

– Balancing the Energy

Triangle


Defining Energy

Architecture and

the Energy Triangle

The World Economic Forum defines

energy architecture as the integrated

physical system of energy sources, carriers

and demand sectors that are shaped by

government, industry and civil society.

The “energy triangle” – sometimes known

as the “energy pyramid” or “energy trilemma”

– frames the inherent objectives

central to every energy system: the

ability to provide a secure, affordable and

environmentally sustainable energy supply.

The Energy Architecture Performance

Index (EAPI) conceptualization of energy

architecture can be seen in figure 1. While

this is a greatly simplified view, it highlights

the complex interactions and systems that

will need to be factored into the transition

process.

Figure 1: Energy architecture conceptual framework

The Global Energy Architecture Performance Index Report 2013

11


Energy architecture should promote

economic growth and development…

Energy architecture underpins economic

growth. Given energy’s importance for

industrialization and infrastructure building,

energy prices strongly correlate with the

global business cycle. As an industrial

sector, it is often a critical value creator. In

2009, the US energy sector contributed

4% of GDP. In countries that are net

energy exporters, the share is even higher:

30% in Nigeria, 35% in Venezuela and

57% in Kuwait. 1 Energy is a prerequisite for

all sectors of an economy so its cost is

critical – price volatility and supply

interruptions can destabilize economies.

Reliable energy promotes economic

and social development by boosting

productivity and facilitating income

generation, and so it follows that energy

availability should affect job availability

and national productivity. However, price

signals must reflect the true associated

costs of energy production to ensure

consumption is economically viable and

producers remain lean and responsive to

an undistorted market.

…in an environmentally sustainable way…

The production, transformation and

consumption of energy are associated

with significant negative environmental

externalities. The most critical are

global energy-related emissions: energy

architecture remains the main contributor

to global warming. 2 The International

Energy Agency’s (IEA) 450 scenario 3

suggests that a global warming of

more than 3.5°C would have, “severe

consequences: a sea level rise of up to

2 metres, causing dislocation of human

settlements and changes to rainfall

patterns, drought, flood, and heat-wave

incidence that would severely affect food

production, human disease and mortality.” 4

A range of further issues relating to

environmental degradation (for instance

particulate matter pollution and land-use

impact) remain of continuing concern

and the energy sector’s reliance on other

constrained resources – water and metals

to name but two – highlight sustainability

as a critical transition priority.

1

World Economic Forum, Energy Vision Update, 2012.

2

International Energy Agency (IEA), Topic: Climate Change;

see www.iea.org/topics/climatechange.

3

450 Scenario is a scenario presented in the World Energy

Outlook that sets out an energy pathway consistent with

the goal of limiting the global increase in temperature to

2°C by limiting the concentration of greenhouse gases in

the atmosphere to around 450 parts per million of CO2 equivalent.

4

International Energy Agency (IEA), World Energy Outlook,

2011, Chapter 6, “Climate Change and the 450 Scenario”.

12 The Global Energy Architecture Performance Index Report 2013

…while providing universal energy access

and security.

What constitutes “energy security” is

much debated. Physical supply of energy

is subject to a number of risks and

disruptions. Principal concerns relate to the

reliability of networks for the transmission

and distribution of energy, and vulnerability

to interruptions of supply, particularly for

countries dependent on a limited range of

energy sources. But energy security is also

about relations among nations, how they

interact with one another, and how energy

impacts their overall national security. 5

Chatham House research suggests that

the Asia-Pacific and European regions may

need imports to meet about 80% of their

respective oil demand by 2030. 6 So the

security of supply from trade partners, risks

of energy autarky (prompting disintegration

of energy markets) and uncertainty over

prices creating volatility are critical

concerns that must be managed.

Security of supply is immaterial without

access to that supply. Universal energy

access is a United Nations (UN) Millennium

Development Goal. 7 According to the

UN, the level of access to energy services

has “implications in terms of poverty,

employment opportunities, education,

community development and culture,

demographic transition, indoor pollution

and health, as well as gender- and agerelated

implications.” 8 The degree of

impact links to economic development;

wealthy countries enjoy modern, clean,

affordable and efficient energy services

(for lighting, heat, cooking uses) almost

universally. In low-income economies,

energy is responsible for a larger portion

of monthly household income, and the

use of basic equipment often means fuels

such as kerosene and charcoal are burned

inside houses, impacting human health

and contributing to disease through air

pollution.

5

Yergin, Daniel, The Quest: Energy, Security and the

Remaking of the Modern World, 2011.

6

Mitchell, John V., More for Asia: Rebalancing world oil and

gas, Chatham House, 2010.

7

UN Secretary-General’s Advisory Group on Energy and

Climate Change, Energy for a Sustainable Future, 2010.

8

United Nations Department of Economic and Social Affairs

and International Atomic Energy Agency, Energy Indicators

for Sustainable Development, 2007.


The Challenges

Associated with

the Transition to

a New Energy

Architecture

Over the past century, affordable energy

has been a significant component of global

economic growth and development. But

the past decade alone has seen a series

of significant changes impact the global

energy system.

The Challenges – Charting the

Transition Course

Achieving the imperatives of the

energy triangle has become particularly

challenging as security and environmental

pressures – including tackling resource

scarcity and climate change – must be

delivered against the background of

difficult economic conditions following the

global financial crisis.

Due to the economic slowdown, countries

are changing legislation and exercising

caution around the deployment of

new energy projects with large upfront

capital costs. Some countries have been

reconsidering their renewables obligations

and CO 2 targets 9 while others have been

reaffirming them. Consumers, concerned

by bills, are less willing to carry the cost

of greener technologies as part of their

utilities spend. With the recovery of coal

and oil prices since 2008, 10 a squeeze on

OECD industrial production can be felt,

with energy costs absorbing an increasing

slice of revenue.

With global energy demand expected

to increase 53% by 2035 (see figure 2)

and the People’s Republic of China and

India accounting for half of that growth,

increased scarcity may herald an era of

sustained high prices for traditional energy

sources. 11

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/.

Figure 2: World energy consumption projections, 1990-2035

Source: US Energy Information Agency data

Quadrillion Btu (qBtu)

800

700

600

500

400

300

200

100

In this context, governments are trying to reshape their energy systems to meet the

objectives of the energy triangle. This process will be enabled by new technologies

across the value chain.

This is a time of change for the global energy architecture.

1. The New Energy Architecture Challenge – Balancing the Energy Triangle

0

1990 2000 2008 2015 2020 2025 2030 2035

Non-Organisation for Economic Co-operation and Development countries

Organisation for Economic Co-operation and Development countries

Figure 3: Advances expected across the energy value chain to help meet transition challenges

The Global Energy Architecture Performance Index Report 2013

13


A Tool for

Transition – The

Energy Architecture

Performance Index

The Energy Architecture Performance

Index (EAPI) is a tool that will help

decision-makers manage and monitor

these challenges. By creating more

transparency and a basis for assessing

overall energy system performance, it can

inform decisions to enable a more effective

transition to a new energy architecture. It

builds on the beta version used in the New

Energy Architecture: Enabling an Effective

Transition report released in April 2012.

The EAPI measures an energy system’s

specific contribution to the three

imperatives of the energy triangle:

economic growth and development,

environmental sustainability, and access

and security of supply. It comprises 16

indicators aggregated into three baskets

relating to these three imperatives. It

both scores and ranks the performance

of a country’s energy architecture (see

figure 4). The EAPI helps stakeholders

as they look for performance areas to

improve and balance the imperatives of

the energy triangle over the long term.

By measuring and reporting on a various

14 The Global Energy Architecture Performance Index Report 2013

set of indicators, the EAPI provides a

transparent and holistic set of insights

into energy architecture successes and

challenges, acting as a base from which to

make policy and investment decisions and

prioritize opportunities for improvement

across the energy value chain.

Indicators were selected against the

following criteria:

– Output data only: The measurement

of output-oriented observational data

(with a specific, definable relationship

to the sub-index in question) or a best

available proxy, rather than estimates

– Reliability: The use of reliable source

data from renowned institutions

– Reusability: Data sourced from

providers that the EAPI team can work

with on an annual basis and that can

therefore be updated with ease

– Quality: The data selected represents

the best measure available given

constraints; with this in mind, the

Expert Panel reviewed all potential

datasets for quality and verifiability and

those that did not meet these basic

quality standards were discarded 12

– Completeness: Data is of adequate

global and temporal coverage; it has

been consistently treated and checked

for periodicity to ensure the EAPI’s

future sustainability.

The EAPI team also wished to include

other indicators than those listed in

figure 4 but could not due to a lack of

compliance with the criteria or, more

often, a lack of data availability. In the

Methodological Addendum, the team flags

to the international energy community the

stark gaps found in global energy-related

data banks in a bid to raise awareness

and take action. A pull-out focused on the

water/energy nexus can also be found

in the Methodological Addendum as this

is an important topic around which later

iterations of the EAPI should include data.

12 Please see the “Data Paucity & Country Exclusions”

section of the Methodological Addendum for further detail

around these criteria.


Figure 4: Structure of the Energy Architecture Performance Index 2013 13

13 For a detailed technical description of the methodology, please see the Methodological Addendum at the end of this report.

1. The New Energy Architecture Challenge – Balancing the Energy Triangle

The Global Energy Architecture Performance Index Report 2013

15


2. Understanding

Performance on the

Energy Architecture

Performance Index

2013


The Energy Architecture Performance

Index (EAPI) uses a universal set of

indicators to assess different countries’

performances. Accepting the very different

set of circumstances each country is in,

all countries are heading for the same end

goal of a high performing and balanced

energy system across each aspect of the

energy triangle, but each has a unique

starting position on that journey.

Within this context, certain countries are

demonstrating that they can achieve the

transition to a new energy architecture

more in line with the imperatives of the

energy triangle. The analysis in this section

studies a selection of EAPI 2013 top

performers and the drivers of their high

scores and ranks.

The EAPI 2013

Rankings

Table 2 shows the rankings for each

of the separate components of the

energy triangle (economic growth and

development, environmental sustainability,

and energy access and security) and the

EAPI 2013 overall ranking. All scores are

between 0 and 1.

No country achieves top scores against

any basket. This reflects the fact that,

although some countries score relatively

high and balance the requirements of

the energy triangle well in comparison to

other countries, not one has managed to

do all that can be done. This is especially

true of the scores in the environmental

sustainability basket. Here, country

results are often compared with targets or

policy directives. For example, particulate

matter (PM10) country-level emissions are

assessed against compliance with the 20

microgram per cubic metre (µg/m 3 ) annual

mean that the World Health Organization

stipulates in its air quality guidelines, while

the target value of 5.2 l/100 kilometres

for average fuel economy for passenger

cars represents the European Union

objective. This sets a higher threshold for

performance in this basket and reflects

how much work is still to be done to

address the global challenges associated

with sustainable energy production and

consumption.

Table 2: EAPI 2013 rankings

Country/

economy

Economic

growth and

development

Environmental

sustainability

Energy access

and security

EAPI 2013

Overall rank Overall score

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

Romania 0.65 0.63 0.73 11 0.67

Uruguay 0.69 0.58 0.72 12 0.67

Ireland 0.61 0.63 0.74 13 0.66

Germany 0.60 0.58 0.79 14 0.66

Peru 0.78 0.55 0.63 15 0.65

Hungary 0.53 0.67 0.76 16 0.65

Slovak Republic 0.48 0.69 0.78 17 0.65

Portugal 0.64 0.56 0.75 18 0.65

Costa Rica 0.62 0.61 0.72 19 0.65

Austria 0.61 0.52 0.79 20 0.64

Brazil 0.59 0.60 0.73 21 0.64

Lithuania 0.53 0.64 0.73 22 0.63

Canada 0.61 0.47 0.82 23 0.63

Slovenia 0.55 0.56 0.77 24 0.63

Japan 0.60 0.48 0.77 25 0.61

Croatia 0.66 0.47 0.71 26 0.61

Russian Federation 0.58 0.54 0.71 27 0.61

Australia 0.66 0.36 0.81 28 0.61

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

Paraguay 0.60 0.66 0.54 35 0.60

Argentina 0.65 0.48 0.66 36 0.60

Poland 0.60 0.48 0.71 37 0.60

Korea, Rep. 0.59 0.43 0.76 38 0.59

Mexico 0.61 0.50 0.67 39 0.59

Singapore 0.70 0.41 0.67 40 0.59

Netherlands 0.50 0.50 0.77 41 0.59

Azerbaijan 0.47 0.51 0.78 42 0.59

Iceland 0.30 0.70 0.75 43 0.58

Turkey 0.51 0.53 0.70 44 0.58

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

Bulgaria 0.56 0.55 0.62 48 0.57

El Salvador 0.48 0.60 0.64 49 0.57

Tunisia 0.43 0.54 0.73 50 0.57

Kazakhstan 0.55 0.45 0.70 51 0.57

Dominican Republic 0.53 0.61 0.55 52 0.56

Czech Republic 0.50 0.40 0.78 53 0.56

Ecuador 0.56 0.52 0.59 54 0.56

United States 0.56 0.34 0.77 55 0.56

Cyprus 0.57 0.51 0.57 56 0.55

Georgia 0.37 0.61 0.66 57 0.55

Algeria 0.37 0.52 0.75 58 0.54

South Africa 0.60 0.49 0.54 59 0.54

Armenia 0.36 0.61 0.64 60 0.54

Philippines 0.41 0.62 0.58 61 0.53

India 0.54 0.59 0.47 62 0.53

Indonesia 0.48 0.56 0.53 63 0.52

Morocco 0.41 0.54 0.61 64 0.52

Malaysia 0.30 0.48 0.77 65 0.52

Libya 0.35 0.47 0.73 66 0.52

Bolivia 0.37 0.55 0.62 67 0.51

Brunei Darussalam 0.40 0.35 0.79 68 0.51

Sri Lanka 0.43 0.63 0.48 69 0.51

Tajikistan 0.29 0.66 0.58 70 0.51

Botswana 0.48 0.57 0.45 71 0.50

Ukraine 0.22 0.56 0.70 72 0.49

Egypt, Arab Rep. 0.27 0.52 0.68 73 0.49

China, People’s Rep. 0.34 0.53 0.60 74 0.49

Trinidad and Tobago 0.46 0.37 0.62 75 0.48

Oman 0.34 0.29 0.80 76 0.48

Nicaragua 0.37 0.60 0.45 77 0.48

Vietnam 0.29 0.55 0.57 78 0.47

Namibia 0.43 0.57 0.39 79 0.47

Cameroon 0.40 0.66 0.33 80 0.46

Senegal 0.42 0.63 0.33 81 0.46

Saudi Arabia 0.30 0.28 0.78 82 0.46

Kyrgyz Republic 0.20 0.58 0.58 83 0.45

Cote d’Ivoire 0.36 0.68 0.31 84 0.45

Ghana 0.34 0.66 0.34 85 0.45

Jamaica 0.32 0.50 0.52 86 0.45

United Arab Emirates 0.38 0.22 0.73 87 0.44

Pakistan 0.31 0.59 0.42 88 0.44

Nigeria 0.36 0.70 0.25 89 0.44

Syrian Arab Republic 0.31 0.38 0.62 90 0.44

Jordan 0.25 0.38 0.66 91 0.43

Qatar 0.35 0.15 0.78 92 0.43

Kenya 0.34 0.69 0.26 93 0.43

Haiti 0.44 0.64 0.20 94 0.43

Kuwait 0.35 0.16 0.76 95 0.42

Iran, Islamic Rep. 0.22 0.36 0.68 96 0.42

Zambia 0.33 0.71 0.22 97 0.42

Cambodia 0.37 0.64 0.22 98 0.41

Bahrain 0.29 0.23 0.68 99 0.40

Mongolia 0.29 0.48 0.41 100 0.39

Nepal 0.31 0.69 0.18 101 0.39

Mozambique 0.27 0.71 0.19 102 0.39

Lebanon 0.35 0.37 0.44 103 0.39

Tanzania 0.30 0.72 0.11 104 0.37

Ethiopia 0.25 0.72 0.11 105 0.36

The Global Energy Architecture Performance Index Report 2013

17


Top Ten – Key Takeaways

Figure 5: Map of top performers overall

1st

2nd

3rd

4th

5th

Norway

0.75

Sweden

0.71

France

0.70

Switzerland

0.70

New Zealand

0.70

1. High GDP correlates with high

performing energy systems.

The top ten EAPI 2013 performers

enjoy an average GDP per capita of

over US$ 46,000 and all, bar Latvia,

are within the top 25 countries globally

on this metric. The link between higher

GDP and better EAPI performance is

also replicated in the overall economic

and regional cluster analysis (see

section 2. Economic and Regional

Clusters Analysis for further detail).

2. Having a low-carbon fuel mix is a

performance factor.

The top ten performers source on

average 36% of their total primary

energy supply (TPES) from alternative

or renewable energy sources, including

biomass and nuclear. Sweden, France

and Switzerland all source over 26% of

their TPES from nuclear (France 42%),

with an average nuclear TPES of 12%

for the top ten compared to 4% for the

EAPI 2013 sample. Large-scale hydro

power use also drives performance,

with an average hydro TPES of 9% for

the top 10, 5% for the rest of the EAPI

2013 sample.

18 The Global Energy Architecture Performance Index Report 2013

3. Other factors also contribute.

Top quartile scores for low energy

intensity, diverse energy supply and

low emissions rates also contribute.

The top ten have an average energy

intensity score of US$ 9.93 GDP per

unit of energy use (2005 PPP US$ per

kilogram of oil equivalent), above the

EAPI sample average of US$ 7.14.

They score an average 0.90 / 1 for

diversity of TPES and an average of

0.64 / 1 for environmental sustainability

– above the EAPI sample average of

0.54.

4. Two success stories are surprises.

Latvia’s affordable energy (no fuel

subsidy and marginal taxes) and

excellent energy intensity score, and

New Zealand’s supply diversity (39%

alternative or nuclear sources and

3rd most diverse TPES) boost their

performance significantly.

5. Europe dominates the leader board.

This is due to concerted regional action

on environmental sustainability, better

energy efficiency across the value chain

and the adoption of clean technologies.

6th

7th

8th

9th

10th

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.

6

7

8

9

Colombia

0.69

Latvia

0.69

Denmark

0.67

Spain

0.67

United Kingdom

0.67

Spotlight on 1st Place: Norway

Norway owes much of its excellent

score to its geological resources – and

its efficient management of them.

Norway provides much of the oil and gas

consumed in Europe and, in 2011, was

the 2nd largest exporter of natural gas in

the world after the Russian Federation, and

the 7th largest exporter of oil. 14 This drives

GDP: in 2010, crude oil, natural gas and

pipeline transport services accounted for

almost 50% of Norway’s exports revenues,

21% of GDP, and 26% of government

revenues according to the Norwegian

Petroleum Directorate.

Strong policy has met with resource wealth

to see Norway rank 1st in the EAPI 2013.

A strong policy vision has had an obvious

impact on Norway’s score across

the efficiency metrics. The Enova SF

programme promotes energy savings, new

renewables and natural gas solutions and

is owned by the government of Norway.

It promotes environmentally sound energy

use and production, relying on financial

instruments and incentives to stimulate

market actors 15 to boost the energy


efficiency of Norwegian industry and

mitigate its environmental impact. Projects

with energy requirements of more than

0.1 gigawatt-hour (GWh) can apply for

investment support for efficiency initiatives

(i.e. measures for energy recovery or

waste heat conversions to renewable

energy) from a managed energy fund of

over € 874 million. Under the programme,

publically funded research, development

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

Hydropower delivers clean and cheap

electricity to Norway’s consumers.

From an environmental sustainability

perspective, Norway scores fairly well at

25th overall. Hydropower is the principal

source of Norway’s electricity supply

at 95%, while only 4% comes from

conventional thermal sources, followed

by 1% from other renewables, namely

biomass and waste and wind according

to IEA data. 17 Norway hosts two of the

world’s five large-scale carbon capture

and sequestration (CCS) projects and,

according to the IEA, the government is

strongly committed to significant support

of further CCS technology development.

The building code, introduced in 2007,

means long-term improvements in energy

efficiency in buildings are guaranteed.

In the transport sector, Norway has a

supportive incentive package to encourage

uptake of electric vehicles, including

exemptions from toll road charges, parking

fees and certain taxes. The government

also plans to substantially increase public

transport and the use of rail in freight

transport. 18

However, the slightly lower score

compared to the other two sides of the

triangle (see figure 6) can be explained

by Norway’s carbon-intensive industry

base. The oil and gas sector is a heavy

CO 2 emitter, with refineries representing

three-quarters of the country’s emissions

according to the EU Emissions Trading

Scheme. The energy sector emitted 19.2

million tonnes of carbon dioxide in 2011 19

and, although Norway sources almost all

of its power needs from its hydro plants,

the transport sector is a large emitter with

relatively poor vehicle efficiency (8.65 l/100

km) compared to the European average.

16

International Energy Agency (IEA), Norway Review, 2011.

17

International Energy Agency (IEA), World Energy Outlook,

2011.

18

International Energy Agency (IEA), Norway Review, 2011.

19

Thomson Reuters Point Carbon, Point Carbon Research;

available at www.pointcarbon.com.

Figure 6: Norway’s performance on the EAPI 2013

Energy access

and security

0.95

Norway

Economic growth and

development

1.00

0.50

0.00

Bard Vegar Solhjell, the Environment

Minister, has recently pledged over US$

8.2 billion to drive industry CO 2 cuts to

meet the nation’s target of 30% emissions

reduction by 2020, 20 with the transport,

manufacturing and oil and gas sectors

likely to have to meet the majority of these.

Overall, only 37% of total primary energy

supply (TPES) is from alternative and

nuclear energy – this sees Norway rank

31st in the overall rankings for this indicator,

pulling down this basket’s overall score.

That said, industrial energy efficiency is

improving ahead of the EU curve, as figure

7 shows.

Cost efficiency is also seen as essential

in regulating the environmental impact of

transport, so duties on petrol and diesel

are high, as is the registration tax on

vehicles. From an economic growth and

development perspective, this reflects as

a relatively low score for the level of price

distortion for pumped super gasoline and

diesel indicators, but these taxes are also

used to finance road infrastructure and/

or to reduce traffic in cities, thus reducing

air pollution. The Transnova initiative

was established in 2009 to encourage

20

Norwegian Ministry of the Environment, Roadmap for a

Low Carbon Economy – Review, 2011.

2. Understanding Energy Architecture Performance Index Performance

0.67

0.63

Environmental sustainability

more environmentally friendly transport

technologies and manages some of these

tax revenues.

Although Norway’s oil production peaked

in 2001 at 3.4 million barrels per day

(bbl/d) and declined to 2 million bbl/d in

2011, natural gas production has been

steadily increasing since 1993, reaching

3.6 trillion cubic feet (TCF) in 2011. And

in terms of its resource management,

Norway’s sovereign wealth fund, the

Government Pension Fund, exemplifies

the correct resource “model” with the

International Monetary Fund (IMF) citing it

as “an exemplary sovereign wealth fund”. 21

This is an important point. The effects of

indirect-deindustrialization on resource

wealth are well understood (see Pull-out:

Accounting for the Resource Curse for

further detail). Yet the Government Pension

Fund’s obvious contribution to GDP

shows a successful “boom minimization

structure” at work, stabilizing the powerful

revenue stream to reduce the risk of Dutch

disease and drive competitiveness through

investment in education and infrastructure

programmes.

Figure 7: Norway’s compound annual change in the ODEX* energy efficiency index for industry,

2000-2009

Source: ODYSSEE

Norway

EU27

1.31%

2.35%

21 International Monetary Fund (IMF), “Norway’s Oil Fund

Shows the Way for Wealth Funds”, www.imf.org/external/

pubs/ft/survey/so/2008/pol070908a.htm.

*The Odyssee ODEX is a European energy efficiency index combining Industry, Transport and Household energy efficiency indicators

The Global Energy Architecture Performance Index Report 2013

19


Norway’s energy future

looks bright

In June 2012 the Norwegian government

confirmed plans to partner in the

construction of a subsea electric power

interconnector with the United Kingdom

and Germany, due for completion in 2020.

The purpose is to strengthen the northern

European electricity grid and increase

supply security. Measures to promote

energy efficiency, given that the electricity

supply is already practically carbon-free,

means the government should also avoid

a possible energy intensity increase.

And, as a result of a recent agreement

with the Russian Federation, Norway has

gained 54,000 square miles (139,859

square kilometres) of continental shelf for

the development of oil and gas deposits

that cross between the two countries’

economic zones in the Barents Sea and

Arctic Ocean. 22

With strong policy in place to support the

improvement of scores across each of

the three elements of the energy triangle,

Norway looks likely to continue its strong

performance over the near-term.

Spotlight on New Zealand and

Latvia

New Zealand and Latvia break the top

quartile GDP per capita/high performance

trend, although they are very small in

terms of total population 23 – together

they represent just 3% of the top ten’s

combined population. So what are the

drivers of their performance?

In New Zealand, the adoption of the 2009

electricity market reform, the Resource

Management Act, the 2009 Petroleum

Action Plan and the Energy Research

Roadmap have helped drive energy

market and infrastructure improvements. 24

Government policy statements on gas

governance and land transport funding and

a National Policy Statement on Electricity

Transmission have encouraged the move

towards a liberalized market. And geology

has helped: hydroelectric power stations

generate the majority of New Zealand’s

electricity, with 24,831 gigawatt-hour

(GWh) total generated by hydroelectricity

in 2011 – equal to 57.6% of total electricity

generation. 25 This translates to cheap

industrial power, a driver of economic

growth and development, with prices

averaging US$ 0.07 per kilowatt-hour

(kWh), ranking New Zealand 14th overall

for this indicator.

22

US Energy Information Administration (EIA), Norway

Country Report, August 2012; available at www.eia.gov/

countries/cab.cfm?fips=NO.

23

World Bank, Databank, Population (Total), 2011.

24

International Energy Agency (IEA), New Zealand Energy

Policy, 2010.

25

Government of New Zealand, Energy Data File, 2011.

20 The Global Energy Architecture Performance Index Report 2013

New Zealand enjoys abundant natural

resources. Therefore, although New

Zealand is currently a net importer of

energy (it imports 10.6% of energy when

imports are defined as energy use less

production ), oil and gas production could

be substantially increased – potentially to

the point where New Zealand becomes

a net exporter of oil by 2030, according

to the New Zealand government’s Energy

Strategy Document 2012.

Latvia’s energy efficiency has largely

improved following its devolution from

the former Soviet Union – with GDP per

unit of energy use (at purchasing power

parity, PPP) leaping from a 1990 level of

US$ 2.66 per kilogram of oil equivalent

(kgoe) to US$ 8.50 per kgoe in 2011, just

below the EU27 average of US$ 8.75

per kgoe for 2011. This has been the

defining story for Latvia. It is the result of

structural reforms to the energy sector and

liberalization of the electricity market, as

well as separate energy efficiency initiatives

focused on improving heat supply systems

and reducing consumption in buildings. 27

Latvia also scores well due to affordable

fuel pricing without subsidy distortion

(and marginal tax) on pumped gasoline

and diesel, leading to a rank of 4th and

12th respectively on these products’ price

indicators.

New Zealand and Latvia’s geological

advantages drive good environmental

sustainability scores.

From an environmental sustainability

perspective, New Zealand scores very

well relative to the other economies

assessed. In 2010, approximately 39%

of total primary energy supply was from

renewable sources. Renewables will likely

play a more significant role in the future

energy mix. In 2005, geothermal and wind

generated 9% of New Zealand electricity,

whereas in 2010 the proportion generated

from these sources increased to 17%, and

overall 74% of electricity was generated

from renewable sources. The large share

of renewable energy sources makes New

Zealand one of the most sustainable

countries in terms of energy generation,

though electricity demand is also still

growing, by an average of 2.1% per year

since 1974. 28 The government goal is to

increase the proportion of renewables to

90% of electricity generation by 2025 (in

an average hydrological year), providing

this does not affect security of supply. 29 In

2008, the government introduced a New

Zealand Emissions Trading Scheme (NZ

ETS). By 2015, this will cover all sectors

and all gases. And given the excellent,

though currently underused, wind and

26

World Bank, Energy imports, net (% of energy use), 2010.

27

Energy Charter Secretariat, In-depth Review of Energy

Efficiency policies and Programmes, Latvia, 2007.

28

New Zealand Government, Energy Data File, 2012.

29

International Energy Agency (IEA), New Zealand Energy

Policy, p. 7-8.

geothermal energy resources available,

New Zealand could be a world leader in

renewable energy generation very soon.

(For an in-depth analysis of Latvia’s

environmental sustainability score, see

the Spotlight on top three performers:

Sweden, France and Latvia in section 4.

Environmental Sustainability.)

Both New Zealand and Latvia have a

diverse total primary energy supply.

Although New Zealand uses more energy

per capita than most OECD countries, it

has improved its energy intensity by 21%

between 1990 and 2011. The growth of

relatively less energy-intensive service

industries is a factor. Total consumed

energy dropped by 0.2% between 2007

and 2011, although the impact of the

financial crisis on energy use must not

be overlooked when considering this

drop. Oil still dominates New Zealand’s

TPES. In 2011 it accounted for 34% of

TPES, geothermal energy for 19% and

gas for 19%. As a net importer of energy,

the predominant slice of which is crude

(in 2011 98% of refinery input was from

imported crude and feed stocks 30 ), New

Zealand needs to manage this trend.

The real success story for New Zealand

relating to energy access and security

is its diversity of supply. With a score

of 0.98 on the Herfindahl 31 index, New

Zealand’s TPES portfolio is almost perfectly

balanced, as is reflected in its rank of 3rd

for this indicator.

Latvia’s supply profile sees a good diversity

score (0.89 on the Herfindahl index) and

sustainability of the energy mix, averaging

a normalized score of 0.62 (out of a

possible 1.00) for all specific emissionsrelated

indicators. 32 However, unlike New

Zealand, it does relatively poorly in terms

of energy access, with median scores

across the quality of electricity supply

(4.9 out of 7) and a significant proportion

of the population still using solid fuels for

cooking (10%), contributing to Latvia’s

estimated 235,658 deaths per year due

to indoor air pollution, as estimated by the

Global Alliance for Clean Cookstoves. With

little evidence that these indicators are

the subject of any policy initiatives, it may

be an area for the Latvian government to

consider focusing on in order to improve its

EAPI ranking moving forwards.

30

New Zealand Government, Energy Data File, 2012.

31

See section 7. Definitions for a description of the Herfindahl

calculation.

32

These include: nitrous oxide emissions in the energy sector

(tmte CO )/total population, CO emissions from electricity

2 2

and heat production (total)/total population, PM10 country

level (micrograms per cubic metre).


Economic and

Regional Clusters

Analysis

This section considers some of the macro

trends from the analysis of the EAPI results

and the factors at play for different regions

and economic clusters as they look to

manage the transition to new energy

architectures.

Fast-growing, industrial clusters find it

harder to perform well on sustainability

and security indicators than richer, more

deindustrialized counterparts.

The need to meet large energy

requirements makes it harder for

countries to score well across each of the

imperatives of the energy triangle.

Figure 8: Regional energy intensity scores

Source: World Bank

EU15

MIST - Mexico, Indonesia, South Korea and

Turkey

Nordic Countries - Denmark, Finland, Iceland,

Norway and Sweden

BRICs - Brazil, Russia, India and People's

Republic of China

Comparing four economic clusters – the

BRIC (Brazil, the Russian Federation,

India and the People’s Republic of

China), MIST (Mexico, Indonesia, South

Korea and Turkey), EU15 33 and Nordic

economies 34 – though with very different

requirements of their energy systems,

they show similar scores in terms of how

their energy systems drive economic

growth. The average economic growth

and development score for the BRIC

countries is 0.51, 0.54 for the Nordic

countries and 0.55 for the MIST grouping.

The EU15 cluster scores highest with an

average score of 0.59. It is worth noting

that energy intensity scores were highly

dispersed (see figure 8). However, it was

the environmental sustainability and energy

access and security scores that showed

a greater divergence (see figure 9). This

33 The EU15 comprises Austria, Belgium, Denmark, Finland,

France, Germany, Greece, Ireland, Italy, Luxembourg,

Netherlands, Portugal, Spain, Sweden, and the United

Kingdom. This report excludes data for Luxembourg, which

should be discounted from the grouping.

34 The Nordic designation encompasses the economies of:

Denmark, Finland, Iceland, Norway and Sweden.

0.32

GDP per unit of energy use - EAPI Normalised Score (0 - 1)

Figure 9: Energy access and security and environmental sustainability scores

Energy access and

security

Economic growth and

development

1.00

0.50

0.00

Nordic economies

EU15

BRICs

MIST

Environmental

sustainability

2. Understanding Energy Architecture Performance Index Performance

aligns with the clusters’ different situations

and energy priorities. The BRIC (and to a

lesser degree MIST) countries are driving

global energy demand. Total primary

energy supply among BRIC countries

was 1,024 million tonnes of oil equivalent

(mtoe) in 2010, up 28% from 2005.

Comparatively, the EU15’s TPES was 103

mtoe in 2010, down 4% from 2005. The

BRIC economies are generally relying on

cheaper or subsidized fossil fuels, such as

coal, petroleum and natural gas, to meet

demand. In the People’s Republic of China

alone, coal-fired electricity generators

represented 78% of the 1 billion kilowatts

of installed capacity in 2011 and demand

for coal will likely exceed 4 billion metric

tonnes in 2015 – more than half of the

world’s total demand for coal. 35

35 World Economic Forum and IHS CERA, Energy for

Economic Growth Energy Vision Update, 2012.

0.44

0.50

0.67

BRIC economies are growing. GDP

levels per capita are not fully realized and

are showing growth despite the global

economic crisis (BRIC real GDP grew

6.53% in 2011 alone 36 ). Yet the demands

that they are putting on the engine rooms

of their growth – their energy systems –

means these engines are being stressed.

36 CME Group, BRIC Country Update, July 2012; available at

www.cmegroup.com/education/files/ed133-market-insightsbric-2012-8-1.pdf.

The Global Energy Architecture Performance Index Report 2013

21


How does GDP correlate with EAPI performance?

Figure 10: Regional Clusters – Comparison of 2013 EAPI score by average GDP per capita 37

EAPI 2013 score

0.80

0.60

0.40

0.20

Sub-Saharan

Africa

Middle East and

North Africa

Figure 10 shows the higher levels of GDP

per capita generally indicating a higher

spread of scores on the EAPI 2013

globally. How might this be the case? And

what would explain the exception to this

rule – the Middle East and North Africa’s

performance – and the less than stellar

performance of the Advanced Economies,

given their proportionally higher GDP per

capita?

Simply framed, rich countries are more

likely to be able to score well against one

or more objectives of the energy triangle.

ASEAN and Commonwealth

Developing Asia of Independent

States

Economic Cluster

22 The Global Energy Architecture Performance Index Report 2013

Latin America

and the

Caribbean

Central and

Eastern Europe

Average GDP per capita (current US$, 2011) Linear (Median)

37 See Definitions section for explanation of the graph structure and economic/regional clusters.

Figure 11: Energy intensity performance

UQ

LQ

Max

Min

Advanced

Economies

They have the economic flexibility and

clout to engage in concerted action

on environmental sustainability and

the adoption of more efficient, cleaner

technologies involving legacy infrastructure

upgrading across the energy system

and the incorporation of renewables

into the energy mix. With diversified or

large service-based economies and

a deindustrialized GDP base, energy

efficiency is easier to achieve. Figure 11

shows average energy intensity for a

selection of regional/economic clusters

against the World Bank’s Energy Price

$45,000

$40,000

$35,000

$30,000

$25,000

$20,000

$15,000

$10,000

$5,000

$0

Average GDP per capita (current US$, 2011)

Figure 10 is a ‘box’ or ‘spread’ chart

Spread charts show the distribution of a

dataset in this case the different economic /

regional clusters' average Energy Architecture

Performance scores

The silver bars are the spread of data from

minimum, median to the maximum value

The blue boxes show the quartiles

Quartiles are a set of values that divide the

data set into four equal groups, each

representing a fourth of the sample

The upper quartile represents the split of the

highest 25% of data the top performers

The lower quartile represents the split of the

lowest 25% of data the bottom performers

These spreads are charted against average

GDP per capita for the cluster

Index. Developing, largely industrial

economies all show lower performance on

an aggregate level than developed, largely

diversified economies. Unsurprisingly, the

energy intensity scores dip or flat-line with

the tumultuous first years of the global

financial crisis between 2008 and 2010 as

cheaper energy flooded world markets in

the wake of the slowdown, and this effect

is most noticeable in the intensity scores

of the relatively more deindustrialized

economies.

Source: World Economic Forum analysis, World Bank, World Bank Commodity Price Data. For more information about country cluster definitions, please see the Definitions section.


Geology also plays a part in performance;

in the case of many of the Advanced

Economies, natural resources such

as hydro, geothermal and oil and gas

resources are blended into their energy

systems and economies to enable strong

performance across each aspect of

the energy triangle. A strong degree of

development often indicates a successful

management strategy for the distribution

of resource revenue within an economy,

and the establishment of suitable security

measures to maintain low reliance on

imports and strong, transparent trade

networks.

Performance at the top end, among

the Advanced Economies, is lower than

might be expected proportional to the

level of GDP per capita. The average

rank for Advanced Economies is 25th,

and the average score 0.63 / 1, but a

few economies score particularly badly

on certain indicators, drawing down the

cluster’s performance overall. The US,

which ranks 55th overall, is an example of

an Advanced Economy that faces some

key energy architecture challenges, most

specifically around emissions intensity.

Globally, the US accounts for about

18% of fossil fuel combustion-related

emissions. By OECD standards, the US

reliance on fossil fuels is relatively high at

approximately 85% of TPES, according to

IEA data. These fossil fuels are combusted

to generate energy and contribute to

the increase in CO 2 emissions over the

decade from 1990 to 2010 (see figure 12).

If Cyprus (56th), Czech Republic (53rd)

and Italy (46th) the lowest ranked of the

Advanced Economy cluster – were also to

improve their environmental sustainability

scores, the group would likely see large

improvement in EAPI scores overall – the

four countries average just 0.44 / 1 on

environmental sustainability as opposed to

0.56 / 1 for all other Advanced Economies.

The Middle East and North Africa’s

performance bucks the trend toward

higher GDP levels and higher EAPI

performance. From a production point

of view, resource wealth in this area has

translated into enormous sovereign wealth

for many of the (mainly) Middle Eastern

economies, but these countries’ energy

systems often struggle to maximize

performance against all three objectives of

the triangle.

From a consumption perspective, fossil

fuel products are heavily subsidized,

creating economic drag; a glut of energy

availability has discouraged the adoption

of efficiency measures impacting on both

economic and sustainability metrics;

economies have been (historically)

Figure 12: Comparison of US greenhouse gas emissions 1990 - 2010

Source: United States Environmental Protection Agency; World Economic Forum analysis

Million metric tonnes CO2

6,000

5,000

4,000

3,000

2,000

1,000

0

28

219

338

846

1,486

1,821

undiversified 38 and susceptible to oil price

volatility; and access rates and quality of

energy supply are below the leader board’s

standards as grids have sagged under

pressure to cater to soaring demand. 39

A comfortable degree of energy security

has been achieved by taking advantage

of domestic resources as generation

feedstock, but even this success has been

vulnerable to the dangerous combination

of sharply increasing demand from both

supply partners and consumers.

In some regions, there’s much

work still to do…

The lowest scorers, as might be expected,

face challenges around energy access,

efficiency and sustainability, and tend to be

located in Sub-Saharan Africa, developing

Asia or the highly resource-endowed

countries of the Middle East.

The small, resource-strapped economies

of Sub-Saharan Africa exhibit low

electrification rates and patchy electricity

supplies. They often have limited fuel

source diversity (in the case of the

bottom ten performers, oil – which is

38 Growth has been below potential in the Middle East and

North Africa (and not labour absorbing) because of the lack

of economic diversification, low private investment (averaging

15% of GDP relative to over double this level in East Asia) in

the wake of barriers to entry and an incentive framework that

promotes privileges rather than competition. These countries

have undertaken a range of economic reforms over the past

years, but the quality of implementation of reforms has been

low. Source: World Bank, MENA: Emerging Developments

and Challenges, 2011.

39 Up to 2020, electricity demand will rise by 7% to 8%

per year on average in Gulf Cooperation Council member

countries. Source: Economist Intelligence Unit, The GCC in

2020: Resources for the future, 2010.

2. Understanding Energy Architecture Performance Index Performance

42

224

340

1,746

2,258

362 319

1990 2010

Other Electricity generation Transportation Industrial Residential Commercial US territories

778

mainly imported – and biomass are the

primary components of TPES). The high

sustainability scores (in relation to their

economic growth and energy access

and security scores) that these countries

sometimes exhibit an overwhelming

dependence on biomass energy consisting

of wood, charcoal and agricultural

residues. This ranking therefore needs to

account for the high-poverty contexts of

many of these countries.

Many resource-rich Middle Eastern fuel

exporters score poorly due to high energy

intensity and a low-diversity fuel mix.

With a dominance of hydrocarbons in the

energy supply and the attendant negative

environmental impact, these countries

also score poorly against environmental

sustainability metrics, especially CO 2

and nitrogen oxide (NOx) emissions

relating to energy. This plays out the

message inherent in the structure of the

index – inefficient, intensive energy use is

problematic for a secure and sustainable

energy supply, regardless of the resource

endowment enjoyed by a country.

The bottom ten performers average a

score of 0.39 out of a possible 1 overall,

compared to the top ten, which enjoy an

average score of 0.70 per country, and

the mid-range performers, which average

0.55.

The Global Energy Architecture Performance Index Report 2013

23


3. Economic Growth

and Development


The relationship between energy and

economic growth has always been close.

Since the industrial revolution, and even

before, fossil and other sources of energy

have been the engines of economic

growth, replacing physical labour and

changing the shape of the world’s work

forces and work patterns. Increasing

efficiency has kept fuel prices low during

the 20th century, even as efficiency gains

have driven growth. Can these efficiency

gains continue in the future?

Figure 13: Map of top economic growth and development performers

Here, economic growth and development

can be broken down across three core

components:

1. How affordable the energy provided is

– taking into account price distortions

as the result of subsidy and tax

2. How efficiently it is used

3. Whether the provision of this energy

adds to or detracts from a country’s

accounts.

Top Ten Economic Growth and Development Performers –

Key Takeaways

1st

2nd

3rd

4th

5th

Peru

0.78

Colombia

0.76

Switzerland

0.73

Spain

0.71

Singapore

0.70

Energy intensity for the top ten

performers is, on average, far

lower than the Energy Architecture

Performance Index (EAPI) sample, with

an average GDP per unit of energy use

of US$ 11.37 compared with the full

EAPI sample average of US$ 7.14.

– Cheap electricity for industry is a driver

of top ten performance, with a US

$0.09 US / kWh average for the top

ten, compared with a US$ 0.11 US /

kWh average for the full EAPI sample

(the EAPI indicator represents available

data that cannot take into account the

potential subsidizing of this price).

1

1 0.66

– All of the top performers have a clearly

defined energy efficiency programme

or policy measures in place, with

examples in Uruguay, Romania and

Croatia receiving funding from external

parties such as the World Bank.

– Generally, pump gasoline and diesel

prices reflect the cost of production

more accurately, with a 0.86 / 1

average score for (lack of) gasoline and

diesel price distortion across the top

ten compared with 0.67 / 1 across the

full EAPI sample.

0.65

6th

7th

8th

9th

10th

Uruguay

0.70

Norway

0.67

Australia

0.66

Croatia

0.70

Romania

0.69

– Excluding Singapore, fuel imports

represent an average of 0.03% of

GDP for the top ten, below the EAPI

sample average of 0.10%; when

including Singapore in the analysis, the

figure raises to 0.07%. The inclusion

of Singapore in the result may be

misleading, however, owing to its

status as one of the world’s top three

oil trading hubs (with approximately

US$ 500 billion in trade channelled

through Singapore annually) and the

world’s biggest shipping fuel industry,

with 26 million tonnes of bunker (fuel to

refuel a ship) delivered last year. 40

40 Singapore Economic Development Board/Reuters,

Factbox: Singapore, 2012; available at uk.reuters.

com/article/2007/06/12/singapore-economy-oilidUKSIN19966120070612.

The Global Energy Architecture Performance Index Report 2013

25


Spotlight on the Top Three

Performers: Peru, Colombia and

Switzerland

Peru, Colombia and Switzerland head

up the table for economic growth and

development, with an average EAPI score

of 0.76 against a global average of 0.45.

Peru and Colombia have reformed energy

markets and taken advantage of natural

resource endowments to drive economic

growth and development.

Peru’s results speak for themselves. It is

one of the best performing Latin American

economies, with an average GDP growth

rate of 6.5% between 2002 and 2011,

contributing to an excellent energy intensity

score (1st in the EAPI this year) that is

also the result of various campaigns

promoting energy efficiency. 41 The past

5 years have seen much progress on

many fiscal fronts, with high growth rates

coupled with low inflation. From a market

structure perspective, a distinct move

towards “trade openness, exchange rate

flexibility, financial liberalization, higher

reliance on market signals and prudent

monetary policy, including strong build-up

of reserves” has been the strong suit of a

series of reforms that have seen income

per capita rise over 50% over the past

decade. 42

The wider country trend for fiscal reform

has been reflected in the energy sector;

laws such as the Ley de Concensiones

Electricas (electrical concessions act)

have seen the generation, transmission

and distribution divisions of generators

split and have opened the door for private

companies to own these operations,

increasing competition and efficiency.

Overall exports averaged US$ 28.8 billion

US between 2007 and 2009, a five-fold

increase over a single decade, with the

rising production of natural gas liquids

contributing significantly to this revenue.

Electricity comes from the abundant

natural gas (52%) and hydropower

resources (48%) enjoyed by the country,

and which contribute to the low cost

of electricity (just US$ 0.079 US / kWh

according to IEA data). According to the

US Energy Information Administration (EIA),

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

of hydropower infrastructure vulnerability to climate change

risks; develop a Strategic Environmental Assessment; boost

environmental standards through regulations training and

support for municipal eco-efficiency plans; issue guidelines

on minimum standards and energy efficiency labelling; and

help set up an energy efficiency agency. According to the

Asia Pacific Energy Research Centre, Peru has developed 42

appliance standards since 1996, with 29 of them referring to

energy efficiency.

42 World Bank, Peru: Country Overview, September 2012;

available at www.worldbank.org/en/country/peru/overview.

26 The Global Energy Architecture Performance Index Report 2013

Peru is seeing increased production of

both natural gas and petroleum, with new

reserves (Peru has added 50 million barrels

of reserves in each of the past two years)

generating a stream of investments from

international oil companies. New policies

have been focused on attracting foreign

direct investment towards the development

of these resources for both export and

domestic customers.

Colombia’s story is very similar. An

improved regulatory framework and

security situation has boosted investment

in the country by international business and

international oil companies. Markdowns to

the royalties that the government requires

from smaller (less than 125,000 barrels

per day) hydrocarbon discoveries have

encouraged this process. Hydropower

provides for almost all of Colombia’s

electricity needs (more than 70%

according to IEA data) and so it is able to

export many of the energy commodities

that it produces. 43

The future is bright too; according to the

EIA, production is expected to reach

1 million barrels per day by the end of

2012 and 1.5 million barrels per day by

2020. 44 Colombia’s liberalized market and

resource-rich geology means the energy

sector provides a strong revenue stream

for the country.

Lacking the resource wealth of Peru

and Colombia, Switzerland represents a

different model of success to that of its

Latin American counterparts.

The SwissEnergy programme has been

running for more than 30 years under

various incarnations and is solely focused

on projects relating to energy efficiency

and the development of renewable energy

sources. It has pursued a successful

strategy. According to an Energici report,

Switzerland had a total installed renewable

capacity (biomass + geothermal +

hydroelectricity + solar + wind) of 14,189

megawatts in 2011, an increase of 158

megawatts (or 1.13%) on 2010, 45 putting

the Swiss renewable energy market at

17th globally for total installed renewable

capacity.

43

Although Colombia consumed 298,000 barrels of oil per

day in 2011, it currently produces over 951,000 barrels per

day and can export most of its oil. It can also export most of

its coal – Colombia was the 4th largest coal producer in the

world in 2010. Source: US Energy Information Administration,

Colombia Country Analysis, 2012.

44

US Energy Information Administration, Colombia Country

Analysis, 2012.

45

Energici, Switzerland Renewable Energy – Annual, 2011;

available at www.energici.com/energy-profiles/by-country/

europe-m-z/switzerland.

Switzerland’s excellent energy intensity

score (3rd overall) is partially a result of the

predominance of hydro in the electricity

generation mix, as well as the lower

reliance on industrial output to drive GDP.

Several targets have been implemented

to reduce the consumption of fossil fuels

by 10% before 2020 compared with 2010

levels and to cap electricity consumption

growth at 5% over the same period.

These include: energy labels for household

appliances and lamps; building codes

(MINERGIE label); voluntary efficiency

agreements with industry; and a tax fund,

which deducts up to US$ 0.83 cents per

kWh (US$ 1.25 cents per kWh as from

2013), to finance further energy efficiency

projects.

The government has also funded a district

heating scheme worth US$ 28 million as

part of a strategy to replace electric heating

systems. And although it is dependent on

fossil fuels for 52% of total primary energy

supply according to the IEA, Switzerland’s

good overall score can be further explained

by its small expenditure on fuel imports

(just 2% of GDP), cheap electricity for

industry (hydro generates 70.9% of total

installed energy capacity) and low CO 2

emissions. 46

46 Emissions per unit of GDP decreased twice as fast as the

total energy intensity over the period 1990 to 2009 (1.2% per

year) thanks to substitutions of oil with gas and biomass. This

switch out explains around 70% of the reduction in the CO 2

intensity since 2000. Source: Sachs, J. D. and A.M. Warner,

Centre for International Development and Harvard Institute for

International Development, Natural resource abundance and

economic growth, 1997.


Pull-out: Accounting for the Resource Curse

Figure 14: Oil- and gas-related sovereign wealth funds

Source: Sovereign ealth Fund Institute. October 2012

United Arab Emirates Abu Dhabi

Norway

Saudi Arabia

Kuwait

Russia

Qatar

United Arab Emirates Dubai

Libya

Kazakhstan

Algeria

61.8

56.7

The expert panel and World Economic

Forum team frequently debated the

inclusion of a fuel exports (% GDP)

indicator. The effects of indirectdeindustrialization,

or the “resource

curse”, are well understood. Many studies

have reported on the inverse correlation

between resource abundance and the

economic development of a country. 47 The

symptoms include a decline in national

70

65

47 Sachs, J. D. and A.M. Warner, Centre for International

Development and Harvard Institute for International

Development, Natural resource abundance and economic

growth, 1997.

115

149.7

296

manufacturing sector productivity due to

the currency-strengthening effect of natural

resource exploitation.

What might be the impact of the “resource

curse” on the various economies assessed

by the EAPI?

Brazil must carefully manage its revenues

from hydrocarbon production.

Taking Brazil as an example, the case is

complex. The benefits of the exploitation of

its hydrocarbon reserves are undeniable.

Revenues from the 2.6 million barrels of

538.1

3. Economic Growth and Development

0 100 200 300 400

Billion US$

500 600 700 800

656.2

740.5

crude oil produced daily 48 have been used

to help millions of Brazilians out of poverty

and drive down the country’s net debt to

37.2% of GDP from a high of 60.4%. 49

But in a world of weak European and US

currencies, the historical boom and bust

pattern of Brazil’s economy may be hard to

avoid. How concerned should Brazil be?

48

US Energy Information Administration, Brazil Country

Analysis, February 2012.

49

Bristow, Matthew and Juan Pablo Spinetto, “Brazil Faces

New Oil Boom Curse as the World’s Resource Engine”,

Bloomberg, 13 March 2012; available at www.bloomberg.

com/news/2012-03-13/brazil-faces-new-oil-boom-curse-asthe-world-s-resource-engine.html.

The Global Energy Architecture Performance Index Report 2013

27


The answer might be “vigilant”. Brazil’s

economy is well-positioned to avoid

the long-term pitfalls that might follow

large resource discoveries. From a wider

economic perspective, the relatively stable

currency, low inflation, positive trade

balances and a growing service sector

coupled with a reduction of the number

of people employed in agriculture can be

seen as signals of a developing economy

that is well-positioned to counterbalance

the potentially destabilizing injection of

resource revenue into the economy. 50 The

government’s legislation in this area should

prove effective too; oil-field operators often

use domestic technology and must use

local content for up to 65% of the goods

and services required. They also attract

a vast amount of FDI in terms of the R&D

spend stipulated. Therefore, Brazil is not

just an exporter, but is growing as a talent

and technology hub.

Norway offers a best practice example of

how to manage resource wealth effectively.

Norway’s Government Pension Fund

(established by the Norwegian government

to manage resource revenues) is valued

at over US$ 600 billion. Through the

fund, Norway is actively avoiding a

situation in which oil money is poured

into the Norwegian economy, resulting in

overheating and inflation. 51 Instead, the

focus has remained on the development

of oil and gas sub-sectors like platform

construction (which has had a positive

spill-over effect into other engineering

and information and communications

technologies industries) and considered

investment initiatives in rural regions with

no access to the revenues accrued by the

extraction industry. 52

50

Imperial College London Business School, Can Dutch

disease harm the export performance of Brazilian Industry?,

2010.

51

Royal Norwegian Embassy / Thor Englund; available at

www.norway.org/ARCHIVE/business/businessnews/ethicoil.

52

World Economic Forum and IHS CERA, Energy for

Economic Growth Energy Vision Update, 2012.

28 The Global Energy Architecture Performance Index Report 2013

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 positively 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 indirect-deindustrialization and drive

competitiveness through investment in

education and infrastructure programmes.

This is a point of view reflected in recent

studies into resource curse theory. 53 An

obvious caveat would be that this is true

if the economy remains diversified and

productive in other areas of its operation,

not restructuring solely to exploit natural

resources. Due to the lack of data

around the dispersal of fuel export related

revenues for the majority of countries in

scope, the EAPI has had to assume a

positive net outcome from the fuel export

process.

53 In “Does Oil Abundance Harm Growth?”, Applied

Economics Letters, 2011, Cavalcanti et al challenge whether

natural resource abundance is a curse, citing analysis that

shows oil abundance having a positive effect on both longrun

income levels and short-run economic growth, as well as

social and human capital.


Pull-out: The Case for Reform of Fossil-Fuel Subsidies

Any analysis of the economics of global

energy architecture must consider

subsidies, which affect prices, public

sector budgets and the signals to energy

consumers. The EAPI’s take on the

issue is upfront: fossil fuels subsidies

are detrimental to every angle of the

energy triangle. But this position needs

justification.

Consider the trajectory of the World Bank’s

global energy index (see figure 15).

Figure 15: World Bank Energy Price Index, 1960 to present

World Bank Energy Price Index (2005 = 100)

180

160

140

120

100

80

60

40

20

Figure 15 shows energy prices growing

at an exponential rate. Should continuous

upward pressure persist, many developing

countries will reach an untenable situation

as many of them commit upwards of 5%

of their GDP to fossil energy subsidies

(an aggregate total of between US$ 300

billion to US$ 550 billion depending on

current oil prices). 54 The IEA’s 2011 World

Energy Outlook report estimates a potential

reduction in global energy demand of

4.8% or some 900 million tonnes of oil

equivalent by 2035 from the removal of

all supply-side subsidies that are targeted

54 McKinsey Global Institute, Resource Revolution: Meeting

the world’s energy, materials, food, and water needs,

November 2011.

1970s

oil shock

3. Economic Growth and Development

at reducing consumer prices for fossil

fuels and electricity generated from fossil

fuels. 55 This is a staggering potential

saving. The declaration of the G20 Cannes

Summit in 2011 reaffirmed commitments

to “rationalise and phase-out over the

medium term inefficient fossil-fuel subsidies

that encourage wasteful consumption,

while providing targeted support for the

poorest,” 56 demonstrating that there is a

recognized political will to end fossil-fuel

subsidies on a global basis.

55

International Energy Agency (IEA), World Energy Outlook,

2011.

56

G20 Declaration; available at www.g20-g8.com/g8-g20/

g20/english/for-the-press/news-releases/cannes-summitfinal-declaration.1557.html.

"Super-cycle"

of developing world growth

Recession

0

1960 1970 1980 1990 2000 2010

The Global Energy Architecture Performance Index Report 2013

29


Why aren’t subsidies working?

Fossil-fuel subsidies have a wide array

of proponents. Frequently, improving

social equity, boosting employment and

ensuring energy security are advocated

as reasons for fossil-fuel subsidies. But

this type of subsidy often has an array of

damaging side effects. Fossil-fuel subsidies

divert investment from other potentially

more needful government departments.

They reduce fuel consumption efficiency

by industry and domestic consumers

and encourage rent-seeking by limiting

the capital flow available to new energy

infrastructure projects. Subsidies are

difficult to target accurately. According

to Fatih Birol, Chief Economist of the

International Energy Agency, fossil fuel

“subsidies mainly benefit middle-income

and higher-earning urban types; the

rural poor use little fossil fuel.” 57 In 2010,

only 8% of the US$ 409 billion spent

on fossil-fuel subsidies was distributed

to the poorest 20% of the population. 58

The level of energy infrastructure is also

a critical factor affecting the distribution

of fuel subsidies. For instance, subsidies

are more likely to reach poor households

in the People’s Republic of China, where

the electrification rate is 99%, than

poor consumers in India, where the

electrification rate is 66%.

Fossil-fuel subsidies also have an

environmental cost - clean energy

investments suffer as a result of cheaper

fossil fuels and CO 2 emissions are also

exacerbated. According to the IEA’s 2011

World Energy Outlook, global spending

on fossil subsidies, defined by the IEA as

initiatives that directly lower the cost of

consuming or producing oil, natural gas or

coal, totalled US$ 409 billion in 2010, with

the figure expected to grow to US$ 630

billion in 2012. Comparatively, renewable

energy subsidies totalled approximately

US$ 66 billion in 2010. Even clean energy

subsidies (most frequently applied via

tax reductions and feed-in tariffs, as with

Germany’s solar industry) have come under

fire for their high costs in regions where the

price of renewable energy sources is far

behind grid parity.

57

The Economist, “Fossilised policy”, October 2009.

58

International Energy Agency (IEA), World Energy Outlook,

2011.

30 The Global Energy Architecture Performance Index Report 2013

Table 3: Estimated energy subsidies, 2007-2010 (US$ billion, nominal)

Source: Source: International Energy Agency, World Energy Outlook, 2011

Estimated energy subsidies 2007 2008 2009 2010

Fossil fuels (consumption), of which 342 554 300 409

Oil 186 285 122 193

Gas 74 135 85 91

Coal 0 4 5 3

Electricity* 81 130 88 122

Renewable energy, of which 39 44 60 66

Biofuels 13 18 21 22

Electricity 26 26 39 44

*Fossil-fuel consumption subsidies designated as electricity factor out the component of electricity subsidies attributable to nuclear

and renewable energy – they reflect the under-pricing of electricity generated by the combustion of fossil fuels

What is preventing the removal of

fossil-fuel subsidies?

The energy industry offers some major

opportunities for fossil-fuel subsidy

reform, but the lobbying sector on behalf

of subsidies is often powerful and public

opposition to rapid phase out can be

strong. Since 2007, about 80% of fossil

fuel consumption subsidies have been

in net oil and gas exporting countries. 59

Many producers propose that a subsidy

be seen as an opportunity cost for the

supply of energy below international prices.

The Russian Federation spends US$ 17

billion on natural gas subsidies while Iran,

a producer of both oil and gas, subsidizes

both fuels, spending US$ 66 billion in

total plus an additional US$ 14.4 billion

on electricity consumption subsidies. 60

Industry and consumers enjoy the resultant

cheaper fuel prices. Many countries also

support fossil energy production in an

indirect fashion. For instance, energy is

taxed at a relatively low level in the United

59

International Energy Agency (IEA), “Fossil-fuel consumption

subsidy rates as a proportion of the full cost of supply”, World

Energy Outlook, 2011; available at www.iea.org/subsidy/

index.html.

60

International Energy Agency (IEA), World Energy Outlook,

2011

States. According to the OECD, there are

federal tax breaks available for some types

of offshore oil and gas production. 61 Tax

breaks can help refiners benefit from a

rebate of up to 50% on the cost of capital

equipment 62 and a shortened depreciation

period for natural gas distribution pipelines

from 20 years to 15 years.

There are also social ramifications

associated with subsidy removal. Subsidy

cuts are often blinkered and neglect some

realities of infrastructural and institutional

deficiencies in the countries in which they

are enforced. 63 When the fuel subsidy in

Nigeria was removed overnight in early

2012, many businesses, already impaired

by the relatively high cost of power supply,

become even less competitive, leading

to social unrest and nationwide strikes

headed up by labour and trade unions.

Of course a more nuanced and gradual

programme to remove subsidies may

make sound, practical sense. Nigeria is

61

Organisation for Economic Co-operation and

Development, Inventory of estimated budgetary support and

tax expenditures for fossil fuels, 2011; available at www.oecd.

org/site/tadffss/48805150.pdf.

62

US Department of Energy, Energy Policy Act (EPAct),

2005.

63

Bazilian, Morgan and Ijeoma Onyeji, Fossil fuel subsidy

removal and inadequate public power supply: Implications for

businesses, 2012.


currently an oil exporter that reimports

refined crude products, generating

value and employment externally, while

shouldering the burden of the cost of

its fossil-fuel subsidy. With spend on

subsidy approximately at 30% of total

federal government expenditure and 4%

of national income, this is an economically

inefficient situation.

How distortion is measured

The EAPI uses a “price gap” approach

to measure the impact of distortions

such as subsidy and tax on fuel prices,

a method with clear strengths and

weaknesses. Using Deutsche Gesellschaft

für Internationale Zusammenarbeit (GIZ,

the German agency for international

cooperation) data, the EAPI evaluates the

positive or negative difference between

a country’s domestic energy price and

the delivered price of crude imported

or exported, which can be translated

into the cost of supply by an efficient

market. This allows for the estimation

of price distortions with relatively little

data – a useful facet for a multi-country

index. However, it means the analysis is

sensitive to assumptions regarding what an

efficient market price is at any given time

and misses the full picture of support and

taxation mechanisms. And the approach

cannot account for non-cash transfers that

do not directly affect prices; for example,

an inefficient producer may still charge at

import parity, but be subsidized regardless.

Again, the EAPI cannot tell the full story

without a more detailed data set.

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

On a global basis, the removal of fossil-fuel

subsidies could save the US$ 400 billion 66

currently spent on the subsidies annually.

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 fossilfuel

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.

3. Economic Growth and Development

The Global Energy Architecture Performance Index Report 2013

31


4. Environmental

Sustainability


From an EAPI perspective, environmental

sustainability is of equal importance to

both of the other imperatives of the energy

triangle.

The EAPI measures how countries’ energy

systems impact the environment across

two main areas:

1. Greenhouse gas and particulate matter

emissions from energy generation

activities

2. The ratio of low-carbon energy sources

in the fuel mix.

Figure 16: Map of top environmental sustainability performers

For high-income non-OECD and

high-income OECD economies – with

the highest impact energy sectors

performance against this imperative is

significantly lower than the other two. This

low performance is a function of three

factors:

1. The economic cost of building a truly

sustainable energy system

2. The high performance targets (based

predominantly on existing legislation

or official recommendations) used to

assess performance

Top Ten Environmental Sustainability Performers –

Key Takeaways

1st

2nd

3rd

4th

5th

Sweden

0.76

France

0.75

Latvia

0.74

Ethiopia

0.72

Tanzania

0.72

– On average 72% of the top ten

countries’ total primary energy supply

comes from alternative energy sources

including nuclear and biomass.

This compares to the EAPI 2013

sample average of 29%. Biomass

considerations 67 in this indicator

mean countries sometimes have an

overwhelming dependence on biomass

energy consisting of wood, charcoal

and agricultural residues. This ranking

therefore needs to account for the poor

contexts of many of the top-scoring

countries.

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.

Energy-related emissions are generally

lower and average out at 0.58 metric

tonnes of CO 2 per capita, against an

EAPI 2013 sample average of 2.89

metric tonnes of CO 2 per capita.

Particulate matter (PM10) emissions

average at 22.8 micrograms per cubic

metre, against an EAPI 2013 sample

average of 37.7 micrograms per cubic

metre.

3. The fact that environmental

sustainability was not a priority

component of the energy discourse

until recently, meaning countries

are naturally further behind on

environmental sustainability metrics

than against the other aspects of the

triangle (which have been the historic

concern of global energy systems).

This chapter explores the top performers

and some of the key issues relating to

environmental sustainability for the energy

sector.

6th

7th

8th

9th

10th

Mozambique

0.71

Zambia

0.71

Nigeria

0.70

Iceland

0.70

Slovak Rep.

0.69

The average fuel economy for

passenger cars is slightly lower than

the EAPI 2013 sample average at 8.2

litres/100 kilometres for the top ten

compared with an overall average of

9.46 litres/100 kilometres. To put this

in perspective, the Middle East North

Africa region averages 13.69 litres/100

kilometres while European countries

average at 7.18 litres/100 kilometres

– some of the developing countries

in the top ten still have work to do

around the adoption of fuel economy

measures that European countries

have pioneered.

The Global Energy Architecture Performance Index Report 2013

33


Spotlight on Top Three Performers:

Sweden, France and Latvia

Some geological advantages allow Sweden

to exploit hydro resources. Both Sweden

and France use a large component of

nuclear in their total primary energy supply

(TPES) with low carbon impact, driving

performance in this section. Low PM10 and

CO 2 emissions are also key performance

factors for the top three.

Sweden is the EU’s great success story for

clean energy production.

In 1970, oil accounted for over 75% of

Swedish TPES; then followed the oil shocks

of that decade, forcing a rebalancing of

the energy mix. Now the figure is 27%,

mainly attributable to the use of residential

heating oil. A further 65% of TPES comes

from alternative or nuclear energy sources

(the highest in the EU according to IEA

data). Sweden generates 43% of electricity

from hydropower and 39% from nuclear,

meaning carbon emissions from the

electricity and heat sector are the third

lowest in the EU, when broken down by

population.

With most of today’s energy demands

easily met domestically, Sweden has

been able to pursue a strong series of

sustainable energy policy objectives. The

Oil Free Society initiative and a green

energy certification programme, where

producers are granted one electricity

certificate for every megawatt-hour (MWh)

of renewable electricity generated (and

often obliged to buy them in proportion to

their supply or consumption profile) coupled

with a carbon taxation system implemented

in 1991, 68 means Sweden has made

significant progress around its CO 2 and

PM10 emissions, driving high scores across

these emissions indicators.

France is low carbon, low intensity

Due to its nuclear provision, France’s

CO 2 intensity is one of the lowest in the

developed world, just behind Iceland

and Sweden, with a score of just 1.4

kilograms per kilogram of oil equivalent

energy used. Of the 51% alternative energy

that France uses for its TPES, 42% is

attributable to nuclear, according to the

International Energy Agency. The nuclear

sector generates a nuclear capacity of

63 gigawatts (GW) 69 using 58 reactors,

and France is a large user and exporter of

low-carbon electricity, with exports heading

mainly to Italy and Switzerland. France is

also using its nuclear experience to pioneer

new reactor designs and is at the cuttingedge

of nuclear fuel recycling programmes,

with reprocessed fuel generating about

10% of the country’s electricity per year

while saving up to 25% of the uranium

content of used fuel. 70

68 Widegren, Karin, Renewable Energy Support in Europe:

The Swedish Experience, Energy Markets Inspectorate, 2011.

69 Nuclear Energy Agency, Country Profile: France, 2010.

70 Areva Group, company website: http://www.areva.com/.

34 The Global Energy Architecture Performance Index Report 2013

France has framed up a series of policies 71

to support its plan to see a 75% reduction

in CO 2 emissions by 2050 and a reduction

in greenhouse gas emissions in the

transport sector to 1990 levels by 2020.

France already has an average passenger

vehicle fuel efficiency of 7.36 litres/100

kilometres, ranking it 20th overall and in

line with the European trend. France may

yet take advantage of the low-carbon

electrical generation mix by enlarging

its electrically powered transportation

sector (including the TGV high speed train

network). The relatively large solar PV

capacity (1.7 GW 72 ) should grow over the

short-term as France’s current government

has advocated support for the technology

approving more than 200 large solar

projects totalling 541 MW in July, shortly

after it took office.

In Latvia, renewable energy initiatives are

well incorporated into national climate

change policy.

Latvia’s energy policy has a clear renewable

energy remit with targets to reach 40%

energy sourced from renewables by 2020

already underway. Currently, 37% of

Latvia’s TPES is from renewable sources

including biomass (none of Latvia’s TPES is

nuclear), based on exploiting the country’s

natural hydro and biomass resources.

Latvia’s electricity produced by renewable

sources is higher, at about 55% of total

electricity production, according to IEA

data, of which hydro accounts for 54%

from a cascade of dams on the Daugava

river. But the use of biomass in Latvia for

power production is growing. Wood is

a common local energy source used for

heat generation, currently accounting for

approximately 22% to 29% of primary

energy consumption in the country.

Electricity generation from coal and oil

stopped in 2004, and various initiatives, like

the 2010 Law on End-use Energy Efficiency

and Energy Development Guidelines

2007-2016, have been adopted in a bid

to reduce the average heat consumption

in buildings by at least 11% by 2016

and to improve energy efficiency in heat

production installations. 73

Information campaigns to drive improved

literacy and energy audits have improved

energy efficiency in the residential and

services sectors, the largest energy

consumer groups in Latvia, using 54%

of total supply. 74 Increasing final energy

consumption in the transport sector,

especially motor transport, is a current

issue, but given Latvia’s excellent average

fuel economy for passenger cars (slightly

better than the EU27 average of 7.18

71

These policies include The Energy Law (July 2005);

Grennelle de l’Environnement policy stipulates a 75%

reduction in emissions between 1990 and 2050 while also

setting specific targets for energy efficiency and renewable

energy sources.

72

PBL Netherlands Environmental Assessment Agency /

EC Joint Research Centre, Trends in Global CO Emissions,

2

2012.

73

ABB, Latvia: Energy efficiency report, 2011.

74

ABB, Latvia: Energy efficiency report, 2011.

litres/100 kilometres), this is a problem that

will likely impact further down the line, as

further development encourages expansion

in transport networks. 75

Spotlight: Iceland’s Remarkable

Environmental Sustainability

Journey

Iceland, 9th in the rankings for

environmental sustainability, now sources

100% of its electricity from alternative

sources. The country generates 73% of

electricity from hydro installations using

the vast array of rivers and glacial melt

waters, while underground heated springs

drive 27% of geothermal generation,

according to the International Energy

Agency. Iceland’s geothermal power and

heat sector is one of the largest in the

world: geothermal heated water provides

residential buildings with approximately

90% of their heating requirements. 76

“Geothermal utilisation has reduced CO 2

emissions in Iceland by some 2-4 million

tonnes annually compared to the burning

of fossil fuels.” 77 This is more remarkable

given the country’s dependency, across

sectors, on fossil fuels up to the 1970s.

Like Sweden, Iceland was forced by the

decade’s price shocks to reconsider this

position.

The country is not first in this basket,

however. Fossil fuels still represent a

significant portion of TPES, with 2% of

the mix attributable to coal and 16%

attributable to oil. The fossil fuel-dependent

sectors such as transport and the large

fishing boat fleet still run mainly on

petroleum products.

From a policy perspective, Iceland is

pushing towards a zero carbon impact

– Iceland’s recent climate change

strategy sets out a vision of reducing net

greenhouse gas emissions by 50% to 75%

by 2050, from a 1990 emissions baseline.

This will involve reduction of the fossil fuel

component of the fuel mix and carbon

sequestration strategies (geothermal plants

emit small amounts of CO 2 – the aim is

to capture and store them). With industry

taking advantage of the cheap, abundant

and clean geothermal energy resource

(new data storage centres are being built 78

and the large aluminium manufacturing

sector uses geothermal energy to power its

smelting rigs) the future of Iceland’s energy

sector is looking very sustainable indeed.

75

Government of Latvia, National reform programme of

Latvia for implementation of the “Europe 2020” strategy,

2011.

76

Bjornsson, Sveinbjorn, Geothermal Development and

Research in Iceland, 2006.

77

Gunnlaugsson, Einar, Orkuveita Reykjavikur, CO2 Saving

by Using Geothermal Energy for House Heating in Iceland,

Workshop for Decision Makers on Direct Heating Use of

Geothermal Resources in Asia, United Nations University,

TBLRREM and TBGMED, Tianjin, China, 11-18 May 2008.

78

IT World, Iceland’s carbon-neutral data centre opens for

business, 2012.


Pull-out: Financing Renewables

Prepared using Bloomberg New Energy Finance data

Figure 17: Total new investment in clean energy

Source: Bloomberg, Global Trends in Renewable Energy Investment, 2011

$ US million

$300,000

$250,000

$200,000

$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

is growing (see figure 17). Total global

investment in renewable energy grew to

around US$ 250 billion in 2011 according

to Bloomberg New Energy Finance data.

This was up 18% from 2010, and is almost

three times the level of investment in

2006. 79 Yet the increasing numbers belie

a drop in the overall growth rate; between

2010 and 2011, growth was only 18%,

below the 39% rise in investment from

2009 to 2010. 80

79 Liebreich, Michael, Bloomberg New Energy Finance, “Total

new investment in clean energy ($m)” chart for the Bloomberg

New Energy Finance Summit, 2011.

80 Ibid.

World - Total new investment in clean energy

Uncertainty in the sector

The US was the big spender in 2011,

with US$ 51 billion worth of investment in

clean energy. The Obama administration

has encouraged renewables investment

though various means – tax incentives,

loan guarantees and other subsidies – and

launched new efficiency standards targets

for vehicles, with plans to double average

fuel efficiency by 2025 through a targeted

federal loan scheme. But a proposed cap

and trade scheme to limit CO 2 emissions

was scrapped in 2009.

Germany has its bold Energiewende

(energy transformation) plan to meet

4. Environmental Sustainability

greenhouse gas emissions cuts from 1990

levels by 40% by 2020 and by 80% by

2050, even without nuclear. One of the

few rich countries to still be aggressively

pursuing a “staggering transformation of

the energy infrastructure”, Germany must

still build or upgrade 8,300 kilometres

(5,157 miles) of transmission infrastructure

and numerous backup generators to

counter the intermittency of its envisaged

wind and solar supply. 81 The subsidies

required to fund renewables rebates will

ultimately lie with Germany’s consumers,

81

The Economist, “Energiewende”, July 2012; available at

www.economist.com/node/21559667.

The Global Energy Architecture Performance Index Report 2013

35


driving wholesale electricity prices 70%

higher by 2025 according to some

predictions. 82

In the UK, the offshore wind industry is

facing challenges. The UK has over 636

turbines in 18 wind farms, over 55% of the

global market share, but political pressure

to cut costs, regulatory uncertainty and

Europe’s financial woes have stalled the

funding cycle. The troubled utilities sector

accounts for 80% of investment, with

an estimated £ 48.6 billion more needed

to meet 2020 offshore wind capacity

targets. 83

In India and the People’s Republic of

China, the wind sector has also faced

issues. In the People’s Republic of

China, insufficient grid access is stalling

development, while the end of a key

tax break incentive in India may hurt

the sector’s growth trajectory through

2012, according to Ernst & Young’s

2012 Renewable Energy Country

Attractiveness Indices report. Italy has also

cut the preferential rates incentive scheme

awarded to renewable projects.

Clean energy offers a transition opportunity

to India and the People’s Republic of

China.

In the People’s Republic of China’s 12th

five-year plan (2011-2015), energy is a

critical concern. As Lin Boqiang comments

in his contribution to the Energy for

Economic Growth Energy Vision Update

2012, “Energy security concerns, energy

scarcity, high energy costs and mitigation

of negative environmental externalities

may present challenges to the People’s

Republic of China’s ability to continue

along a path of sustainable economic

growth.” 84 India faces similar challenges,

with only half of the generation capacity

expected realized over the last 15 years. Its

creaking, coal-dependent grid is coming

under ever increasing strain.

Both countries are looking to renewables

in light of their supply challenges. In 2010,

17% of India’s electricity generation was

attributable to alternative and nuclear

energy sources, 12% hydro, 2% solar, and

3% nuclear according to IEA data. The

same year, India added nearly 2.3 GW

of wind capacity, “reaping the benefits

of this trend [towards wind] as Indian

manufacturers of wind products expand

[to] capitalize on India’s currently favourable

regulatory regime for renewable energy.” 85

India’s government has also approved

plans to boost solar capacity to 2 GW

82

The Economist, “Energiewende”, July 2012; available at

www.economist.com/node/21559667.

83

The Financial Times, “Offshore wind: Financing woes pose

a threat to 2020 target date”, 1 June 2012.

84

World Economic Forum and IHS CERA, Energy for

Economic Growth Energy Vision Update, 2012.

85

World Economic Forum and IHS CERA, Energy for

Economic Growth Energy Vision Update, 2012.

36 The Global Energy Architecture Performance Index Report 2013

in the next ten years – a growth plan of

unprecedented scale in this technology

(the US has just over 9 GW installed and

has developed this portfolio over a far

longer timeframe).

These plans have been aided by Chinese

solar enterprise. Panel makers are

constantly reducing the cost of silicon

panel technology – recently, prices have

declined by about 35% to less than US$

1 per watt. 86 The People’s Republic of

China’s five-year plan includes targets

for reducing energy intensity and

increasing the share of non-fossil fuels

across industry and identifies industries

that should contribute up to 8% of

GDP by 2015, many of which are in the

field of sustainable energy. According

to Bloomberg New Energy Finance

figures, approximately US$ 51 billion

was invested in the People’s Republic of

China’s renewable energy sector in 2011,

fractionally below the US investment, but

roughly 20% of total global investment in

the sector during that year. 87

The relationship between renewable

energy policy and environmental

sustainability performance

How do the varying clean energy

investment rates by country correlate with

the EAPI’s environmental sustainability

scores? Unsurprisingly, fairly well. Figure

18 compares Bloomberg’s investment data

against the average sustainability scores

awarded to different country samples.

The approach is intended to highlight

whether there is a meaningful correlation

between investment in clean energy and

improved performance on this aspect of

the energy triangle’s set of indicators. To

draw out the analysis, the upper quartile

86

Renewable Energy World, Investing in Dragons and Tigers:

The Allure of China and India, 2012.

87

Liebreich, Michael, Bloomberg New Energy Finance, “Total

new investment in clean energy ($m)” chart for the Bloomberg

New Energy Finance Summit, 2011.

Figure 18: EAPI environmental sustainability scores vs total new investment in clean energy

per capita

Source: World Economic Forum Analysis; Bloomberg New Energy Finance

Upper quartile

Rest of EAPI sample

EAPI environmental sustainability score 2013

0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80

0.50

$70.62

0.67

$86.33

$- $20 $40 $60 $80 $100

Total new investment in clean energy ($) per capita

Average total new investment in clean energy (million US$), 2011

Average environmental sustainability score 2013

sample of country scores for environmental

sustainability was selected for comparison

against the remaining sample.

Figure 18 shows an average level of per

capita investment for the top quartile

performers 22% larger than the rest of the

sample for 2013. The results reflect more

generally the industrial and consumption

profiles of the two clusters; the top

quartile, though party to many developing

countries, contains a significant proportion

of diversified or large service-based

economies. These countries generally have

deindustrialized GDP bases, with increased

investment in renewable energy and

improved performance against emissions

targets that are potentially easier to achieve

than average. Although the rest of the

sample includes Australia, the US, the

United Arab Emirates, Canada, Singapore,

Italy and Germany – all large investors per

capita – the generally higher energy and

emissions intensity of the wider sample

sees an overall poorer performance against

the environmental sustainability metrics.

Using clean energy to mitigate climate

change

As the IEA notes, the global economy-wide

costs of decarbonizing power networks

will likely result in only a small reduction

in overall economic growth rates. 88

Given the often lower operating costs

and the genuine comparative advantage

alternative energy can offer, especially

in many developing countries, policymakers

should not be too quick to forget

the implications of severe global warming

nor miss opportunities to shift to a more

environmentally sustainable energy model.

88 The low-carbon scenario referred to in the IEA’s Summing

up the Parts report shows a total investment requirement

between 2010 and 2050 US$ 46 trillion higher than that

of the baseline scenario. However, this cost is offset by

(undiscounted) fuel savings of US$ 112 trillion, so that the

increased investment results in overall net savings compared

to the baseline scenario. Source: International Energy Agency

(IEA), Summing up the Parts, 2011.


Pull-out: How Does Nuclear Impact EAPI Performance?

Every country must make its own choices

around its fuel mix. However, as figure 19

shows, countries that have low-carbon

fuel mixes score better in the EAPI 2013

due to the reduction in fossil fuel-related air

pollution and reduced CO2 emissions they

entail.

As nuclear generation is low carbon, 89 it

contributes positively to environmental

sustainability scores on the index. We

wished to include an indicator that spoke

to the storage implications of spent fuel

deposits generated by nuclear facilities.

89 This definition is consistent with the International Energy

Agency (IEA) Energy Technology Perspectives 2010 BLUE

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.

Figure 19: The contribution of nuclear to the low-carbon energy mix

Source: World Economic Forum analysis; IEA data

EAPI 2013 score

0.76

0.74

0.72

0.70

0.68

0.66

0.64

0.62

0.60

Nuclear waste emits ionizing radiation

that is harmful to humans and ecological

systems if not processed and stored

properly. Temporary safe storage methods

exist, but currently there is no universally

accepted long-term storage method.

Data for waste processing techniques

and volumes was not available for the

105 countries assessed by the EAPI, and

accurate estimation of volumes and types

of waste treated by country is limited due

to the large amount of contracted waste

disposal and the different types of disposal

strategies employed by different countries.

The next iteration of the EAPI will aim to

access better, more detailed data around

nuclear waste.

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)

16,599

6,744

4. Environmental Sustainability

Ultimately, the EAPI does not penalize or

reward nuclear, nor any fuel type, based

on its perceived economic efficiency – it

captures this component of a country’s

energy systems in the end prices of the

fuels measured. Each country must make

its own choices regarding the acceptability

of and investment in different fuel sources,

nuclear included. Many countries are

reassessing the role of nuclear post

Fukushima, with countries such as

Germany and Japan gradually replacing

nuclear with other fuel sources and other

countries moving ahead with nuclear as

part of the fuel mix.

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

The Global Energy Architecture Performance Index Report 2013

0

Thousand tonnes oil equivalent (ktoe)

37


5. Energy Access

and Security


All countries need a few staple

components to ensure energy security.

These include reliable networks for

transmitting and distributing energy,

reducing vulnerability to supply shocks

(particularly for countries dependent on a

limited range of sources) and management

of relations among energy trading partners.

Consumers need ready access to energy,

but many nations are failing this remit.

Today, 1.5 billion people have no access

to electricity, while 3 billion people still

use cook stoves and traditional biomass

for domestic heating and cooking. With

the UN Secretary-General’s stated

goal to “achieve universal access to

modern energy services by 2030,” 90

these numbers feel uncomfortably large.

Inefficient, antiquated energy supply stifles

productivity (foraging for biomass is not a

national revenue generator – the proportion

of households in developing countries

using biomass for cooking declines

approximately 0.16% for every 1.0% of

income growth 91 ), impairs health (the

smoke from inefficient cooking, lighting,

and heating devices kills nearly 2 million

90

United Nations Foundation, Achieving Universal Energy

Access; available at www.unfoundation.org/news-and-media/

multimedia/videocasts/achieving-universal-energy.html.

91

World Bank, Modern cooking solutions: status and

challenges, 2011.

Figure 20: Map of top energy access and security performers

people a year and is responsible for a

range of chronic illnesses 92 ) and makes first

priority services such as healthcare and

education harder to deliver.

In short, when it comes to assuring ready

access to secure energy, the world still has

plenty to do. This chapter will explore how

various countries have performed against

this aspect of the energy triangle, highlight

some best practices and consider some

of the behavioural changes that need to

occur in order to boost the aggregate

scores for energy access and security – on

both the supply and demand sides.

The Energy Architecture Performance

Index (EAPI) measures how secure each

country’s energy systems are and the level

of access to energy in three main areas:

1. Diversity of supply

2. Level and quality of access to energy

sources

3. Self-sufficiency

Top Ten Energy Access and Security Performers –

Key Takeaways

1st

2nd

3rd

4th

5th

Norway

0.95

Canada

0.82

Denmark

0.82

Australia

0.81

Finland

0.81

92 United Nations Foundation, Achieving Universal Energy

Access; available at www.unfoundation.org/news-and-media/

multimedia/videocasts/achieving-universal-energy.html.

6th

7th

8th

9th

10th

Oman

0.80

Sweden

0.80

Germany

0.79

Switzerland

0.79

Austria

0.79

The Global Energy Architecture Performance Index Report 2013

39


There is an exact split between net

energy importers and exporters in the

top ten, with the five net exporters

exporting an average of 228% of

the energy they consume and the

importers importing on average 53%

of the energy they consume.

– Whether the countries are exporters or

importers, they all (with the exception

of Oman) have a highly diversified total

primary energy supply with an average

score of 0.88 on the Herfindahl index

(which measures the concentration of

different fuel types in a country’s total

primary energy supply). The top ten are

thus able to capitalize on geological

advantages or a well-established

trade network to ensure supply is not

dependent on too few energy sources.

Excluding Oman (which relies overtly

on extracted hydrocarbons to power

itself), the average diversity score is

0.93 – far above the EAPI 2013 sample

average of 0.68.

– 96% of the top ten’s population enjoys

access to electricity and an average

quality of electricity supply of 6.61 / 7.

This compares to an average of 87%

electrification and score of 4.84 / 7 for

the entire EAPI 2013 sample. Less than

5% of the population of each country

uses solid fuels for cooking.

Spotlight on Top Performers:

Norway, Canada, Denmark and

Oman

Norway enjoys secure energy and provides

energy security to trade partners.

Norway has an excellent energy security

score. It is also a reliable and transparent

supplier. Its economy is largely fuelled by

its oil and gas production. The industry

generates enormous revenues for Norway.

This is reflected in the high score for net

energy imports, scoring -562.95% (as a

percentage of energy use) for 1st place,

which indicates that it is a well-established

supplier while speaking to the country’s

self-sufficiency as an energy producer with

zero (net) imports.

With demand for oil and gas likely to

rise over the near-term, Norway is

positioning itself well by aiming to increase

both production and recovery rates by

opening new acreage for exploration – for

example the recent maritime delimitation

treaty between Norway and the Russian

Federation, through which Norway has

gained 54,000 square miles (139,859

square kilometres) of continental shelf for

the development of oil and gas deposits. 93

As part of the Nordic wholesale market,

Norway enjoys access to a liberalized

cross-border integrated electricity market.

Its plentiful hydropower and natural gas

allocations are ideally suited to variable

power generation back-up (e.g. wind)

93

International Energy Agency (IEA), Energy Policies of IEA

Countries (Norway), 2011.

40 The Global Energy Architecture Performance Index Report 2013

and are strong drivers for further crossborder

interconnections. There is capacity

for Norway’s hydro to balance supply

and demand peaks on a wider European

market, boosting Norway and Europe’s

security of supply. This is especially

important given Norway’s almost complete

reliance on hydropower for electrical

generation, as the score of 0.85 (rank

27th) for diversity of total primary energy

supply (TPES) reveals; expanding the grid

transnationally will mean less exposure to

supply constraints during periods of low

hydropower availability.

Norway’s access metrics display

strong scores on every measure, with

electrification rates at 99.8% and the

percentage of the population using solid

fuels for cooking at less than 5%. Norway’s

quality of electricity supply scores 6.5 out

of 7, indicating a supply that performs (in

terms of lack of interruptions and lack of

voltage fluctuations) near to the highest

standards in the world. Norway has little to

improve with regard to the level of access,

quality and modernity of its electricity

supply.

Canada’s diverse portfolio of energy

resources drives its high performance.

Canada is a diverse and varied set of

provinces, but its energy security policy is

centrally managed to deliver against some

clear national objectives. Canada is a net

exporter of both its oil and gas resources.

From an oil security perspective, Canada’s

oil sands have been a game changer –

they represent the majority share of the

173.6 billion barrels of proven oil reserves,

ranking Canada 3rd globally and the

majority (99% 94 ) of production goes to a

long established and stable trade partner

– the United States. Canada’s excellent

score for net energy imports of -55.01%

(as a percentage of energy use) speaks

to its strong position as an exporter. Here,

geography plays a large role: Canadian oil

exports generally stem from the western

provinces, directed to refineries in the US

Midwest and following the established

network of pipelines.

Some of Canada’s urban and densely

populated eastern provinces import

a portion of the energy products they

consume, including crude oil from the

US. This is small in terms of the overall

import/export picture, but, even so, the

government would do well to consider

mitigating strategies for the risk of supply

disruptions, some of which have impacted

the central and eastern refineries over

recent years. As the main risk of supply

shortages revolves around refined products

rather than crude oil, plans to create

a strategic petroleum reserve (which,

surprisingly, Canada does not have) were

still under discussion as of mid-2012.

The picture for natural gas is rosy. Canada’s

market is deep, efficient, competitive and

secure and in the event of a physical supply

94

US Energy Information Administration, Canada Country

Analysis, 2012.

disruption, the federal government or

provincial jurisdictions have clear authority

to control natural gas flows. High prices are

more of a threat than physical infrastructure

failure.

Denmark has a bold energy security

strategy.

Denmark’s approach to energy

security is considered and simple:

reduce consumption through efficiency

programmes, boost use of renewables and

collaborate closely with European markets.

It is also fairly bold; Denmark aims to be

independent of fossil fuel use by 2050.

These priorities are as set out in its Energy

Strategy 2050. 95

Denmark has demonstrated a strong

historic track record of innovative and

inclusive policy-making measures. As

the International Energy Agency (IEA)

comments in its 2012 Energy Policy

Analysis of Denmark, the Energy Strategy

2050 is the outcome of a, “long and stable

process and is a continuation of previous

policies which commenced in the 1980s

and existing uniquely-Danish energy

agreements.” Denmark’s strong scores in

this section of the EAPI are proof; it scores

0.93 for TPES diversity (of which over 22%

is generated by renewable energy sources

made up predominantly of biomass and

wind – Denmark uses no nuclear) indicating

a balanced source of supply portfolio.

It is also a net energy exporter, scoring

-17.90% for net energy imports (as a

percentage of energy use). As with Norway,

its access metrics display strong scores

on every measure, with electrification

rates at 99.8% and the percentage of the

population using solid fuels for cooking at

less than 5%. It scores first for quality of

electricity supply with 6.9 out of 7.

Looking forward, Denmark’s energy

security strategy seems exciting and

innovative. Critically, its Energy Strategy

2050 shows prescience and an

understanding of the targets that it has set

itself and the stakeholders it must manage

to ensure security of supply, as well as

performance against economic growth

and development goals and environmental

sustainability. The document puts findings

by the Climate Commission into action by

clearly outlining the policy and principles

needed to enable a successful transition

to a fossil fuel-free energy system. The

strategy is technology neutral, and

stipulates a clear, time-banded roadmap

towards the realization of objectives around

energy efficiency, heating and electricity

production, transport, and connection to

a linked European energy system. It also

allows for variation in the operational life of

technologies and policies, technological

maturity and prices across the energy

system. 96

95 In 2011, the government published its Energy Strategy 2050,

a detailed and ambitious policy document that contains a series

of new energy policy initiatives, the purpose of which is to build

on existing policies and transform Denmark into a low-carbon

society with a stable and affordable energy supply.

96 International Energy Agency (IEA), Denmark Energy Policy, 2012.


Pull-out: Energy Security and the Rate of Technological Change

A common observation is that the world’s

energy infrastructure changes slowly.

As Simon Henry, Chief Financial Officer

of Royal Dutch Shell, commented in the

World Economic Forum’s 2011 New

Energy Architecture: Enabling an effective

transition report, “once a new energy

technology is proven, it takes about 30

years for it to achieve 1% of the overall

market… New energy sources take time

to develop because of the massive scale

of our modern energy system, which has

been more than a century in the making.

And because of the need to build industrial

capacity and learn by doing.” Frequently,

statistics bear out this judgement; it took

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

Coal

Years to supply 5%

of all primary energy

Years to supply 25% of

the market share after

reaching 5%

50 years for the proportion of coal and in

global total primary energy supply (TPES)

to increase from 2% to around 10% in

the mid-1850s. It was the same journey

for nuclear generation. In the US, nuclear

delivered 10% of all electricity after 23

years of operation, taking 38 years to reach

a 20% share in 1995. Electricity generation

by natural gas turbines in the US followed a

similar trajectory; it took 45 years to reach

20% of the US TPES mix. 97

97 Smil, Vaclav, “A Sceptic Looks at Alternative Energy”,

Spectrum, Institute of Electrical and Electronics Engineers,

July 2012; available at spectrum.ieee.org/energy/renewables/

a-skeptic-looks-at-alternative-energy/0.

Oil

Natural gas

Nuclear

1750 1775 1800 1825 1850 1875 1900 1925 1950 1975 2000

Wind

Nuclear & wind

have not reached

25%; solar PV is

negligible

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.

5. Energy Access and Security

However, these changes need to be put

into context in order to be interpreted

correctly. Long lead times (of between

50 to 70 years) in terms of technology

shifts are mostly characteristic of energy

systems in which the entire infrastructure is

reworked (see figure 21). Existing networks

lock-in their technology of choice, creating

price and compatibility barriers to new

technologies that slow the rate of diffusion.

The Global Energy Architecture Performance Index Report 2013

41


The more modular or

localized the change is, the

faster and more effective

the change process, all

other things being equal.

Kwok Shum Professor of Sustainability, Akio

Morita School of Business, Anaheim

University

When technology diffusion takes place

within an existing network, the rates of

change can be much faster. 98 An example

of this would be the significant switch

around the world from coal and oil-based

electric generation to natural gas, a

process accelerated by existing networks

of large electric grids. Accordingly, the

world may see a far greater rate of

change as electric power systems start

to decarbonize. In the US, the expansion

of gas production from shale has pushed

gas prices down 69% over the past four

years, and seen natural gas-fired plants

expand to absorb 34% of the generation

mix (see figure 22). 99 This shift will probably

impact positively on EAPI results for the US

moving forward, as CO 2 emissions from

heat and electricity generation fall.

While macro-systemic changes in energy

architectures may be slow to unfold, intragrid

network changes can be more within

the 25-35 year range. This faster transition

time has benefits. Lower carbon fuels can

replace legacy infrastructures to yield more

energy per unit of carbon pollution, thus

potentially decarbonizing the global primary

energy supply by 0.3% per year. 100

Energy security and technology

development are inextricable. As the IEA

has suggested, increased energy efficiency

though the accelerated deployment

of low-carbon technologies can help,

“cut government expenditure, reduce

energy import dependency and lower

98 Grubler, Arnulf, Nebojsa Nakichenovich, David G. Victor,

Dynamics of energy technologies and global change,

Abstract, 1999.

99 Bloomberg, “Natural Gas Matches Coal as Top U.S. Power

Fuel”, 2012; available at www.bloomberg.com/news/2012-

08-03/natural-gas-matches-coal-as-top-u-s-power-fuelbgov-barometer.html.

100 Grubler, Arnulf, Nebojsa Nakichenovich, David G. Victor,

Dynamics of energy technologies and global change,

Abstract, 1999.

42 The Global Energy Architecture Performance Index Report 2013

Figure 22: US share of total fossil fuel generation (all sectors)

Source: US Energy Information Administration

Share of total fossil fuel generation (all sectors)

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

1%

1950 1960 1970 1980 1990 2000 2010

emissions.” 101 Technological diversification

of energy supply improves energy security

and drives economic benefits: countries

could save a total of 450 exajoules (EJ) in

fossil fuel purchases by 2020 equating to

the last six years of total fossil fuel imports

among OECD countries through the

adoption of new technologies. According

to the IEA 2DS scenario, 102 “by 2050, the

cumulative fossil fuel savings in the 2DS

are almost 9,000 EJ – the equivalent of

more than 15 years of current world energy

primary demand.” 103 From a security point

of view, this represents an opportunity.

How new technologies in transport may

improve security of supply.

Transportation is one sector that looks set

for significant technological change over

the near-term, and this will revolve around

efficiency. The sector is energy hungry;

demand has doubled since the 1970s and

the share of overall final oil consumption

attributable to transport has increased by

46% (53% between 1990 and 2010). 104 In

the US, fuel economy (a measure of the

productivity of each vehicle mile travelled in

the US economy) continues to improve and

is likely to do so over the near to mid-term

according to the US Energy Information

101

International Energy Agency (IEA), Energy Technology

Perspectives, 2012.

102

The International Energy Agency’s (IEA) Energy

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

lower emissions. Its emissions trajectory is consistent with the

IEA World Energy Outlook’s 450 scenario through 2035. The

2DS identifies the technology options and policy pathways

that ensure an 80% chance of limiting the long-term global

temperature increase to 2°C - provided that non-energy

related CO emissions, as well as other greenhouse gases,

2

are also reduced.

103

International Energy Agency (IEA), Energy Technology

Perspectives, 2012.

104

McKinsey Global Institute, Resource Revolution: Meeting

the world’s energy, materials, food, and water needs, 2011.

Coal Petroleum Gas

65%

34%

Administration (EIA), due to further

regulation like the Energy Independence

and Security Act (EISA). 105

This effect is not just limited to the

US; the International Council on Clean

Transportation (ICCT) estimates that the

global car fleet, though expected to double

over the next 20 years, will see improving

fuel efficiency (see figure 23). 106 Indeed,

global demand for transport is almost

certain to balloon over the near-term – the

IEA projects that transport fuel demand will

grow by about 40% by 2035. 107 This has

security implications. To manage them,

policy-makers will need to encourage the

behavioural shifts required to improve

vehicle efficiency and bolster the regulations

that force manufacturers to improve vehicle

efficiency metrics, as the European Union

has done by strengthening the bind of its

preliminary voluntary agreements. 108 This is

especially true of medium- and heavy-duty

vehicles used to transport goods, which

account for most emissions.

105 US Energy Information Administration (EIA), Fuel economy

standards have affected vehicle efficiency, August 2012;

available at www.eia.gov/todayinenergy/detail.cfm?id=7390.

106 International Council on Clean Transportation (ICCT),

Global Passenger Car Fuel Economy and/or Greenhouse Gas

Emissions Standards, 2010.

107 International Energy Agency (IEA), CO2 Highlights, 2011.

108 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

grams CO2/km

300

250

200

150

100

50

0

If major car manufacturers in the United

States, Europe, the People’s Republic of

China and Japan commit to tightened

fuel economy standards, the average fuel

economy of new light-duty vehicles could

improve from “7 litres per 100 kilometres

today to just below 5 litres per 100

kilometres in 2030.” 109 Further technological

developments and reduced cost curves

could encourage a move to new, preferably

low-carbon fuels and technologies. As

noted by the National Petroleum Council

(NPC) in its 2012 paper Advancing

Technology for America’s Transportation

Future, many new technologies are

relatively unproven; but with technologyneutral

policy designed to support

innovation in transport technologies, the US

(and the world) can expect to see electric

and plug-in hybrid vehicles, hydrogen

fuel-cells, ultra-light vehicle materials and

a greater use of biofuels blended with

traditional automotive fuels as the new

potential engines of change. 110

When mature, these technologies (if

combined with effective fuel duties and

the removal of fossil-fuel subsidies) could

reduce the burden on domestic fuel

supplies, minimizing the threat of supply

disruptions. As a sector more susceptible

than most to the geopolitics of oil trade,

the world’s transport networks can act as

an efficient lever in the transition to a new

energy architecture.

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.

US EU People's Republic of China

5. Energy Access and Security

The Global Energy Architecture Performance Index Report 2013

43


6. Key Takeaways and

Focus Areas


While accepting that each and every

country has a distinct set of energy

priorities and opportunities, Energy

Architecture Performance Index (EAPI)

analysis has shown some key themes that

are developing across the various regions

and economic clusters. This section

will draw on some of the focus areas,

as derived from the results of the EAPI,

that countries within the cluster should

concentrate on targeting in order to drive

up their result on the EAPI and improve

their energy system performance moving

forwards.

Key Takeaways

Nobody’s perfect - and

improvements in environmental

sustainability especially should

be a global priority.

Not one country scores perfectly in the

2013 EAPI. That is reflective of the core

message behind the index: the global

energy architecture still has a long way to

go before it can claim to meet the three

imperatives of the triangle. Of these three

objectives, environmental sustainability is

an area that needs significant attention.

For advanced and high-income economies

– with the highest impact energy sectors

performance against this imperative is

lower than the other two (see figure 24).

This low performance is a function of three

factors:

1. The economic cost of building a truly

sustainable energy system

2. The high performance targets (based

predominantly on existing legislation

or official recommendations) used to

assess performance

3. The fact that environmental

sustainability was not a priority

component of the energy discourse

until recently, meaning countries

are naturally further behind on

environmental sustainability metrics

than against the other aspects of the

triangle (which have been the historic

concern of global energy systems).

Tough assessment is critical here; targets

considered and set by experts in the field

of pollution mitigation and climate policy

need to be met. Given the overall global

underperformance, it will be interesting to

see how the countries assessed by the

EAPI progress in this area most especially.

Figure 24: High-income OECD and non-OECD cluster performance on the EAPI 2013

0.77

Energy access

and security

0.72

A large natural energy resource

endowment is not a critical

performance factor.

Having a large provision of exploitable

natural resources has enabled high

performance for many of the countries

under analysis. But the prevalence of

countries without large endowments in

the upper quartile of results indicates the

importance of efficiency and sustainability

measures, largely linked to the degree

and efficacy of a country’s energy policy.

Hence countries like Switzerland, Latvia

and France are in the top ten performers

overall. Higher gross domestic product

(GDP) levels and a diversified economic

base allow the top performers to

manoeuvre policy in a way that meets the

three objectives of the energy triangle.

Many hydrocarbon-rich nations with high

to median GDP levels also score poorly

within the index. This reinforces how

resource wealth needs to be managed

effectively to drive economic growth as

well as development, and to mitigate

negative environmental externalities

due to reliance on hydrocarbons in total

primary energy supply (TPES). Resources,

particularly hydrocarbons, can be a boon

or a burden depending on the policies

employed to manage their development.

While helping on some security metrics,

they may impact especially badly on the

economic growth and development and

environmental sustainability performance of

an energy system if exploited without due

consideration.

Economic growth

and development

0.44

0.58

0.31

0.55

High-income OECD

High-income non-OECD

Environmental

sustainability

Globally, some big issues

around fossil-fuel subsidies,

water use for energy production

and effective management of

resource wealth need addressing.

A concerted global effort is needed to

gather more data around the application

of fossil-fuel subsidies, water use per

type of energy generation and extraction

technology (and the stress this places on a

country’s overall water resources), and the

best models for the development of energy

resources. Against each of these energy

priorities, a paucity of detailed global data

is limiting action – neither the EAPI nor

any index can paint the full picture of a

country’s energy situation and priorities

without a more detailed view of these

factors and their impact on a country’s

energy architecture.

Managing the trade-offs and

complementarities

Managing the transition to a new energy

architecture is not easy. The imperatives

of the energy triangle may reinforce or act

in tension with one another, forcing difficult

trade-offs to be made, and, in some cases,

meaning that decisions have unintended

consequences. Efforts to bolster energy

security through diversification may, for

example, have negative implications for

environmental sustainability. This can be

seen in practice as the European Union

(EU) takes advantage of cheaper coal

imports from the US. Data from Point

Carbon estimates that increased EU coal

use will drive a 2.2% rise in EU carbon

emissions in 2012, after a 1.8% drop in

2011. 111

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/useurope-emissions-shale-idUKBRE88O0GC20120925.

The Global Energy Architecture Performance Index Report 2013

45


In response, some utilities are attempting

to make coal clean as well as economical.

Coal gasification and carbon capture

technologies can reduce greenhouse

emissions from a conventional power

plant by 80% to 90%, but the trade-off

is the increased cost of facilities (up to

91% greater than a conventional plant). 112

Policies that support diversification may

also come at a considerable cost, with the

expansion of technologies not yet at grid

parity requiring continued financial support

from feed-in tariffs and other financial

mechanisms.

In some instances, there are “silver bullets”.

An example is Iceland’s development

of profitable and clean data centres.

Iceland’s electricity is provided by 100%

renewable energy sources. This clean

and cheap electricity source (a local utility,

Landsvirkjun, offers a public rate of US$

43 per megawatt for 12 years 113 ) coupled

with its cool climate means a data centre

can operate more energy efficiently and

with less carbon impact. In this example,

environmental advantages are realized with

total cost of ownership up to 60% lower

than a similar deployment in London. 114

There is no easy formula for managing

these trade-offs and complementarities.

What is required is a conscious awareness

that such balances between the

imperatives of the triangle exist and that

they are nuanced. In response, decisionmakers

must ensure that they carefully

weigh their choices, creating a portfolio of

policies to create an energy mix that best

balances the challenges and opportunities

of the energy triangle.

112

Intergovernmental Panel on Climate Change, Special

report on Carbon Dioxide Capture and Storage, 2005.

113

Pike Research, Iceland Bets on Green Data Centers, April

2012.

114

Pike Research, Iceland Bets on Green Data Centers, April

2012.

46 The Global Energy Architecture Performance Index Report 2013

Focus Areas for

Selected Regional

and Economic

Clusters

Figure 25: Focus areas for selected regional and economic clusters

EU 27

Selected data

EAPI 2013

Economic Growth and Development

Environmental Sustainability

Energy Access and Security

Further work to do on sustainability

North America

Selected data

Average

Score ( 0-1 )

EAPI 2013

0.60

Economic Growth and Development 0.58

Environmental Sustainability

0.40

Energy Access and Security

0.80

Focus on energy intensity and emissions

Latin America and the Caribbean

Selected data

EAPI 2013

Economic Growth and Development

Environmental Sustainability

Energy Access and Security

Average

Score ( 0-1 )

0.63

0.57

0.58

0.74

Environmental Sustainability: EU27 scores above EAPI average on

environmental sustainability - 0.58 - but score lags far behind

comparably developed Nordic economies with 0.62

CO2 prices: Have decreased with economic slowdown

dis-incentivising low carbon energy project development

Defining roadmap and regulations for regional interconnection: A

priority, to minimise reliance on imports external to the EU zone

(predominantly from Norway and Russia).

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 opportunities).

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).

Average

Score ( 0-1 )

0.57

0.56

0.55

0.61

Each of the sub-indices offer focus areas for LAC

Economic Growth and development: Subsidies across all fuel types

often used by LAC governments to try and improve social equity - could

lead to deteriorating price distortion score (current score for this indicator

aligns with EAPI sample)

Environmental Sustainability: LAC score (0.55) aligns with EAPI average

(0.54). Alternative energy sources relatively well utilised, 33% of LAC’s

total primary energy supply, but PM10 performance poor – could

potentially improve vehicle efficiency (LAC scores 0.55 for the Average

Fuel Economy for passenger cars (l/100km) indicator, below EAPI average

of 0.61

Energy Access: Priority to improve quality of electricity supply. New

energy wealth pouring into different parts of region could be managed to

translate into social development and prevent indirect de-industrialisation


Sub-Saharan Africa

Selected data

EAPI 2013

Economic Growth and Development

Environmental Sustainability

Energy Access and Security

Improving Energy Access

Average

Score ( 0-1 )

0.44

0.38

0.65

0.29

Access: Struggle to supply citizens with basic energy services. In

15+ countries over 50% of population uses solid fuels for cooking

Quality of supply: 25 countries, mainly from SSA, receive a score

< 3.5 / 7 for quality of electricity supply, indicating unreliable and

insufficient supply

ASEAN & Developing Asia (DA)

Selected data

EAPI 2013

Economic Growth and Development

Environmental Sustainability

Energy Access and Security

Each of the sub-indices offer focus areas for Asia

Middle East and North Africa

Selected data

EAPI 2013

Economic Growth and Development

Environmental Sustainability

Energy Access and Security

0.50

0.41

0.54

0.56

0.46

0.33

0.36

0.70

Better energy efficiency / fewer emissions

Brazil, Russia, India and China (BRICs)

Selected data

EAPI 2013

Economic Growth and Development

Environmental Sustainability

Energy Access and Security

Average

Score ( 0-1 )

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.

Average

Score ( 0-1 )

High energy-related emissions: Net exporters often perform poorly

on the environmental sustainability sub-index due to high emissions

from hydrocarbon use / extraction. Fuel exports as % of GDP exhibits

strong negative correlation with sustainability score

Negative economic impacts: Energy intensity is $5.88 per unit of

energy, compared to $7.14 for EAPI overall sample.

Average

Score ( 0-1 )

0.57

0.51

0.57

0.63

Each of the sub-indices offer focus areas for BRICs

Energy Efficiency: Critical factor, for different reasons: Russian energy sector

= quarter of GDP through energy / export earnings (Chatham House) but

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

intensity score ($8.40GDP / per unit) indicates transition stage of economy –

improved living standards and GDP growth may reduce score. India and

China relatively energy inefficient, but China building strong clean energy

sector and demand management solutions due to relatively modern grid.

CO2 emissions: Critical focus for Russia and China –rank 93rd & 63rd

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

demand (China uses most energy in world – 2438 mtoe - Russia 3rd most

(after U.S.) with a 703 mtoe TPES)

Energy Access: Economies a blend of energy ‘haves’ and ‘have nots’ – India

scores poorly on access metrics (0.45 compared to EAPI average of 0.73).

Russia, Brazil and China highly electrified but suffer from quality of supply

issues, scoring an average 0.64 / 1 for this metric.

6. Key Takeaways and Focus Areas

The Global Energy Architecture Performance Index Report 2013

47


7. Definitions

Statistical

Herfindahl index – A normalized Herfindahl

index is used here as a measure of the size

of fuel-type consumption in relation to a

country’s total energy industry. The score

represents the sum of the squares of the

total primary energy supply types of the

different countries being analysed within

the energy industry, where the energy

shares are expressed as fractions. The

result can range from 0 to 1.0, moving

from a large number of individual energy

sources to a single-source supply. In this

case, increases in the score indicate a

decrease in diversity and vice versa.

The formula is as follows:

H = N ∑ s i 2

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)

The normalized result can range from 0 to 1.

spread charts – Spread charts show the

distribution of a dataset. The bar equals

the spread of data from minimum, through

the median to the maximum value of the

dataset. The quartiles are a set of values

that divide the data set into four equal

groups, each representing one-fourth

of the population being sampled. The

upper quartile represents the split of the

highest 25% of data – the top performers.

The lower quartile represents the split

of the lowest 25% of data – the bottom

performers.

48 The Global Energy Architecture Performance Index Report 2013

Economic/Regional Clusters

In the context of this report, the

designations only cover the countries

available within the Energy Architecture

Performance Index 2013 sample.

Advanced Economies – A term used

by the International Monetary Fund

to describe the following developed

countries: Australia, Austria, Belgium,

Canada, Cyprus, Czech Republic,

Denmark, Estonia, Finland, France,

Germany, Greece, Iceland, Ireland,

Israel, Italy, Japan, Republic of Korea,

Netherlands, New Zealand, Norway,

Portugal, Singapore, Slovak Republic,

Slovenia, Spain, Sweden, Switzerland,

United Kingdom and United States.

APEC – The Asia-Pacific Economic

Cooperation’s primary goal is to support

sustainable economic growth and

prosperity in the Asia-Pacific region.

In the context of this report, the APEC

designation only covers the countries of

APEC within the EAPI 2013 sample, which

include: Australia, Brunei Darussalam,

Canada, Chile, Indonesia, Japan, Republic

of Korea, Malaysia, Mexico, New Zealand,

People’s Republic of China, Peru,

Philippines, Russian Federation, Singapore,

Thailand, United States and Vietnam.

ASEAN – The Association of Southeast

Asian Nations, or ASEAN, was established

on 8 August 1967 in Bangkok, Thailand,

and is made up of: Brunei Darussalam,

Cambodia, Indonesia, Malaysia,

Philippines, Thailand and Vietnam.

Singapore is included in the Advanced

Economies regional grouping. This report

excludes data for Laos and Myanmar,

which should be discounted from the

grouping.

BRIC – The BRIC designation comprises

the economies of Brazil, the Russian

Federation, India and the People’s

Republic of China.

Central and Eastern Europe – This grouping

comprises Bulgaria, Croatia, Hungary,

Latvia, Lithuania, Poland, Romania and

Turkey.

Commonwealth of Independent States

– This grouping is made up of Armenia,

Azerbaijan, Georgia, Kazakhstan, Kyrgyz

Republic, Mongolia, Russian Federation,

Tajikistan and Ukraine.

Developing Asia – Developing Asia is an

International Monetary Fund definition for

countries in the Asia region that are less

developed than neighbouring counterparts.

These include Cambodia, India, Indonesia,

Malaysia, Nepal, Pakistan, People’s

Republic of China, Philippines, Sri Lanka,

Thailand and Vietnam.

EU15 – Fifteen was the number of Member

Countries in the European Union prior to

the accession of ten candidate countries

on 1 May 2004. The EU15 comprised the

following 15 countries: Austria, Belgium,

Denmark, Finland, France, Germany,

Greece, Ireland, Italy, Luxembourg,

Netherlands, Portugal, Spain, Sweden

and United Kingdom. This report excludes

data for Luxembourg, which should be

discounted from the grouping.

G20 – The Group of Twenty, or G20,

is a forum for international cooperation

that brings together the world’s major

advanced and emerging economies. In the

context of this report, the G20 designation

only covers the G20 countries within the

EAPI 2013 sample: Argentina, Australia,

Brazil, Canada, France, Germany, India,

Indonesia, Italy, Japan, Republic of Korea,

Mexico, People’s Republic of China,

Russian Federation, Saudi Arabia, South

Africa, Turkey, United Kingdom and United

States.

High-Income (OECD) – A World Bank

classification encompassing: Australia,

Austria, Belgium, Canada, Czech Republic,

Denmark, Estonia, Finland, France,

Germany, Greece, Hungary, Iceland,

Ireland, Israel, Italy, Japan, Republic

of Korea, Netherlands, New Zealand,

Norway, Poland, Portugal, Slovak Republic,

Slovenia, Spain, Sweden, Switzerland,

United Kingdom and United States.


High-Income (non-OECD) – A World Bank

classification encompassing: Bahrain,

Brunei Darussalam, Croatia, Cyprus,

Kuwait, Oman, Qatar, Saudi Arabia,

Singapore, Trinidad and Tobago, and

United Arab Emirates.

Latin America and the Caribbean – The

Latin America and the Caribbean (LAC)

region encompasses Argentina, Bolivia,

Brazil, Chile, Colombia, Costa Rica,

Dominican Republic, Ecuador, El Salvador,

Haiti, Jamaica, Mexico, Nicaragua,

Panama, Paraguay, Peru, Trinidad and

Tobago, and Uruguay

MENA – The Middle East and North Africa

(MENA) is an economically diverse region

that includes both the oil-rich economies

in the Gulf and countries that are

resource-scarce in relation to population.

In the context of this report, the MENA

designation only covers the countries

of MENA within the EAPI 2013 sample:

Algeria, Bahrain, Egypt, Iran, Jordan,

Kuwait, Lebanon, Libya, Morocco, Oman,

Qatar, Saudi Arabia, Syrian Arab Republic,

Tunisia and United Arab Emirates.

MIST – The MIST designation

encompasses Mexico, Indonesia, South

Korea and Turkey.

NORD – The NORD designation

encompasses the economies of Denmark,

Finland, Iceland, Norway and Sweden.

SSA – The designation Sub-Saharan

Africa (SSA) is used to indicate all of Africa

except northern Africa and ex Sudan,

which is included in Sub-Saharan Africa.

SSA comprises: Botswana, Cameroon,

Cote d’Ivoire, Ethiopia, Ghana, Kenya,

Mozambique, Namibia, Nigeria, Senegal,

South Africa, Tanzania and Zambia.

The Global Energy Architecture Performance Index Report 2013

49


8. Methodological

Addendum

This section describes the methodology

behind the Energy Architecture

Performance Index (EAPI) 2013. The

EAPI is a composite index that measures

a global energy systems’ performance

across three imperatives: economic

growth and development, environmental

sustainability, and energy access and

security.

Methodology

The EAPI focuses on tracking specific and

output oriented indicators to measure the

energy system performance of a variety

of countries. These include 16 indicators

aggregated into three baskets relating to

the three imperatives of the energy triangle

economic growth and development,

environmental sustainability, and access

and security of supply to both score and

rank the performance of each country’s

energy architecture.

The EAPI is split into three sub-indices.

The score attained on each sub-index is

averaged to generate an overall score. The

three sub-indices are:

1. Economic growth and development

the extent to which energy architecture

supports, rather than detracts from,

economic growth and development

2. Environmental sustainability the extent

to which energy architecture has been

constructed to minimize negative

environmental externalities

3. Energy access and security the extent

to which energy architecture is at risk

to an energy security impact, and

whether adequate access to energy is

provided to all parts of the population.

How the Energy Architecture Performance

Index functions

An index is a statistical measure of the

changes across a portfolio of indicators

reflective of an entity – in this case, energy

systems. Indices serve the purpose of

reducing complexity by tracking specific

indicators representative of a whole system

so that, ideally, a change in the index

is reflective of a proportional change in

the real world. In this context, the term

50 The Global Energy Architecture Performance Index Report 2013

“indicator” provides empirical evidence

that a certain desired outcome has been

achieved or not, and that decision-makers

within energy systems can use to assess

progress towards their set objectives.

The distinction here between “input” and

“output” indicators is critical; the EAPI

grades as “inputs” indicators that measure

resources (human or financial) specifically

deployed to a particular energy project or

programme, whereas “output” indicators

measure the quantity of energy-related

goods or services produced and the

efficiency of energy production.

Reality and its statistical representation

cannot be assumed to converge in perfect

harmony, and the statistical results of the

analysis need to be set in context in an

understanding of the real world situation.

Furthermore, as an initial effort, the set

of indicators the EAPI measures is by no

means definitive. The EAPI team has had

to exclude data it wished to include, striven

after data that was not available in suitable

quality or coverage, and had to make

assumptions relating to how indicators

should be measured to reflect a high or

low score within the EAPI.

Any targets used are derived from

accepted policy documentation or expert

judgments to ensure the Index produces

policy-relevant insights and rankings.

The team also collected historic indicator

data and calculated an EAPI 2009 score

against the same indicators and thresholds

as the EAPI 2013 sample. It provides a

view of how energy system performance

has changed over time. While scores of

individual countries do change over time,

the average change in rank between

2009 and 2013 is 0 and the correlation

coefficient between the 2009 and 2013

scores is 0.93. The relative similarity of

scores across the 5 year window speaks

to the long lead times involved in most

energy architectural changes. For more

detail around the rate of change, please

see the Energy Security and the Rate of

Technological Change pull-out. A more

detailed time-series analysis of EAPI 2009

scores can be accessed on the online

Spotfire data platform, where results can

also be modelled dynamically.

EAPI 2013

Indicators:

Selection Criteria

and Profiles

The EAPI team is grateful to the Expert

Panel for each individual’s specific

feedback and recommendations around

data sourcing and the data selection

criteria. Where possible, the EAPI team

aimed to select indicators against the

following criteria:

– Output data only – measuring outputoriented

observational data (with

a specific, definable relationship to

the sub-index in question) or a best

available proxy, rather than estimates

– Reliability – using reliable source data

from renowned institutions

– Reusability – data sourced from

providers with which the EAPI can

work on an annual basis and that can

therefore be updated with ease

– Quality – selected data represents

the best measure available given

constraints; with this in mind, all

potential datasets were reviewed

by the Expert Panel for quality and

verifiability and those that did not meet

these basic quality standards were

discarded 115

– Completeness – data of adequate

global and temporal coverage and

consistently treated and checked for

periodicity to ensure the EAPI’s future

sustainability.

Where data is missing for a particular year

within an indicator, the latest available data

point is extrapolated forwards until a more

recent result is obtained. No single data

point has been extrapolated forwards for

more than three years in any one instance,

excepting for the “nitrous oxide emissions

in industrial and energy processes (% of

total nitrous oxide emissions)” indicator,

for which the latest data available ends in

2005.

115 Please see the “Data Paucity & Country Exclusions”

section of the Methodological Addendum for further detail

around these criteria.


Indicator profiles

The table below details each of the

indicators selected, the weight attributed

to it within its basket (or sub-index),

what it measures and the energy system

objective it contributes to, either positively

or negatively.

Table 4: Indicator profiles

Energy system objective Measure (of) Indicator Name

Economic growth and

development

Environmental

sustainability

Energy access

and security

Weighting:

Approach and

Rationale

Within the aggregate score, each of the

three baskets receives equal priority and

weighting. Fundamentally, the World

Economic Forum believes that the

imperatives of the energy triangle are of

mutual importance and are interlinked.

To bring greater balance to the energy

triangle and enable an effective transition to

a new energy architecture, it is important

that policy-makers look to the long term,

providing a more stable policy environment

based upon an in-depth understanding

of the trade-offs they are making. Where

possible, decision-makers should aim

to take actions that result in positive net

benefits for all three imperatives of the

energy triangle.

Efficiency Energy intensity (GDP per unit of energy use (PPP US$ per kg of oil

equivalent))

Lack of distortion/

affordability

Supportive/detracts

from growth

Share of low-carbon

fuel sources in the

energy mix

Emissions impact

Degree of artificial distortion to gasoline pricing (index)

Degree of artificial distortion to diesel pricing (index)

Electricity prices for industry (US$ per kilowatt-hour)

Cost of energy imports (% GDP)

Value of energy exports (% GDP)

Alternative and nuclear energy (% of total energy use, incl. biomass)

Nitrous oxide emissions in energy sector (thousand metric tonnes of

CO 2 equivalent)/total population

CO emissions from electricity and heat production, total/total

2

population

PM10, country level (micrograms per cubic metre)

Average fuel economy for passenger cars (l/100 km)

Electrification rate (% of population)

Level and quality of

access

Quality of electricity supply (1-7)

Percentage of population using solid fuels for cooking (%)

Self-sufficiency Import dependence (energy imports, net % energy use)

Diversity of supply Diversity of total primary energy supply (Herfindahl index)

Each indicator is equally weighted within

the three baskets, with the exception of

the economic growth and development

basket. Here, indicators that correlated

closely (due to their measuring similar,

though not identical, aspects of energy

architecture performance) had their

weights “diluted” to prevent the double

stacking of scores, for example a country

receiving two high scores for subsidy/

high tax free pricing of both super gasoline

and diesel. As such, the super gasoline

and diesel indicators combine to form a

mini-index within the economic growth and

development basket, and this mini-index

is allocated equal weighting with the other

indicators.

Indicator

weight

Indicator code

0.25 ENINTENS

0.125 SUPGASPRICE

0.125 DIESELPRICE

0.25 ELECPRICEIND

0.125 FUELIMPORTSGDP

0.125 FUELEXPGDP

0.2

0.2 NO2

ALTNUCENINCLBIO

0.2 CO2HEATELEC

0.2 PM10

0.2 AVCARLPKM

0.2 ELECRATE

0.2 QUALELEC

0.2 POPSOLFUELS

0.2 ENIMPORTS

0.2 DIVTPES

Where a country’s scores across two

similar indicators were likely to run

orthogonal to one another (for instance

across the fuel imports and exports as a

share of GDP indicators), the weights were

again “diluted” so as to avoid a narrower

statistical distribution of scores across the

basket and to offset any double stacking

of scores. Similarly, the fuel imports and

exports as a share of GDP indicators are

combined to form a mini-index within

the economic growth and development

basket, and this mini-index is allocated

equal weighting with the other indicators.

The Global Energy Architecture Performance Index Report 2013

51


Table 5: Raw scores per indicator

* “C” in this column designates confidential information sourced from the International Energy Agency (IEA) that cannot be distributed publically.

52 The Global Energy Architecture Performance Index Report 2013


8. Methodological Addendum

The Global Energy Architecture Performance Index Report 2013

53


54 The Global Energy Architecture Performance Index Report 2013


8. Methodological Addendum

The Global Energy Architecture Performance Index Report 2013

55


Indicator Metadata

Table 6 provides the metadata for each

of the selected indicators. This includes

the title, the rationale for each indicator’s

inclusion in the EAPI, the year for which

the latest data is available, the source of

the data, the time series it covers, any

technical notes relating to the construction

of the indicator including nominators,

denominators and unit; and the URL for

the source data (if available).

The additional notes column includes

further detail (as necessary) regarding the

normalization of indicator data, including:

– Low performance thresholds

– Target/ceiling values

– Rationale for threshold and ceiling

values

– Any transformation to raw data

required

56 The Global Energy Architecture Performance Index Report 2013

Table 6: Indicator metadata

Technical notes URL Additional comments*

Sources Time

series

Title Rationale for inclusion Latest

data

No specific global targets for energy

intensity. The Kyoto Protocol sets targets

for total greenhouse gas emissions

for Annex I (developed) countries. The

European Council for an Energy Efficient

Economy recommends 20% reductions

by 2020 in energy intensity across

many different eurozone countries, but

not universally. The low performance

distribution threshold is based on the

lowest performance value for 2010.

databank.worldbank.

org/ddp/home.do?S

tep=12&id=4&CNO=2

Energy use per PPP GDP is the

kilogram of oil equivalent of energy use

per constant PPP GDP. Energy use

refers to use of primary energy before

transformation to other end-use fuels,

which is equal to indigenous production

plus imports and stock changes, minus

exports and fuels supplied to ships and

aircraft engaged in international transport.

PPP GDP is gross domestic product

converted to 2005 constant international

dollars using purchasing power parity

rates. An international dollar has the same

purchasing power over GDP as a US

dollar has in the United States.

1980-

2009

2010 World Bank and

International

Energy Agency

Provides an indication of the country-level

efficiency of energy use, and whether

there is an opportunity to improve energy

availability by reducing energy intensity

GDP per unit of

energy use (PPP

US$ per kg of oil

equiv.)

The target value is based on the highest

performance value for 2010, with the

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.

No data available for target setting. The

low performance distribution threshold is

based on the lowest performance value

for 2010. The target value is 0%.

databank.worldbank.

org/ddp/home.

do?Step=12&id=4&

CNO=2

Fuel Imports, US$ at current prices. Fuel

imports include mineral fuels, lubricants

and related materials as classified

under the Standard International Trade

Classification, Revision 3, Eurostat. GDP is

the total market value of all final goods and

services produced in a country in a given

year, equal to total consumer, investment

and government spending, plus the value

of exports, minus the value of imports,

calculated using today’s dollar value.

1980-

2010

2010 World Trade

Organization and

World Bank

Provides an indication of the extent to

which the energy sector has a negative

impact on economic growth. Import bill

is calculated in US$ at current prices and

is based on the import of fuels (mineral

fuels, lubricants and related materials) then

divided by country GDP in US$ (current),

the monetary value of all the finished

goods and services produced within a

country’s borders on an annualized basis

Fuel imports

(% GDP)

stat.wto.org/Home

/WSDBHome.aspx

?Language=E


The low performance distribution

threshold is based on the lowest

performance value for 2010: 0.

The target value is 1.

www.giz.de/

Themen

/en/29957.htm

Price per litre of super gasoline in US

cents. All prices relate to November 2010

data. Prices reflect Brent crude price of

US$ 81 per barrel (reference day 16 to 18

November 2010). All pricing data related

to GIZ database. Score derived from

the level of a country’s deviation from

a threshold price, set as the threshold

point between high taxation and very

high taxation per fossil fuel, per year.

These boundaries are defined by GIZ in

their International Fuel Prices report. A

very high subsidy equates with a retail

price of gasoline and diesel below price

of crude oil on world market. A subsidy

is indicated by a price of gasoline and

diesel above the price of crude oil on the

world market and below the price level

of the United States. Cost-covering retail

prices incl. industry margin, VAT and

incl. approx. US$ 0.10. This fuel price

without other specific fuel taxes may be

considered as the international minimum

benchmark for a non-subsidized fuel.

Taxation is indicated by a price of

gasoline and diesel above price level of

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.

2004-

2010

2010 GIZ (Gesellschaft

für Internationale

Zusammenarbeit),

the German

development

agency

Fuel subsidies are a burden on economies

and encourage wasteful fuel use. Aligning

fossil fuel pricing with market prices

would foster greater economic and

energy efficiency. Fossil fuel taxation is a

powerful revenue tool for, most notably,

the transport sector. But very high taxation

burdens the consumer and drives inflation

as costs rise for transporting goods

around a country, and revenue generated

from taxation may be elastic over the

long-term as consumers adjust their

consumption in light of higher prices. The

EAPI therefore proposes that a high tax

rate is the optimal pricing mechanism, on

a global basis and excluding consideration

of other externalities associated with fossil

fuel consumption. A very high subsidy

is therefore penalized, as is very high

tax, though not equally – the EAPI uses

an offset bell-curve that measures the

standard deviations from the target fuel

price (which is between the taxation and

very high taxation price bands). The price

differential between high subsidy and high

tax is greater than that between high tax

and very high tax.

Super gasoline

Level of price

distortion through

subsidy or tax

(index 0-1)

The low performance distribution

threshold is based on the lowest

performance value for 2010: 0.

The target value is 1.

www.giz.de/

Themen/en/29957.

htm

Price per litre of diesel in US cents. All

prices relate to Nov. 2010 data. Prices

reflect Brent crude price of US$ 81 per

barrel. All pricing data related to GIZ

database. Score derived from level of

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.

2004-

2010

As above 2010 GIZ (Gesellschaft

für Internationale

Zusammenarbeit),

the German

development

agency

Diesel Level of

price distortion

through subsidy or

tax (index 0-1)

8. Methodological Addendum

The Global Energy Architecture Performance Index Report 2013

57


Technical notes URL Additional comments*

Sources Time

series

Title Rationale for inclusion Latest

data

No specific targets available. The low

performance distribution threshold is

based on the lowest performance value

for 2010. The target value is based on the

highest performance value for 2010, with

the spread adjusted for Italy’s high and

outlying result.

www.eia.gov/

electricity

/data.cfm

Energy end-use prices including taxes,

converted using exchange rates.

2001-

2009

2009 Energy

Information

Administration,

Monthly Energy

Review, May

2010, Table 9.9.

Other Countries

-- International

Energy Agency

(IEA), Energy

Prices & Taxes

- Quarterly

Statistics, Fourth

Quarter 2009,

Part II, Section

D, Table 22, and

Part III, Section

B, Table 19,

2008.

Energy consumption is strongly correlated

to GDP, and lower energy prices are key

drivers of economic growth, with electrical

generation and other energy efficiencies

good proxies for the Solow residual,

describing technological progress. The

EAPI therefore uses this data as an

indicator of low energy prices having a

positive impact on growth. Subsidy data

is unavailable across this data point,

meaning that electricity prices must be

assumed to be the product of a liberal

energy market pricing mechanism at

an aggregate level, although in reality, a

larger portion of some countries’ bills may

be determined by political or regulatory

decisions warranting a subsidy, and a

smaller share depending on the actual

supply and demand conditions

Electricity Prices for

industry (US$/kWh)

www.iea.org/stats/

prodresult.

asp?PRODUCT

=Electricity/Heat

Price includes state and local taxes,

energy or demand charges, customer

service charges, environmental

surcharges, franchise fees, fuel

adjustments, and other miscellaneous

charges applied to end-use customers

during normal billing operations. Prices

do not include deferred charges, credits

or other adjustments, such as fuel or

revenue from purchased power, from

previous reporting periods.

58 The Global Energy Architecture Performance Index Report 2013

NB: The International Energy Agency (IEA)

maintains annual and quarterly time series

of this price data that begin in 1978, and

that also include the most recent quarterly

prices. Information on purchasing this

data online from the IEA is available at:

data.iea.org/ieastore/default.asp

No data available for target setting. The

low performance distribution threshold is

based on the lowest performance value

for 2010. The target value is fixed at

the highest value for the 2010 dataset,

54%. The inclusion of this indicator was

frequently debated by the team, given

the well understood effects of indirectdeindustrialization,

the symptoms of

which include the decline in productivity

of national manufacturing sectors due

to the currency strengthening effect

of natural resource endowment and

exploitation, and the following shift of

labour resources away from the nontradable

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.

databank.worldbank.

org/ddp/home.do?

Step=12&id=4&CNO

=2

Fuel exports, US$ at current prices. Fuel

exports include (mineral fuels, lubricants

and related materials) as classified

under the Standard International Trade

Classification, Revision 3, Eurostat. GDP

is the total market value of all final goods

and services produced in a country in

a given year, equal to total consumer,

investment and government spending,

plus the value of exports, minus the value

of imports, calculated using today’s dollar

value.

1980-

2010

2010 World Trade

Organization and

World Bank

Provides an indication of the extent to

which the energy sector has a positive

contribution to economic growth. Export

bill is calculated in US$ at current prices

and is based on the export of fuels

(mineral fuels, lubricants and related

materials) then divided by country GDP

in US$ (current), the monetary value

of all the finished goods and services

produced within a country’s borders on an

annualized basis.

Fuel exports

(% GDP)

stat.wto.org/Home/

WSDBHome.aspx?

Language=E


The low performance distribution

threshold is based on the lowest

performance value for 2010. The target

value is based on expert opinion,

stipulating that an energy system 100%

reliant on alternative and nuclear energy

represents the ideal.

www.worldenergy

outlook.org/

Alternative energy includes hydropower

and nuclear, geothermal, biomass and

solar power, among others.

1980-

2010

2011 International

Energy Agency

Alternative and nuclear energy production

reduces reliance on fossil fuels, which

produce greenhouse gases and pollute

the atmosphere. Inclusion of this indicator

supposes that nuclear energy is also

environmentally preferable to fossil fuel

usage given the higher volume of negative

environmental externalities associated with

fossil fuel mining, power production and

emissions.

Alternative and

nuclear energy

(% of total energy

use, incl. biomass)

No universal targets applicable. The low

performance distribution threshold is

based on the lowest performance value

for 2010, with outliers above 53% of

total emissions automatically earning a

score of 0. The target value is 0% of total

emissions.

databank.world

bank.org/ddp/

home.do?Step=

12&id=4&CNO=2

Energy processes produce nitrous oxide

emissions through the combustion of

fossil fuels and biofuels.

1990-

2005

2005 World Bank and

International

Energy Agency

Nitrous oxide is both an ozone-depleting

compound and greenhouse gas, and

is now the largest ozone-depleting

substance emitted through human

activities. It is one of a group of highly

reactive nitrogen oxides (NOx). NO forms

2

quickly from emissions from cars, trucks

and buses, power plants, and off-road

equipment. In addition to contributing

to the formation of ground-level ozone,

and fine particle pollution, NO is linked

2

with a number of adverse effects on the

respiratory system.

Nitrous oxide

emissions in energy

sector (thousand

metric tonnes of

CO equivalent)/total

2

population

The target value of 0% represents

the ideal state of CO emissions from

2

electricity and heat. The low performance

distribution threshold is 0.000016 metric

tonnes per capita.

databank.worldbank.

org/ddp/home.do?

Step=12&id=4&CNO

=2

CO emissions from electricity and heat

2

production equal the sum of the IEA’s

categories of CO emissions: main

2

activity producer electricity and heat,

which contains the sum of emissions

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 CO emissions from fuel

2

combustion, emissions from own on-site

use of fuel in power plants (EPOWERPLT)

are also included.

1980-

2008

2008 World Bank and

International

Energy Agency

Carbon dioxide emissions from electricity

and energy production contribute to

climate change and ensuing environmental

degradation.

CO emissions from

2

electricity and heat

production, total/

total population

The target value of 0 represents the ideal

state of PM10 country-level particulate

emissions. The low performance

distribution threshold is based on the

20 μg/m3 annual mean stipulated

by the World Health Organization’s

recommendations – scores over this

threshold score 0.

databank.worldbank.

org/ddp/home.o?Step

1990-

2009

=12&id=4&CNO=2

2009 World Bank

(World Bank,

Development

Research Group

and Environment

Department)

Suspended particulates contribute

to acute lower respiratory infections

and other diseases such as cancer.

Finer particulates lodge deep in lung

tissue, causing greater damage than

coarser particulates. Annual average

concentrations of greater than 10

micrograms per cubic metre (μg/m3) are

known to be injurious to human health.

PM10, country level

(micrograms per

cubic metre)

8. Methodological Addendum

Particulate matter concentrations refer

to fine suspended particulates less than

10 microns in diameter (PM10) that are

capable of penetrating deep into the

respiratory tract and causing significant

health damage. Data for countries and

aggregates for regions and income

groups are urban-population weighted.

The estimates represent the average

annual exposure level of the average

urban resident to outdoor PM10. The

state of a country’s energy technology

and pollution controls is an important

determinant of PM10 concentrations.

The Global Energy Architecture Performance Index Report 2013

59


Technical notes URL Additional comments*

Sources Time

series

Title Rationale for inclusion Latest

data

In its 2007 review of the EU CO and 2

cars strategy, the European Commission

announced that the EU objective of 120

g CO /km (5.2 l/100 km or 45.6 mpg)

2

by 2012 must be met. A resolution was

formally adopted to enforce mandatory

fuel efficiency standards of 120 g/km (5.2

l/100 km or 45.6 mpg), with carmakers

achieving 130 g/km (5.6 l/100 km or 42

mpg) through technical improvements

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

the EU target. The low performance

distribution threshold is based on the

lowest performance values from the 2010

data range.

www.worldenergy

outlook.org/

Measure of the average litres of gasoline

equivalent used per hundred kilometres

driven, indicating the efficiency of a

country’s transport system. Passenger

cars in this instance need to stand as

proxy for the entire transport sector, given

the paucity of global data across this

indicator for both light-duty and heavyduty

vehicle fleets.

1990-

2010

2010 International

Energy Agency,

by special

arrangement

with the World

Economic

Forum

The transport sector is one of the most

important areas requiring attention in

improving environmental sustainability.

Over 50% of oil use around the world is

for transport, and nearly all the recent

and future expected growth in that use

comes from increased transport activity

(source: International Energy Agency).

Fuel efficiency directly affects emissions

causing pollution by affecting the amount

of fuel used.

Average fuel

economy for

passenger cars

(l/100 km)

60 The Global Energy Architecture Performance Index Report 2013

United Nations Secretary-General Ban

Ki-moon’s Advisory Group on Energy

and Climate Change stipulated a target

to achieve universal access to modern

energy services by 2030. The EAPI has

therefore set a target of 100% for this

indicator. The target value represents the

ideal state of country-level electrification

rates. The low performance distribution

threshold is based on the lowest

performance values from the 2010 data

range.

en.openei.org/wiki/

IEA-Electricity_

Access_Database

The IEA data reflects urban and

rural electrification levels collected

from industry, national surveys and

international sources, assessed in

assistance with World Population

Prospects - The 2011 Revision, published

by the United Nations (UN). Additionally,

UN data has been adjusted with data

from the IEA Statistics Division in order

to get the most accurate demographic

estimate for 2009.

2007-

2009

2009 International

Energy Agency,

Electricity

Access

Database

Over the last few years, there has been

international focus on the issue of access

to energy. High global energy and food

prices have shown the impact on both

the global economy and the world’s poor.

In addition to the UN General Assembly

adopting “sustainable energy for all” as an

annual theme, the UN Advisory Group on

Energy and Climate Change has called

for universal access to modern energy

services by 2030.

Electrification

rate (%)

No specific targets available due to

qualitative nature of data range. The low

performance distribution threshold is

based on the lowest performance value

for 2010. The target value is based on the

highest performance value for 2010.

www.weforum.

org/issues/globalcompetitiveness

Survey response to: “How would you

assess the quality of the electricity supply

in your country (lack of interruptions and

lack of voltage fluctuations)?”

2005-

2011

2011 World Economic

Forum, Global

Competitiveness

Index

Survey participant responses to: “How

would you assess the quality of the

electricity supply in your country (lack

of interruptions and lack of voltage

fluctuations)?” [1 = insufficient and suffers

frequent interruptions; 7 = sufficient &

reliable] | 2009-10 weighted avg.

Quality of electricity

supply (1-7)

[1 = insufficient and suffers frequent

interruptions; 7 = sufficient and reliable] |

2009–10 weighted average

This indicator correlates highly with GDP

levels. For literature relating to targets, the

EAPI focussed its analysis on developing

country policy targets in order to reflect

the status quo. The Forum of Energy

Ministers of Africa has committed to

providing access to modern cooking

energy to 50% of the rural poor. In 2005,

the Economic Community of West African

mdgs.un.org/unsd/

mdg/SeriesDetail.

aspx?srid=712

Solid fuel information is either

extrapolated (single year data point),

averaged (two or more years that are

spaced four or fewer years apart) or a

linear regression is performed when solid

fuel use information is available for two

or more years that are spaced at least

five years apart. All countries with a gross

national income (GNI) per capita above

1990-

2007

2007 United Nations

Statistics

Division, The

Millennium

Development

Goals Database

The number of people who use traditional

biomass, such as wood and manure, is

projected to rise from 2.7 billion today, to

2.8 billion in 2030. According to estimates

from the World Health Organization (WHO)

and International Energy Agency (IEA) it

is estimated that household air pollution

from the use of these traditional sources of

biomass in stoves with inadequate

% of population

using solid fuels for

cooking


States (ECOWAS) committed to providing

modern cooking energy to 100% of the

rural population (corresponding to more

than 300 million people). The UN pledge

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


EAPI Data

Limitations – A

Global Rallying Call

The EAPI team wishes to flag to the

international energy community the stark

gaps it has found in global energy-related

data banks in a bid to raise awareness and

take action.

The EAPI is missing critical facets of energy

system performance due to lack of data.

A means to build these data for on-going

analysis and improve future iterations of the

tool is suggested here. The next version of

the Index should focus on building out the

indicators that have been missed in this

version and that are recorded in table 7.

Of special interest would be the creation

of an indicator that accurately reflects the

impact of the energy sector on a country’s

domestic water resources (see Pull-out:

The Criticality of Better Understanding the

Water/Energy Nexus), an indicator that

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).

62 The Global Energy Architecture Performance Index Report 2013

As part of this effort, the EAPI is reaching

out to international organizations that may

have data sources that could be used

to create these indicators and would

like to request that readers and partner

companies also contribute, wherever

possible. Please review table 7 carefully. If

you might be able to contribute any data or

advice that could go towards the creation

of one or more of the indicators listed,

please contact

espen.mehlum@weforum.org.

Excluded indicators

Table 7 shows exactly where there were

issues sourcing data or sufficient temporal

and geographic coverage, or an indicator’s

inclusion was rejected due to contravention

of the methodology.


Table 7: Indicators excluded or missing from the EAPI 2013 and rationale

Element of the

energy triangle

Economic

growth and

development

Environmental

sustainability

Energy access

and security

Excluded or missing

indicators

Wholesale and retail gas

prices, by country

Retail electricity prices, by

country

Energy use per unit of

industrial output, per capita

by country

R&D spend (energy specific)

by country

Energy industry-related

employees (per country)

Water impact of energy

sector

Toxic waste deposits (incl.

radiation waste) by country

Average building efficiency

(Btu per sq. foot-hour

potentially) by country

Average building efficiency

(Btu per sq. foot-hour

potentially) by country

Average electrical grid

reserve capacity by country

Spend on grid infrastructure

as % of GDP by country

Diversification of import

counterparts by country

Number of energy-specific

free trade agreements signed

Initial rationale for inclusion in the EAPI Reason for exclusion

Energy consumption is strongly correlated with GDP, and

lower energy prices are key drivers of economic growth. The

EAPI therefore uses this data as an indicator of low energy

prices having a positive impact on growth.

Energy use per unit of industrial output, per capita by country

provides an indication of the country-level industrial efficiency

of energy use, and whether there is an opportunity to improve

energy availability by reducing energy intensity.

R&D combines with human capital to drive economic growth

and development. A large volume of literature proposes a

solid rate of return to R&D investment as multiplied by the

share of its percentage in output, though the social rates of

return (i.e. of net societal benefit) may sometimes be greater

than private rates of return (i.e. to business).

With an average permanent staff salary of more than

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.

Energy production is, more often than not, highly reliant on

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.

Nuclear energy in a country’s energy mix is an alternative

energy source that avoids fossil fuel related air pollution and

reduces CO emissions. But nuclear waste, for which no

2

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.

Across the globe, residential and commercial buildings are

significant users of primary energy (accounting for 10.6% of

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

Across the globe, residential and commercial buildings are

significant users of primary energy (accounting for 10.6% of

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

Utilities should retain reserve margins of extra generating

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.

A 3-year rolling average of annual investment in grid

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.

Having a variety of import counterparts means market risk

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.

Development of free market fundamentals strengthens an

energy sector, enabling energy security through increased

trade and growth while ensuring that domestic resources can

be developed and extracted.

8. Methodological Addendum

Data not available on global scale

Data not available on global scale

Data not available on global scale.

Also, where data was available, it

was only as direct funding of R&D –

other elements including investment

in human capital and talent, patent

protection and research linked tax

benefits could not be accounted for.

Data not available on global scale

Data not available on global scale

Selected countries covered by the

International Atomic Energy Agency,

but no data on global scale

Data not available on global scale

Data not available on global scale

Data not available on global scale

Data not available on global scale

Data not available on global scale

Data not available on global scale

The Global Energy Architecture Performance Index Report 2013

63


Pull-out: The Criticality of Better Understanding the Water/Energy Nexus

Energy production is often highly reliant

on the ample provision of water. Climatic

changes in rainfall and intensified

water use could have profound supply

security implications for water-intensive

methods of energy generation 116 such

as hydropower, which currently supplies

17% of global electricity and is a potential

carbon-free energy source for much of

Sub-Saharan Africa. The provision of

energy to households and industry is

becoming steadily more water intensive on

a global scale (see figure 25). A case for

consideration is the Arabian Gulf. With only

1% of the world’s renewable freshwater

available for exploitation, countries in this

region – collectively large energy producers

rely heavily on desalinated seawater,

accounting for more than half the world’s

desalination capacity. 117

116 McKinsey Global Institute, Resource Revolution: Meeting

the world’s energy, materials, food, and water needs,

November 2011.

117 Arab Forum for Environment and Development, Water:

Sustainable Management of a Scarce Resource, 2010.

64 The Global Energy Architecture Performance Index Report 2013

Over-abstraction of water for energy

production is a critical issue for waterstressed

countries.

From an economic perspective, water for

energy use has historically been cheap,

with almost a complete absence of price

signals reflecting the true cost implication

of abstraction, trade and supply. This has

had environmental implications. Overabstraction

relating to resource extraction

activities and energy production is a critical

issue in places where water scarcity is

a problem, such as Australia, India and

MENA. As the World Energy Council notes

Figure 26: Global water consumption rates for electric power generation plants

Source: World Energy Council, 2011; US Department of Energy - National Energy Technology Laboratory (NETL) 2008

Water consumption (billion m3)

120

100

80

60

40

20

0

2005 2020 2035 2050

in its 2011 report Water for Energy, the

local nature of water (and the resulting

lack of the ability to match water demands

with needs) is a critical concern in a world

where “less than ten countries hold 60% of

Earth’s available freshwater: Brazil, Russia,

the People’s Republic of China, Canada,

Indonesia, the United States, India,

Colombia, and the Democratic Republic of

Congo.”

Wind and solar

Hydro and geothermal

Nuclear

Biomass and wastes

Thermal


The goal in building the EAPI was to

calculate an average water requirement

per power generation technology (gallons/

MWh) and then divide against the power

generation profile for each country. A

final score in terms of an energy system’s

impact on a country’s water resources

could be derived via comparison with

the water scarcity or stress score

for that country, as detailed by the

Aquastat database or the Environmental

Figure 27: Water intensity of US electricity generation by plant technology

Source: Source: Harvard Energy Technology Innovation Policy Research Group, 2010

*IGCC: integrated gasification combined cycle.

gallons/MWh

800

700

600

500

400

300

200

100

0

Once-through

Closed-loop

Dry

Once-through

Closed-loop

Steam turbine (coal, gas, biomass) Steam turbine (nuclear) Combined-cycle gas turbine IGCC* (coal)

Vastly different water requirements per

technology and lack of precise data on

the type of technologies used (or plant

size) per country make an aggregate

analysis based on the approximate power

generation technology profile of a country

too speculative, given that these factors

are often determined by the location

of plant (i.e. next to water or not) and

size, not to mention cost restrictions.

Though comprehensive data for electricity

generation by fuel and technology type

for a selection of Advanced Economies

was sourced from the International Energy

Agency, the EAPI team could not find data

for the vast majority of countries in the

EAPI 2013.

Performance Index (Yale) though with the

caveat that extraction rates are notoriously

difficult to accurately assess due to the

local nature of water resources and the

lack of data around their location and type.

Power generation technology profiling was

difficult. As figure 26 shows, there is an

enormous difference (in gallon withdrawn

or consumed per MWh generated terms)

between the different types of power

Max

Average

Min

Dry

Once-through

Closed-loop

The EAPI team advocates the formation

of a database that records the power

generation sector’s impact on country

water stress.

An understanding of the power generation

sector’s impact on country water stress

is a priority indicator, and the EAPI is

significantly weakened by its absence.

The solution? This data does not appear

to exist in any collated form, but there

are many examples from within the

energy context that can be looked to for

models to assemble and disseminate

such information. Institutions such as

Carbon Manufacturing for Action 118 retain

global data on power plant outputs,

energy intensity and CO 2 emissions. The

Joint Organisations Data Initiative 119 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

worldwide.

119 The Joint Organisations Data Initiative (JODI) oil database

collates oil market data from its member countries by means

of a harmonized questionnaire on 42 key oil data points, and

was born out of a perceived lack of transparency relating to

critical oil market statistics.

Dry

Closed-loop

8. Methodological Addendum

plant technology steam turbine (gas/

coal/biomass), steam turbine (nuclear),

combined cycle gas turbine, integrated

gasification combined cycle (coal) and,

within those, different cooling technologies:

closed loop/once through/dry – and this is

in the US alone.

an example of a successful data sharing

model based on mutual benefit for all

parties. Models such as the Global Water

Tool for Power Utilities (developed by the

World Business Council for Sustainable

Development 120 ) could be built as online

portals and harnessed to collect the

required data from power generators while

providing a useful benchmarking tool for

businesses.

Managing the water/energy nexus is critical

to meeting the three imperatives of the

energy triangle. The formation of a global

database would be highly beneficial and

allow for an accurate assessment of the

energy sector’s contribution to water stress

for a comprehensive set of countries.

120 The World Business Council for Sustainable

Development’s Global Water Tool for Power Utilities enables

generators to calculate water consumption, efficiency

and intensity metrics for benchmarking and performance

improvement, and establishes relative water risks in a

company’s portfolio to prioritize action.

The Global Energy Architecture Performance Index Report 2013

65


Contributors and

Data Partners

Contributors

World Economic Forum

– Roberto Bocca, Senior Director, Head

of Energy Industries

– Espen Mehlum, Associate Director,

Head of Knowledge Management and

Integration, Energy Industries

– Thierry Geiger, Associate Director,

Competitiveness Team

– Roberto Crotti, Quantitative

Economist, Competitiveness Team

Project Advisers: Accenture

– Arthur Hanna, Managing Director,

Energy Industry

– James Collins, Senior Manager,

Energy Strategy

– Mauricio Bermudez-Neubauer, Head

of Carbon Markets

– Mike Moore, Project Manager, New

Energy Architecture, Accenture;

seconded to the World Economic

Forum

– Freddie Darbyshire, Lead Author,

Accenture; seconded to the World

Economic Forum

66 The Global Energy Architecture Performance Index Report 2013

Data Partners

The World Economic Forum’s Energy

Industries Team is pleased to

acknowledge and thank the following

organizations as its valued Data Partners,

without which the realization of the Energy

Architecture Performance Index 2013

would not have been feasible:

France

The International Energy Agency, Paris

– Dr Fatih Birol, Chief Economist and

Director, Global Energy Economics

Directorate

– Pawel Olejarnik, Senior Energy

Analyst, Global Energy Economics

Directorate

United Kingdom

– Bloomberg New Energy Finance,

London

– Michael Liebreich, Chief Executive

– William Young, Chief of Staff

Expert Panel

The EAPI was developed with an Expert

Panel of advisers, including:

– Manpreet Anand, Senior Policy

Adviser, Chevron Corporation

– Juergen Arnold, Chief Technology

Officer, ESSN, EMEA, Hewlett-

Packard Company

– Gabriel Barta, Head of Technical

Coordination, International

Electrotechnical Commission

– Morgan Bazilian, Deputy Director,

Joint Institute for Strategic Energy

Analysis (JISEA), US National

Renewable Energy Laboratory - NREL

– Mauricio Bermudez Neubauer, Head

of Carbon Markets, Accenture

– Suman Bery, Chief Economist, Royal

Dutch Shell

– Lin Boqiang, Director, China Center for

Energy Economics Research, Xiamen

University

– Daniel Esty, Commissioner,

Connecticut Department of Energy

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


The World Economic Forum

is an independent international

organization committed to

improving the state of the world

by engaging business, political,

academic and other leaders of

society to shape global, regional

and industry agendas.

Incorporated as a not-for-profit

foundation in 1971 and

headquartered in Geneva,

Switzerland, the Forum is

tied to no political, partisan

or national interests.

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