US added to WEC negative watch list

November 12, 2015 | By Barbara Vergetis Lundin

Overall, the world's energy trilemma is improving, according to the fifth edition of the World Energy Council's (WEC) annual ranking of energy and climate policies. That's the good news.

Top 10 performers. Click on image to enlarge. Credit: World Energy Council

The bad news is, an astonishing number of countries are still struggling to develop a balanced approach to energy policy. In fact, only two countries out of 130 register the highest AAA balance score, according to the World Energy Trilemma report, produced for the WEC by global management consulting firm Oliver Wyman, along with the Global Risk Center of its parent Marsh & McLennan Companies.

The WEC report ranks the energy systems of countries across the world by giving them a score based on how they are balancing the three dimensions of the energy trilemma: energy security (a country's ability to meet its current and predicted energy demand), energy equity (the accessibility and affordability of energy across the population) and environmental sustainability (achievement of supply of renewable or low carbon forms of energy).

Switzerland and Sweden top the list with an AAA balance score. While the UK remains in the top 10, it loses its A grading for energy equity, moving it from AAA to AAB -- a downgrade that reflects the challenges countries across the world are facing in balancing the trade-offs of the trilemma goals and dealing with financing the transformation of their energy systems.

"Our research underlines how priorities vary from country to country -- though energy security is key for all," said Joan MacNaughton, executive chair of the World Energy Trilemma study. "And the report highlights a real issue for the 21st Conference of the Parties due to begin later this month in Paris, namely translating the Intended National Determined Contributions from international objectives into national level actions for energy. The investment required is huge, and driving it to the right places will require a balanced approach if countries are to meet the three goals of the trilemma."

To support the UNFCCC process, the report is being sent to all parties attending COP21 and will form the basis of post 2015 ministerial dialogue which will take place at the World Energy Congress to be held in October 2016 in Istanbul.

"For countries to move up in the rankings and remain ahead of the pack, they must adopt prudent, forward-looking energy policies to meet decarbonization goals and maintain competitiveness," said MacNaughton. "This report provides a map for the long road from Paris to help policymakers and businesses chart a sustainable course."

Two new countries have been added to the negative watch list, which, in 2014, included German, Italy, Japan and the UK. The countries added this year are South Africa due to its electricity crisis, and the U.S. where lack of investment in ageing infrastructure and exposure to extreme weather events pose threats to the country's currently strong energy security performance in the Trilemma Index.

The report's findings show that the best performing nations tend to be developed countries with higher shares of energy coming from low- or zero-carbon energy sources supported by well-established energy efficiency programs.

"The $48-53 trillion needed for investment in global energy infrastructure is increasingly contingent on a clear climate framework and a global target for emissions," MacNaughton said. "It is clear that the energy industry has embraced the sustainability agenda and is working to help curb greenhouse gas emissions. It has an important role to play in achieving a successful energy transition, but key actions are required by countries if the full potential of the energy sector is to be realized."

One of those actions is that governments must set clear market frameworks and consistent energy goals to create the conditions to support energy investments and innovation.

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