Even as the global energy transition is plateauing due to equity challenges, major economies are showing significant progress.

The frontiers of the global energy transition are constantly shifting as countries attempt to emerge out of various health, geopolitical and economic crises. The “polycrisis” has forced countries to reallocate resources and implement measures to address near-term energy security and affordability constraints. It has also provided an opportunity to think about how various aspects of the “energy triangle” have evolved. Equity and inclusiveness evolved from focusing only on access to embracing sustained economic development. Security took a leap from ensuring supplies towards diversifying the energy mix. And sustainability now includes a wider form of clean energy beyond decarbonization, whereas transition readiness demands more focus on regulatory and financial environments. Considering the changing needs of the energy frontier, the Energy Transition Index (ETI) framework has been revised this year to incorporate a wider approach of balancing the three imperatives of the energy triangle - equity, security and sustainability - while harnessing transition enablers effectively.

The ETI benchmarks countries on their current energy system performance and provides a forward‑looking measure of transition readiness. Over the past decade, the global ETI scores improved by 10%, supported by an increase of 19% in transition readiness scores, but only a 6% increase in system performance scores. The Nordic countries (Sweden, Denmark, Norway and Finland) continue to maintain their top rankings, scoring highly on both system performance and transition readiness. A few countries, such as Kenya and Azerbaijan, jumped significantly in rank this year for making aggressive efforts towards transition readiness by improving their regulatory environment and infrastructure. Importantly, in the last decade, the world’s largest energy consumer, China, gained 43% – approximately double the global average – in its transition readiness scores, making its way into the top 20 as the only Asian country. This report spotlights certain countries accomplishing noticeable achievements or laying the groundwork for a robust energy transition (see section 6).

This edition of the report refocuses on the need for urgent action towards the transition. Despite making progress on decarbonization and improving on infrastructure, the world still falls short of achieving balanced progress on all aspects of the energy triangle. Thus, “transition momentum” has been incorporated as a measure to determine country progress on the system performance parameters. Only two countries – India and Singapore – are making advances on all aspects of energy system performance.

The window of opportunity for the energy transition is closing fast. The limited number of countries simultaneously advancing across all aspects of the energy triangle highlights the challenges that countries face in progressing along their energy transition pathways. The following themes emerge from analysing the drivers of past progress that can highlight the path for an accelerated transition:

The global average ETI score has increased each consecutive year over the last decade, but the growth has plateaued in the past three years, due to rising challenges to the equity and inclusiveness of the transition. Energy market volatilities resulting from macroeconomic and geopolitical developments over the past three years have led to extreme price shocks, exacerbating energy poverty and stalling energy access. High fuel prices have affected the cost competitiveness of energy intensive industries, and the rising subsidy burden poses a risk to economic growth. Low-income countries have been disproportionately affected, facing simultaneous challenges from fuel price inflation, food inflation and rising debt burden. While performance on environmental sustainability has grown the fastest and countries are prioritizing energy security after lessons from the energy crisis, inclusiveness and equity considerations need to be addressed for a robust and resilient transition.

With increasing populations and economic growth in developing countries, particularly China and India, the global demand for energy remains unfazed. Short-term effects from the energy crisis notwithstanding, all emerging economies show consistent improvement on transition readiness, performing better than the global averages over a longer-term horizon. The improvements in the growth of clean jobs, infrastructure development (including the addition of renewables capacity) and political commitments have been significant. An opportunity also lies in the cost effectiveness of implementing clean solutions in emerging economies, as the average cost of reducing emissions in these economies is estimated to be approximately half of that in advanced economies. All of this, however, must be accompanied by improving the energy intensity of the economy, while reducing the carbon intensity of the energy mix. Further, directing investments towards developing economies can help them boost acceleration.

The countries performing strongly on the equitable dimension have been able to manage affordability concerns due to less reliance on energy imports and cost reflective energy pricing. Oman, Canada, United States and Sweden are top scorers on this dimension. Chronic energy access challenges are reflected in the low scores of Democratic Republic of Congo, Zambia, Tanzania and Senegal on this dimension. The top scorers in the secure dimension are mainly advanced economies, such as United States, Australia and Estonia, followed by Malaysia, a developing country. All these countries have a highly diversified energy mix, minimal dependence on fuel imports and minimal interruptions in energy supply. The countries scoring the lowest are Lebanon, Jamaica and Dominican Republic, mainly because of challenges on the diversity of the energy mix, the need for energy imports and electricity losses. Latin America leads the chart on the sustainable dimension with Costa Rica, Paraguay and Uruguay, on account of abundant hydroelectric potential. Fossil fuel exporting countries Bahrain, Kuwait, Oman and Qatar score the lowest on this dimension, attributed to high energy and carbon intensities and a very low share of clean energy in the mix. These results infer that, irrespective of economic development, countries can harness different available resources to successfully transition on various aspects of the energy triangle.

Despite the fastest growth among the three dimensions of the energy triangle, the global average score on the sustainable dimension lags the scores of the equitable and secure dimensions on an absolute scale throughout the past decade. The silver lining, however, came in 2022 with investments in renewables reaching a record high of $1.3 trillion, a 19% increase from 2021 investment levels and a 70% increase from pre-pandemic levels in 2019. Around the globe, countries have added to their renewable capacities. One reason for this is the wide availability and maturity of renewable technologies. To increase the supply of clean energy and its associated technologies, the innovation landscape of clean energy solutions must be boosted, including alternative fuels, hydrogen, and carbon capture and sequestration.

With updated country commitments, global greenhouse gas emissions coverage increased from 69% to 77%. A combination of recent policies, such as the US Inflation Reduction Act, Japan’s Green Transformation programme, the European Union’s Carbon Border Adjustment Mechanism, and evolving mandatory and voluntary carbon markets, are accelerating clean energy supply and technology scalability, and promoting demand efficiency while allowing for transition-oriented economic growth. The transition trajectory hinges on the quality of implementing these policies to stimulate investments in enabling the transition infrastructure, while avoiding unintended consequences on energy equity and global trade. Increasing financing for a low-carbon energy system requires concerted efforts from governments, emphasizing a strong policy and price to ensure green investments offer an attractive risk-adjusted return.