World Energy Trilemma

Time to get real –

the case for
sustainable
energy policy
World Energy Council

Project Partner
OLIVER WYMAN
Time to get real – the
case for sustainable
energy policy
Officers of the World Energy Council World Energy Trilemma
Time to get real – the case for sustainable energy policy
Pierre Gadonneix
Chair Project Partner
OLIVER WYMAN
Abubakar Sambo
Vice Chair, Africa
Copyright © 2012 World Energy Council
Liu Tie’nan
Vice Chair, Asia
All rights reserved. All or part of this publication may be used or
Arup Roy Choudhury
reproduced as long as the following citation is included on each
Vice Chair, Asia Pacific & South Asia
copy or transmission: ‘Used by permission of the World Energy
Leonhard Birnbaum Council, London, [Link]’
Vice Chair, Europe
Published 2012 by:
José Antonio Vargas Lleras
World Energy Council
Vice Chair, Latin America/Caribbean
Regency House 1-4 Warwick Street
Taha Mohammed Zatari London W1B 5LT United Kingdom
Vice Chair, Special Responsibility for Middle East &
ISBN: 978 0 946121 18 2
Gulf States

Kevin Meyers
Vice Chair, North America

Joong-Kyum Kim
Vice Chair, Daegu Congress 2013

Marie-José Nadeau
Chair, Communications & Outreach Committee

Graham Ward, CBE

Chair, Finance Committee

Michael Morris
Chair, Programme Committee

Brian Statham
Chair, Studies Committee

Christoph Frei
Secretary General
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

Contents

Contents 1

Foreword Pierre Gadonneix 2

Foreword Joan MacNaughton 4

Executive Summary 7

Introduction 13

1. 2012 Energy Sustainability Index 17

2. Framing the energy sustainability

discussion 29

3. Define a coherent and predictable energy

policy 37

4. Enable market conditions that attract

long-term investments 49

5. Encourage public and private initiatives that

foster R&D in all areas of energy
technology 61

6. Conclusion 69

Appendix A. Industry participation 72

Appendix B. Project participation 75

Appendix C. Index rationale, structure and

methodology 77
 World Energy Trilemma: Time to get real – the case for sustainable energy policy World Ene

Foreword by
Pierre Gadonneix

I am glad to unveil the 4th edition of our World deterioration of our environment. The summer of
Energy Trilemma report. This new name and new 2012 has seen further melting of the Arctic ice cap.
edition marks a decisive step in what has been a
decisive year: 2012 was the year when the world We, in 2012, cannot escape the fact that 1.3 billion
gathered in Brazil for the Rio+20 summit. Many people still lack access to modern forms of energy.
who attended had mixed feelings, hopes mingled This figure could still increase due to demographic
with fears in the face of the huge task of assessing shifts, urbanisation, and the impact of the economic
the results of a 20-year awareness of the crisis on many parts of the world and jeopardising
environmental, economic, and social challenges human development everywhere.
that confronted our world. 2012 was also the year
that UN Secretary General Ban Ki Moon dedicated That is why I cannot stress enough the need to act
to promote access to “Sustainable energy for all”, now on the three intertwined dimensions of the
thus recognising the fundamental role that energy energy trilemma: energy security, social equity, and
plays in achieving the worlds’ millennium goals. He environmental impact mitigation. Now, ‘how to act’
rightly identified the need to monitor progress in is the real question. 2012, and namely the Rio+20
reaching our goal to help achieve global human summit, showed that awareness and benevolence
development. In these respects, 2012 marks the were strong everywhere, but in a world with
return of the energy issues to the very heart of the disparate levels of development and uneven
global agenda. resource distribution, clear roadmaps, pragmatic
yet comprehensive tools and, above all, timely
Clearly there is reason for this. All countries are coordination were more difficult than ever to come
experiencing growing difficulties and uncertainties up with.
in securing their energy supply, and in engaging at
the same time a cleaner growth pattern. This is Yet, solutions do exist and men and women from
emphasised by the current economic crisis that all around the world know them and are ready to
threatens long term efforts to protect our implement them. They all plead for more
environment in many countries. interconnected policy within each country and for
more coordination among countries.
It is expected that energy demand will double by
2050. Therefore if we do not act now and invest in The World Energy Council, in its role as principal
generation and network infrastructures, it is very impartial network for energy leaders, has decided
likely that more countries will suffer from blackouts to make the 2012 and 2013 World Energy
like the one the USA experienced this year, or Trilemma report the place for our energy leaders’
worse, like the one more than 600 million Indian community to express their vision for a sustainable
people underwent in July 2012. In the same period future. In 2012, the floor is given to the industry
we have to cut by half our current volume of leaders. Next year it will be the turn of government
greenhouse gas emissions if we want to limit the leaders to engage in the dialogue.
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

The real lesson to be learned from industry leaders

is that they strongly believe we have the means to
solve the energy trilemma; we have the tools,
technologies, and resources it takes. What lacks is
the method, the master plan to assemble them as
well as a scheme to release market resources and
initiatives. What also lacks is the monitoring tool to
have a clear vision of progress, but here, our
Energy Sustainability Index can be of use.

What strikes me and what I want to highlight as a

conclusion is that industry leaders deliver us a
message of hope in the future as well as a
message of confidence in technological progress.
At a time when scepticism and fear of technology
arise in many parts of the world this is provoking a
rejection of new investments. It is true that the
world has to face the consequences of severe
accidents like Fukushima and the oil spills in the
Gulf of Mexico and more recently in the Gulf of
Nigeria. It is therefore necessary to reaffirm both
our strong belief in technological progress and our
equally strong belief in the fact that there is on
earth only room for a safe technology that is
controlled and monitored by man’s enduring
vigilance.

I wish you an inspiring dive in the first part of our

energy policy dialogue.

Pierre Gadonneix
Chair, World Energy Council
 World Energy Trilemma: Time to get real – the case for sustainable energy policy World Ene

Foreword by
Joan MacNaughton

Delivering policies which simultaneously address assessment of the social equity and environmental
energy security, universal access to affordable impact mitigation dimensions – it becomes
energy services, and environmentally-sensitive necessary to recalculate the rankings in previous
production and use of energy is one of the most years, in order for countries to understand how
formidable challenges facing governments - their performance has changed over time. This we
indeed some might argue that it is the most have done. It is also important to see the Index as
formidable, or even the most important. The World a starting point for understanding the sustainability
Energy Trilemma report, now in its fourth year, of countries’ policy approaches, since it does not
aims to help governments rise to the challenge of and cannot capture all relevant aspects of
tackling this ‘trilemma’. performance. Nevertheless, additional analysis by
our partners Oliver Wyman of the data
Even if global economic circumstances were more underpinning the Index shows how countries can
benign, governments could not tackle the benefit from effective policy approaches –
challenges without the private sector. Investment is regardless of their natural resource endowments.
needed on an unprecedented scale, as developing There is some correlation between greater wealth
countries build out their infrastructures, as and for example energy security or the ability to
developed countries replace their ageing capital take a more developed approach to safeguarding
stock, and as recovering and transporting energy the environment. This is perhaps unsurprising, but
sources becomes ever more financially and nevertheless it is striking that some less affluent
technically challenging. Globally, countries at every countries do outperform their peers in terms of
stage of development must clean up their energy GDP per capita. The fact that they do seems to
act, to avoid damage to their domestic owe a great deal to the quality of their policy
environments and above all to contribute to tackling approaches.
climate change. The IEA has estimated that in
addition to global investment in energy supply What makes for good policy? The answer must
infrastructure and to provide energy for all depend on local needs and circumstances. But
USD36 trillion may be needed in the energy sector common themes emerge: a long-term, stable
by 2050 in order to deliver clean energy solutions. approach to policy; predictability and consistency in
the regulatory process; the ability to harness the
Yet again the World Energy Trilemma report power of markets and the private sector to public
contains important pointers to how countries can goals; and the need for strong support for research
improve their performance against the trilemma and development across all areas of energy
goals. The Energy Sustainability Index ranks technology. Having a master plan – and, if
countries against the three dimensions on the basis politically possible, an approach which does not
of selected measures for which data is widely rule out any individual source of energy or any
available. As we enhance the Index methodology specific technology – certainly helps in striking a
year on year – this year we have improved the balance among the three objectives of the
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

trilemma. So countries with a significant proportion

of renewables in their energy use and those with a
significant penetration of nuclear seem to do better
than comparable countries who have not taken
advantage of these energy sources.

The execution of policy in a consistent way is also

important. It is clear that governments will succeed
in fitting the detail of their policy making within such
a strategic overall framework if they take
advantage of the expertise and perspectives of all
key stakeholders. They should accordingly engage
in a genuine dialogue with such stakeholders,
among whom must be counted the business
community who understand what works in practice
including in terms of energy regulation. It is they
who will make the crucial investment decisions.

This is the unambiguous message from more than

40 CEOs and senior executives whom we
interviewed for the report. As they – and we – say,
in confronting the energy trilemma, it is time to get
real.

Joan MacNaughton
Executive Chair, WEC World Energy Trilemma
 e n e r g y
“Behaviour

demand”
determines
“We need private sector “The most precious thing
World Energy Trilemma: Time to get real – the case for sustainable energy policy World Ene
for energy development
engagement
6 for real
internationally is good
sustainable solutions” and sound public policy”

medium to long-term future”

of energy systems are

electricity services in the
needs for mobility, heat, and

debate about which kinds

it is often a problem of political

don’t usually take correct decisions,

“We need an open societal

will and not a lack of capability”

“If you think about why governments

“We need to look at the
overall affordability of
energy - governments
have to be able to afford
this as well or else
you might end up with
D ivider page bankrupt governments”
“Governments need corporations
institutions need
“ F i n a n c i a l

to become more

unconventional”
“ You ne e d a
to provide low-carbon and green
supportive policy
technology, the skills to deploy
and you ne e d
and operate it, and the funds of the consensus
of the people”
sustainable energy systems”

and the path for ward for

vice-versa to improve clarity

engage with industry and

and compare the global effects”

isolation – policymakers must

inclusive look to energy pricing

“ We n e e d t o t a ke a m o r e

“You can’t develop policy in

“ G ove r nm e nt s need

based advice on the

best way to generate
power and shouldn’t let
the political process and
ideologies control this”
“ We need a

s u c c e e d ”
in order to
global mindset

“Having a “Getting together for

discussions can be
master plan is helpful in broadening
very important” the understanding”
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

Executive Summary
“We must accept that we have to make hard choices in this
generation to bring about real changes for future generations and
the planet. Politicians and the industry must get real.”

You can see it in the faces of the global management consulting firm Oliver Wyman,
670 million people who recently suffered through has prepared the report World Energy Trilemma:
blackouts in India, or sense it from the frustrations Time to get real – the case for sustainable energy
expressed by three million Americans forced to live policy. This first of a two-part series of reports
without power in the middle of a record heat wave. examines the drivers and risks preventing the
After decades of work to advance sustainable development of sustainable energy systems. It then
energy solutions, an energy gap is growing as recommends actions to address these risks and to
energy systems around the world buckle under accelerate a global transition to a low-carbon future
significant strain. which will present new opportunities for economic
growth.
Policymakers and the energy industry urgently
need to work together to correct this mismatch by The 2012 report describes what senior energy
making the hard decisions necessary to realise industry executives believe they need from
sustainable energy systems on a much broader policymakers to advance sustainable energy
scale. If the supply of sustainable energy continues systems. It is based on interviews with more than
to lag behind rapidly rising demand globally, billions 40 energy industry CEOs and senior executives
of people could be forced to live without reliable and the 2012 Energy Sustainability Index built on
electricity and economic growth could be put in an analysis of 22 indicators across 93 World
jeopardy. Already, 1.3 billion people live without Energy Council member countries. The 2013 World
access to electricity. This number could rise if Energy Trilemma report will focus on what
demand continues to jump by as much as 30% policymakers need from the energy industry.
1
over the next two decades.
Three dimensions of energy
Goals supported at The United Nations Conference
on Sustainable Development (Rio+20) in June sustainability
2012 could also remain out of reach. Unless action
is taken now, it will be difficult to double the rate of The World Energy Council’s definition of energy
energy-efficiency improvement, ensure universal sustainability is based on three core dimensions -
access to modern energy, or to double the share of energy security, social equity, and environmental
renewable energy in the global energy mix by impact mitigation. The development of stable,
2030. affordable, and environmentally-sensitive energy
systems defies simple solutions. These three goals
To assist policymakers and the energy industry constitute a ‘trilemma’, entailing complex
with pressing forward sustainable energy systems, interwoven links between public and private actors,
the World Energy Council, in collaboration with governments and regulators, economic and social
factors, national resources, environmental
1
International Energy Agency (IEA), 2011: World Energy concerns, and individual behaviours.
Outlook 2011
 World Energy Trilemma: Time to get real – the case for sustainable energy policy World Ene

Recommendation 1: Design coherent and

Energy sustainability dimensions
predictable energy policies
 Energy security: For both net energy
importers and exporters, this refers to the Policymakers must establish coherent, long-term,
effective management of primary energy accessible, predictable, and transparent policies
supply from domestic and external sources, that rise above narrow interests to respond to
the reliability of energy infrastructure, and energy needs holistically. Contradictory and ad hoc
the ability of participating energy companies policies developed in isolated ‘silos’ hinder energy
to meet current and future demand. For investments. Sound and coherent policies that are
countries that are net energy exporters, this oriented toward results rather than around the
also relates to an ability to maintain types of energy or technology used to achieve
revenues from external sales markets. them can - and should - enable the world to
achieve energy sustainability.
 Social equity: This concerns the accessibility
and affordability of energy supply across the
A master plan must be developed that connects
population.
energy policies on two fronts. First, national energy
 Environmental impact mitigation: This policies must complement and link together
encompasses the achievement of supply national industrial, financial, environmental,
and demand-side energy efficiencies and transportation, and agricultural goals and policies.
the development of energy supply from Second, policies concerning energy resources,
renewable and other low-carbon sources. infrastructure, environmental issues, and
regulations must be regionally coordinated.
Sharing resources across borders enables
countries to increase regional energy security,
Energy industry reduce power costs, and attract investments by
recommendations creating greater market scale to interest investors,
optimise natural resources, and develop common
CEOs and senior executives from leading energy infrastructure.
companies have three main recommendations for
how policymakers must expedite the development To make sure that these policies are predictable for
of sustainable energy systems: 1) Design coherent industry, governments must develop regulations
and predictable energy policies, 2) Support market that are consistent, clear, and simple, in spite of the
conditions that attract long-term investments, and complexities that they address. Equally important,
3) Encourage initiatives that foster research and policymakers should separate energy policies from
development in all areas of energy technology. short-term politics to guarantee that they reflect a
well-defined, long-term view. A significant hurdle to
policy longevity, as perceived by industry, is the
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

conflict between the long-term nature of energy technologies, and to build new and replace ageing
investments and the comparatively short-term infrastructure. Cash-strapped governments have
nature of politics. limited funds to support a shift to a low-carbon
future. Unfortunately, capital from the private sector
Consumer education and awareness is also and from investment funds remains largely on the
crucial. To encourage energy efficiency, for side lines. Less than 1% of pension investment
example, governments must not only establish funds worldwide, for example, are invested in
environmentally responsible construction and infrastructure projects designed to improve the
manufacturing standards, but can also set a supply of electricity. 2
regulatory framework for progressive energy tariffs
to make consumers more aware of energy The use of subsidies should be minimised, since
efficiency as a means to reduce overall national they increase political and regulatory uncertainty.
energy costs, introduce tax reductions on energy- This distorts competition and erodes investor
efficient equipment (on VAT or on import duties), confidence. If used, subsidies must be focused on
or on energy-efficiency investments (reduction in achieving a specific outcome, and have a clear
VAT rate). sunset built-in from the start.

Recommendation 2: Support market conditions Recommendation 3: Encourage initiatives to

that attract long-term investments foster research and development in all areas of
energy technology
With consistent and committed regulatory
approaches, policymakers must encourage the To drive innovation further in all areas of energy
development of attractive markets to stimulate technology, policymakers should implement goal-
long-term private investments in energy driven policies rather than prescriptive policies.
infrastructure and technologies. Simultaneously, New renewable energy and fossil fuel technologies
they must support the development of new can bring the world much closer to attaining
investment mechanisms that can reduce risks and sustainable energy systems and potentially spur
stimulate greater private sector investment in the economic growth. For this to happen, however,
energy sectors. Such mechanisms can include policymakers need to leave it to the market to
green banks, a green bond market, and public- decide which types of technology should survive so
private partnerships. These efforts must be that they can remain competitive in the long term.
underpinned by a stable and predictable carbon
price necessary to drive the transition to a low-
carbon energy system.

Huge investments are required to improve access 2

Organisation for Economic Co-operation and Development
to energy worldwide, develop new energy (OECD), 2011: Pension Funds Investment in infrastructure: A
Survey
 World Energy Trilemma: Time to get real – the case for sustainable energy policy World Ene

10
Figure 1
Similarities and differences for the top 10 performing countries in 2012 Index

2012 Rank Country Key Similarities

1 Sweden  Common GDP grouping (GDP per capita
2 Switzerland greater than USD33,500)
3 Canada  OECD members

4 Norway  Post-industrial economy

 High (>10%) renewables in electricity mix
5 Finland
Key Differences
6 New Zealand
 Nuclear and non-
7 Denmark
nuclear power producers
8 Japan  Low and high fossil fuel reserves
9 France  Net energy exporters and importers
10 Austria  Various geographic locations

‘Technology-neutral’ research and innovation Energy Sustainability Index

policies should be supported with economic
incentives and appropriate accountabilities. The 2012 Energy Sustainability Index shows that
developed countries such as Sweden, Switzerland,
Intellectual property rights must also be strongly
and Canada are closest to achieving sustainable
enforced for the private sector to invest in
energy systems. This is in large part because a
environmentally responsible and energy-efficient higher share of their energy mix comes from low-
technologies.
carbon energy sources, such as hydro power and
from nuclear power. These countries are leaders in
Finally, governments must support the research,
terms of energy security largely because of their
development, and demonstration of new
diversified energy mixes.
technologies to boost investor confidence.
Policymakers will encourage companies to invest in
The top three performers also have a significant
developing new technologies if they establish a advantage when it comes to mitigating their energy
strong research-oriented environment that
systems' environmental impact because they have
promotes national and international collaborative
long-term programs in place. Sweden, for example,
research and funds large-scale demonstration has significantly reduced its greenhouse emissions
projects that support companies' efforts to bring
even though its GDP is rising mainly because it has
their technologies to market.
set long-term sustainable energy and climate
policies and goals for 2020.
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

11

Nevertheless, developing sustainable energy sustainability is, its importance for economic
systems overall remains a challenge. Countries growth, and the steps necessary to achieve it. Only
at all stages of development still have trouble then can they work together to build on clearly
balancing the trade-offs involved in providing defined sustainability goals that will encourage all
secure, affordable, and environmentally-sensitive forms of energy in every nation’s energy mix by
energy. Developing countries, for example, taking a technology-neutral approach.
struggle to use cleaner forms of energy as they
industrialise. With clearly defined, coherent, and predictable
energy policies, the energy industry will be able to
Sound policy making determines to what extent a mobilise the natural and human resources,
country will be able to develop a sustainable finances, and technologies necessary to realise
energy system. The energy industry and sustainable energy systems. Without them, billions
policymakers should assist in helping nations to of people will continue to live without secure,
forge an alternative path of energy development. affordable, and environmentally-sensitive energy.
As Figure 1 shows, the top ten performers all have Global prosperity could also be threatened. There
high GDPs per capita. They are OECD member is no time to waste.
countries with predictable and strong political,
societal, and economic frameworks. However,
there are also key differences between them,
underscoring that there is not one single solution.
France is a significant user of nuclear power.
Canada is a net energy exporter. By contrast,
Japan is a net importer.

Conclusion
Energy systems around the world remain at vastly
different stages of development. But all countries
share a common problem: They are far away from
achieving sustainable energy systems.

To make affordable, secure, and environmentally-

sensitive energy systems a reality, policymakers
urgently need to develop interconnected, lasting,
and coherent energy policies. Policymakers and
energy industry executives must develop a
common understanding of what energy
 “Reduction of CO2

also

how people live”

shifts
assumes major

and changes in
“Will countries recognise that “ There is a lack of
World Energy Trilemma: Time to get real – global concern
the case for sustainable forEne
energy policy World
it is in their genuine interest

emissions
12 energy poverty except

societal
to move towards this new for the countries which
sustainable energy system?” have energy poverty”
concerns into account”

your mouth is”

t a ke e nv i r o nm e nt a l

technologies

money where
but also diversif ied

sure you put your

“You want investments

goals and make

“ D eve l op c l ear
“Governments must

un de r st an d t hat
that

Divider page
energy is a priority”
“A C O 2 t a x c o u l d b e m o r e

certain. But who would

“Ideas need to be translated

have the politic al will to drive

“Governments must
up the levels of tax since

80 -90% of the electorate is

opposed to carbon pricing

at the consumption level”

into clear targets, then you
realise that they are
can work on a policy to
not an island and
achieve these targets and

you need to think about

that an integrated

h ow to e n ga g e p e o p le” approach is necessary”

a limited amount of time”
can only prop them up for
coal, then governments
compete with gas or
h i n d e r s e c o n o m ic

If renewables c annot
the foot on the break”
be like driving with
g r o wt h a n d w o u l d

energy efficiency
on renewables and
mix that relies only
“Aiming at an energy

bet ter than subsidies:

“ Free mar kets wor k
“Approaches to and views

on energy sust ainabilit y

are ver y dif ferent and

no universal definition or

understanding of sustainable

energy systems exists”

are often not in

market rhythm”
phase with the
“Governments

“Governments need to
“Most important
is that the rule realise that they c annot

of law protects address building robust

the investment” energy systems alone”

World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

13

Introduction

This report is the fourth annual assessment of supporting the Energy Sustainability Index.
energy and climate policies across the globe by the Throughout this report, statements in quotation
World Energy Council (WEC) and builds on the marks capture the insights and comments of the
findings and recommendation made in previous interviewees.
reports. Earlier studies were based on in-depth
reviews of selected energy policies from around the This report will be followed up in 2013 with the
world. This year’s report takes a new approach and views of policymakers on what they need from
is structured to support a global dialogue between industry to be assured the policies will have the
industry and policymakers. intended effects of supporting sustainable energy.
The 2012 and 2013 reports’ methodology is based
With the challenges of transforming the global on the guiding premise that energy sustainability
energy system ahead of us, policymakers and involves both the efforts of industry and
industry must collaborate to design and implement policymakers. Together the publications will
broadly supported mechanisms to address energy support an evolving dialogue to develop knowledge
sustainability in the near and long term. To facilitate and understanding of effective strategies and
such collaboration, the WEC acts as a catalyst in policies and thus to deliver the necessary
building dialogue, sharing best practices and transformation of the energy system.
fostering a clear vision for sustainability among
energy leaders. The WEC’s World Energy Leaders’ Consistent with previous studies, this report
Summits and the triennial World Energy Congress includes the Energy Sustainability Index. The Index
are milestones in this process of bringing captures and aggregates country-level data to
policymakers and industry together. outline the relative energy performances and
contextual attributes of WEC member countries. It
The goal of the 2012 report is to provide provides a comparative ranking of countries’ ability
policymakers with the energy industry’s views on to provide a stable, affordable, and
what the industry needs from policies and environmentally-sensitive energy system and
policymakers to succeed in providing highlights current challenges. The findings of the
environmentally-sensitive, affordable, accessible, Index analysis are complemented with the
and secure energy. The purpose was to capture individual WEC member country profiles captured
industry perspectives on what makes an effective in the companion report World Energy Trilemma:
policy to support sustainable energy goals. 2012 Energy Sustainability Index.

The report findings are based on three sources of The research and formulation of the 2012 report’s
research: interviews with more than 40 energy recommendations to policymakers have benefited
industry CEOs and senior executives from across from the extensive involvement of energy industry
the sector and around the world (see Appendix A), leaders and experts around the world. The World
supporting research, and empirical data analysis Energy Council conducted the overall project in
 World Energy Trilemma: Time to get real – the case for sustainable energy policy World Ene

14

partnership with the global management consulting

firm Oliver Wyman. Senior representatives from
WEC member committees served on a study group
that guided the analysis and shaped the report’s
contents. Further details on the project’s
participants and the supporting analyses can be
found in the appendices.

Iconography

Graphics displaying results of the Energy

Sustainability Index analysis make use of the
following iconography.

Energy performance dimensions:

Energy security

Social equity

Environmental impact mitigation

Contextual performance dimensions:

Political strength

Societal strength

Economic strength

Additional:

Innovation score

Energy Sustainability Index results and country

profiles can be found on the WEC website at
[Link]/data/sustainability-index.
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

15
 “Can objectives be

ec onomic grow th? ”

“Energy policy cannot

reconciled within a

w it hout

compromising
reasonable economic
“ H o w yo u d e f i n e
be considered in one
sustainability targets World Energy Trilemma: Time to get real – the case for sustainable energy policy World Ene

dimension but must

f r amewo r k
g i16
ves you ver y realise interconnections

different outcomes” of dif ferent objectives”

GDP growth away”

than now, it drives
drastically higher
become more cost-efficient”

energy prices are

be hinder growth. If
in which new technologies can

manufacturers and on the horizon

economic model can’t

sustainable the
“If it is going to be
fuel consumption will depend on

“The shift towards low-carbon

“Nowhere are leaders

standing up to say ‘All

we have is a choice

among evils’ – we don’t

Divider page
have a clean solution”

but there is no random

“Nordic countries are

may be uncertainty,
“A coherent energy
the most stable and

market based: There

mo st aspec ts are

“Environmental

decision making”
system cannot be
aspects and the
price gap have
established unles s to be considered
the country or the in the decision
whether or not a
region is politically and certain energy type
economically stable” is desirable overall”
a lot more than they realise”

and we will be able

r e s o u r c e endowments, probably

understand this
of

global energy mix”

“ G ov e r n m e n t s

run people will

issue. In the long
“Energy is a global
“We must accept that we have
l eve r a g e

to make hard choices in this

generation to bring about real

t h r o ug h

changes for future generations

h ave

and the planet. Politicians and

a
t h ei r

lot

the industry must get real”

that this is a
“The fact

diversi fied

“A global information
good news”
solution is

“Energy access
society depends on globally has to be driven
secure power supply” by policies”
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

17

1. 2012 Energy
Sustainability Index

Comparing country situations For the deeper Index analysis countries were
organised in four economic groups 3:
The 2012 Energy Sustainability Index (“Index”)
confirms that developed countries are in a better • Group A: GDP per capita greater than
position to provide secure, affordable, and USD33,500
environmentally-sensitive energy and to balance • Group B: GDP per capita between
the ‘trilemma of energy sustainability’. This is USD14,300 and USD33,500
driven by their increased reliance on low- and zero-
carbon emission producing forms of energy such
• Group C: GDP per capita between
USD6,000 and USD14,300
as renewables, including hydro power, and nuclear
power. • Group D: GDP per capita lower than
USD6,000
However, a deeper analysis shows that even top
The 2012 Energy Sustainability Index results are
performing countries face challenges. Energy
exhibited in Figure 2. Figure 3 shows the ranking of
sustainability remains a far-off objective as trade-
countries across the three dimensions underlying
offs within the energy trilemma persist for countries
their energy performance – security, affordability,
at various stages of development. Moreover, the
and environmental sensitivity. This illustrates how
Index shows that countries face specific challenges
countries are balancing the energy trilemma.
as they pass through the stages of economic and
social development.

For example, developed Middle Eastern countries

with large fossil fuel endowments often face a
trade-off between maintaining affordable energy
and attempts to set incentives for energy
consumption reductions and lowering energy and
emissions intensity per capita. Developing
countries, on the other hand, struggle with
providing electricity access and energy services for
their growing populations, while emerging countries
often increase their environmental impact as they
achieve economic growth.

3
GDP per capita on a purchasing power parity (PPP) basis;
International Monetary Fund (IMF), 2010
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Figure 2
2012 Energy Sustainability Index rankings
2012 Rank Country Importer / Exporter GDP Group 2011 Rank 2010 Rank
1 Sweden I A 4 7
2 Switzerland I A 3 1
3 Canada E A 1 2
4 Norway E A 5 3
5 Finland I A 2 4
6 New Zealand I B 6 5
7 Denmark E A 8 8
8 Japan I A 11 11
9 France I A 7 6
10 Austria I A 9 10
11 Germany I A 10 18
12 United States I A 12 9
13 Belgium I A 18 12
14 Netherlands I A 16 13
15 United Kingdom I A 28 21
16 Spain I B 15 26
17 Slovakia I B 20 17
18 Luxembourg I A 13 16
19 Hungary I B 21 25
20 Australia E A 24 20
21 Italy I B 31 33
22 Slovenia I B 25 14
23 Iceland I A 14 15
24 Croatia I B 17 40
25 Portugal I B 29 19
26 Russia E B 27 29
27 Korea (Republic) I A 37 34
28 Argentina E B 19 24
29 Czech Republic I B 26 22
30 Ireland I A 39 28
31 Lithuania I B 22 27
32 Taiwan, China I A 33 35
33 Colombia E C 32 37
34 Hong Kong, China I A 35 32
35 Estonia I B 38 23
36 Uruguay I C 34 30
37 Latvia I B 23 31
38 Bulgaria I C 40 51
39 Ukraine I C 36 45
40 Albania I C 41 58
41 Qatar E A 48 38
42 Greece I B 52 44
43 Kazakhstan E C 30 49
44 United Arab Emirates E A 49 50
45 Bolivia E D - -
46 Saudi Arabia E B 47 42
47 Poland I B 53 47
48 Iran (Islamic Republic) E C 63 39
49 Cyprus I B 51 48
50 Mexico E C 46 53
51 Trinidad & Tobago E B 62 55
52 Paraguay E D 56 59
53 Brazil I C 45 56
54 Kuwait E A 60 54
55 Egypt (Arab Republic) E C 50 36
56 Romania I C 42 41
57 South Africa E C 55 46
58 Peru I C 59 63
59 Gabon E B 73 -
60 Tunisia I C 66 52
61 Israel I B 61 73
62 Macedonia (Republic) I C 58 43
63 Thailand I C 67 72
64 Turkey I C 75 61
65 Cameroon E D 65 66
66 Serbia I C 44 82
67 Kenya I D 69 65
68 Jordan I C 70 60
69 Congo (Dem. Republic) E D 77 83
70 Côte d'Ivoire E D 74 81
71 China I C 71 78
72 Zimbabwe I D - -
73 Sri Lanka I D 68 70
74 Nepal I D 78 74
75 Philippines I D 57 64
76 Syria (Arab Republic) E D 64 69
77 Lebanon I B 72 67
78 Algeria E C 84 79
79 Namibia I C 81 68
80 Swaziland I D 43 57
81 Ghana I D 80 76
82 Tanzania I D 79 80
83 Indonesia E D 76 71
84 Nigeria E D 83 77
85 Mongolia E D 85 88
86 Chad E D - -
87 Morocco I D 82 85
88 Libya E C 86 75
89 Ethiopia I D 92 91
90 Niger I D 90 90
91 Botswana I B 87 86
92 Pakistan I D 88 87
93 India I D 89 84
94 Senegal I D 91 89
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Figure 3
2012 Country rankings for energy performance dimensions

2012 Rank Energy security (2011 rank) Social equity (2011 rank) Environmental impact mitigation (2011 rank)
1 Canada (1) United States (1) Paraguay (8)
2 Sweden (9) Canada (2) Sweden (1)
3 Denmark (5) Australia (3) Iceland (2)
4 Zimbabwe (-) Switzerland (4) France (3)
5 Colombia (6) Luxembourg (5) Norway (4)
6 Slovakia (28) United Kingdom (8) Finland (6)
7 Japan (16) Austria (7) Albania (15)
8 Russia (2) France (10) New Zealand (7)
9 Norway (21) Japan (6) Lithuania (5)
10 Hungary (20) Norway (11) Switzerland (14)
11 Germany (13) Germany (12) Austria (18)
12 Switzerland (15) Belgium (9) Canada (12)
13 Finland (7) New Zealand (13) Latvia (9)
14 Croatia (11) Finland (14) Slovakia (17)
15 Czech Republic (38) Qatar (15) Belgium (24)
16 New Zealand (33) Sweden (33) Russia (11)
17 Spain (27) Argentina (20) Slovenia (20)
18 Ukraine (8) Saudi Arabia (18) Luxembourg (13)
19 Italy (49) Spain (17) Hungary (22)
20 Kenya (23) Netherlands (22) Netherlands (31)
21 Gabon (10) Iceland (19) Brazil (16)
22 Bolivia (-) Taiwan, China (21) Uruguay (19)
23 Portugal (39) Greece (16) Ukraine (23)
24 Nigeria (18) Ireland (24) Japan (37)
25 Australia (42) Korea (Republic) (25) Denmark (28)
26 Congo (Dem. Republic) (30) Italy (23) Croatia (26)
27 United States (32) Kuwait (31) Taiwan, China (47)
28 Slovenia (41) Denmark (26) Bulgaria (43)
29 France (29) Cyprus (28) Nepal (25)
30 Côte d'Ivoire (3) Hong Kong, China (29) Argentina (27)
31 Belgium (61) Iran (Islamic Republic) (30) United States (39)
32 Cameroon (17) Czech Republic (27) Korea (Republic) (35)
33 Egypt (Arab Republic) (14) Croatia (32) Italy (48)
34 Netherlands (53) Mexico (34) Colombia (33)
35 Argentina (12) Slovakia (35) United Kingdom (53)
36 Romania (46) Hungary (39) Trinidad & Tobago (34)
37 United Kingdom (58) Portugal (36) Ethiopia (66)
38 Kazakhstan (34) Poland (38) Portugal (40)
39 Austria (37) United Arab Emirates (40) Ghana (38)
40 Bulgaria (25) Kazakhstan (37) Spain (46)
41 Turkey (68) Slovenia (41) Germany (44)
42 Estonia (69) Romania (43) Ireland (41)
43 Greece (63) Israel (42) Tanzania (49)
44 Albania (26) Uruguay (44) Kazakhstan (21)
45 Mexico (51) Lithuania (45) Bolivia (-)
46 Peru (48) Estonia (46) United Arab Emirates (55)
47 Iran (Islamic Republic) (71) Russia (48) Congo (Dem. Republic) (51)
48 Chad (-) Trinidad & Tobago (49) Niger (81)
49 Sri Lanka (40) Egypt (Arab Republic) (47) Hong Kong, China (60)
50 Poland (57) Latvia (50) Estonia (29)
51 Tunisia (60) Tunisia (51) Iran (Islamic Republic) (50)
52 Philippines (31) South Africa (52) Gabon (79)
53 Lithuania (36) Turkey (53) South Africa (57)
54 Syria (Arab Republic) (19) Macedonia (Republic) (58) Cameroon (62)
55 Libya (70) Jordan (54) Swaziland (42)
56 Macedonia (Republic) (43) Colombia (59) Côte d'Ivoire (77)
57 Ireland (88) Serbia (57) Namibia (73)
58 Thailand (67) Ukraine (56) Chad (-)
59 China (45) Bulgaria (60) Saudi Arabia (56)
60 Indonesia (47) Algeria (55) Peru (45)
61 Korea (Republic) (83) Albania (67) Czech Republic (32)
62 Paraguay (54) Thailand (63) Serbia (30)
63 Uruguay (50) Lebanon (62) Cyprus (59)
64 Latvia (22) Bolivia (-) Qatar (75)
65 Lebanon (44) Brazil (65) Poland (63)
66 Israel (52) Morocco (66) Egypt (Arab Republic) (74)
67 Serbia (35) Peru (68) Jordan (67)
68 Tanzania (56) Syria (Arab Republic) (71) Macedonia (Republic) (58)
69 Trinidad & Tobago (86) China (72) Kenya (54)
70 Swaziland (4) Paraguay (69) Algeria (84)
71 Iceland (55) Sri Lanka (74) Zimbabwe (-)
72 Luxembourg (81) Indonesia (61) Syria (Arab Republic) (70)
73 Pakistan (64) Libya (64) Australia (72)
74 Mongolia (72) Botswana (73) Kuwait (68)
75 Algeria (65) Swaziland (70) Mongolia (78)
76 Hong Kong, China (66) Namibia (75) Greece (83)
77 Brazil (62) Philippines (76) Pakistan (71)
78 South Africa (59) Gabon (77) Philippines (52)
79 United Arab Emirates (80) Mongolia (78) Thailand (65)
80 Morocco (77) Pakistan (79) Romania (36)
81 Qatar (91) Ghana (80) Nigeria (88)
82 Nepal (76) India (84) Sri Lanka (61)
83 Taiwan, China (73) Cameroon (81) Mexico (64)
84 Kuwait (92) Nigeria (82) Turkey (69)
85 Saudi Arabia (85) Côte d'Ivoire (85) Lebanon (82)
86 Senegal (78) Kenya (86) Senegal (85)
87 India (84) Niger (88) Morocco (76)
88 Ghana (79) Chad (-) Libya (92)
89 Botswana (87) Senegal (87) Tunisia (80)
90 Namibia (75) Ethiopia (92) Indonesia (90)
91 Cyprus (90) Congo (Dem. Republic) (89) China (87)
92 Niger (74) Nepal (90) Israel (89)
93 Jordan (82) Tanzania (91) India (86)
94 Ethiopia (89) Zimbabwe (-) Botswana (91)
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There are leading countries but energy

Index methodology
sustainability remains a distant target
The Energy Sustainability Index ranks WEC
member countries in terms of their likely ability Governments seek to provide affordable energy in
to provide a secure, affordable, and an environmentally-sensitive way to ensure social
environmentally-sensitive energy system. The and economic well-being of people in the long run.
rankings are based on a range of data and However, developing and maintaining energy
databases that capture both energy sustainability involves a shifting balance of trade-
performance and the context of that energy offs between the three dimensions of the energy
performance. Energy performance indicators trilemma – energy security, energy access and
consider supply and demand, the affordability affordability, and mitigating the environmental
and access of energy, and the environmental impact – with no single ‘silver bullet’ formula. The
impact of the country’s energy use. The
Index shows that a few countries have achieved
contextual indicators consider the broader
significant traction in providing sustainable energy,
circumstances of energy performance including
societal, political, and economic strength and but most countries, no matter if developed,
stability. Indicators were selected based on the emerging or developing, struggle with the balance
high degree of relevance to the research goals; between the three dimensions.
each is distinct, could be derived from reputable
sources and captured for most WEC member A focus on top-performing Sweden
countries.
Sweden’s top ranked position in the 2012
Overall, the Index displays the aggregate effect of Energy Sustainability Index is based on its top
energy policies applied over time in the context of rankings in two energy performance
each country. It is important to see the Index as a dimensions of the Index and a relatively high
position (16th) in the social equity dimension.
starting point for understanding the sustainability of
A number of elements of the Swedish energy
countries’ policy approaches. More details on the
policy support this high position. Overall, the
methodology, which has been improved since the country’s energy policy is based on the same
2011 report – this year the assessment of the three pillars as energy policy for Europe -
social equity and environmental impact mitigation energy sustainability, competitiveness, and
dimensions has been enhanced – can be found in security of energy supply.
Appendix C. Index rankings for 2010 and 2011
were calculated retrospectively with the improved Sweden has a high share of renewable energy
methodology to allow a year-to-year comparison. compared to many other countries (about 48%
The complete 2010 and 2011 Index ranking can of total final energy consumption in 2010) with
also be found in Appendix C. hydro power and bioenergy as the two main
sources. Bioenergy comprises 29% of total final
energy consumption, equivalent to that of hydro
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

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power and nuclear power together (final

In 2009, the Swedish Government agreed on a
consumption) and larger than the domestic
long-term and sustainable energy and climate
consumption of oil. Historically, Sweden has
policy with specific goals set for 2020:
been very dependent on the import and use of
fossil fuels. But the development of nuclear  40% reduction of GHG emissions compared
power, starting in the 1970s, together with to 1990
earlier development of large-scale hydro power,
and later on bioenergy, has enabled Sweden to  At least 50% share of renewable energy in
diversify its energy mix, improve energy the energy mix
security, and move towards being a low-carbon
economy.  At least 10% share of renewable energy in
the transport sector
In the transport sector, renewable energy has
reached almost 10% (2011) with ethanol,  20% more efficient use of energy compared
biodiesel and biogas as the three main biofuels. to 2008
Furthermore, HVO (synthetic diesel) from tall
4
oil was introduced into the market in 2011. Looking beyond 2020, Sweden is aiming for a
vehicle stock that is independent of fossil fuels
The heating sector - to a large extent based on by 2030.
district heating (about 40% of heating demand)
- is practically fossil fuel free as a result of the The main policy measures in Sweden are
increased use of biomass and heat pumps. general economic instruments: providing
There is very limited use of natural gas. financial incentives aiming for cost-effective
solutions and promoting competition among
The same is true for the electricity sector, technologies. Instruments include CO2 and
where hydro and nuclear power stand for the energy taxation, emissions trading and tradable
bulk of the production and wind power is certificates for renewable electricity. Sweden
increasing rapidly. has established joint policy approaches with its
neighbours; for example, since 2012 the
These developments have allowed Sweden to electricity green certificates market is a joint
manage its energy and emissions intensity very Swedish-Norwegian market. Sweden is also a
effectively. Since 1990, the emissions of member of Nord Pool, the Nordic wholesale
greenhouse gases (GHGs) decreased by electricity market, which operates in Norway,
approximately 10% while GDP increased by Denmark, Sweden, Finland, Estonia, and
more than 50%. Lithuania.

4
Tall oil is a mixture of mainly acidic compounds found, like
turpentine, in pine trees and obtained as a by-product of the
pulp and paper industry.
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Figure 4
Similarities and differences for the top 10 performing countries in 2012 Index

2012 Rank Country Key Similarities

1 Sweden  Common GDP grouping (GDP per capita
2 Switzerland greater than USD33,500)
3 Canada  OECD members

4 Norway  Post-industrial economy

 High (>10%) renewables in electricity mix
5 Finland
Key Differences
6 New Zealand
 Nuclear and non-
7 Denmark
nuclear power producers
8 Japan  Low and high fossil fuel reserves
9 France  Net energy exporters and importers
10 Austria  Various geographic locations

Few countries manage to balance the trade-offs are net energy exporters while others are net
within the energy trilemma importers and some countries have very high fossil
fuel reserves. This further confirms that
The top performers in the Index were able to policymakers’ choice is a discriminating factor in
maintain their strong positions over the last couple providing energy sustainability. There is no specific
of years and exhibit strong performance in both the single solution for energy sustainability. Countries
contextual as well as the energy dimension. which consider available indigenous resources and
Moreover, the top 10 countries in the overall Index develop a policy framework that supports energy
ranking are almost identical to the top 10 countries sustainability through the value-chain to the end-
in energy security performance only. user can overcome the energy trilemma.

Figure 4 shows that top performers are all high While countries like Norway, Canada, and Sweden
GDP per capita, OECD member countries with manage to balance the three dimensions of energy
stable and strong political, societal and economic sustainability extremely well, other top performing
frameworks. The majority of the countries is post- countries exhibit weaknesses in some dimensions
industrial and generates most of its GDP from the and underlying indicators. Countries throughout the
service sector. All countries have a well-diversified Index exhibit trade-offs; in particular between
energy mix with an increasing share of renewable affordability and low environmental impact.
energy. However, there are also key differences:
some of them are nuclear power producers, some
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

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Figure 5
5
At higher levels of GDP per capita countries attain greater overall energy security

GDP Group A GDP Group B GDP Group C GDP Group D

Metric (> USD33,500) (USD14,300–33,500) (USD 6,000–14,300) (< USD6,000)
Five-year growth rate of
0.0% 0.0% 1.0% 2.5%
energy consumption

Diversity of electricity 0.44 0.44 0.33 0.35

generation (Shannon index)

Proportion of countries that

71% 78% 65% 58%
are net energy importers

Countries at various stages of development development is required to keep up with rapidly

struggle with energy security increasing energy consumption driven by
increasing industrialisation, urbanisation and more
Developing and emerging countries (GDP Groups energy-intensive lifestyles. But it is also the case
C and D) primarily struggle with energy security that developed countries struggle with the ratio of
due to their strong energy consumption growth production to total energy demand, as consumption
rate, which is necessary for their industrial, has outpaced their ability to expand domestic
economic, and social development. This energy production of energy.
consumption growth rate tends to slow down as
economies mature and shift towards the service Providing high quality and affordable energy
sector. In addition, as economies mature, countries access remains a significant challenge for
are better able to support and promote investments developing and partly for emerging countries
in energy efficiency; for example, the Brazilian
labelling programme (PROCEL seal) for energy- As demonstrated in Figure 6, countries with higher
efficient household and energy consuming GDP per capita are more likely to provide high-
equipment and China’s 1,000 Enterprise Program. quality and affordable electricity access, as well as
affordable gasoline prices (as measured in the
Countries with higher GDP per capita have a more ‘social equity’ dimension). However, fuel poverty is
secure energy supply. Besides better managed also becoming a topic of increasing importance in
consumption growth, this is further supported by a some of these countries and should not be
well-diversified electricity generation mix with underestimated.
higher shares of renewable, including hydro, and
nuclear energy (see Figure 5). To achieve these For developing countries, the main challenge is
developments, however, a country needs political that large parts of the population remain without
will, strong institutional frameworks, and the access to electricity. Scarce financial resources on
availability of the necessary financial means. the demand and supply side limit the functioning of
markets and the ability to attract investments in the
For emerging countries, maintaining a good ratio of energy sector. One result of the lack of modern
production to total energy supply becomes a energy is the reliance on traditional biomass for
challenge as they have to develop the needed cooking with a tremendous negative impact on the
infrastructure and generation capacity. Such local environment. In Sub-Saharan Africa only 31%
of the population has electricity access and 80%
5
relies on the traditional use of biomass. In India
The Shannon diversity index was calculated using the
contributions to total electricity generation of four components: more than 400 million people do not have electricity
conventional thermal (oil, gas, and coal), nuclear, hydro, and
non-hydro renewables. The index values are normalised to one,
such that a country producing 25% of its electricity from each
source would score a 1. A country receiving 100% of its
electricity scores a 0 on the index.
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Figure 6
Countries improve their ability to provide affordable and high quality energy with increasing
GDP per capita

2012 Energy GDP GDP GDP GDP

Sustainability Group D Group C Group B Group A
Index social
equity score 10
United States
Argentina
9

R² = 0.849
8
Iran (Islamic Republic)
7

6
Egypt (Arab Republic)

5 United Arab Emirates

2 China

1
Gabon

0
0 10,000 20,000 30,000 40,000 50,000 60,000
GDP per capita (USD PPP)

access and more than twice as many people as while they face new challenges with rising
6
that do not have clean cooking facilities. economic development.

However, there are also examples of countries Figure 7 shows that countries with lower GDP per
achieving dramatic improvements in electricity capita have higher levels of energy and emission
access. For example, China has secured rural intensity per unit of economic output. In general,
energy access for many millions of people in the these countries have low levels of energy
past decade and is expected to achieve universal consumption, partly due to insufficient electricity
access by 2015. Vietnam has increased access to access and low energy services. However, due to
electricity from less than 5% all the way to 98% in inefficient energy generation, lower GDP per
7
the last 35 years. Latin and South America have countries tend to exhibit high CO2 emissions per
also expanded electricity access during recent kWh from electricity and heat generation and
years, with targeted policies and subsidy programs strong pollution of air and water. Therefore, while
to improve electricity access and affordability. overall energy intensity usage is low (low levels of
energy use per capita), the countries still perform
Environmental impact mitigation is a universal poorly in environmental impact mitigation overall.
problem
Figure 7
In general, as countries’ GDP per capita increases Countries with higher GDP per capita exhibit
they demonstrate improved ratings in the Index’s stronger environmental impact mitigation
measures of environmental impact mitigation.
However, a deeper analysis of the driving forces
(thousand BTU per USD of industrial sector GDP)

(kg CO 2 per USD of industrial sector GDP)

40 2.5
shows that countries improve only in certain areas, 35
Energy
2.0
Emissions intensity

30
Energy intensity

Emissions
25 1.5
20
6
IEA, United Nations Development Programme (UNDP), United 15 1.0

Nations Industrial Development Organization (UNIDO), 2010: 10

0.5
Energy Poverty: How to make modern energy access universal? 5
7
United Nations Sustainable Energy for All, 2012: Achieving 0 0.0
GDP Group A GDP Group B GDP Group C GDP Group D
universal energy access (> USD33,500) (USD14,300 –33,500) (USD6,000–14,300) (< USD6,000)
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

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Figure 8
Countries with higher shares of renewables, including hydro, in their electricity generation
outperform economic peers with less diversified generation

Low share of renewable energy including hydro (<15% of electricity generation)

High share of renewable energy including hydro (>15% of electricity generation)

Countries with higher GDP per capita face opposite At present, absorbing renewable energy into the
challenges. They have very high levels of energy energy mix poses several challenges and
and emissions intensity per capita. This is based developed countries appear to be better at
on energy-intensive consumption behaviours and leveraging this opportunity. Due to intermittent
lifestyles, which are further supported by highly production with wind and solar, there is a need for
affordable energy. However, most developed back-up capacity (often gas), energy storage
countries are likely to successfully engage in active facilities, and efficient transmission and distribution
measures to mitigate CO2 emissions per kWh from systems to transport energy from the production
electricity and heat generation and to improve the sites to end consumers. This requires substantial
air and water quality. Among other initiatives, this is infrastructure investments, which are considered
driven by their stronger reliance on renewables, high-risk projects for private investors due to long
including hydro, and nuclear in their power lead times as well as regulatory, market, and
generation. technology uncertainties. Because renewable
energies struggle to compete with conventional
Based on the 2012 Index results, a comparison energy sources, they often rely on financial
between groups with similar GDP per capita support. Technological development will help drive
confirms that countries with larger shares of down the cost curve of renewable energy
renewables, including hydro, in their electricity technologies and support meeting current and
generation have significant advantages in future global energy needs in an environmentally
mitigating their environmental impact. This is sustainable way.
measured by indicators of ‘cleaner’ electricity,
lower heat generation as well as lower levels of air Developing countries often lack the financial
and water pollution. These countries also exhibit resources, market sophistication and economic
better performance in providing a secure energy stability needed to deploy new technologies as they
supply, due to greater diversification of electricity still prioritise expansion of access to electricity and
production. However, there are little differences in satisfaction of energy demands from their
their ability to provide affordable electricity (social industries. Developed countries, on the other hand,
equity), as illustrated in Figure 8. One reason could have already established complete electricity
be that ‘new’ renewable technologies such as solar access at affordable prices and can invest in
and wind are currently more expensive than decarbonising their energy mix, thus improving
conventional generation methods. their performance in all dimensions of the trilemma.
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Figure 9
Current and potential pathways to energy sustainability

All countries need to

decrease environmental
impact while supporting
affordable and
9 accessible energy IV

Post-industrial countries rely more on the service sector

8 than industrial sectors. Through active mitigation and
cleaner electricity generation they manage to mitigate
their environmental footprint but can still improve
7
III

6
Social equity

Industrialising countries with high industry

rates and higher energy consumption
5 typically increase their environmental
impact as they strive to increase energy
access and economic growth Opportunity
4 II II A current challenge is how
countries can maintain good
environmental performance
3 during all stages of
economic development.

2
I Pre-industrial countries have good
environmental performance, but need to
1 expand electricity access and industrialisation.

1 2 3 4 5 6 7 8
Environmental impact mitigation
2012 Energy Sustainability Index rankings

Potential Index rankings

Existing pathway to energy sustainability
Potential pathway to energy sustainability

Pathways to a sustainable energy system poor performance in social equity (see Group I,
Figure 9). It is crucial that these countries
Figure 9 plots the current social equity and modernise and increase their energy services to
environmental impact performance of pre- improve human well-being, reduce poverty,
industrial, industrial and post-industrial country improve health and contribute to the country’s
8
groups in the Index. The Index data highlights the economic development through productivity
question of whether the current trajectory during increases and competitiveness enhancements.
development stages could be changed in the future
so that a drop in environmental performance could As countries succeed in addressing these
be avoided. challenges by increasing energy services, they
typically embark on a path of strong
Pre-industrial countries have relatively low macroeconomic growth, accompanied by
environmental impact due to low energy and increasing industrialisation and urbanisation which
emissions intensity per capita. However, this also leads to higher energy and emissions intensity
reflects their low energy consumption, low levels of per capita. To meet rapidly increasing energy
industrialisation and limited access to modern demand countries currently rely heavily on fossil
energy. At the same time, these countries have fuel-based generation and therefore exhibit high
CO2 emissions per kWh from electricity and heat
8 generation and strong air and water pollution,
Levels of industrialisation and GDP per capita classify a
country’s development stage: pre-industrial countries that rely compromising their environmental sensitivity (see
most heavily on agriculture are the least developed; emerging, Group II, Figure 9). Many countries do not have the
industrial countries have the highest development rates and
usually exhibit strong economic growth rates; and post-industrial capability to invest heavily in decarbonising
countries are the most developed, with the highest GDP per solutions at this point as they lack financial
capita and a stronger reliance on the service sector.
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resources and human capital. At this development hydro, and geothermal, but that this potential is
9
stage, the focus of political priorities and resource currently barely exploited.
allocation is to improve social and economic
stability, which is a pre-condition to attract foreign It is crucial to deploy technologies, existing and
investors. new, with appropriate economic incentives and
well-targeted support to enable economic and
Once countries have reached a certain level of social development while at the same time
development and have established a strong addressing energy sustainability and increasing
political, social and institutional framework, they are access to affordable energy. Given recent
more likely to invest in decarbonising their energy technological advances, with proper planning and
mix and improve performance across all adequate policies and regulations, countries have
dimensions (see Group III, Figure 9). However the potential to attract investments, embrace an
even post-industrial countries struggle with several alternative pathway and to make progress on all
underlying indicators such as high energy and three aspects of energy sustainability. The balance
emissions intensity per capita. These countries of this report captures the energy industry
face trade-offs between affordable energy prices perspectives on key actions required by
and the need to set incentives to reduce energy policymakers to achieve this goal.
intensity through energy-efficiency programs or
changes in consumption behaviour. Targeted
energy policies are needed to improve
performance across all dimensions of the Energy
Sustainable Index (Group IV).

Summary
The Energy Sustainability Index identifies the need
for countries to be proactive in mitigating their
environmental impact while passing through
various stages of their economic development. At
international climate summits, this is a consistent
focus: can emerging economies commit to stricter
CO2 reduction targets while they still struggle with
expanding energy services and with responding to
energy demands from their growing economy?
Multiple analyses point out that developing
countries have the highest potential to develop 9
United Nations Environment Programme (UNEP), February
renewable energy sources such as solar, wind,
2012: Financing renewable energy in developing countries.
 “Energy
savings
a re ni c e,

generate
energy”
“No policy can work if the

but d o n’t
“ We need a
global mind- World Energy Trilemma: Time to get real – the case for sustainable energy policy

genuine understanding of
World Ene

s 28
et in order
to succeed” the general public isn’t there”
policymakers, industry, and the public”

has to be a joint effort between

a meaningful policy”

it is difficult to get to
“Achieving

“Without clear direction

“If it doesn’t work in
energy

the market place, it

sustainability

Divider page
is not sustainable”
“We don’t need to resolve
“ W it h ex i st in g

awful lot can

be achieved”
technology and
commitment an
“Diversification
the debate around the
climate changes since is an insurance
most people can see that

policy against
answer than digging things
up and bur ning them” external shocks”
sustainable solutions”

engagement for real

energy sources”

among different

find the balance

“It is important to

“We need private sector

“We shift carbon emissions to
other parts of the world where
the total energy package is
cheaper and then we import
the very same product and

a CO2 emitter. But we should

product as the CO2 emitter.”

conservation”
source is energy
“The fifth energy

“The greenest “Right now we

are sp en ding
e n e r g y i s
energy like
energy saved” drunken sailors”
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

29

2. Framing the energy

sustainability
discussion
Energy benefits people far beyond what they use energy industry emphasised the need for an
individually at home, at work or on the road. adequate debate between policymakers, the
Access to energy is critical to the development of a energy industry and the public.
modern economy be it for agriculture, transport,
computing, manufacturing, construction, or health Global energy sustainability requires addressing
and social services. Energy is part of people's lives three challenges in the energy sector:
more than ever before. The shift from primary
energy to electricity is a key feature of modern 1) Energy security - whether it is security of
society and the impact of electrification on the supply or demand - to fuel economic growth;
quality and standard of living is significant, with
benefits for general health, opportunities for more 2) Energy access and the reduction of energy
productive activities that can generate additional poverty; and
sources of income and new possibilities for
education and media. 3) Environmental impact mitigation.

The projected economic and population growth Ideally, advances in meeting these challenges are
from roughly 7 billion to 9.3 billion people by 2050
10 aligned so that progress in all three areas is
as well as the aspirations of a rapidly growing interdependent and complementary.
global middle class, will drive energy demand. This
Today, energy systems around the world remain at
increased demand will put even greater pressures
vastly different stages of development. But they all
on energy resources, energy infrastructure and the
environment. share a common problem: they are far away from
being sustainable. “If a sustainable energy system
Sustainable energy is not only an opportunity to is something that is more secure than currently, at
transform societies and grow economies, but also a a cost that will support economic development
necessity - a prerequisite to meet growing energy particularly in developing countries, but which is
demand and reduce the carbon footprint. The also less carbon-intensive than currently, then you
energy industry plays a vital role in securing the are probably looking at somewhere in the middle of
transformation to a sustainable energy system. the current century – around 2050. If someone
“Achieving [energy] sustainability has to be a joint says otherwise they are not dealing with reality.”
effort between policymakers, industry and the
public.” To reach a common understanding of what Perspectives on urgency of the three pillars of
energy sustainability vary across countries, making
energy sustainability is, its importance for
it hard to define a common playground for all
economic growth, the challenges and issues to be
addressed, and the steps necessary to achieve it, participants in the market place. All countries are
very focused on energy security and price volatility.
However, there is more variability when it comes to
10
UN, 2010: 2010 Revision of World Population Prospects energy access and affordability, the social equity
 World Energy Trilemma: Time to get real – the case for sustainable energy policy World Ene

30
Figure 10
Relationship between economic development (measured by GDP per capita) and prioritisation
of pillars in energy trilemma

Group A (> USD33,500)

Group B (USD14,300-33,500)
Group C (USD6,000-14,300)
Group D (< USD6,000)

pillar, and even more so for the environmental of attention on the federal level with lesser attention
mitigation pillar (see Figure 10). Each country faces paid to environmental aspects and system
unique challenges in meeting the energy trilemma efficiency. Within Europe, the focus is on adjusting
and must chart its own path though the hard the energy mix and the transformation of the
choices which need to be made. energy system. The move towards renewable
energy, away from a fossil-fuel based economy, is
Developing countries in Sub-Saharan Africa, South also based on a desire to be more independent
East Asia, and Latin America need to build out their and less vulnerable to geopolitical uncertainties.
energy infrastructure to increase access to electricity “The transformation towards renewable energy
and ensure reliable energy supply to support economic does not emerge out of purely good nature, but
growth. Developing and emerging countries are also problems of limited resources and increasing
asking the question: "Shall we get electricity from difficulty to access resources - especially fossil
whatever source is currently available or wait to get fuels.” The challenge here is how to increase the
electricity from a cleaner source?” share of renewable energy in the system, diversify
generation, and ensure load balancing.
Similarly, emerging economies and high-growth
regions need to increase energy availability and
Driving three global energy goals
reliability quickly to ensure supply security, to
maintain a strong long-term economic development There is a growing focus on the energy
and to meet the aspiration of a rapidly growing trilemma and the importance of energy in
middle class. Moreover, many of these countries, economic development. Most recently, its
for example China and India, also face the importance was recognised at the Rio+20
challenge of supporting massive urban growth and conference. The United Nations Conference on
an increasing number of mega-cities. Sustainable Development (Rio+20) held in
June 2012 as a 20-year follow-up to the 1992
In developed regions with slow economic growth United Nations Conference on Environment
and a mature energy infrastructure, the focus is on and Development (UNCED) produced a vision
energy security, transforming the energy system statement “The future we want”. The Rio+20
vision statement clearly supports the initiative
and mitigating environmental impact. For example,
in the USA, energy independence is at the centre
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

31

by the UN Secretary-General on Sustainable • Have a master plan with clearly defined

11
Energy for All launched in 2011. energy sustainability goals

The initiative’s ultimate goal is to achieve three • Ensure the approach is economically viable
key objectives by 2030: • Include all forms of energy in the energy mix
 Ensure universal access to modern energy • Recognise that the transformation of the
services; energy system is a long-term process

 Double the rate of improvement in energy Have a master plan with clearly defined energy
efficiency; and sustainability goals

 Double the share of renewable energy in the To provide energy systems that are simultaneously
global energy mix. affordable, stable, and environmentally-sensitive is
a universal aspiration and industry repeatedly
Since its launch Sustainable Energy for All calls
stressed that “having a master plan is very
on all sectors of society to make commitments
to achieve these goals. To date, the private important.” “Without clear direction it is difficult to
sector has committed over USD50 billion and get to a meaningful policy; that is why we see
several billions of dollars have been committed policymakers and politicians muddling through and
by other key stakeholders, including changing policies at any given time depending on
governments, multilateral development banks, where the wind blows or where voters tend to.”
and international and members of the civil Currently, there is no common global roadmap, no
12
society. common global targets have been agreed on, and
there are no agreements on what ‘sustainability’
Underlying this effort is the need to benchmark should include for each country. Furthermore, there
and track policy performance to ensure are many different views on how to provide
progress. To this goal, tools such as the annual
sustainable, affordable, and reliable energy among
WEC Energy Sustainability Index are critical.
politicians, scientists, general public, and other
stakeholders - which makes it difficult for
The energy industry noted that debates on policymakers to craft policies. This adds to the high
achieving energy sustainability must include and degree of uncertainty for industry.
recognise the following:
To develop a master plan - on a national or global
level - a clear vision describing what needs to be
11
accomplished in the mid-term or long-term future is
[Link]
commitments/high-impact-opportunities/item/109-rio-plus-20 needed. Sustainability is a moving target and the
12
WEC not only welcomes and supports the UN Sustainable “toughest issue for policymakers is to define what
Energy for All Initiative, but is engaged in contributing to the
ongoing monitoring of the initiative’s goals beyond 2012.
stable, affordable, and environmentally-sensitive
 World Energy Trilemma: Time to get real – the case for sustainable energy policy World Ene

32

means.” Countries have different economic Include all forms of energy in the energy mix
development, structure of the economy, resource
endowments, skill sets, and technologies. Each Currently, the global energy mix is composed of
country must leverage its competitive advantage to around 80% fossil fuels, including coal, oil, and
achieve sustainable energy. South Africa for gas, and 20% carbon-free energies, such as
13
example has solar resources, the USA has shale nuclear, hydro, and other renewables. By 2035
gas, or Brazil has hydro resources. The definition this is expected to have changed to approximately
14
of the master plan will drive industry investment 60% fossil fuels and 40% carbon-free energies.
and innovation to leverage indigenous resources. Executives predominantly agree with this prediction
and emphasised that fossil fuels will continue to
The majority of interviewed industry executives play a dominant role for the next two to three
made the point that energy sustainability should be decades. “With fossil fuel, at best, you can burn it
defined by outcomes (for example, overall in the smartest way. There is no choice but to keep
reduction in CO2 emissions) rather than by inputs burning.”
(for example, increased share of renewable energy
in energy mix). Industry suggested that “maybe it Ultimately, the future energy mix will depend on
would be better to focus on reducing CO2 indigenous fuel sources, technologies available
emissions because it is less expensive to hit the and the economic drivers for those. Policy has a
target and leaves more options on the table.” huge impact on the timing and path taken. Given
Choices made now will have significant impacts on the magnitude of the challenge, industry across
future energy portfolio. different regions and sectors called on
policymakers to “have technology-neutral
Ensure the approach is economically viable frameworks that bring all options to the table” and
include all forms of energy in the future energy mix.
In considering the path to a sustainable energy
system, industry leaders stressed the importance “All available forms of energy should be included in
of recognising that projects must also be countries' energy portfolios, supported by
economically sustainable. “Sustainability is an technologies to mitigate the environmental impact
expression which often focuses just on of fossil fuels and energy-efficiency efforts.” There
environmental factors. However, if it doesn’t work is an urgent need to recognise the range of energy
in the market place, it is not sustainable.” It is most sources; none is the single answer. Intertwined
important for policymakers to develop a business solutions are necessary and combinations will not
model perspective and understand that companies be the same everywhere. It is beneficial to create
do not invest where there are only adequate or fair structures where private investment flows into a
returns, but where they expect secure returns
which match or exceed other investment 13
IEA, 2011: World Energy Outlook 2011
opportunities. 14
IEA, 2011: World Energy Outlook 2011 (450 ppm Policy
Scenario, based on policies under consideration)
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

33
Figure 11
G20 countries with a higher percentage of nuclear electricity in the portfolio outperform in all
dimensions of the energy trilemma

G20 high nuclear power share (>10% of electricty generation)

G20 low nuclear power share (<10% of electricty generation)
G20 no nuclear power

mix of different energy sources and technologies considerable. Gas can also scale up or down
(see Figure 11). The entire value chain needs to be very easily to meet changing demand. The
taken into consideration. “Diversification is an more gas in the portfolio mix, the more
insurance policy against external shocks.” renewables (and the intermittency) can be
accommodated.”

The role of shale gas If unconventional gas is developed in a

responsible way, the upside can be
Unconventional gas has been one of the tremendous. If it is done irresponsibly, a
biggest game changers in the energy space in backlash is possible and the full potential of the
this generation. Given the slow pace of change resource may be delayed. The USA can lead
and long lead-times typical to the energy the way and encourage other countries,
sector, it is remarkable how different the global especially in Europe, to adopt similar
outlook for shale gas is today compared to only approaches in dealing with uncertainties
a few years ago. A technological revolution in around regulation, technology (for example, the
drilling and gas production technologies has use of chemicals in hydraulic fracking,
greatly increased the world’s reserves of assessment and evaluation of fractures,
natural gas and changed the outlook for fossil liquefaction and handling) and market
fired electricity generation over the next decade integration (for example, integration with LNG,
and possibly longer. Furthermore, if the United pipeline transport, and gas balancing). “The
States (USA) and China, now hydrocarbon potential use of unconventional gas has a big
importers, become hydrocarbon neutral or even upside potential, but requires policy decisions in
15
exporters in the future, it will impact the energy order to develop it in a responsible way.”
sector globally. While shale gas is certainly an important game
changer in the USA - with its impact on the
Change in types of hydrocarbons could also be usage of coal and nuclear power - it is far from
remarkable from an environmental point of view being a proven game changer elsewhere in the
with ramifications on carbon emissions and world. Numerous barriers, such as
management strategies and abatement environmental concerns, accessibility and
technologies, as already seen in the USA. For exploitability of reserves, as well as human
example, the use of CCS for gas facilities and resources, technology and policy capacity
the policy debate around the benefits of natural build-up, make replicability elsewhere difficult.
gas and renewable energy. As one executive
noted: “It is a relatively easy switch from oil to
15
gas and the emission reduction can be World Energy Council (WEC), 2012: Survey of Energy
Resources: Shale Gas – What’s New
 World Energy Trilemma: Time to get real – the case for sustainable energy policy World Ene

34
Figure 12
Historical energy transformations and an energy future that meets the sustainable energy for all
16
objectives
Source: UN Sustainable Energy for All, 2012: Technical Report of Task Force 2; International Institute for Applied Systems Analysis
(IIASA), 2012: Global Energy Assessment – Toward a Sustainable Future

1200 Savings
Nuclear
Gas
1000 Oil
Coal
Other renewables
Biomass
800
~40%
100%
Renewable energy
90%
EJ

600 (biomass and renewables) 30%

80%
70% Low-carbon
60% options
50%
400 40%
30% Fossil fuels
20%
10%
0%
200 2005 2010 2015 2020 2025 2030
~30%

0
1850 1900 1950 2000 2030 2050

Recognise that the transformation of the biofuels, improve fuel efficiency, and electrify
energy system is a long-term process surface transportation amongst other changes. In
the electricity sector there is a need to consider the
The energy system is massive and has a “large shift in infrastructure demands to support an
turning radius”. From the perspective of the energy increased share of renewables and the more
industry, it will take until the middle of the current efficient use of energy. Moreover, major societal
century – around 2050 – to change the energy shifts and changes in how people live need to be
system significantly (see Figure 12). This is in large taken into account.
part because of the time-lag. Innovations come at a
slower pace and R&D processes often have a time Lowering CO2 emissions by increasing the share of
horizon of several decades. New energy renewable energy and decreasing the share of
infrastructure takes a long time to build. Furthermore, fossil fuels, while meeting growing demand from
“economic growth requires energy which currently population and economic growth, requires focused
requires fossil fuels.” It is likely to take a very resources and commitment. Policymakers will need
substantial period of time to move away from fossil to devise, implement, and commit to policies that
fuels altogether as “fossil fuels are such an efficient provide the “push on the steering wheel.”
carrier of energy and the infrastructure delivering
those fuels is long lived, embedded and very The question of wealth transfer
expensive to change.”
The challenge of establishing a system within a
Increasing the share of renewable energy is a long- country for carbon abatement will have a social
term goal that requires a number of changes in impact and inevitably lead to a substantial
many sectors. For example, in the transportation transfer of wealth within the economy - from
sector it is necessary to increase the use of one sector to another, from the private sector to
government, from consumers to government.
16
Political questions about the redistribution of
The grey area represents energy demand that could be wealth need to be addressed. Those questions
avoided through energy-efficiency improvements. New
renewables includes solar, wind, hydro and geothermal power. are very controversial and tend to delay the
In this scenario, traditional biomass is replaced by modern implementation of effective policy.
biomass. The historical data are shown in primary energy, while
the inset figure shows final energy demand.
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

35
Figure 13
Three key interconnected policy areas are necessary to support the transition to sustainable
energy

Coherent Integrate long-term policies to reduce Stable regulatory

and predictable political and regulatory risk and legal
energy policy frameworks for
long-term
investment

Attract and retain investments necessary to

achieve energy policy and sustainability goals

Enable implementation
and commercialisation
of new technologies

Encourage flow of new

Develop clear, goal-driven,
technologies to support
long-term policies to foster
energy policy and
technology innovation and
sustainability goals
commercialisation

Support flow of investments to boost

Public and private R&D of new technologies
initiatives that
enable R&D and
innovation

Summary
In addressing the sustainability challenge,
executives emphasised the need to develop a clear
vision that encompasses a mix of different energy
sources and technologies. As illustrated in Figure
13, governments must set the framework and the
boundaries to help overcome the hurdles
surrounding regulations, markets, technologies,
and customer preferences by setting a clear
agenda in three key interconnected policy areas:

• Define a coherent and predictable energy

policy
• Enable market conditions that attract long-
term investments
• Encourage public and private initiatives that
foster R&D in all areas of energy technology
The following chapters discuss each of these areas
in turn.
 f r o m
“Detach

politics

policies”
“People need to be much
“Simplicity in World Energy Trilemma: Time to get real – the case for sustainable energy policy World Ene
mo re educ ated and
the
36 regulation aware of things when

is important” it c omes to energy ”

a n d l e g i s l at i ve e nv i r o n m e nt ”

b u s i n e s s p l an i n t h e p o l i t i c a l

harder to reliably build a

“ I t i s b e c o m i n g i nc r e a s i n gl y

towards a technology

“We need to work

“Consistency in
policymaking is
a prerequisite
fo r o pt imising
Divid er page
the energy mix”

objectives”
“The private sector should
space

“Industry needs
it is impor tant to have

policies

frameworks set by
play a mo re imp o r t ant ro le in
energy

politicians that are

non-partisan

clear

stable, transparent,
p rovi ding gui da nc e, st akeho lder
the

long-term, and level

with
“In

impac t and tec h nic al ex per t ise” the playing field”

successful than
more likely to be
bottom-up is
together from

with current technology”

we have to be more ef ficient

UN regulations”

“Knitting policies

“Until we find something,

“Decisions on energy

policies are not made any

more to achieve long-term

industrial objectives, but to

capturevoters,leadingtoan

unpredictability of policies”
important to pursue
“Public awareness

is
of the true cost

“Decisions are driven by the

energy efficiency”

“ Yo u h ave t o
make a plan
energy

mainstream political view

and stick to it
instead of relying on consistently
- it needs to be
predictable”
of

d eve l o p ed, c l e a r o b j e c t i ve s ”
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

37

3. Define a coherent and

predictable energy
policy
The challenge Industry recommendations
Energy policy is highly complex as it must balance In the face of these challenges, industry executives
energy security, affordability, and environmental make the following six recommendations for
sensitivity. In addition, energy is vital to all areas of policymakers with regards to energy policies (see
economic development while, in turn, changes to Figure 14).
the economy and society affect the energy agenda.
Develop an integrated and coherent energy
Selecting the right instruments to drive energy policy framework
goals is challenging, given the interdependencies
and cause-and-effect mechanisms between energy Industry uniformly called on policymakers to
sustainability dimensions and the overall economy. develop a coherent and comprehensive energy
Industry expressed concerns over policymakers’ policy, but noted: “formulating and articulating an
silo-thinking, with separate departments for climate actual energy policy is a huge hurdle.” Industry
change, energy transformation systems, taxation, needs to have a clear understanding of the broad
transportation, etc. This can promote contradictory goals and business opportunities within a country.
ad-hoc policies that can hinder energy As noted, “We need to start with a national energy
developments. For example, policies such as the strategy to come to an understanding where we
EU Water Framework Development should are, which needs we must serve, and where we
address water use relating to both energy and want to be.”
agricultural use.
A country’s energy policy should therefore be
Added to this complexity is the fact that crafting based on a clear assessment of its energy
energy policy is often highly political, which can sustainability balance considering affordability and
detract from effective public debate. As industry accessibility, environmental mitigation, and energy
executives noted, achieving sustainability is not yet security. Within that triangle, policymakers need to
a joint effort and all stakeholders, including end- ask:
users and consumers, need to be included in the
dialogue. Without adequate public debate with • What are the main needs of the country?
open, honest facts on the table, there will be no • What are the economic goals?
genuine policy decisions that will be in place long
enough to ensure that investments are being • What industries do we need to support over
made. the next 20 years?
• Where are investments needed?
• Which instruments will we choose to address
needs?
 World Energy Trilemma: Time to get real – the case for sustainable energy policy World Ene

38
Figure 14
Recommendations to establish a coherent and predictable energy policy

Support mechanisms
Dialogue with industry Dialogue with general public
• Increase understanding • Generate social license for • Increase awareness of cost
of energy business sustainable energy targets of energy
and mechanisms
• Establish robust feedback • Reduce energy demand
loop on emerging issues growth curve

Level playing for all energy technologies

Consistent, clear, and simple regulations Think regionally
• Reduce complexity • Harmonise regulations across markets
• Detach politics from policies • Develop multi-national energy markets to
stimulate investment

Critical fundamentals
Establish a coherent and predictable energy policy
• Develop predictable, long-term, accessible, and transparent policy
• Integrate with adjacent policy areas (for example, environment, industry, finance, and transportation)

Executives noted that setting an energy policy is • China’s Five Year Plans, continually updating
challenging: “policymakers and regulators have to its policies to address emerging vulnerabilities
be aware of the country’s fundamental energy in the sector
needs and have to address them by installing a
• Brazil’s energy auctions, which support a
credible and capable political and regulatory
competitive tender between energy sources
system, while simultaneously proving that
sustainability dimensions and side questions are • Colombia’s consistent framework for the
understood and balanced.” Furthermore, energy electricity sector set in 1994 (under Laws 142
policy must be aligned with the policy of numerous and 143) with only a few changes over the
adjacent fields (see Figure 15). Above all, industry years
called on governments to establish energy policies
• South Africa's integrated resource plan, a
that are long-term, accessible, predictable, and
broad national process which aims at
transparent and serve to level the playing field for
balancing energy security, social equity,
technologies and nations. “Consistency in
resource efficiency, and environmental
policymaking is a prerequisite for optimising the
improvement
energy mix.”
Think regionally to harmonise regulations and
Industry pointed to positive aspects of the energy
develop energy markets and assets
policies of a number of countries, including:
Energy resources and markets are rarely bound by
• UAE’s nuclear energy policy to meet growing national borders; however, policies and regulations
demand and lower GHG emissions
remain defined by national boundaries. There is a
• South Korea’s smart grid initiative as a growing need to take a broader perspective with
national policy to achieve the vision of ‘low- regards to energy decisions. Industry called on
carbon, green growth’ policymakers to examine opportunities to adopt
regionally coordinated approaches to energy
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

39
Figure 15
Elements of a coherent energy policy
A coherent energy policy recognises that energy goals must support and be aligned with the goals of
critical adjacent policies

Transportation policy
• Reduce reliance on fossil fuels
• Public transport
• Vehicle technology including e-mobility
• Low-emission zones and congestion charges

Industrial and economic policy

• Economic goals
• Industry structure
Energy policy
• Transition to low-carbon economy
• All forms of energy
• Establishment of new industry sector
• Energy efficiency
Environmental policy • Energy infrastructure
• Emission reduction targets • Transition to low carbon
Social, industrial, economic, • Water and air pollution • Renewables portfolio
security, and development goals
• Waste management • Access
• Protection of flora and fauna • Affordability

Financial policy • Harmonisation of regulations with

key energy export / import
• Tax regimes partners
• Incentives for R&D / innovation
• Incentives / subsidies
Food and agriculture policy
• Food security
• Competing demand issues for biomass

Foreign affairs
• Trade laws
• Access to resources

Enablers

Aligned and Supporting education and

Clear and simple regulations
achievable timeframes research framework

17
resources, infrastructure, and regulations. As one power costs and investment needs. Similar
executive noted, “Getting countries together to opportunities to increase energy security exist in
discuss can be helpful in broadening understanding Latin America. Some African nations have
… and components of an international energy developed regional power pools that bring together
strategy may be achievable.” a number of countries with the aims of setting
common standards and policies, including detailed
For emerging economies, developing a regional items such as the joint exploitation of resources or
energy policy or a framework for cross-border the management of cross border transmission lines
resource-sharing would enable countries to build and electricity trade agreements including legal and
market scale to attract investments, leverage regulatory frameworks including tariffs. “These
shared natural resources, and develop common kinds of agreement open up a larger market for
infrastructure. These frameworks, such as the power companies, where the potential market size
proposed ASEAN power grid objectives for 2020, of a single country alone may not be sufficient.”
are viewed as a means to both increase regional
energy security and power reserves and reduce
17
See [Link] and
[Link]
integrate-power-grids-by-2020-for-regional-power-security-says-
thai-energy-expert/#ixzz21B3ZoxTP
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40

Building a regional market: Eastern Africa World Trade Organization and free trade
19
Power Pool (EAPP) agreements.

Mature energy markets also benefit from regional

The EAPP is a regional intergovernmental body
of seven Eastern Africa countries: Burundi, approaches through regulatory coordination.
Democratic Republic of Congo, Egypt, Ethiopia, Industry pointed to the challenges presented by
Kenya, Rwanda, and Sudan. By pooling and overlapping regional and national regulatory
coordinating electrical energy resources, the mechanisms as evident in the European Union.
EAPP aims to make available affordable, Countries such as Denmark, Finland, and Sweden
sustainable and reliable electricity and increase have implemented a carbon tax and also operate
the rate of access to electricity. Supported by a within the European Union’s Emissions Trading
broader East African Community (EAC) Treaty, Scheme. In effect, the countries face a doubling of
the EAPP is developing an East African Power regulations on CO2 emissions, which can lighten
Master Plan (EAPMP) that will embrace the the overall responsibility of other players in the
concept of public private partnerships (including
European Emissions Trading Scheme and distort
human capital training), and the development of
the carbon price. As result, there are no additional
a code to guide design and operation of
electricity interconnections in the region. It is benefits at the regional level: “if one part is very
hoped that this coordinated approach with its speedy and successful in emissions reduction,
25-year horizon will serve to reduce electricity other parts in Europe have no responsibilities
production cost and create an environment anymore.”
conducive for investment. One example of this
shared approach is the proposed regional Looking at the development of energy
hydro power plant, Rusizi III, which could infrastructure, industry commented that there are
produce 145 MW to be shared among Rwanda, few “… positive examples of cooperation in supply
the Democratic Republic of Congo and and demand issues across borders, usually it’s
18
Burundi. rather a nightmare for infrastructure companies.” A
positive example is the establishment of Nord Pool,
To advance global integration, improve market the Nordic wholesale electricity market, which
access and overcome trade barriers, international operates in Norway, Denmark, Sweden, Finland,
agreements, such as the recent agreement of Asia- Estonia, and Lithuania. However, it was noted that
Pacific Economic Cooperation (APEC) members, there are still multiple distinct electrical power
serve as leading examples. Members agreed to
cap tariff rate on 54 ‘environmental goods’ at 5% by 19
Many of these ‘environmental goods’ are energy products and
2015, and this offers an immediate path forward reducing both tariffs and non-tariff market access barriers will
and may set the stage for subsequent action in the lower the cost of new energy-efficient technologies, thereby
spurring their utilisation and ultimately assisting in the realisation
of broader development and environmental goals for the world
community at large, as recommended by the WEC Task Force
18
[Link] on Rules of Trade.
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

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markets across Europe. Different regulators apply achieve defined goals. Industry noted the
different tariffs at different stages and on different importance of consistent, clear, and simple
parties, either consumers or producers, which regulations. Governments can have a sound policy
makes it difficult to build a large single overarching but implementation often falters due to regulatory
20
electrical grid. Industry noted, “… there would be complexity. Industry pointed out that “simplicity in
improvement to the energy system as a whole if regulation is important” and regulators should
there were a greater willingness for governments “reduce the complexity of their policy instruments.”
to cooperate on the development of large scale In particular, industry noted the most effective
transmission infrastructure.” regulations are those that set clear targets or
objectives that do not overlap or overly specify
Coordinated regulation would also help improve mechanisms or technologies to reach those goals.
cross-county links and encourage the adoption and
implementation of new and currently available While calling for simplicity, industry also cautioned
technologies. Differing energy targets can hinder policymakers against ‘single issue’ regulations
existing cooperative energy agreements. For since these will typically lead to distortions or
example, alternative energy targets may bubbles in the overall energy system and a sub-
compromise capacity and can lead to breaches in optimisation of performance and investments.
capacity support in inter-regional agreements. Dis- Comprehensive policies can be more effective than
harmony in the regulatory process can also require multiple, potentially overlapping and narrowly-
companies to go through separate processes of focused policy regimes which create a complex
reviews and standards. For example, Canada and policy landscape with potential unforeseen risks
the USA trade large volumes of electricity across and unintended impacts. Policies must be
the border. Both countries require similar toll, considered with a framework of how sectors
economics, and environmental impact statements, interact on a macroeconomic scale. Only by taking
but due to small differences in standards, into account the feedback of economic impacts
companies must go through each process twice. across all sectors and regions, can the total
effectiveness of the energy policy be optimised.
Apply clear, basic and simple regulations
Regulators can also examine how to implement
Guided by a clear energy policy, supporting regulations with a ‘single window’ concept to
regulations must be developed and implemented to streamline processes. This can be particularly
important for new technologies where all processes
20 and associated regulatory frameworks necessary
The member states of the EU have recognised the challenges
of multiple electricity markets and have agreed on an ambitious for planning and permitting may not yet be fully
plan of building the biggest market of electricity, connecting mapped out. For example, solar power developers
more than 500 million consumers throughout the continent. The
“Third energy package” includes actions to removing technical in India must secure permission to transfer land
obstacles to cross-border energy trade and coordinates from agriculture to non-agricultural use and may
activities of national energy regulators.
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42

have to acquire and document water rights for the technical expertise …” to achieve energy
life of the project from local water authorities, sustainability. For example, a dialogue with
secure approval of the pollution control board and industry is crucial to assess the cost and efficacy of
the aviation ministry to achieve overall approval at technologies and thus inform policymakers' in
21
state and national level. In some European setting sustainability goals.
countries waiting for permits for roof-top solar
project can account for 50% of the total project “Much of the energy space is changing – especially
22
timeline. for renewables. You can’t develop policy in
isolation.” Policymakers must engage with industry
Finally, industry called on policymakers to “detach and vice-versa to improve clarity and the path
politics from policies” and noted the importance of forward for sustainable energy systems.
regulators that are independent from governmental Policymaking can be enhanced through an ongoing
changes as a mechanism to support consistency. and long-term dialogue between industry and
“In the energy space it is important to have non- government. Some countries noted for having
partisan policies with clear objectives.” Industry effective ongoing dialogue between policymakers
noted that short-term, inconsistent, and opaque and industry include Korea (Republic) and
regulatory frameworks limit or stop a company from Colombia.
investing in a country’s energy infrastructure. As
one executive noted: “The greater the political Industry Initiatives to drive the sustainable
consent on an energy policy, the more willing I energy dialogue
would be to invest in the country.”
The Global Sustainable Electricity Partnership,
Increase the dialogue between policymakers which includes many members of the World
and industry Energy Council, is a non-profit international
organisation, composed of leading electricity
“The feedback loop with policymakers is very companies looking to promote sustainable
important” and greater dialogue with policymakers energy development through renewable energy
is critical to developing sustainable energy projects and capacity-building activities in
strategies. Executives noted: “Industry is vital to developing and emerging nations worldwide.
solving the sustainability challenge” and Initially formed by European and North
American utilities in 1992, the organisation
acknowledged that “… on the policy side, the
expanded in 2010 to include counterparts from
private sector should play a more active important
major emerging economies including Brazil,
role in providing guidance, stakeholder impact and South Africa, China, and Mexico. The initiative
focuses on supporting the development of joint
21 policy frameworks, engaging in the global
Rikki Stancich, February, 11, 2011: India site procurement:
Overcoming DNI data availability, permitting and regulatory debates on electricity-related issues, and
challenges (see [Link] bringing together competencies, experience
22
IEA, 2012: Tracking Clean Energy Progress
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

43

and motivated individuals to tackle the discussions solely around climate science is not
challenges of sustainable and accessible helpful on the grounds that in can often become
energy. Recently, the partnership organised the controversial. As one oil and gas executive bluntly
“Global Summit to Strengthen Public Private noted: “We don’t need to resolve the debate
Partnerships (PPP) to Accelerate Global around the climate change since most people can
Electricity Technology Development” with the
see that we have to find a better answer than
United Nations. The Summit highlighted
digging things up and burning them.”
recommendations from 2011 and 2012 global
surveys of public and private PPP practitioners
and the learnings from over 30 case studies.
23 Industry recommended that policymakers re-frame
the energy discussion to focus on the overall costs
of energy, the benefits of new energy technologies
Increase the dialogue with general public (for example, smart meters) and the need to foster
energy efficiency. “Public awareness of true cost
A country’s energy policy must be underpinned by on energy is important: it is a political role to speak
a ‘social license’, that is to say, broad approval clearly to consumers to give them a clear message
from the general public. “Achieving sustainability and get acceptance of the cost of energy from the
has to be a joint effort between policymakers,
people.”
industry and the public.” This license must be
based on adequate and engaged public debate Industry noted that government also has a key role
around energy sustainability challenges. to play in promoting the awareness and
Governments can play a critical role in information acceptance and in emphasising the advantages
dissemination, awareness raising and stimulating and the attractiveness of new and emerging energy
broad stakeholder engagement in the discussion of technologies. “We need to work towards a
energy issues since “no policy can work if the technology affinity, not aversion. Policymakers
genuine understanding of general public isn’t should more actively shape opinions in this matter.”
there.” Currently, many renewable projects can take
several years to secure permits. The challenge is
Industry noted that there must be honest to “create an inclusive process that still gets to
communication and debates with consumers and a decision that is predictable for investors in a
end-users about trade-offs and related energy ‘do-able’ timeframe.”
costs. Currently, in many countries, energy
discussions quickly dissolve into disputes over Promote energy efficiency
climate change that can stall discussions on energy
strategy. Industry noted that structuring energy Energy executives noted the importance of greater
energy efficiency to reduce the growth rate of
23 energy demand. “With the current technology,
[Link] and
[Link] energy resources are finite.”
[Link]
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Figure 16
Examples of progressive pricing in California (USA)
Source: CEC Workshop on rate design, incentives and market integration, June 2008

.4 1 - Baseline use
.359 2 - 101-130% of baseline use
3 - 131-200% of baseline use
4 - 201-300% of baseline use
.313 5 - Over 300% of baseline use
.3 .285
Electricity price (USD /kWh)

.250 .243
.226 .219
.215
.2

.152
.131 .137 .130
.116 .118

.1

N/A

0 Tariff Brackets
1 2 3 4 5 1 2 3 4 5 1 2 3 4 5

Pacific Gas and Electric Southern California Edison San Diego Gas and Electric

“Until we find something, we have to be more of the need for and benefits of energy efficiency as
efficient with the current technology” and a mean to reduce overall national energy demands
“Policymakers should prioritise increasing energy and costs.
efficiency.” There are gains to be made in
improving the efficiency of energy generation and Progressive energy tariffs to drive efficiency
transmission. For example, the continued
implementation of smart grid technologies can, as In Dubai, UAE, where energy is still highly
some studies show, reduce energy consumption subsidised, a new progressive residential /
and transmission losses commercial tariff structure was introduced in
by 2-5%. 2008 with electricity charges ranging from 23
fils per kWh (USD0.06 per kWh) for monthly
Energy-efficiency behaviour can “… be driven by consumptions below 2,000 kWh to 38 fils per
our wallet” but raising energy costs as a kWh (USD0.10 per kWh) for consumptions
mechanism to drive energy efficiency has limits. As more than 6,000 kWh per month. In addition, a
executives noted, policies must ensure that variable fuel surcharge of currently 6 fils
(USD0.02) is added per kWh consumed. A
households are not put into energy poverty, and
similar tariff structure applies for industrial
this is especially true given the correlation between 25
users.
energy poverty and highly inefficient housing stock.
Progressive electricity tariffs and budgetary Japan, Toronto (Canada), and California (USA)
transfers to the poorest with the market price set at have also introduced progressive energy tariffs
full cost can be used to deliver the right economic to reduce the energy use growth curve. In
signals to consumers and at the same time protect Japan the introduced electricity tariff is a
and ensure access and affordability for poor and function of power subscribed and a unit price
low-income consumers. These programs can be per kWh consumed, which depends on the slice
complemented by broad government-run energy- of volume consumed.
24
efficiency awareness programs. As industry
noted, “government need to engage citizens on Where in Dubai and Japan the slices of volume
consumed monthly are fixed, in California (see
energy efficiency.” Governments have a significant
Figure 16) and Toronto slices evolve daily
role to play in consumer education and awareness
according to public holidays and temperatures
and a ‘baseline’ is defined for each day.
24
For more information about effective energy-efficiency
policies, please see WEC, 2011: Policies for the Future: 2011
25
Assessment of Country Energy and Climate Policies [Link]
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

45

consumer demand for energy-efficiency

The approach implemented in California and
services by applying customer data analytics,
Toronto depends on a reliable system of
developing customised offerings and
invoicing that can only be set up with real time
compelling messages for specific markets, and
metering (for example, smart meters) and daily
learning to integrate energy efficiency with the
posting of the consumption that allows
overall utility customer experience
consumers to have the ability to actively
26 management.
monitor their own energy consumption. In
contrast, the Dubai and Japan approach, with
However, utilities face real challenges in driving
fixed slices and defined monthly volumes,
through the full potential adoption of energy-
progressive tariffs can be introduced without
efficient technologies and behaviour. Uptake is
smart meters and is thus easier to roll-out.
hindered by mixed incentives for users and
suppliers of energy; the up-front costs of more
efficient technology, and the increasingly
widespread use of consumer electronics - in
Promoting energy efficiency
particular, personal computers, televisions, and
related devices which are a growing component
Residential energy use (including the energy
of household energy use. Added to this are
efficiency of homes) represents a key focus for
sophisticated pricing and tariffs that mask the
energy-efficiency programs. In many countries,
true costs of energy (particularly electricity), the
regulators have set out energy-efficiency
complexities of human behaviour, the lack of
obligations (EEOs) for energy providers to meet
knowledge of the opportunities for and benefits
and deliver. Most recently, for example, 27
of energy efficiency, and the ‘rebound effect’.
Australia is examining the benefits of
establishing a national Energy Savings
As shown in Figure 17, the average cost of one
Initiative. This market-based tool for driving
MWh of energy saving in the USA has
economy-wide improvements in energy
increased by 82%, from approximately
efficiency would place obligations on energy
USD20/MWh in 1999 to USD36/MWh in 2010.
retailers to find and implement energy savings
in households and businesses.
This illustrates that efficiency gains get harder
and more costly to achieve once the ‘low
Leveraging energy providers to drive energy-
hanging fruit’, such as equipment upgrades,
efficiency programs has many advantages.
have been implemented.
Utilities have existing commercial relationships
with a wide range of end-users and also are
looking for opportunities to transform
themselves from commodity energy suppliers to
providers of value-added energy services,
including energy efficiency. Utilities can target
27
WEC, 2011, Policies for the Future: 2011 Assessment of
26
[Link] country energy and climate policies
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46
Figure 17
Average cost of one MWh of energy saving in the USA
Source: U.S. Energy Information Administration (EIA), 2011: Electric Power Annual 2010 (EIA form 861); Oliver Wyman analysis

USD spend per

MWh saved
$40
$36.35

$35

$30

$25
$21.98
$19.92
$20

$15

$10

$5

$0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Continued gains in the success of utility energy- Summary

efficiency programs will require efforts by both
28
policymakers and utilities: Energy industry outlines a series of inter-related
recommendations for policymakers to ensure
 Policymakers can support and implement energy policy sets the conditions to support the
energy-efficiency awareness-raising achievement of energy sustainability:
programs and consumer demand for
efficiency services, including promoting
• Develop an integrated and coherent energy
efficient household appliances (for example,
policy framework
stimulus rebates, tax credits, free appliance
recycling), and where appropriate, banning • Think regionally when developing energy
old technologies. markets and assets

 Policymakers and utilities can engage in • Apply clear, basic and simple regulations
dialogue to agree on how to implement • Increase the dialogue between policymakers
energy-efficiency measures from the
and industry
transformation of energy to the final
consumption of energy with clear program • Increase the dialogue with general public
objectives, and effective regulatory based on an impact assessment that shows
structures that create innovative incentives benefits and costs to support the discussion
for utilities to operate with lower overall
energy demand. Methods such as cost • Promote energy efficiency
recovery methods should be considered to
Predictable energy policies with defined goals,
assure alignment of interests between
enacted by clear regulations and supported by
shareholders, regulators, and consumers.
engagement with industry and the general public,
and the critical untapped ‘fuel source’ of energy
efficiency will enable industry to apply investments
and innovations at lowest cost.

28
IEA for European Union Regional Workshop, 18‐19 January
2012: Policies for Energy‐Provider‐Delivered Energy Efficiency;
Michael Britt, Oliver Wyman, 2011: Is Energy Efficiency Losing
its Efficiency?
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

47
 cycles don’t
investment
“Industry

cycles and
political
“Ma rk et p a rt ic ip a nts a re
usually better informed and
“The key thing
World Energy Trilemma: Time to get real – the case for sustainable energy policy World Ene

48 is to put a
economical solutions that can
achieve environmental goals” price on CO2”
thecountry’sabilityto

this policy is needed”

attract investments”

and actively support

or not policies allow
point is whether
“The real tipping

been created that

once the illusion has
bad instruments
systems to abolish

“Generally, it is very
“The issue of financial

constraints is not a

problem but it comes back

Divider page
to the business model”

protection against legal changes”

“To secure investment you
of political commitment and
“Inv e s tor s need guar an tee s

“Over time
subsidies need three main things:

have proven a master plan, clarity on

to always be a expectations, and the

losing policy” ability to negotiate quickly”

be able to tap into a

renewable segment to

bond market for the

subsidies or feed in tariffs”

larger capital market”

“We need a corporate

energy types than providing

“It is more effective to jack

up prices for particular
“If you give private
sector room and a
simple set of rules that
are predictable and
maintained, we will

how to make money”

cost of production”
economic value and

“We need assurance that

“In general, prices

“A s e n s e o f investments are secured

continuity with the transaction and
there is a social benefit
that allows or return on investment
investment” in the short or long term”
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

49

4. Enable market
conditions that attract
long-term investments
The challenge feed-in tariffs, or CO2 prices. Policies around these
instruments must be aligned and work in synergy.
Huge investments are necessary to expand energy
Ensure policy consistency
access, develop new energy technologies,
replenish aging infrastructure and build new energy
Governments need to show commitment and
infrastructure assets and associated supply chains.
consistency in regulatory approaches. For
It is estimated that capital investment of about
example, uncertainty increases when policies that
USD1.5 trillion per year will be required from
are temporary approach their expiration, or when
2011 to 2035 to maintain energy services at
political control changes and new leaders reject
current levels and begin the transition to more
policies of the previous government. As one
sustainable energy system. Expansion of modern
executive noted: “We are very sensitive to how
energy services to the approximately 1.3 billion
countries clarify their rules of engagement and
people without electricity and 2.7 billion without
policy framework and how stable they are in order
clean cooking facilities is estimated to require
to create the right investment conditions in these
USD48 billion per year until 2030, representing
29 countries.” Overwhelmingly, industry noted that “...
only a 3% increase on total investment.
the single best mechanism to drive investment is a
stable, predictable policy framework.”
Cash-strapped governments have limited capacity
to fund the increased energy access and shift to a
A significant hurdle to policy predictability, as
low-carbon future. Private sector capital must be
perceived by industry, is the conflict between the
attracted to invest in the sector.
political and regulatory timescales and the
timescales of energy investments, including
Industry recommendations research and development, project lead-time,
project realisation, and the lifetime of the asset.
Industry made the following six inter-dependent “Industry investment cycles and political cycles just
recommendations to policymakers to help their don’t fit together.” Attracting investments to the
countries attract the necessary levels of private energy sector will require politicians and
sector investment and ensure those are directed to policymakers to address this fundamental
meeting the country’s energy goals and anticipated challenge. “At the time of investment, you are
future demands (see Figure 18). In making these looking for guarantees that these policies will stay
recommendations, industry stressed the valid for these particular plants for a certain period
importance of ‘connecting the financial dots’ to of time (for example, 20 years).” Instability of
optimise investment opportunities. For example, returns pushes up required rates of return and
investors calculating net present value (NPV) factor deters investments. As one executive noted,
in all financial instruments, including any subsidies, “We’re not short of cash, we’re short of stable
returns.”
29
IEA, 2011: World Energy Outlook 2011
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50
Figure 18
Recommendations to attract long-term investments

Support mechanisms
Green banks Green bond market Public private partnerships
• Provide low-cost financing to • Enable institutional investors (PPP)
clean energy projects to be a greater source of • Apply public
debt to leverage private
• Fill gaps that markets, sector investments by
commercial banks, and other mitigating risks
classical financial institutions
cannot effectively serve

Level playing for all energy technologies

Careful application of subsidies Market based pricing instruments for
• Reduce regulatory and political risk of new and emissions trading
emerging technologies • Establish carbon pricing and an effective
carbon market
• Ensure that low-carbon investments are offering
same level of risk-adjusted returns as high-
carbon ones

Critical fundamentals
Investment framework and policy stability to reduce political and regulatory risk and increase
attractiveness of investments
• Promote coherent energy policies and frameworks
• Support a predictable and transparent legal system
• Foster macroeconomic growth and social inclusion
• Develop fair and reliable tax schemes
• Ensure safe business and working conditions
• Align financial instruments

The challenge is even greater for companies in energy demand. Government decisions on
developing countries, no matter if privately or energy policy, regulatory decisions relating to
publicly owned. Beyond securing funding, projects energy or other areas such as environment,
require expertise to support processes such as the transport, or industry policy can greatly affect
preparation of a feasibility study or transactions the return ROI of energy projects in the short
and long term. As illustrated below, real-time
skills which can affect the time to agree on a
electricity economics are related to the efficient
concession purchase agreement. Many companies
use of existing and available generation assets.
in developing countries have limited expertise in Long-term electricity economics are related to
these areas and these gaps in expertise can easily the efficient investment in power plants and
add 2-3 years to the project development process. other assets. What happens on timescales of
seconds can have a profound impact on the
The challenge of forecasting return on long-term economic performance of assets with
investment lives of decades or more (see Figure 19).

The return on investment (ROI) for energy Support mechanisms to increase energy
infrastructure, such as electricity power investments
generation plants, implementing electricity
transmission networks, or building gas pipelines
Policymakers can support the development of
is often captured over a 25-30 year timeframe
mechanisms that will compensate for underlying
and is based on projections and models of
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

51
Figure 19
Electricity economics timescales go from seconds to years
Source: NERA, Oliver Wyman 2012

Before

Decades
Generation
investments
Years
Physical Reserves
and financial and ancillary
contracts services
Months

Pre-
Weeks dispatch

Hours

Dispatch
and market
Seconds clearing
Real time
system
control
Real time
Spot
market
prices
Hours

Contract
Months
settlements

Investment
Years returns

Decades

After

externalities and market failures and stimulate lesser interest in lending for investments in
investments in the energy sector. Both mature and potentially risky carbon reduction projects.
emerging technologies and infrastructure projects
face challenges in accessing financing from New technologies, particularly new low- or zero-
traditional sources (see Figure 20). carbon infrastructure and technologies, face even
greater difficulties in raising capital to demonstrate
Energy investments require large amounts of long- commercial viability. As one executive noted: “You
term, reasonably priced debt and equity finance to don’t see a rapid deployment of renewables as
provide investors with the necessary returns and they don’t yet have bankable systems.” Private
ensure affordable energy to consumers. Traditional equity, venture funds or infrastructure funds can be
sources of private finance (debt and equity) for sources of investments into energy infrastructure.
infrastructure projects are becoming more However, these funds require greater certainty
constrained in their capacity to provide long-term about the legislation governing the returns
capital. Utilities face uncertain energy demand, generated by these projects and more
increased borrowing costs and the need to reduce transparency on the funding process and parties
their leverage to protect their credit ratings. Thus, involved before they will invest.
the commercial market is constrained by risk
aversion and a competition for funding resources at Buttressed against these specific finance
banks. The banks, in turn, currently face capital challenges is regulatory and political uncertainty
and liquidity constraints, including legislation that affects large, long-term energy projects. For
requirements for higher capital ratios, and show example, in Europe, the investment market for low
 World Energy Trilemma: Time to get real – the case for sustainable energy policy World Ene

52
Figure 20
30
The funding challenge for low- and zero-carbon technologies and energy infrastructure

Typical funding sources Current challenges

Utilities (bonds) • Uncertain energy demand

• Increased borrowing costs
• Need to reduce leverage to protect credit ratings
• Internally competing demand for capital – across business units and
geographies
• Uncertain regulatory structures in evolving mature markets and developing
emerging markets

Banks and commercial market • Financial recession reduced ability to deliver volumes of debt capital required
(project finance) • New legislation (for example, Basel III) requiring higher capital ratios may
further limit ability to lend

Pension funds/ institutional investors • Project complexity, especially if a PPP project

• Large number of government bodies involved in this area
• Lack of the necessary level of expertise and experience to directly in specific
projects or direct construction risk
• Pension funds can only invest in top-rated securities

Venture capital funds • Regulatory stability and certainty

• Long time frames associated with proving commercial viability of many
projects (for example, wave and tidal projects can require 15-20 years)

Private equity funds • Project development risk

• Market adoption risk
• Scalability issues as small projects may offer unattractive economic returns
for many banks and investors yet have same transaction and diligence costs
as large projects

Infrastructure funds • Construction and operation risk

• Lack of clarity on business models, some of which are likely to be based on
public-private structures, or on source of returns for new and as yet
unregulated infrastructure assets such as a CO2 transport network, electric
car charging networks, heat networks or smart grids

and zero carbon technologies is negatively affected critical to reducing the cost of capital. This can be
by a current carbon pricing regime that does not achieved by allocating funds from either
present a sufficiently stable price signal for governments or multinational investment banks to
investors to select environmentally-sensitive over provide incentives, or by acting as a guarantee for
high-carbon projects. One industry executive noted private investors. Examples include a fund to
of investments “… first a project must be purchase policy insurance that mitigates political or
sufficiently priced to make it profitable, and regulatory risks and thereby enables the financing
secondly it has to be sufficiently secure and this is of a project.
even more so with newer technology and
renewables.” Energy investments require a long-term approach
focused on lowering risk to levels that the market
Catalyse private sector investment in low- and will finance. Policymakers can support the
zero-carbon technology and energy development and expansion of sources of financing
infrastructure and, in particular, green banks and green bonds
can be promoted.
Effectively applied, public funds can be used to
unlock and leverage significant amounts of private Green banks are intended to provide low-cost
capital to drive investments in energy financing to clean energy projects and help fill the
infrastructure. Lowering the perceived or real risk is gaps that markets, commercial banks and other
classical financial institutions cannot effectively
30
Green Investment Bank Commission, 2010: Unlocking serve. A number have been established. For
investment to deliver Britain’s low-carbon future
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

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example, the USA’s first green bank, the Clean development banks, including the World Bank and
Energy Finance and Investment Authority (CEFIA), the European Investment banks, have issued
established in June 2011, functions as a quasi- green energy bonds of USD7.2 billion. The USA
public corporation providing low-interest loans to government has also established a Clean
projects that will generate clean energy and Renewable Energy Bonds program that has
promote energy efficiency. The bulk of its funding allocated USD2.4 billion. A well-structured green
comes from an existing surcharge on electricity bond market would enable institutional investors to
bills and additional funds from the Connecticut be a greater source of debt financing.
Green Loan Guaranty Fund. It can also tap into any
federal funds made available to finance state green The main institutional investors in the OECD,
banks and contract with private capital. including pension funds, insurance companies and
mutual funds, held over USD65 trillion at the end of
In the United Kingdom (UK), the Green Investment 2009. In non-OECD countries with mandatory
Bank (GIB) is expected to be launched in 2012 with Defined Contribution (DC) pensions, large pension
an initial seed funding of £3 billion to 2015 (with the fund asset pools have also been accumulated. The
expectation that it will not need to borrow before assets are smaller, but growing more rapidly than
2015). Its focus will be green infrastructure projects in OECD countries. 31 In principle, the long-term
including offshore wind, commercial and industrial investment horizon of pension funds and other
waste, energy from waste, non-domestic energy institutional investors should make them natural
efficiency, and support for the UK government’s investors in less liquid, long-term assets such as
“Green Deal”. KfW Banking Group (Kreditanstalt für infrastructure. As one industry executive
Wiederaufbau) is a German government-owned commented: “If we could have pension funds and
development bank and acts as a second-tier bank. insurance companies enter the area, we would get
It covers over 90% of its borrowing needs in the access to capital that is satisfied with 4-5% annual
capital markets, mainly through bonds guaranteed return, then the cost of projects could be cut in half
by the federal government. This, along with its and renewable energy would be quite competitive.”
exemption from corporate taxes, allows KfW to
provide commercial banks with liquidity at low rates Yet, it has been estimated that less than 1% of
and long maturities. The bank is especially active in pension funds worldwide are invested in energy
promoting energy-efficient housing for owner- infrastructure projects. Institutional investors often
occupied houses as well as for landlords, both for
new houses and refurbishments. 31
In Latin America, total assets of private pensions are much
smaller, amounting to USD283 billion in June 2008. Their
There is currently no widespread green bond smaller size is due to the only recent introduction of mandatory
market and industry noted: “We need a corporate DC pensions, to the low coverage of pension systems and, to
the smaller GDP size in these countries. However, assets grew
bond market for renewable segment to be able to at an annualised value of 22% in the period 2003-2008, double
tap into a larger capital market.” Multilateral the average growth in OECD countries. Brazil is considered one
of the fastest growing pension markets.
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lack the necessary level of expertise and order to attract greater pension fund investment
experience to directly invest in large scale in infrastructure, governments can take
infrastructure projects. Further, regulations can limit measures to help overcome three current broad
or prohibit pension fund investments in perceived barriers to investment (see Figure 21).
‘risky’ projects. Policymakers can support the
development of new mechanisms, such as green Minimise the use of subsidies to reduce
bonds, that would facilitate institutional investment regulatory and political risk
in energy infrastructure.
Industry noted that policymakers should carefully
Increasing institutional investments in consider how subsidies are applied to ensure these
infrastructure policies do not create regulatory or political risks
around investments into emerging low- or zero-
The prospect for increased institutional carbon technologies.
investment in infrastructure is strong. The
financial crisis and the gradual maturing of There are a number of examples where subsidies
pension plans’ demographic profiles have have generated booms and busts in renewables
underlined liquidity issues and at the same time when governments could no longer afford the
lowered risk appetite for many investors. There subsidy. Significant uptake of subsidies can drive
is growing interest in good quality – income- up costs for clean megawatt-hours, leading to
oriented – inflation-linked investments that can
reduced public support for renewables, and often
match their liabilities. In addition, the growth in
increase total policy costs beyond initial estimates.
‘Socially Responsible Investing’ (SRI) has
In extreme instances, this can lead to abrupt policy
increased the demand for ‘ethical’ projects
including renewable energy. cancellations by government, such as occurred in
Spain. Following the 2008 financial crisis, the
Emerging economies generally face an even Spanish government drastically cut its subsidies for
greater opportunity to develop their institutional solar power and capped future increases. In 2012,
investors sectors as, with few exceptions, their the Spanish government went further, placing a
financial systems are largely bank-based. moratorium on renewable energy subsidies with
Whether such growth materialises will depend the aim of saving several billion Euros owed under
on policy decisions, such as the establishment the policy.
of a national pension system with a funded
component, a common feature in most OECD These examples illustrate how misaligned
countries.
subsidies can increase political and regulatory
uncertainty and erode investor confidence, as the
Despite the growth potential, currently, only a
market ultimately relies on government
few pension funds are investing in
infrastructure, including energy projects. In interventions (subsidies, renewable obligation
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

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Figure 21
Policymakers can focus on the following areas to help overcome barriers to greater
institutional investments in infrastructure
Source: OECD, 2011: Pension Funds Investment in Infrastructure: A Survey

Design policy measures supportive of long-term investment

• Consider long-term policy planning, tax incentives, and risk transfer mechanisms required to engage
investors in less liquid, long-term investments such as infrastructure

Reform regulatory framework for long-term investment

• Address bias for pro-cyclicality and short-term risk management goals in solvency and funding
regulations, and ease quantitative investment restrictions to allow investment in less liquid assets such
as infrastructure

Support a transparent environment for infrastructure investment

• Support mechanisms to share objective, comparable information and quality data to support effective
risks assessment of infrastructure investment opportunities

Promote greater expertise in the governance of institutional investors

• Encourage collaboration and resource to create institutions of scale that can implement a
broader investment strategy and more effective risk management systems that take into account long-
term risks

Barriers to institutional investment in infrastructure

Investment opportunities Investor capability Conditions for investment
• Lack of long-term • Lack of expertise in • Negative perception of
political commitment infrastructure sector infrastructure value
• Regulatory instability • Problem of scale of • Lack of transparency in
• Fragmentation of market pension funds infrastructure sector
among different level • Misalignment of interests • Shortage of data on
of governments between infrastructure funds performance of infrastructure
• Lack of clarity on and pension funds projects, lack of benchmark
investment opportunities • Short-termism of investors
• High bidding costs involved • Regulatory barriers
in infrastructure project
procurement process

contracts) which may change over time. This, in you extrapolate it to its end points and people
turn, can make it harder to secure funding and cannot afford this.”
investments in these technologies. As a whole,
subsidies negatively influence market dynamics, While cautioning on the use of subsidies, industry
mask the real costs of the energy, and increase clearly differentiated between subsidies on the
uncertainty since it is unclear what the customer is supply and the demand side, and recognised that
willing to pay. As one executive noted, “We look at effectively designed subsidies can help to increase
overall affordability of energy and are deterred energy access for the very poor and alleviate
[from investing] where the model doesn’t work if energy poverty. Further, some executives noted
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Figure 22
Global fossil fuel consumption subsidies compared to renewable energy support
Source: IEA, 2012: World Energy Outlook 2012

$523bn
Fossil fuel subsidies consumption (2011)

$88bn
Renewable energy support (2011)

that where subsidies are effectively directed to low • Include a mechanism that reduces the level of
income consumers, it can help secure the return of subsidy over time from the onset ‘clear built-in
investment in the whole chain of generation, sunset’ to ensure that projects are sustainable
transmission, and distribution markets. However, it long-term without the subsidy. For example,
was noted that consumption and end-use subsidies reduce the subsidy to the point where the
do not always benefit the intended recipients. The differential between the cost of the emerging
IEA notes that subsidies are an extremely technology and energy in the market place
inefficient mean of assisting the poor, as only 8% of effectively becomes zero. Industry noted that
the USD409 billion spent on fossil-fuel if it becomes clear that that gap cannot be
consumption (demand) subsidies in 2010 went to narrowed sufficiently in a reasonable period of
32
the poorest 20% of the world’s population. time, the subsidy regime should be
Subsidies can also discourage energy efficiency as terminated.
the true price of energy is masked.
Industry noted, “Ultimately, commercial feasibility is
the best and most effective motivation and driving
Despite the implementation challenges, subsidies
force for sustainability.”
nonetheless play an important role in stimulating
the adoption of new and emerging technologies −
Use public private partnerships to stimulate
by providing higher support at critical points in a
investments
project’s lifecycle to prompt the market to invest.
However, governments have to be very careful that
Governments can stimulate private sector
policies do not become a financial burden. Industry
investment and foreign direct investment by helping
advised policymakers to carefully consider the
to reduce or remove, especially country risk, out of
following before applying a subsidy to stimulate
the equation. Public private partnerships (PPPs)
investment:
can be particularly effective risk reduction
mechanisms in emerging and developing countries
• Ensure subsidy policy is clearly defined with
which may not yet have the experience to create a
stated targeted outcomes, and designed with
structure or institutions within which private
a high degree of financial literacy so that
investment can occur. “To spur PPPs, the public
investors are given the certainty they need
sector should assume risks that cannot be fully
and public finance is effectively directed.
borne by the private sector.”
• Maintain controls through economic
evaluation to ensure the subsidy is not overly Public private partnerships can exist in many
costly to the government. As industry noted, forms. Illustrative formats include: a publicly-owned
“… subsidies will be gamed.” electricity distribution utility signing a power
purchase agreement (PPA) with a private power
32
IEA, Paris, 4 October 2011: World Energy Outlook 2011 - IEA plant; a publicly-owned oil and gas company
analysis of fossil-fuel subsidies
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

57

signing a fuel supply contract with privately-owned An emission trading system (ETS) for carbon,
plant; build operate or build transfer models; and which includes self-reinforcing market incentives,
concessions which are granted by public entities, would be a significant signal to investors, funding
for example, public lands to access resources and institutions, and utilities. “Introduce some form of
explorations. The range of structure and models carbon pricing in the form of a market based
allows countries to “… align market forces with instrument.” In short, industry called for carbon
their needs and goals.” pricing and noted: “a liquid, harmonised global
carbon market would be the most effective
In developing countries, PPPs should be structured mechanism.”
to include a clear focus on human capital. Industry
advised that “based on legislative frameworks and Currently, there are carbon markets in the EU, New
bilateral agreements, private sector collaboration Zealand, Australia, and British Columbia (Canada).
should be strengthened to cover construction, California (USA) is starting the implementation and
operation and human resources development.” China is undertaking pilot projects while
Many developing nations face a scarcity of considering implementing a carbon market. Un-
technical and management skills in the energy harmonised markets will reduce the overall
sector. This affects the prospects for developing effectiveness of the mechanism and support
the country's energy resources and reduces the regulatory arbitrage. The trend towards
scope for effective policy-making and the planning harmonisation and linking of current and upcoming
and operations of energy producing, marketing, emission trading schemes, for example, the
and consuming institutions. “Utilities need to build European and Australian market 33, is viewed as an
within themselves the capacities to help play a role important step in overcoming the risk of un-
between investors, regulators and themselves harmonised markets.
especially where they act in a quasi-private / public
sector role.” Success story: Acid rain market-based cap
and trade programs
Apply market-based economic approaches to
curb carbon emissions The USA’s Acid Rain Program was established
under Title IV of the 1990 Clean Air Act
Industry noted that market-based approaches, Amendments to reduce acid rain by reducing
properly structured by policies, are more effective emissions of sulphur dioxide and nitrogen
in driving the shift to an economically sustainable oxide. Using a market-based cap-and-trade
low-carbon energy system. “Market-based approach, the program sets a permanent cap
approaches are needed to achieve a low-carbon on the total amount of SO2 that may be emitted
future.” by electric power plants nationwide. By 2002,

33
[Link]
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Figure 23
Modelling the average cost per tonne removed and cumulative tonnes of CO2 reduced
Source: NERA, Oliver Wyman, 2012

$40
Welfare cost per emissions reduction (USD/tCO2)

$30
Combo
Reg

$20

CES

C&T
$10

$0

20,000 30,000 40,000 50,000 60,000 70,000 80,000

Cumulative emissions reductions through 2050 (MMtCO2)

level of risk-adjusted returns as high-carbon

sulphur dioxide emissions from power plants
were 9% lower than the year 2000 and 41% investments. A carbon price can be determined by
lower than 1980. carbon markets or by a carbon tax. “It is important
that we come to an agreement where you have a
A 2003 Office of Management and Budget harmonised market-based system that sets a price
(OMB) study found that the Acid Rain Program that supports the development of new
accounted for the largest quantified human technologies.”
health benefits of any major federal regulatory
program implemented in the last 10 years, with It should however be noted that, in the absence of
34
benefits exceeding costs by more than 40:1. low-cost alternatives, a carbon price will increase
the costs of energy in an economy. This means
A carbon price offers a number of benefits. Firstly, that for poorer economies there has to be a means
the trade opportunities would be significant for of securing credits to offset the increased costs of a
economies as CO2 certificates can become a new low-carbon energy sector.
commodity. Secondly, a carbon price would help
level the playing field for emerging low- or zero- While calling for an emission trading system (ETS)
carbon technologies. Thirdly, it would stimulate for carbon, industry cautioned that the system
investments in new technologies to reduce carbon should not be applied to only one sector of the
emissions. Implemented in tandem with a carefully economy. Industry also noted that a carbon pricing
applied and limited amount of highly targeted could be applied at the consumption level but:
regulation, or transitional support for emerging low- “80-90% of the electorate is opposed to carbon
or zero-carbon technologies, a carbon price would pricing at the consumption level” and this deters
send a clear market signal to investors and ensure politicians.
that low-carbon investments are offering the same

34
United States Environmental Protection Agency: Cap and
Trade: Acid Rain Program Results
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

59

A market-based approach to carbon Summary

emissions reductions
A combination of inter-related measures is
The potential effectiveness of carbon policies necessary to stimulate private sector investment in
under consideration in the USA were examined sustainable energy and carbon reduction. Most
for their effectiveness and economic impact. important is policy and regulatory consistency and
Four approaches and scenarios were predictability. This sets the context for
examined: a clean energy standard (CES), an
policymakers to support mechanisms to
economy-wide cap-and-trade scenario (C&T), a
supplement existing financing options, such as
regulatory policy and mandate scenario (Reg),
a combination scenario that includes the green banks and the development of a green bond
regulatory mandates as well as the cap-and- market. Market instruments to curb carbon
trade scenario (Combo). emissions will help level the economics for
renewable technologies and signal the need for
As illustrated in Figure 23, the analysis and investments and innovations in low-carbon
model indicates that an economy-wide cap- technologies.
and-trade (with banking) policy proves to be the
least-cost, or economically most efficient • Ensure policy predictability
means of reducing emissions from an
economy. Under this approach, sectors with • Support mechanisms to increase investment
higher costs of abatement make fewer emission in sustainable energy, including green banks
reductions while sectors with lower marginal and green bonds
costs of abatement make more reductions and
• Minimise the use of misaligned subsidies and
sell them to sectors with higher abatement
costs. This ability to trade equalises the cost where deployed, ensure the program includes
across all covered sectors in the economy and clear built-in subsidy sunsets from the onset
reduces the targeted level of emissions at the to reduce regulatory and political risk
least cost. Thus, carbon cap-and-trade was • Use public private partnerships to stimulate
modelled to be the most effective of the four
investments
policies as a way to achieve carbon reduction
goals, even though it has among the largest of • Catalyse private sector investment in low- and
35
the economic impacts. zero-carbon technology and energy
infrastructure
• Apply market-based economic instruments
approaches to curb carbon emissions

35
NERA Economic Consulting, Dr. Sugandha D. Tuladhar,
Sebastian Mankowski, and Scott Bloomberg, March 14, 2012:
Analyzing the Changing US Carbon Policy Landscape
 invest and know
on which one can

that one can get

a return for it”

“It is a fundamental contradiction

“IPR is the basis

“The incentive always has
World Energy Trilemma: Time to get real – the case for sustainable energy policy World Ene
to encourage investment and
to be that the innovation
60an idea but to also share
protect

this IP with emerging countries”

sustainable energy systems”

power generation system into

allow us to change conventional

and increase ef f iciency ”

of scale, lower costs,

help
“Technological innovation could

“International standards would

“Policymakers have to

achieve
credibly signal openness

economies
to technologies and

their deployment ”
Divider page
“You can foster investments

by creating a framework with

not by paying for innovation”

“To secure technology “ T h e key i s to h ave
returns on innovation, but

investments you need

more efficient systems
a c l e ar f r am ewo r k

to ensure payback ” with current technology”

solution to the problem”

scapegoat, but as the

not be seen as the

“Technology should

by establishing institutions”

The efficient way of

government supporting R&D
“Uncertainty is a real

killer for investors. The

more things shift back

an d fo r t h, t h e l e s s

innovation occurs”
“Governments can

demonstration and

“Policymakers need to think “It will not work if policymakers

help support the

commercialisation

of technologies”

be developed and pay to ensure

about the industry’s business
that this technology finds its
way into the marketplace. This
model to promote innovation” is just costly and inefficient”
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

61

5. Encourage public and

private initiatives that
foster R&D in all areas
of energy technology
The challenge developed. Research and development (R&D)
relies heavily on private sector expertise,
Addressing the trilemma of energy sustainability experience and investment; it is a necessity and
presents extraordinary environmental, social and needs to be encouraged. But because of ‘spillover
economic challenges requiring national and effects’ industry needs to be sufficiently
international action not only by governments, but incentivised to invest in basic research. In 2009,
also the private sector and civil society. The way the private sector in OECD countries accounted for
energy is produced and used must be transformed almost two thirds of total R&D investment. 36 Global
in order to ensure reliability and to mitigate research, development and deployment spending
environmental impact and greenhouse gas (GHG) on cleaner energy technology at the same time
emissions. In addition, technologies must be amounted to nearly USD25 billion, 60% of which
developed to enable the rapid expansion of reliable was financed by the private sector (see Figure 24).
energy access to millions.
Figure 24
To achieve these goals, there is an urgent need to R&D investment in sustainable energy, 2004-
improve existing fossil fuel and renewable energy 2011 (billion USD)
technologies, advance the energy-efficiency Source: Frankfurt School - UNEP Collaborating Centre for
agenda, improve transmission and distribution Climate Change & Sustainable Energy Finance, 2012: Global
trends in Sustainable Energy Investment 2012
network technologies, but also to add completely
-36% 12% 3% 26% 15% 32% -16%
new technologies to the mix over the medium and
10
long term. Energy leaders noted, “There is a lot of
technology and innovation to come in the energy 8

space” but as for now, it is not yet clear which 8

7
technologies or technology families will prove the 7
5
most competitive. Robust enabling environments 5
5

and political will are required, including appropriate

technology mechanisms and a global trade and
investment regime that facilitates and encourages
investment, innovation, and technology uptake.
2004 2005 2006 2007 2008 2009 2010 2011
A large part of the innovation challenge is adequate Governmant R&D Corporate R&D

allocation of resources and investments to bring

new and advanced technologies to maturity and 36
OECD, 2011: Main science and technology indicators,
reduce costs so they can be commercially 2010/2; OECD, 2012: Main science and technology indicators,
2011/2
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62
Figure 25
Recommendations to foster R&D and innovation

Support mechanisms
Foster RD&D Maintain strong intellectual property rights
• Prioritise research efforts to allow industry to • Support strong IPR to provide companies and
compete sucessfully in a global market investors confidence to trade in and share
knowledge and know-how
• Establish and support research institutions
• Be cautious when adding or taking away
• Promote collaborative research mandates; IPR is well regulated
• Support large-scale demonstration projects

Level playing for all energy technologies

Develop technology-neutral frameworks
• Allow market place to identify successful technologies
• Credibly signal technology openness

Critical fundamentals
Give private sector clarity
• Have a long-term, stable vision, strategy, and targets
• Implement goal-driven policies versus prescriptive policies

Industry recommendations Industry recommended: “goal-driven policies

versus prescriptive policies” as this will drive R&D
In light of these challenges industry made the and innovation agendas. For example, a steady,
following four recommendations to policymakers, long-term policy with the goal to reduce CO2
shown in Figure 25, to encourage both public and emissions in a certain timeframe will drive
private initiatives that foster R&D in all areas of innovation towards low- and zero-carbon emitting
energy technology. technologies, whereas the goal to reach a certain
penetration of renewable energy will drive
Provide clarity on goals to the private sector innovation towards renewable energy technologies.
“If there is clarity of policies and therefore clarity of
Industry noted that: “there is a big policy industry interest, then people come up with creative
component” to encourage private sector investment solutions and investment in the development of
into R&D and that a: “clear market driver for where technologies.”
the R&D investment will go” is needed. For
example, clear targets with regards to the Develop technology-neutral frameworks
composition of the energy mix, emission reductions
or energy savings help identify technology gaps Energy leaders cautioned policymakers not to
and steer R&D in the intended direction. Industry “select or dictate the ‘right technology’ or the ‘right
noted that, with rapidly changing and significant solution’” as “market participants are usually better
shifts in vision, strategies, and targets it is hard to informed and qualified to find most economical
maintain a long term R&D program. “Uncertainty is solutions that can achieve environmental (or other)
a real killer for investors: the more things shift back goals.” An interesting example of ‘technology-
and forth, the less innovation occurs.” forcing’ regulation is California’s zero emission
vehicle mandate. Adopted in 1990, it mandated
In formulating polices and targets, policymakers major car companies in the USA to offer electric
must consider how they define policy targets. vehicles, assuming a greater potential of electric
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

63
Figure 26
WEC 2012 World Energy Issues Monitor shows that energy industry remains highly uncertain
37
about energy issues such as climate framework, CCS, or smart grids
High
Critical
uncertainty
2012
2012
2011
2011

2009 CCS
Climate framework
2010
2012
2010
Uncertainty

2009

2011
2011
2010
2011
Smart grids
2012

2009

Weak Need for

signals action

Low Impact of issues High

vehicles and underestimating the improvements in However, industry noted that, when encouraging
conventional vehicle technology. Consequently, the innovation and fostering R&D: “policymakers have
policymakers needed to change the program, to signal credible openness to technologies and
eventually moving to providing credit for new types their deployment.” There were cases in which R&D
of clean conventional vehicles. In the end, the was encouraged, but then technologies or their
adapted mandate led to nearly the same level of deployment were not permitted. One such example
reductions of regulated air pollutant emissions as is a case in Germany which has provided public
would have been achieved through the original funding for research projects on CO2 storage and
38
target. the quantification of CO2 storage potential since
2005. In addition Germany supported international
As illustrated by this example, research can be R&D activities within the EU framework programs,
stimulated in areas policymakers want to prioritise, the Zero Emission Fossil Fuel Power Plants
but researchers should have the freedom to Technology Platform and others. However, the
determine in which direction they go. Industry more than two years of ongoing political debate
noted, “It doesn’t work if policymakers define the surrounding the country’s transposition of the EU
technology that should be developed and pay to directive on CO2 storage has deterred national and
39
ensure that this technology finds its way into the international investors.
marketplace.” Diversification of energy sources and
technologies is key to secure a resilient energy Continue fostering research and development
system. Research and development can help find
the best technologies to diversify the energy mix Industry called on governments to continue their
while optimising existing assets and developing focus on fostering R&D. “Government’s
new sources. engagement in R&D provides more certainty as
investment will receive support from policymakers
for some time as they actually invest in it
37
The annual WEC World Energy Issues Monitor gathers the themselves.” In particular, governments can
views of WEC's energy leadership community, from over 90 support long-term research programs, on the scale
countries, in order to assess the evolution of the global energy
agenda in a high-level ‘helicopter perspective’. The maps of 10 to 15 years, and initiate R&D with public
provide an insight into the critical uncertainties affecting the funding that requires matching funds from the
energy sector, identifying key trends while highlighting the areas
where action is required to ensure the sustainable supply and
use of energy for the greatest benefit of all.
38 39
WEC, 2011, Policies for the future: 2011 Assessment of [Link]
energy and climate change ashelseth/2011/10/10/ccs-germany-it-game-over
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64
Figure 27
Ranking of top patenting countries in selected cleaner energy technologies (CETs; 1988-2007)
Source: UNEP, EPO, and ICTSD, 2010: Patents and Clean Energy bridging the gap between evidence and policy; WIPO,
Global Innovation Index 2012; WEC, 2012 Energy Sustainability Index

WEC WIPO
Selected Solar Geo- Hydro/- Carbon Carbon
Solar PV Wind Biofuels IGCC Index Index
CETs thermal thermal marine capture storage
Ranking Ranking

Japan 1 1 3 3 3 3 3 2 3 2 8 25
United
2 2 2 2 1 1 1 1 1 1 12 10
States
Germany 3 3 1 1 2 2 2 3 4 3 11 15
Korea
4 4 27 21
(Republic)
France 5 5 4 5 4 4 2 9 24
United
6 4 5 5 5 4 15 5
Kingdom
Italy 7 5 21 36
Canada 9 5 5 3 12
Denmark 12 4 7 7
Spain 13 5 16 29

private sector. This funding is particularly important geothermal, CCS and integrated gasification
in accelerating investments the in the pre- combined cycle (IGCC). 40
competitive, early stage of technology development
which otherwise might not happen at that point. Five countries, Japan, the USA, Germany, Korea
(Republic), and France, account for almost 80% of
One such example is the USA’s National patent filings worldwide for cleaner energy
Renewable Energy Laboratory and its research on technology and also score relatively high in WEC’s
photovoltaic films that helped to drive innovations Energy Sustainability Index (Figure 27). All these
in PV panels and significant decreases in costs. countries have created a strong research-oriented
environment with government support that allows
In applying R&D resources, policymakers must deployment and application of technologies.
consider their country’s competitive advantage and
“… choose one or two areas for technological “The efficient way of government R&D support is
breakthrough in which they believe their country not through financing but by establishing
can excel and compete in a global market.” When institutions.” For example, in Germany, one of the
looking at cleaner energy technology patents, leading countries, the establishment of research
countries such as Italy, Denmark, Canada, Norway, institutions such as Fraunhofer and Max-Planck
or Sweden excel in only one or two fields Society and the development of clusters between
seemingly linked to resource availability and universities and research institutes have proven to
specific country needs (Figure 27). Those countries be as very successful in driving technology
also perform relatively well in other, similar country research and development.
comparisons, such as the WEC’s Energy
Sustainability Index or the World Intellectual National and international partnerships can
Property Organization’s (WIPO) Global Innovation accelerate the technology research and
Index. A similar trend is visible in some emerging development process. “It is important for
markets with innovation primarily occurring in niche governments around the world to jointly promote
technology areas, for example, Brazil and Mexico collaborative research and development.” Sharing
focus on hydro / marine and biofuels technology; technology development roadmaps, identifying
China, having some of the leading manufacturers
of solar PV and wind, has emerged as a an 40
UNEP, European Patent Office (EPO), and International
innovator hub in the field, but also in the fields of Centre for Trade and Sustainable Development (ICTSD), 2010:
Patents and clean energy bridging the gap between evidence
and policy
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

65

common areas of interest for joint national and network needs to be in place to support its
international collaborative R&D efforts or application and adoption. Once the technology
supporting R&D alliances can be mutually is demonstrated and tested, government needs
beneficial undertaking. For example, Canada’s Oil to step back and let market take over.
Sands Innovation Alliance (COSIA), an alliance of
A practical example is the European Union’s
oil sands producers, was founded after the
GRID4EU project, which aims to enhance
government gave a clear mandate to improve the
several major smart grid pilot projects around
environmental performance in Canada’s oil sands. Europe. The project is part of the Seventh
Enabled by a framework designed by the Framework Programme (FP7) of the EU and is
government, the industry was able to develop a carried out by six distribution system operators
collaborative approach to sharing technological (DSOs), which cover more than 50% of the
advances to accelerate the pace of innovation in metered electricity customers in Europe, and 27
environmental performance, while remaining partners including utilities, energy suppliers,
41
competitors. “It is a very proactive intervention manufacturers and research Institutes. The
from the government.” However, in the support of main objectives of the four-year program
cooperation it is important to consider how to (November 2011 to December 2015) are:
protect intellectual properties and prevent
 Develop and test innovative technologies
technology leaks so as to not discourage private
sector R&D involvement and find an optimal  Define standards through the setup of
balance between competition and cooperation. demonstrators

 Guarantee the scalability of these new

Demonstration of technologies requires
technologies
governmental support
 Guarantee the replicability over Europe
Industry noted that a large amount of basic
42
R&D for the development of new technologies  Analyse smart grid cost benefits
necessary for the energy transition has been
done. However, given the size of demonstration 43
Maintain strong intellectual property rights
projects, a greater governmental support for
pilot and demonstration projects to help get the
cost curve down is needed. “Government can Intellectual property rights (IPR) are a key
help support demonstration projects – instrument and a pre-requisite for the private sector
especially on the overall networks needed for to invest in environmentally-sensitive and energy-
energy systems.” For example, if a new fuel or
technology, such as biofuels, CCS, smart grids, 42
[Link]
or electric vehicles, is to be rolled out, a whole 43
WEC, 2011: Energy sector environmental innovation:
understanding the roles of technology diffusion, intellectual
property rights, and sound environmental policy for climate
41
[Link] change
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66
Figure 28
Greatest R&D intensity gains are in Asia 1999-2009
Source: OECD,2011: OECD Factbook 2011-2012 - Economic, Environmental and Social Statistics

Strong growth in
Flat or limited growth in R&D intensity R&D intensity
4.0%

3.5%
R&D intensity (% of GDP)

3.0%

2.5%

2.0%

1.5%

1.0%

0.5%

0.0%
G7 France OECD Germany United India China Japan Korea
States

1999 2009

efficient technology and the diffusion of technology Avenues for technology sharing and for countries
and knowledge. Industry cautioned that to access new technologies are through trade,
“undermining the IPR system for innovations, including product sales, foreign direct investment
including climate change-related technologies and (FDI), cooperative agreements such as joint
solutions, is one of the most counterproductive ventures, or the assignments of rights through
moves.” licensing or patent sales. As the private sector
focuses on enhancing the value and long term
It is crucial to address issues around technology sustainability of their enterprises, it must be able to
transfer in general and around the funding of clean profit from introducing innovations to the market in
energy technologies in developing countries in order for technology to flow. “There needs to be a
particular. However, making technologies freely strong institutional framework to protect
available is not a solution and can create huge technological innovation.”
problems. First, the ‘best’ technology to address
climate change is not yet available. Undermining Industry emphasised that intellectual property is,
the IP system would therefore inhibit the for the most part, sufficiently well regulated at the
investment process as industry will not invest international level, and cautioned against adding
without the expectation of returns. Creating a new, potentially conflicting mandates, for example,
‘public good’ and thereby taking returns away will into UNFCCC negotiations or elsewhere.
bring investment, R&D and innovation to a halt.
Secondly, human resources and expertise are However, protection of IPR alone is not sufficient
often not available in developing countries to apply and more efforts are still needed to build the right
and maintain technologies effectively and therefore foundation for innovation, including a stable, long-
need support from the technology developers term and transparent policy framework, adequate
themselves. financing, infrastructure, and absorptive capacity.
Without this, technology diffusion generally, and
Technology diffusion as a side-effect of market sustainable private sector engagement specifically,
expansion should be supported. When is unlikely to occur.
technologies are adopted locally, know-how gets
shared, the local population and workforce learns Innovation and R&D in emerging economies
how to use the new technologies, and installation
and service teams provide a foundation for further Innovation and R&D is not limited to developed
sharing of technology and follow-on innovation. countries. Technology advances also come
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

67
Figure 29
Capacity to innovate increases as political, societal, and economic strength improve
Source: WEC, 2012 Sustainability Index; WIPO, Global Innovation Index 2012

BRICS (Brazil, Russia, India, China, South Africa)

Top five patenting countries (United States, Germany,
France, Korea (Republic), Japan)

engineering (see Figure 28 and Figure 29) in

from emerging and developing economies,
the region.
especially innovation around clean energy
technology. Unhampered by the legacy
As emerging and developing countries enhance
infrastructure of the developed world, the most
their technical foundations, their future
effective solutions may therefore originate from
economic growth depends on their ability to
the emerging and developing world. As a result,
develop and export ‘home-grown’ technology
an increasing number of private companies
solutions and become a true part of global
spend noteworthy R&D budget outside their
supply chains. Reliable IPR supports these
home countries to access local talent and the
44 goals.
ideas they generate.

China is the third largest investor when it Summary

comes to R&D, and countries such as Brazil,
Russia, and India are in the process of catching
Sustainable energy to meet rising demand will
up. Currently, R&D spending in Asia overall
exceeds EU levels and is likely to overtake require a great deal of innovation and basic
USA levels in the next five years, if the current research, development and design in existing and
pace of R&D investment, most notably in China new fossil fuel and renewable technologies. A
and Korea (Republic), continues. China’s combination of coherent, long-term energy policies
spending on R&D has on average increased by and a stable regulatory and legal framework is
20% annually, and by 8% per year in Korea necessary to encourage and facilitate private
(Republic) compared to an average growth rate sector investment, innovation, and technology
of 3.2% annually in the same period in G7 uptake.
45
countries. This growth in R&D investment is
aligned with, and supported by, the expansion • Provide clarity on goals to the private sector
of higher education, especially in science and
• Develop technology-neutral frameworks
44 • Continue fostering research and development
Jaruzelski B, Dehoff K, Strategy & Business Magazine, Issue
53, 2008. pg.56-57: Beyond Borders: The Global Innovation
1000
• Maintain strong intellectual property rights
45
Global Markets Institute, September 2010: The New
geography of Global Innovation
 “Policymakers

e f f i c i e n c y ”
increasing e n e r g y
should prioritise
“We need to do our “Commercial
World Energy Trilemma: Time to get real – the case for sustainable energy policy World Ene

homewor
68 k with feasibility is the
regard to policies” only motivation”

and
be fully borne by

risks that cannot

collaborative research
should assume

world to jointly promote

the private sector”

“The public sector

governments around the

“ It is impor t ant for

“ If there is clarit y of policies

and therefore clarit y of industr y

development ”
interest, then people come

up with creative solutions

and investments into the

Divider page
development of technologies”
“The toughest issue

and environmentally
“ We must ac c ept that we “If a country puts the
is to define what
for policymakers

stable, affordable,

sensitive means”
have to make hard c ho ic es right price on energy it
in this generation to br ing
penalises itself against its
neighbours. That is why
about real c hanges for
international cooperation
future generations and and cross-agreements
the planet. Politic ians and between governments
the industr y must get real ” and industry are needed”
development of
to enable the

stakeholders that could help?”

te c hn o l o g i e s”

set price signals

“It is important to

are….are we missing other

who all the stakeholder s

“We n e e d to u n d e rs ta nd
“Any transitional support

for emerging low carbon

technology should

be self-sun-setting”
unless utility or

industry can get

“ U l t i m a t e l y,

ROI, you are

simply tinkering

“The single best

at the edges”

“Financial institutions
mechanism to drive
investment is a need to become
stable, predictable
policy framewor k ” more unconventional”
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

69

6. Conclusion

The world faces daunting challenges to deliver system. Buttressed by well-designed policies, an
energy reliably and affordably to its entire effective carbon market with consideration of both
population, including the 1.3 billion people who production and consumption level would be a
currently lack access to electricity and 2.7 billion significant step towards setting the right incentives
who do not have clean cooking facilities. While for investors, funding institutions, and utilities.
accelerating the pace of tackling these challenges
is vital, another urgent issue looms – how to reduce Economic and market instruments to curb carbon
emissions from energy production and emissions will help level the playing field and signal
consumption at a scale commensurate with the the need for investments and innovations in low-
increasing risks from man-made climate change. carbon technologies.

To achieve both of these goals requires improving The policy driver

existing fossil fuel, renewable energy and
transmission and distribution network technologies While allowing market mechanisms to spur change,
as well as advancing the energy-efficiency agenda. governments need to set the right frameworks
In addition, completely new technologies must be within which energy sustainability goals can be
developed over the medium and long term. Robust delivered. Governments must accordingly:
enabling environments and political will are
required including a global trade and investment • Develop a clear, long-term vision with
regime which facilitates and encourages challenging but realistic targets
investment, innovation, and technology
dissemination and diffusion. • Implement goal-driven, technology-neutral
policy frameworks
The 2012 Energy Sustainability Index reveals the • Integrate predictable, long -term energy policy
challenges in simultaneously addressing all three frameworks with the goals of critical adjacent
dimensions of energy sustainability - energy policies
security, affordable energy access, and
environmental impact mitigation. Usually there are • Support policy frameworks by clear and
trade-offs to be considered among these three simple regulation to reduce regulatory
policy areas, which is known as the trilemma of uncertainty and attract and attain the
energy sustainability. necessary investments in existing and new
technologies over the long-term.
Moreover, the path to sustainable energy systems Such a coherent and long-term approach is the
has to be economically viable. Market-based way to stimulate further innovation and
approaches, such as carbon pricing, are perceived commercialisation of new technologies.
to be more effective in driving the shift to an
economically sustainable low-carbon energy
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70

Given the difficulties of achieving the balance to invest in environmentally-sensitive and energy-
among the three dimensions of energy efficient technology and for the diffusion of
sustainability, how can countries improve their technology.
capabilities? One answer is to enhance
transparency at different stages of the process, Undermining the IPR system for innovation,
while ensuring the protection of commercially including climate change-related technologies and
sensitive information. An increased dialogue, solutions, is a counterproductive effort. It would
supported by rigorous impact analysis, between inhibit investment and innovation as the private
policymakers, industry, and general public will help sector will not invest without the expectation of
businesses and consumers understand the trade- enhancing the value and long-term sustainability of
offs involved in adopting specific policies and their their enterprises. To ensure the flow of technology,
broader implications. This dialogue will also serve it must be profitable to introduce innovations to the
to provide policymakers with guidance on the market.
impact of policy decisions, to harness industry’s
technical expertise, and to ensure a better Technology advances, especially innovation
understanding of the timescale of energy around clean energy technology, do not come from
infrastructure investments. developed economies with incumbent industries
alone. Emerging and developing economies with
Finally, the implementation of policy and regulation nascent industries will contribute significantly.
must be monitored to ensure that it is delivering as Unhampered by the legacy infrastructure of the
intended, including ensuring consistency across developed world, some of the most effective
policy dossiers. It is vital that policymakers are able solutions could originate in the emerging and
to balance the need to provide markets with long- developing world.
term policy predictability against the necessary
flexibility to adapt and change policies that are As emerging and developing economies enhance
clearly failing, or which are no longer appropriate their technical foundations, their future economic
because circumstances have changed. growth is likely to improve with their ability to
develop and export indigenous technology
The innovation driver solutions and become an integral part of global
supply chains.
While a stable and transparent policy framework,
Intellectual property rights support this evolution
adequate financing, infrastructure, adequate R&D
and are thus a critical enabler of not only
and innovation policy, effective economics,
innovation, but also of the development and
accountability and absorptive capacity are a good
diffusion of environmentally-sensitive and energy-
foundation for innovation, they are not enough on
efficient technology around the world.
their own. The protection of intellectual property
rights (IPR) is a pre-requisite for the private sector
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

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Summary countries; and to drive the deployment of cleaner

technologies globally. It should be a priority for
There is no single instrument which can drive the governments to increase the ease or attractiveness
attainment of all three goals of the ‘trilemma of of investment and policymakers should feel
energy sustainability’ – energy security, access to encouraged to apply internationally emerging
affordable energy, and environmental impact lessons to the benefit of their countries.
mitigation.

Most countries, whether developed, emerging or

developing, struggle to strike the balance. Very few
countries have achieved significant traction in
providing sustainable energy. Analysis of the
results of the WEC’s Energy Sustainability Index
shows that a clear vision, long-term programs and
adequate instruments, a diversified energy mix,
and an increased reliance on low- and zero-carbon
emitting energy generation are important
components of this balance.

An indispensable, integral part of a well-functioning

energy policy is a national implementation
programme, based on broadly accepted sets of
well-tuned, locally efficient implementation
measures.

The challenge is to translate global findings about

successful policy instruments into arrangements
and settings that work in the local context. This
translation can be facilitated through a dialogue
between international energy policy experts,
industry executives, stakeholders, and
policymakers from various jurisdictions.

The energy sector faces the challenge of meeting

an unprecedented need for investments to broaden
access to energy in developing countries; to
replace ageing legacy infrastructure in developed
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Appendix A.
Industry Participation

The World Energy Council and Oliver Wyman BP plc (United Kingdom)
would like to thank the following executives and Dr Paul Jefferiss
their teams for taking the time to talk to us during Head of Policy
the preparation of this report and taking an active
role in driving forward this critically important BASF (Germany)
dialogue regarding our global energy future. Harald Schwager
Hearing your perspective and insights on key Member of the Board of Executive Directors
concerns for government policymaking has been
very helpful and enriched the process greatly. Bharat Heavy Electricals Ltd. (India)
B.P. Rao
Chairman and Managing Director
ABB Asea Brown Boveri Ltd. (Switzerland)
Brice Koch Black and Veatch (USA)
Executive Committee Member Dean Oskvig
President and Chief Executive Officer
Abu Dhabi National Energy Company PJSC
“TAQA” (UAE) BNL Clean Energy (Switzerland)
Carl Sheldon Mikael Rüdlinger
Chief Executive Officer President and Chief Executive Officer

American Electric Power Co. (USA) Codensa S.A. E.S.P. (Colombia)

Michael Morris José Antonio Vargas Lleras
Chairman President

Africa Energy Service Group (Rwanda) Daesung Group (Korea, Republic)

Albert Butare Younghoon David Kim
Chief Executive Officer Chairman and Chief Executive Officer

Alstom (France) Duke Energy (USA)

Patrick Kron Kevin Leahy
Chairman and Chief Executive Officer Managing Director, Environmental and Energy
Policy
Asia Petroleum Limited (Pakistan)
Amjad Parvez Janjua Edison S.p.A. (Italy)
Managing Director and Chief Executive Officer Bruno Lesceour
Chief Executive Officer
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

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Figure A1
Geographical representation of interviewees

Africa
7%
19%
Asia
19%
Europe
10%
Latin America & Caribbean
5%

Middle East & North Africa

40%
North America

Électricité de France (France) Power Systems Group and Power Systems

Jean-Paul Bouttes Company, Hitachi, Ltd. (Japan)
Executive Vice President Strategy and Prospective Tatsuro Ishizuka
President and Chief Executive Officer, Vice
Eletrobras (Brazil) President and Executive Officer
José da Costa Carvalho Neto
President and Chief Executive Officer HydroQuebec (Canada)
Thierry Vandal
Emirates Nuclear Energy Corporation (UAE) President and Chief Executive Officer
Mohamed Al-Hammadi
Chief Executive Officer IBM Corporation (USA)
Michael Valocchi
Enbridge Inc. (Canada) Global Energy and Utilities Industry Leader
Patrick Daniel
Chief Executive Officer Korea Electric Power Corp. (Korea, Republic)
Joong-Kyum Kim
ENI S.p.A. (Italy) President and Chief Executive Officer
Paolo Scaroni
Chief Executive Officer Masdar Clean Energy Company (UAE)
Bader Al Lamki
ENOC - Emirates National Oil Company (UAE) Director of Masdar Clean Energy Unit
Saeed Khoory
Chief Executive Officer Mitsubishi Heavy Industry (Japan)
Masafumi Wani
[Link] AG (Germany) Member of the Board, Executive Vice President,
Johannes Teyssen Head of Power Systems
Chairman and Chief Executive Officer
Renewable Energy Ventures (Kenya)
Eskom Holdings (South Africa) Joseph Nganga
Brian Dames Chief Executive Officer
Chief Executive Officer
RWE (Germany)
GE Energy (USA) Leonhard Birnbaum
Timothy Richards Chief Commercial Officer
Director International Energy Policy
 World Energy Trilemma: Time to get real – the case for sustainable energy policy World Ene

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Royal Dutch Shell (Netherlands) Verbund AG (Austria)

Doug McKay Wolfgang Anzengruber
Vice President, International Organizations Chairman of the Managing Board

Statkraft (Norway)
Christian Rynning-Tønnesen
Chief Executive Officer

Statoil ASA (Norway)

Hege Marie Norheim
Senior Vice President Corporate Climate

Suzlon Energy Ltd. (India)

Ishwar V. Hegde
Chief Economist & Head, Corporate Intelligence,

Toshiba Power (Japan)

Yasuharu Igarashi
President and Chief Executive Officer

Transcanada (Canada)
Russell K. Girling
President and Chief Executive Officer

Turkish Petroleum (Turkey)

Mehmet Uysal
Chief Executive Officer

VNG – Verbundnetz Gas AG (Germany)

Klaus-Dieter Barbknecht
Member of the Board

Vattenfall AB (Sweden)
Øystein Løseth
President and Chief Executive Officer
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Appendix B.
Project Participation

The Project Team would like to thank the Bundit Fungtammasan, Thailand
individuals who informed the project’s approach, Chadarat Sundaraketu, Thailand
supplied information, provided ideas, and reviewed Michael Gibbons, UK
drafts. Their support and insights have made a Paul Loeffelman, USA
major contribution to the development of the report. Barry Worthington, USA (Observer)

World Energy Council Study Group World Energy Council Studies Committee

Joan MacNaughton, UK (Executive Chair) Brian Statham, South Africa (Chair)

Hajime Murata, Japan (Honorary Chair)
Celso Fernando Lucchesi, Brazil
Horacio Fernandez, Argentina Oskar Sigvaldason, Canada
José Henrique Danemberg, Brazil Petr Veselsky, Czech Republic
Pietro Erber, Brazil Jean-Paul Bouttes, France
Steve Dorey, Canada B.P. Rao, India
Jenny Carolina Pérez Moscote, Colombia Hardiv Situmeang, Indonesia
Miroslav Vrba, Czech Republic Yoshiharu Tachibana, Japan
Mihkel Härm, Estonia Cintia Angulo, Mexico
Véronique Renard, France Tobi Oluwatola, Nigeria
Ariane Beauvillain, France Eloy Alvarez, Spain
Paula Coussy, France Maria Sunér-Fleming, Sweden
Jean Eudes Moncomble, France (Observer)
Heimo Friede, Germany Oliver Wyman Advisory Group
Ashutosh Shastri, India
Michael Putra, Indonesia Michel Bernier (Partner)
Mehdi Sadeghi, Iran Michael Britt (Partner)
Valeria Palmisano, Italy Michael Denton (Partner)
Yongduk Pak, Korea (Republic) Cantekin Dincerler (Partner)
Raúl Alejandro Livas Elizondo, Mexico Jeffrey Elliot (Partner)
Lawrence I.N. Ezemonye, Nigeria Boris Galonske (Partner)
Abubakar Malah Umar, Nigeria David Hoffman (Partner)
Maya Czarzasty, Poland Mike King (Senior Vice President, NERA )
Gheorghe Balan, Romania Roland Rechtsteiner (Partner)
Anton Vladescu, Romania Gilles Roucolle (Partner)
Iulian Iancu, Romania (Observer) Johannes Schmitz (Partner)
Paul Westin, Sweden Alex Wittenberg (Partner)
Gerald Davis, Switzerland
 World Energy Trilemma: Time to get real – the case for sustainable energy policy World Ene

76

Project Team

Christoph Frei (WEC, Secretary General)

Karl Rose (WEC, Director of Studies)
Sandra Winkler (WEC, Deputy Head Policies)
Joan MacNaughton (WEC, Executive Chair)
Hajime Murata (WEC, Honorary Chair)
Mark Robson (Partner, Oliver Wyman)
Lucy Nottingham (Oliver Wyman)
Daniel Summons (Oliver Wyman)
Emily Thornton (Oliver Wyman)
Tatjana Kleineberg (Oliver Wyman)
Jacob Mays (Oliver Wyman)
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

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Appendix C.
Index rationale, structure
and methodology
The Energy Sustainability Index (‘Index’) ranks Indicators were selected based on the high degree
WEC member countries in terms of their likely of relevance to the research goals, exhibited low
ability to provide a stable, affordable, and correlation, and could be derived from reputable
environmentally-sensitive energy system. The sources to cover a high proportion of member
rankings are based on a range of country level data countries. These sources include the International
and databases that capture both energy Energy Agency, the U.S. Energy Information
performance and the contextual framework. Energy Administration, the World Bank, the International
performance considers supply and demand, the Monetary Fund, the World Economic Forum and
affordability and access of energy, and the others.
environmental impact of the country’s energy use.
The contextual indicators consider the broader The structure of the Index and the coverage of its
circumstances of energy performance including 22 indicators are set out in Figure C-1. The Index is
societal, political and economic strength and weighted in favour of the energy performance axis
stability. by a factor of 3:1, with the scores for each
dimension carrying equal weight within their axis.
Figure C1
Index structure and weighting

Total score Indicator type Dimension Indicators

1 1.1.1 Ratio of energy production to consumption
1
1.1.2 Diversity of electricity generation
Energy 1.1.3 Wholesale margin on gasoline 1/5
security 1.1.4 Five year energy consumption growth each
25% 1.1.5a Exporters – Diversity of energy exports
1.1.5b Importers – Oil stock reserves

2
Energy 1.2.1 Affordability of retail gasoline 1/2
Social 1.2.2 Affordability & quality of electricity relative
performance equity to access each
25%
75%
3 Environmental 1.3.1 Energy intensity per capita per GDP
1.3.2 Emissions intensity per capita per GD 1/4
impact 1.3.3 CO2 emissions from electricity & heat generation each
25% mitigation 1.3.4 Effect of air and water pollution
Country
position 2 1
Political 2.1.1 Political stability 1/3
100% 2.1.2 Regulatory quality
each
strength 2.1.3 Effectiveness of government
8.3%
2 2.2.1 Control of corruption
Contextual Societal 2.2.2 Rule of law 1/4
performance strength 2.2.3 Quality of education each
2.2.4 Quality of health
8.3%
25%
3
2.3.1 Cost of living expenditure 1/3
Economic 2.3.2 Macro-economic stability
strength 2.3.3 Availability of credit to the private sector each
8.3%

Enhanced methodology for 2012

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78

Overall, the Index displays the aggregate effect of commentaries for each country can be found in the
energy policies applied over time in the context of country profiles online at [Link].
each country and provides a snapshot of current
energy sustainability performance. It is very difficult Index results by GDP group
to compare the effectiveness of particular policies
across countries, since each policy interacts with a To understand how each dimension of the Energy
unique set of policies specific to that country. But it Sustainability Index is affected by wealth, countries
is possible to broadly measure the aggregate were organized in four economic groups:
outcome of policies, for example, how countries
with similar levels of energy intensity per capita • Group A: GDP (PPP) per capita greater than
perform in mitigating their environmental impact or USD33,500
the overall use of electricity per capita.
• Group B: GDP (PPP) per capita between
Where possible, data has been updated, however, USD14,300 and USD33,500
due to constraints on the collection, processing, • Group C: GDP (PPP) per capita between
and dissemination of data the current Index USD6,000 and USD14,300
generally reflects data from 2009-2011. Recent
world events that could affect the Index’s outcomes • Group D: GDP (PPP) per capita lower than
are not completely captured (for example, USD6,000
turbulence in global nuclear power industry due to Figures C-2 through C-5 show the rankings of each
Fukushima, or the political unrest in the Middle country within these GDP groups.
East). Further, policies generally take two to three
years to become fully implemented and it may take
longer for their effects to become evident. That
noted, repercussions from the financial and
economic crisis in 2008 are increasingly becoming
visible as we see strong fluctuations in economic
performance for several countries. It is possible
that the financial crisis had further impacts on
countries’ energy policies, such as cuts of
subsidies due to financial and economic pressures.
However, it is difficult to disentangle the origins as
well as the effects from individual policy changes.

Full details of country scores in the three

dimensions, further key metrics and analytical
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

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Figure C2
Country Ranking for GDP Group A
Rank Country Importer / Exporter Energy security rank Social equity rank Environmental impact mitigation rank 2012 Index rank
1 Sweden I 2 16 2 1
2 Switzerland I 12 4 10 2
3 Canada E 1 2 12 3
4 Norway E 9 10 5 4
5 Finland I 13 14 6 5
6 Denmark E 3 28 25 7
7 Japan I 7 9 24 8
8 France I 29 8 4 9
9 Austria I 39 7 11 10
10 Germany I 11 11 41 11
11 United States I 27 1 31 12
12 Belgium I 31 12 15 13
13 Netherlands I 34 20 20 14
14 United Kingdom I 37 6 35 15
15 Luxembourg I 72 5 18 18
16 Australia E 25 3 73 20
17 Iceland I 71 21 3 23
18 Korea (Republic) I 61 25 32 27
19 Ireland I 57 24 42 30
20 Taiwan, China I 83 22 27 32
21 Hong Kong, China I 76 30 49 34
22 Qatar E 81 15 64 41
23 United Arab Emirates E 79 39 46 44
24 Kuwait E 84 27 74 54

Figure C3
Country Ranking for GDP Group B
Rank Country Importer / Exporter Energy security rank Social equity rank Environmental impact mitigation rank 2012 Index rank
1 New Zealand I 16 13 8 6
2 Spain I 17 19 40 16
3 Slovakia I 6 35 14 17
4 Hungary I 10 36 19 19
5 Italy I 19 26 33 21
6 Slovenia I 28 41 17 22
7 Croatia I 14 33 26 24
8 Portugal I 23 37 38 25
9 Russia E 8 47 16 26
10 Argentina E 35 17 30 28
11 Czech Republic I 15 32 61 29
12 Lithuania I 53 45 9 31
13 Estonia I 42 46 50 35
14 Latvia I 64 50 13 37
15 Greece I 43 23 76 42
16 Saudi Arabia E 85 18 59 46
17 Poland I 50 38 65 47
18 Cyprus I 91 29 63 49
19 Trinidad & Tobago E 69 48 36 51
20 Gabon E 21 78 52 59
21 Israel I 66 43 92 61
22 Lebanon I 65 63 85 77
23 Botswana I 89 74 94 91

Figure C4
Country Ranking for GDP Group C
Rank Country Importer / Exporter Energy security rank Social equity rank Environmental impact mitigation rank 2012 Index rank
1 Colombia E 5 56 34 33
2 Uruguay I 63 44 22 36
3 Bulgaria I 40 59 28 38
4 Ukraine I 18 58 23 39
5 Albania I 44 61 7 40
6 Kazakhstan E 38 40 44 43
7 Iran (Islamic Republic) E 47 31 51 48
8 Mexico E 45 34 83 50
9 Brazil I 77 65 21 53
10 Egypt (Arab Republic) E 33 49 66 55
11 Romania I 36 42 80 56
12 South Africa E 78 52 53 57
13 Peru I 46 67 60 58
14 Tunisia I 51 51 89 60
15 Macedonia (Republic) I 56 54 68 62
16 Thailand I 58 62 79 63
17 Turkey I 41 53 84 64
18 Serbia I 67 57 62 66
19 Jordan I 93 55 67 68
20 China I 59 69 91 71
21 Algeria E 75 60 70 78
22 Namibia I 90 76 57 79
23 Libya E 55 73 88 88
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80
Figure C5
Country Ranking for GDP Group D
Rank Country Importer / Exporter Energy security rank Social equity rank Environmental impact mitigation rank 2012 Index rank
1 Bolivia E 22 64 45 45
2 Paraguay E 62 70 1 52
3 Cameroon E 32 83 54 65
4 Kenya I 20 86 69 67
5 Congo (Dem. Republic) E 26 91 47 69
6 Côte d'Ivoire E 30 85 56 70
7 Zimbabwe I 4 94 71 72
8 Sri Lanka I 49 71 82 73
9 Nepal I 82 92 29 74
10 Philippines I 52 77 78 75
11 Syria (Arab Republic) E 54 68 72 76
12 Swaziland I 70 75 55 80
13 Ghana I 88 81 39 81
14 Tanzania I 68 93 43 82
15 Indonesia E 60 72 90 83
16 Nigeria E 24 84 81 84
17 Mongolia E 74 79 75 85
18 Chad E 48 88 58 86
19 Morocco I 80 66 87 87
20 Ethiopia I 94 90 37 89
21 Niger I 92 87 48 90
22 Pakistan I 73 80 77 92
23 India I 87 82 93 93
24 Senegal I 86 89 86 94

2012 Methodology measures affordability and quality of electricity

supply. The indicator is applied after we normalise
enhancements cost of electricity by access. The new data is
available for almost all countries, with the exception
The Index methodology was enhanced in the 2012 of four African countries for which the African
Index to better assess the countries’ ability to average is used as a proxy. This change reduces
mitigate their environmental impact and to provide the instances of countries with poor grid
social equity. infrastructure capturing anomalously high rankings.
Best scores are now obtained for complete, high
Changes to Social Equity dimension
quality, and affordable access.

The social equity dimension (affordability of energy Changes to Environmental Impact Mitigation
access) was modified to minimise the effects of (EIM) dimension
scale. In previous versions of the Index, large
countries were privileged due to a scale effect (for In the 2010 and 2011 Index, countries with very low
example, very large populations) as both energy consumption, due to poor energy access
indicators, the gasoline prices and household and low levels of industrialisation, were privileged
electricity expenditure were normalised in EIM for their comparatively low environmental
respectively by aggregate household consumption footprint as measured by carbon emissions and
expenditure and by aggregate expenditure on energy intensity per capita. Two main changes
housing, water, electricity, gas and other fuels. were conducted to privilege countries that are able
Furthermore, countries that emphasised to combine economic and social development with
affordability, but faced challenges with the quality environmental sensitivity.
of electricity supply were privileged as the latter
was not formally included in the index. First, the indicators of energy and emission
intensity per capita per GDP PPP (1.3.1. and 1.3.2)
To remove scale effects, the aggregate, individual were normalised by the percentage of energy
consumption as well as the electricity expenditure access and the industrial sector percentage of total
indicator are now scaled by population, thus GDP. This provides a better ‘apples-to-apples’
measuring the indicators on a per capita level. The country comparison as environmental impact
‘per capita’ amendment to Social Equity is in line mitigation accounts for the ‘per capita’ consuming
with the rest of the Index and negates inadvertently energy and the burden of an industrialised nations.
privileging larger populations.
In addition, the calculation of the EIM dimension
In addition, an indicator for “Quality of Electricity was modified to identify those countries that out-
supply” is now included in the indicator 1.2.2 which perform peers for their given level of energy
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

81
Figure C6
Regression-based projections of environmental impact mitigation (EIM) scores identify under-
and outperformers
Switzerland Outperformers: Countries that
High

Colombia Uruguay
exhibit significantly better than
Brazil Austria Norway Sweden expected EIM scores given their
Denmark energy consumption
Nepal
Albania
Finland
France
Paraguay
Environmental Impact Mitigation

“Co Slovakia
Latvia
lum Lithuania
Morocco no New Zealand
Tunisia
f ex Iceland

pec
Indonesia
Turkey t atio
Senegal n”
Israel Romania Canada

Libya Thailand

Lebanon Pakistan
Zimbabwe

Mongolia
Underperformers: Countries that Syria
India Greece
exhibit significantly worse than Macedonia
expected EIM scores given their China
Cyprus
Kuwait Serbia
energy consumption
Low

Saudi Arabia
South Africa

Low High
Total primary energy consumption / GDP (PPP)

consumption. After the environmental impact was

assessed with the regular weighting system, this
preliminary score is now regressed against the total
primary energy consumption per capita per GDP.
This regression allows estimating a projected
environmental impact value for the sample of
countries based on their energy consumption per
capita per GDP. The final EIM score is then refined
as the deviation from the expected and the actual
environmental impact value. Countries that
outperform against their estimate on EIM given
their energy consumption are likely to be making
concentrated efforts to mitigate their environmental
impact, and vice-versa for underperformers. Figure
C-6 presents the ‘column of expectation’ based on
the 2012 regression trend as well as the out- and
underperformers for the 2012 Index.

Rankings for previous years were calculated with

the new methodology to allow for a comparison in
performance between the years (see Figures C-7
and C-8).
 World Energy Trilemma: Time to get real – the case for sustainable energy policy World Ene

82
Figure C-7
2011 Country ranking for the overall Index and energy dimensions
Rank 2011 Overall index ranking 2011 Energy security ranking 2011 Social equity ranking 2011 Environmental impact mitigation ranking
1 Canada Canada United States Sweden
2 Finland Russia Canada Iceland
3 Switzerland Côte d'Ivoire Australia France
4 Sweden Swaziland Switzerland Norway
5 Norway Denmark Luxembourg Lithuania
6 New Zealand Colombia Japan Finland
7 France Finland Austria New Zealand
8 Denmark Ukraine United Kingdom Paraguay
9 Austria Sweden Belgium Latvia
10 Germany Gabon France Tajikistan
11 Japan Croatia Norway Russia
12 United States Argentina Germany Canada
13 Luxembourg Germany New Zealand Luxembourg
14 Iceland Egypt (Arab Republic) Finland Switzerland
15 Spain Switzerland Qatar Albania
16 Netherlands Japan Greece Brazil
17 Croatia Cameroon Spain Slovakia
18 Belgium Nigeria Saudi Arabia Austria
19 Argentina Syria (Arab Republic) Iceland Uruguay
20 Slovakia Hungary Argentina Slovenia
21 Hungary Norway Taiwan, China Kazakhstan
22 Lithuania Latvia Netherlands Hungary
23 Latvia Kenya Italy Ukraine
24 Australia Tajikistan Ireland Belgium
25 Slovenia Bulgaria Korea (Republic) Nepal
26 Czech Republic Albania Denmark Croatia
27 Russia Spain Czech Republic Argentina
28 United Kingdom Slovakia Cyprus Denmark
29 Portugal France Hong Kong, China Estonia
30 Kazakhstan Congo (Dem. Republic) Iran (Islamic Republic) Serbia
31 Italy Philippines Kuwait Netherlands
32 Colombia United States Croatia Czech Republic
33 Taiwan, China New Zealand Sweden Colombia
34 Uruguay Kazakhstan Mexico Trinidad & Tobago
35 Hong Kong, China Serbia Slovakia Korea (Republic)
36 Ukraine Lithuania Portugal Romania
37 Korea (Republic) Austria Kazakhstan Japan
38 Estonia Czech Republic Poland Ghana
39 Ireland Portugal Hungary United States
40 Bulgaria Sri Lanka United Arab Emirates Portugal
41 Albania Slovenia Slovenia Ireland
42 Romania Australia Israel Swaziland
43 Swaziland Macedonia (Republic) Romania Bulgaria
44 Serbia Lebanon Uruguay Germany
45 Brazil China Lithuania Peru
46 Mexico Romania Estonia Spain
47 Saudi Arabia Indonesia Egypt (Arab Republic) Taiwan, China
48 Qatar Peru Russia Italy
49 UAE Italy Trinidad & Tobago Tanzania
50 Egypt (Arab Republic) Uruguay Latvia Iran (Islamic Republic)
51 Cyprus Mexico Tunisia Congo (Dem. Republic)
52 Greece Israel South Africa Philippines
53 Poland Netherlands Turkey United Kingdom
54 Tajikistan Paraguay Jordan Kenya
55 South Africa Iceland Algeria United Arab Emirates
56 Paraguay Tanzania Ukraine Saudi Arabia
57 Philippines Poland Serbia South Africa
58 Macedonia Rep. United Kingdom Macedonia (Republic) Macedonia (Republic)
59 Peru South Africa Colombia Cyprus
60 Kuwait Tunisia Bulgaria Hong Kong, China
61 Israel Belgium Indonesia Sri Lanka
62 Trinidad & Tobago Brazil Lebanon Cameroon
63 Iran (Islamic Republic) Greece Thailand Poland
64 Syria (Arab Republic) Pakistan Libya Mexico
65 Cameroon Algeria Brazil Thailand
66 Tunisia Hong Kong, China Morocco Ethiopia
67 Thailand Thailand Albania Jordan
68 Sri Lanka Turkey Peru Kuwait
69 Kenya Estonia Paraguay Turkey
70 Jordan Libya Swaziland Syria (Arab Republic)
71 China Iran (Islamic Republic) Syria (Arab Republic) Pakistan
72 Lebanon Mongolia China Australia
73 Gabon Taiwan, China Botswana Namibia
74 Côte d'Ivoire Niger Sri Lanka Egypt (Arab Republic)
75 Turkey Namibia Namibia Qatar
76 Indonesia Nepal Philippines Morocco
77 Congo (Dem. Republic) Morocco Gabon Côte d'Ivoire
78 Nepal Senegal Mongolia Mongolia
79 Tanzania Ghana Pakistan Gabon
80 Ghana United Arab Emirates Ghana Tunisia
81 Namibia Luxembourg Cameroon Niger
82 Morocco Jordan Nigeria Lebanon
83 Nigeria Korea (Republic) Tajikistan Greece
84 Algeria India India Algeria
85 Mongolia Saudi Arabia Côte d'Ivoire Senegal
86 Libya Trinidad & Tobago Kenya India
87 Botswana Botswana Senegal China
88 Pakistan Ireland Niger Nigeria
89 India Ethiopia Congo (Dem. Republic) Israel
90 Niger Cyprus Nepal Indonesia
91 Senegal Qatar Tanzania Botswana
92 Ethiopia Kuwait Ethiopia Libya
World Energy Council World Energy Trilemma: Time to get real – the case for sustainable energy policy

83
Figure C-8
2010 Country ranking for the overall Index and energy dimensions
Rank 2010 Overall index ranking 2010 Energy security ranking 2010 Social equity ranking 2010 Environmental impact mitigation ranking
1 Switzerland Canada United States Iceland
2 Canada Switzerland Canada Sweden
3 Norway Denmark Australia France
4 Finland Slovenia Switzerland Norway
5 New Zealand Japan Luxembourg Estonia
6 France Finland France Lithuania
7 Sweden Norway United Kingdom Latvia
8 Denmark Russia Norway Tajikistan
9 United States Cameroon Austria Switzerland
10 Austria Germany Greece Slovakia
11 Japan Netherlands Belgium New Zealand
12 Belgium Portugal Japan Luxembourg
13 Netherlands Sweden New Zealand Canada
14 Slovenia Czech Republic Germany Russia
15 Iceland Slovakia Finland Finland
16 Luxembourg Nigeria Iceland Albania
17 Slovakia New Zealand Qatar Brazil
18 Germany Colombia Spain Austria
19 Portugal United States Argentina Uruguay
20 Australia United Kingdom Saudi Arabia Kazakhstan
21 United Kingdom France Denmark Nepal
22 Czech Republic Argentina Taiwan, China Egypt (Arab Republic)
23 Estonia Macedonia (Republic) Italy Ukraine
24 Argentina Hungary Netherlands Hungary
25 Hungary Belgium Iran (Islamic Republic) Croatia
26 Spain Poland Czech Republic Belgium
27 Lithuania Spain Ireland Argentina
28 Ireland Romania Cyprus Slovenia
29 Russia Indonesia Croatia Denmark
30 Uruguay Austria Sweden United States
31 Latvia Ukraine Korea (Republic) Paraguay
32 Hong Kong, China Tunisia Hong Kong, China Ireland
33 Italy Egypt (Arab Republic) Kuwait Colombia
34 Korea (Republic) Iran (Islamic Republic) Portugal Kenya
35 Taiwan, China Kenya Slovakia Trinidad & Tobago
36 Egypt (Arab Republic) Australia Slovenia Peru
37 Colombia Turkey Hungary Bulgaria
38 Qatar Paraguay Poland Portugal
39 Iran (Islamic Republic) Swaziland United Arab Emirates Japan
40 Croatia Uruguay Israel Iran (Islamic Republic)
41 Romania Syria (Arab Republic) Kazakhstan Philippines
42 Saudi Arabia Côte d'Ivoire Mexico Swaziland
43 Macedonia (Republic) Lithuania Lebanon Macedonia (Republic)
44 Greece Italy Romania Namibia
45 Ukraine South Africa Uruguay Netherlands
46 South Africa Estonia Lithuania Czech Republic
47 Poland Tajikistan Estonia Jordan
48 Cyprus Mexico South Africa Korea (Republic)
49 Kazakhstan Iceland Jordan Hong Kong, China
50 UAE Greece Latvia Romania
51 Bulgaria Congo (Dem. Republic) Egypt (Arab Republic) Tanzania
52 Tunisia Libya Turkey Congo (Dem. Rep.)
53 Mexico Bulgaria Russia Ghana
54 Kuwait Albania Tunisia Cyprus
55 Trinidad & Tobago Latvia Trinidad & Tobago Sri Lanka
56 Brazil Algeria Libya Serbia
57 Swaziland India Macedonia (Republic) Italy
58 Albania Tanzania Ukraine Taiwan, China
59 Paraguay Philippines Serbia Syria (Arab Republic)
60 Jordan Ghana Thailand South Africa
61 Turkey Sri Lanka Colombia Saudi Arabia
62 Tajikistan Qatar Algeria Spain
63 Peru Korea (Republic) Bulgaria Germany
64 Philippines Ireland Brazil United Arab Emirates
65 Kenya Taiwan, China Morocco Côte d'Ivoire
66 Cameroon Saudi Arabia Indonesia Australia
67 Lebanon Pakistan Paraguay Thailand
68 Namibia Lebanon Peru Pakistan
69 Syria (Arab Republic) Peru Syria (Arab Republic) United Kingdom
70 Sri Lanka Kazakhstan Sri Lanka Morocco
71 Indonesia China Botswana Tunisia
72 Thailand Kuwait China Mongolia
73 Israel United Arab Emirates Namibia Mexico
74 Nepal Luxembourg Philippines Kuwait
75 Libya Nepal Swaziland Turkey
76 Ghana Croatia Albania Qatar
77 Nigeria Hong Kong, China Côte d'Ivoire Lebanon
78 China Trinidad & Tobago Pakistan Cameroon
79 Algeria Brazil Ghana Poland
80 Tanzania Niger India China
81 Côte d'Ivoire Israel Mongolia Niger
82 Serbia Namibia Nigeria Algeria
83 Congo (Dem. Republic) Mongolia Cameroon Nigeria
84 India Jordan Senegal Senegal
85 Morocco Thailand Tajikistan Ethiopia
86 Botswana Senegal Niger Greece
87 Pakistan Ethiopia Kenya India
88 Mongolia Morocco Congo (Dem. Republic) Indonesia
89 Senegal Cyprus Ethiopia Botswana
90 Niger Botswana Nepal Libya
91 Ethiopia Serbia Tanzania Israel
Member committees of the World Energy Council
Albania Iceland Philippines
Algeria India Poland
Argentina Indonesia Portugal
Austria Iran (Islamic Republic) Qatar
Belgium Ireland Romania
Bolivia Israel Russian Federation
Botswana Italy Saudi Arabia
Brazil Japan Senegal
Bulgaria Jordan Serbia
Cameroon Kazakhstan Slovakia
Canada Kenya Slovenia
Chad Korea (Republic) South Africa
China Kuwait Spain
Colombia Latvia Sri Lanka
Congo (Democratic Lebanon Swaziland
Republic) Libya Sweden
Côte d'Ivoire Lithuania Switzerland
Croatia Luxembourg Syria (Arab Republic)
Cyprus Macedonia (Republic) Taiwan, China
Czech Republic Mexico Tanzania
Denmark Monaco Thailand
Egypt (Arab Republic) Mongolia Trinidad & Tobago
Estonia Morocco Tunisia
Ethiopia Namibia Turkey
Finland Nepal Ukraine
France Netherlands United Arab Emirates
Gabon New Zealand United Kingdom
Germany Niger United States
Ghana Nigeria Uruguay
Greece Pakistan Zimbabwe
Hong Kong, China Paraguay
Hungary Peru
World Energy Council
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