Top 10 countries best prepared for the future of energy

The Global Energy Architecture Performance Index Report 2014, released this week, ranks the energy systems of 124 countries from three perspectives: economic growth and development; environmental sustainability; and energy access and security. We call these three perspectives the “energy triangle”.

The purpose of the Index is to help countries position themselves for the widespread transition that is expected in global, regional and national energy systems.

Here are the 10 countries that are best prepared for this transition:

1. Norway – 0.75

With a score of 0.75 out of 1, Norway is the top performer across the Index. Norway’s success arises mainly from two factors: its vast natural resource endowment and its focus on developing renewable, sustainable energy. These strengths make the country the highest performer in energy access and security (0.96) and explain its high scores across the other dimensions of the energy triangle.

2. New Zealand – 0.73

New Zealand’s energy system is characterized by the diversity of its total primary energy supply (TPES) and the development of renewable energy sources. Its liberalized energy market has delivered a relatively high level of energy security and economic prosperity.

3. France – 0.72

Energy policy in France has focused on balancing environmentally sustainable energy production, affordability of energy and the competitiveness of its industry. France has been at the forefront of addressing concerns over nuclear energy by creating a framework for managing radioactive waste and materials. However, France aims to reduce the contribution of nuclear to 50% of power generation by 2025, with plans to diversify into renewable energy sources and fiscal disincentives for fossil fuel consumption.

4. Sweden – 0.72

Sweden receives its best score for environmental sustainability, ranking in second place behind France. Sweden’s energy sector is defined by its nuclear generation (though high taxes are imposed on the nuclear industry) and a policy focus on renewable energy. In 2009, Sweden’s Climate and Energy Policy outlined the goals of a fossil-fuel independent vehicle fleet by 2030 and net zero greenhouse gas emissions by 2050. Meanwhile, Sweden leads the way in transport, with a blend of fiscal incentives for the purchase of flexible-fuel vehicles and congestion charge systems in urban centres.

5. Switzerland – 0.72

Switzerland’s strong performance across the energy triangle is largely a result of its nuclear-generating capacity, which contributes to low-carbon, affordable energy. However, in 2011, Switzerland’s Federal Council launched its Energy 2050 strategy that involves both the gradual phasing out of nuclear power and the aggressive target of reducing greenhouse gas emissions by one-fifth by 2020.

6. Denmark – 0.71

Denmark is the best EU performer in both the economic growth and development category and the energy access and security category. It has rolled out a number of policies for renewable energy, energy efficiency and climate change, with the long-term energy objective of becoming completely independent of fossil fuels by 2050.

7. Colombia – 0.70

Colombia’s position on the Index is largely due to the transformation of its oil and gas sector. Following a steady decline in hydrocarbon production up until 2008, Colombia has seen a dramatic increase in production thanks to successful investment in the development of its fields. This affects the country’s performance on energy security and on economic growth, with production making Colombia self-sufficient in natural gas. The export of gas to neighbouring Venezuela has also helped generate revenue.

8. Spain – 0.67

Spain is the fifth largest energy consumer in Europe and, thanks to recent investment in wind and solar power, one of the region’s largest producers of electricity from renewables. However, the sizeable investment and incentive framework for renewables, coupled with the economic downturn, is making it more difficult for the country to maintain its competitiveness in the power-generating sector. It also poses challenges for keeping prices affordable for customers. Addressing the impact of changes to subsidies and investment in renewables are key areas Spain needs to address.

9. Costa Rica – 0.67

Costa Rica, alongside Colombia, is one of only two upper middle-income countries to rank within the top 10 in the Index. Costa Rica has established itself as a world leader in renewable energy, with considerable investment in developing and expanding renewable energy capacity, especially wind power. Costa Rica achieves 52% of its TPES from renewables, with over 99% of electricity output produced by renewable energy sources, predominantly hydro.

10. Latvia – 0.66

Latvia’s success is largely driven by the decline in the overall energy intensity of its economy. This is thanks to the liberalization of its energy sector and targeted initiatives for improvements in energy efficiency. Like most Eastern European countries, Latvia is almost entirely dependent on Russia for its fossil fuel supply. To mitigate the risks of over-dependence on a single supplier, Latvia has diversified its electricity sector to derive 54% of power from hydro and another 3% from wind and biomass.

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Author: Roberto Bocca is Senior Director, Head of Energy Industries at the World Economic Forum.

Image: A photographer takes pictures as water pours from river outlet tubes during an experimental high flow release from the Glen Canyon Dam in Page, Arizona November 19, 2012. REUTERS/Bob Strong