Who is leading the energy transition?

A need to measure

Have you heard these immortal words before?

What gets measured gets managed

Peter Drucker

I first got acquainted with the idea of measuring pretty much everything that might need managing when I was doing my training for a green belt in lean six sigma. These people are obsessed with statistics. The RDMAIC methodology is the bible for six sigma. The MAIC part stands for Measure, Analyse, Improve, Control.

Then, during my management consulting years, I learned about Peter Drucker and many other management and business gurus who measured everything that needed improvement.

Now, I question, how come we are not actively measuring the energy transition?

Defining energy transitions with five indicators

Energy transitions are not easy to understand. There is no consensus on their terminology. There are researchers that have addressed energy transitions in different ways, but I find two issues with the current state of the literature.

First, energy transitions are not agreed upon in a global consensus. Therefore, it becomes increasingly difficult to compare countries across the energy transition of the 21^st century.

Second, the literature does not agree on a specific set of indicators to measure energy transitions. Without agreed-upon metrics, how can we standardise the way we measure transitions?

During my master programme, I attempted to measure energy transitions by proposing five indicators that are comprised from publicly available data and that are partially agreed upon by researchers, international organisations and think tanks. The literature pointed me toward four main areas that describe energy transitions:

1. Energy usage
2. Energy efficiency
3. Climate change
4. Socioeconomic fabric

The thought then is, if these four groups can describe transitions, then which publicly available indicators can fit in those groups to measure transitions? To account for an energy transition that considers the entire energy scope of energy activities, and not just the power sector, the following indicators outline energy transition outcomes (ETOs) for most of the countries in the world.

1. Access to electricity
2. Renewable Energy (RE) Installed Capacity (IC) per capita
3. Renewable Energy (RE) in Total Final Energy Consumption (TFEC)
4. Energy Intensity
5. Carbon Dioxide (CO₂) per Capita

The combination of these indicators reflect each country’s quality of life, electrification, renewable energy ambition, energy sector decarbonisation, technological and behavioural effort to become energy efficient and the carbon dioxide emissions related to the energy, transport buildings and industry sectors.

How is the world doing on these fronts?

If we are going to determine the leaders of the energy transition, a few ground rules must be set before we look at their numbers.

First, we shall rank countries by each one of the five energy transition outcomes (ETOs). The countries are ranked by the maximum reached value for access to electricity, RE IC per Capita and RE in TFEC, and by the smallest reached value for Energy Intensity and CO₂ per capita.

Second, only countries that are getting better are considered to be “in transition”. If a country is a top performer in RE in TFEC, but their value is decreasing across the years, then the country would not be considered.

Third, because of the differences in economic development, we rank the countries by income group levels.

Fourth, the range of analysis is from the year 2000 to 2016/2017, depending on data availability.

Let us look at the top five performers of each ETO

High Income (113 countries)

Three countries outperform others in the high income group: two in energy use and one in climate change and efficiency. Iceland was number one in biggest RE in TFEC and IC per capita. Iceland derives most of their energy from geothermal, which is ideal to fulfil their power and heat sectors. However, their same use of geothermal yields a poor energy intensity compared with other energy sources due to the low-quality, low-pressure water vapour produced by geothermal sources. Sweden also has exceptional performance on renewables, but not precisely on energy efficiency and decarbonisation.

Finally, Malta does not have a high share of renewables, but it is a country with excellent energy intensity and low CO₂ emissions per capita.

Most countries in this group have improved their RE IC per Capita and RE in TFEC over the 2000-2017 period. The few exceptions to this rule are countries from the Gulf Cooperation Council (GCC), island countries, Panama, Chile and Argentina.

Upper-Middle Income (56 countries)

Four countries appear twice in the top five for upper-middle income countries. Montenegro, Brazil, and Costa Rica constantly dominating their renewable energy transformations. Like Malta is for upper-middle income countries, the Dominican Republic is a top performer in energy efficiency and decarbonisation, but not particularly in renewables. Some of its drivers for energy efficiency have been an increase in access to clean cooking fuel & technologies, and an increasing gasoline price. Costa Rica’s adoption of renewable power is directly associated with a decrease of Particulate Matter smaller than 2.5 micrometers (PM_2.5) concentration, reducing Levelised Cost of Electricity (LCOE) for Photovoltaic (PV) non-tracking systems and an increase of Gross Domestic Product (GDP) per capita. Costa Rica performs well in RE in TFEC because of increasing natural gas prices and a reduction in energy imports. A reduction in PM_2.5 concentration, similarly to Costa Rica, increased Brazil’s adoption of RE power.

Moreover, an increase in natural resources of Net Primary Production (NPP) and strategic planning policies helped Brazil adopt renewables in the past couple of decades. However, Brazil is a typical example of a developing economy that performs at the expense of energy intensity and CO₂ emissions. Brazil’s energy intensity has slightly increased (4%) to 4.08 MJ/$, driven by a lower LCOE for wind onshore, power price reductions and increased LCOE of PV non-tracking systems. Finally, Brazil’s CO₂ emissions per capita are on the rise, reaching 2.35 tCO₂ per capita in 2017 (14% higher than in 2000). Lower power prices, higher GDP and Gross National Income (GNI) per capita, and higher Capital Expenses (CapEx) of solid biofuels and waste explain the increase.

Lower-Middle Income (47 countries)

Two countries break the renewables vs. efficiency/decarbonisation problem. Eswatini is top performer in RE in TFEC and in CO₂ per capita. Timor-Leste leads in RE in TFEC while having the lowest energy intensity in the group, proving that it is possible to perform in these two areas simultaneously. Moreover, Ukraine and Moldova made improvements toward 100% access to electricity while keeping their high share of RE in TFEC. Lower-Middle Income countries are struggling to develop their energy systems in a carbon-neutral way.

Only six countries out of 47 show an improvement in RE in TFEC, the rest of the countries are transitioning following the dreaded “U-shape” curve of development. Starting with low development and high renewables, through middle development and low renewables, and finally high development and high renewables again.

Low Income (35 countries)

Low income countries, although highly dependent in renewables for their energy consumption, have extremely low RE IC per capita (power sector). Ethiopia leads with merely 41 Watts per person. To contrast, Iceland is on the other side of global spectrum with 8 kiloWatts (kW). While Ethiopians can turn on about three lightbulbs with 41 W, the Icelanders can turn on a cast iron hob, an electric oven, two microwave ovens and still have enough capacity to power 40 lightbulbs.

Low income countries have bigger ties between high RE in TFEC and low CO₂ emissions than other income groups. Eritrea is in the top five in both ETOs, reflecting its traditional biomass-based economy. Ethiopia, a top performer in RE IC per Capita has 8 energy policies in place. None of them seem to be directly influential for their RE IC per Capita, although they are for their Access to Electricity.

These countries have enormous potential to overcome the dreaded “U-shape” curve of the RE in TFEC development. To help these countries avoid the dreaded fossil fuel trap of development and build a renewables-based economy, the energy transition must holistically adapt market action, governance, and policies.

Let us keep measuring to keep track of our transitions

As our time is running out to decrease global emissions, understanding the energy transitions is important to take note of who is leading the pack, and then asking why and how.

Perhaps these indicators are not the best to reflect energy transitions. These are a step forward on the path of understanding by measuring. I am always looking forward to new publications and quantitative work around energy transitions.

For me, the easiest way to move forward is to define the correct indicators for a holistic energy transition; then to keep measuring these indicators at a global level. Only then can we start analysing properly the global behaviours of energy transitions.

Everything written here is a personal reflection and is by no means educational, financial or professional advice in any way.
Please feel free to cite and refer reliable sources in the comment section down below.