Global energy transition stalls, Germany struggles with affordability

The global energy transition has stalled, partly because of the continued use of coal power worldwide and slower-than-necessary improvements in energy intensity, according to the “Fostering Effective Energy Transition” report, released today by the World Economic Forum (Read the full report, in English, here). The report rates economies on their security of energy supply, environmental sustainability, and economic development and growth. Access to energy has improved, the report found, but the world’s energy systems have become “less affordable” and “no more environmentally sustainable” over the last five years.“Three years after the global milestone of political commitment through the Paris Agreement, this lack of progress provides a reality check,” the authors write, pointing out that global CO2 emissions were expected to rise by more than 2 percent in 2018, “the highest in recent times.” Coal consumption increased in 2018, after declining for the previous three years, and investment in fossil fuels as a share of total energy investment grew in 2017 for the first time since 2014.The report’s Energy Transition Index (ETI), first released last year, ranks 115 countries on the performance of their energy system and readiness for the energy transition. Sweden is ranked first, as it was last year, followed by Switzerland and Norway.

Germany is ranked 17th, down from 16th last year. The report’s authors note that in general, European countries and other advanced economies rank well on the ETI due to “well-developed and modern energy systems” that offer reliable access and energy security, as well as policies that create a supportive environment for energy transitions. “The key challenges for energy transition in these economies relate to affordability and environmental sustainability,” the authors write.

The report’s authors ranked Germany among the top three countries (with India and the UK) for renewable energy policies, and note that “the success of green energy transition” in Germany offers lessons for developing nations. But high retail electricity prices “highlight the complexity of keeping energy prices affordable while investing in energy transition,” the report says. “Recent evidence suggests rising electricity prices are affecting households and small business more than large industrial energy consumers, which affects the equity and inclusiveness in sharing the costs of energy transition,” the report adds.