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Are you ready for the energy transition?

Analysts at the World Economic Forum (WEF), together with Mckinsey&Company, prepared the Energy Transition Index (ETI) 2020, a ranking of states’ power production readiness for the transition to renewable energy. Russia, ranked the 70th last year, now dropped down to the 80th line, although the document attributed it as a “potentially promising” country.

WEF experts ranked the “leading actors in the zero emissions race.” The Energy Transition Index  2020 assesses the relationship of energy systems and economic development of 115 countries by forty indicators, including environmental sustainability and security, economic development, growth in renewable generation, and clean-energy jobs.  

Over the past five years, the World Economic Forum has been carrying out annual assessments of the dynamics of energy “greening” as part of the “Promoting Effective Energy Transfer” initiative. Interest in this area is not accidental: the quantity and quality of energy consumed is traditionally a reliable indicator of economic development. As conceived by the authors, the ETI allows those determining policy and economic development “to chart the course for a successful transition to the energy of the future.” 

 

The authors of the study note the speedy transformations that have taken place in the last decade: countries are moving to the production, supply and consumption of clean energy, “coal-fired power plants ‘retire,’ while the use of natural gas and renewable energy sources are going up.”  

  

The ETI data show that over the past 5 years, 94 out of 115 countries have improved their overall indicators of readiness for the energy transition. But the degree and quality of changes, as and the schedule for achieving net zero emissions, vary widely between countries, and in general, today’s rates are insufficient to achieve the climate goals fixed in the Paris Agreement. 

 

For the third year in a row, Sweden leads the ETI ranking. Switzerland and Finland are right after it. Of the G20 countries, only France and the United Kingdom got to the top 10. “China, India and Italy have made consistent improvements in their overall ETI since 2015, while only modest progress has been recorded in Russia, Japan, South Korea and Germany. The results in the U.S., Canada, Brazil and Iran either remained unchanged or got worse,” experts claimed. 

 
Representatives of the World Economic Forum conclude that high ranking positions are mostly held by countries with a low level of dependence on imported energy, relatively small share of subsidies for fossil fuels and a “strong political commitment to energy conversions for the achievement of climate goals”. 
 
Russia has slightly improved its performance, but compared to other countries, it went down in the ranking as contrasted with last year. The reason for this is that despite the ratification of the Paris Agreement, which was positively perceived by the international community, the Russian Federation remains to be a country heavily dependent on fossil fuels. The report of public organizations Oil Change International и Friends of the Earth U.S. shows that after the Paris Agreement, Russia has annually allocated at least 191 billion rubles ($ 2.97 billion) of public funds for projects related to oil, gas and coal.  

 

Comparing the readiness for an energy transition and the economic performance of various countries, ETI authors conclude that clean energy not only does no harm to the economy, but also makes it more sustainable, and this applies not only to traditionally stable industrialized countries, but also to poor developing ones. Experts say that the energy transfer and the introduction of renewable energy sources are mainly hindered not by lack of finances, but by the inertia of established energy systems. “Policy-makers must develop a solid foundation for energy transfer at the local, national and international levels that would protect citizens from various shocks, such as pandemics,” analysts conclude. 
 
“Whether or not the changing global energy order will be able to form new opportunities for acceleration?” the experts’ question is. “Society had to give up many goods and freedoms in order to collectively fight the global pandemic. In addition to uncertainty about the long-term consequences, COVID-19 has led to powerful real-time effects: a decrease in almost a third of world energy demand, unprecedented fluctuations in oil prices, delayed or suspended projects and investments, and uncertainty about the employment prospects of millions of workers in the energy sector.” 

 

“The coronavirus pandemic provides an opportunity to consider unorthodox intervention in the structure of energy markets and develop global cooperation for recovery that would accelerate the energy transition after the crisis,” says Roberto Bocca, head of the energy department at the World Economic Forum. “This giant restart gives us the opportunity to launch farsighted and long-term strategies leading to a diversified, safe and reliable energy system that will ultimately support the sustainable and equitable growth of the global economy.” 

 

Long before the COVID-19 crisis, representatives of the Russian Social and Ecological Union (RSoEU) spoke about the need for transformations in the Russian energy sector. In their Position,  they pointed out that “the trend of the country’s progress should be not only the development of a climate-friendly ‘green’ image of individual companies, but also the general ‘greening’ of the entire economy and all spheres of Russia’s life.”