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Sustainability boosts energy security – WEC

Boosting the sustainability of energy systems goes hand-in-hand with improving energy security and equity, according to a World Energy Council and Oliver Wyman report

The global energy system can be made more environmentally sustainable while simultaneously improving energy security, defined by the diversification of sources, and energy equity across nations’ populations, according to research launched yesterday.

The 2020 World Energy Trilemma Index, created by the World Energy Council (WEC), a network of energy leaders and practitioners, in partnership with consultancy Oliver Wyman, was launched at the WEC’s World Energy Week virtual event.

Improving the sustainability of energy systems is often seen as a cost to the host country, or trade-off with other factors. “The Trilemma Index actually tends to illustrate that the opposite is true,” says Martin Young, the WEC’s senior director, insights, to Petroleum Economist, based on the results of the 130-country policy development and performance index.

Security & equity

Energy security is based on the diversity and import dependence of a country’s energy system, among other things. “Making that system more sustainable, by increasing its diversity and improving its efficiency, also improves its security. This is demonstrated by the highest overall scoring countries in the Trilemma, which have both high security and sustainability scores.”

The energy equity component is based on a more complicated mix of factors, as the Trilemma Index tries to replicate the UN Sustainability Development Goal 7 (UNSDG7) by looking at energy access and cost.

“More diverse energy systems tend to be market-based with efficient pricing, although the lowest prices tend to be subsidised either implicitly or explicitly within concentrated energy systems that are less sustainable,” says Young. “The poorest countries have focused on improving energy access. This can entail relying upon less sustainable energy systems. However, with an increasing uptake of renewables these can be cost-effective for remote areas and for some grids.”

“Falling prices are making cleaner sustainable technologies more affordable and developing countries can also learn from the mistakes made by others” Young, World Energy Council

Cambodia, Myanmar and Kenya improved the most since 2000 in the overall Trilemma, as a result of a focus on energy access, electrification, energy generation diversity, and infrastructure investment. 

Some countries can improve sustainability without damaging equity and security but the challenge is not equal for all countries. “National and regional contexts can make this more complicated for some areas than others,” says Young.

Switzerland, Sweden and Denmark are the top three rated countries across all three Trilemma dimensions, having maintained consistent and balanced performance coupled with steady economic and population growth over a number of years. 

“OECD countries have been particularly effective, but these richer countries have focused for a number of years on improving energy policies with competitive and diverse energy markets. They have effectively decoupled GDP growth from increased emissions. The UK is a great example of this.”

Developing lessons

Countries can learn from one another by understanding which energy policies are effective. They can then consider how these policies may work in their own contexts in their search for optimal solutions. While the top environmental sustainability performers in 2020 are Switzerland, Sweden and Norway, somewhat less predictably Azerbaijan and Ukraine have since 2000 significantly improved their sustainability performance by decarbonising their energy systems.

“Cost is a key challenge, with oil producers reliant upon high export prices being particularly affected,” says Young. “These countries are challenged by the current low oil price environment, which makes it more difficult for them to broaden their economies and diversify their energy systems.”

OECD countries have been able to break the link between GDP and emissions, a development borne out by the Trilemma Index. Richer countries tend to concentrate on relatively low-carbon activities such as technology and services while importing more carbon-intensive manufactured goods. But developing countries can also make an impact. “This can be possible for developing countries that have effective and proactive energy policies,” says Young.

“Developing countries can build effective energy policies, although they frequently also need to enhance their own governance structures. Countries with strong governance are better able to implement effective and consistent energy policies."

But, more often, developing countries are more focused on improving their energy access to develop their economies and benefit more of their citizens, as illustrated by UNSDG7, according to Young.

“Some countries have made substantive progress in recent years, but improving energy access does not necessarily mean relying upon fossil fuels, and some countries have increased access for remote communities where renewables can be more cost-effective. Falling prices are making cleaner sustainable technologies more affordable, and developing countries can also learn from the mistakes made by others.”

Global improvement 

The rate of improvement in overall Trilemma performance also appears to be increasing. Half of the countries in the study have consistently improved overall scores since 2015, while fewer than 20 countries consistently improved scores since 2000.

WEC secretary general Dr Angela Wilkinson said at the launch of the 2020 index: “This has been a turbulent year for societies and economies. Tools such as the well-respected World Energy Trilemma Index are more important than ever as countries, companies and customers start to recover.

“[OECD countries] have effectively decoupled GDP growth from increased emissions. The UK is a great example of this” Young, World Energy Council

“The index enables individual countries and diverse regions to learn from each other about what’s working and what is not in joining the dots between people, planet and prosperity/managing the connected challenges of energy security, energy affordability and equity and environmental sustainability.”

Francois Austin, partner and global head of energy at Oliver Wyman added: “The 2020 Trilemma Index shows that the significantly improved nations are undergoing a faster-paced energy transition.

“While the impact of Covid-19 likely will not be seen until next year at the earliest, one thing is for sure—top-performing nations achieve their energy goals by balancing policy, corporate action, national resource usage and changes to individual behaviour with environmental concerns. 

“These trends in aggregate as well as at the national and regional levels can give policymakers and business leaders direction to shape energy’s future.”

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