The world’s business and economic policy elite are gathering once again in the mountains of Switzerland this month for the latest iteration of the World Economic Forum’s Annual Meeting, colloquially just known by the name of the town it gathers in: Davos.
Following a run of self-congratulatory meetings in the years before the global financial crisis, since 2008 Davos has turned into a marketplace for ideas to fix the significant problems that have bedeviled developed economies and thrown traditional tenets of globalization on their head. Finding new metrics with which to compare economic performance, and to dig more deeply into the factors that drive economic growth and competitiveness, the substantial analytical group behind WEF has teamed with private sector partners in issuing reports that mirror the aims and hope to emulate the success of the organization’s traditional economic competitiveness indices and analysis.
Energy is a core part of any economy’s performance, but the picture is more complicated than the one that traditionally divides the globe into exporters like Saudi Arabia and importers like Japan. The extension of new resource development technology like hydraulic fracturing around the globe – and particularly in the US – has altered that traditional binary approach, as has increased awareness of the role of resilient infrastructure and political pressure to limit pollution and emissions that contribute to climate change.
At Davos, attendees will have an opportunity to review and discuss the second annual release of the Global Energy Architecture Performance Index, which was compiled by WEF in partnership with Accenture. The index, which follows a recent trend among international organizations of analyzing country performance through the three lenses of security, sustainability and access, has country rankings but equally importantly includes actionable advice for corporate and government leaders.
As delegates gather in Davos, WEF Head of Knowledge Management and Integration for Energy Industries Espen Mehlum told me there are four top things to know from the report:
1) It takes a number of elements to have a high-performing energy system in the Energy Architecture Performance Index. Countries like those in the Middle East that rank highly on energy security often rank less high on sustainability.
2) Nobody’s perfect when it comes to energy architecture. Even high-performing countries like Norway, which snagged the number one spot in the 2014 index, has a long way to go in meeting the energy security, access and affordability concerns raised by the report
3) Energy intensity is a core economic performance indicator. How much energy it takes one national economy to do something compared to another national economy is a fundamental question in globalized trade. Manufacturing firms hastening back to US shores to take advantage of low natural gas prices and hiring thousands of workers can attest to the importance of energy inputs, as can resource-poor countries like South Korea where energy efficiency technology often helps make up the gap.
4) There is no “one size fits all solution” to performance on the energy issues covered by the Energy Architecture Index. Each country and region needs to evaluate its own mix of resources, priorities and political realities as it proceeds with strengthening its own energy competitiveness.
Enabling public-private partnerships is a central component to delivering energy architecture improvements, Accenture global managing director for energy Arthur Hanna told me in an email. “Only through building long-lasting regulatory frameworks will we create the investor certainty required to attract the huge sums of money needed for the transition,” he said. More effective use of data and new technology is going to be crucial in driving the transition in a safe, cost effective and environmentally sustainable way.
“This will be a long process but we’re moving the dial and it’s encouraging to see sweeping change in places like Myanmar, for example, where we have worked with the energy ministry to define a new path forward,” Hanna said.
While the report has already begun to make an impact in corporate boardrooms and government cabinets around the world, it is over the next three to four years that WEF’s Mehlum said the Energy Architecture will come into its own in influencing policymakers and companies. Leaders will begin to see the impacts of competition to perform on the index and will integrate the lessons of comparisons highlighted in the report, he said.
Peter Gardett is Founding Editor of Breaking Energy.
