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EBRD launches new Index of Sustainable Energy
New instrument is guide for policy-makers on successful energy strategies
The EBRD has launched a new Index of Sustainable Energy (ISE) as part of its drive to help countries across its region of operations secure a sustainable supply of energy.
This new monitoring tool will allow experts and policy-makers to benchmark individual countries’ progress in reform of three key areas – energy efficiency, development of renewable energy sources and policies to address climate change.
The Index, which is described in the just-released EBRD brochure Securing Sustainable Energy in Transition Economies, provides a way of assessing how closely a country’s policies, institutions and performance follow international best practice and serves as a guide for pinpointing areas of potential improvement.
EBRD chief economist Erik Berglof noted that, while energy challenges across the transition region vary, “it is increasingly evident that all countries need to develop coherent policies to guarantee a steady supply of energy, to use energy efficiently and to minimise the impact of energy use on the environment.”
“By setting a common yardstick such as the ISE, policy-makers and opinion leaders can benchmark progress in their own countries and learn from the experience of others,” Berglof said.
The basic structure of the indicator relies on three pillars (institutions, market incentives and outcomes) within each of the three components (energy efficiency-EE, renewable energy -RE and climate change -CC). These pillars form the basis of a sustainable energy system.
The ISE scores range from 0 to 1, with 0 representing a lack of institutions and market incentives to implement sustainable energy solutions coupled with poor energy outcomes (high carbon and energy intensity and little or no electricity generated by renewable resources) and 1 indicating an economy with strong sustainable energy institutions, market mechanisms and energy outcomes ranking in the top 20 per cent globally.
The ISE reflects striking contrasts in energy strategies and practices across the region. Western European nations tend to score around 0.8 on the composite scale, while new EU members score 0.5 or above, with the exception of Estonia, just below 0.5.
While some south-eastern European countries, such as Croatia score close to the new EU members, most countries in the western Balkans countries score below 0.4, as do both Russia and Ukraine.
The result for the bulk of the CIS countries is between 0.2 and 0.3 whether they are energy-rich countries or energy importers.
The Index reveals the complex relationship between institutions and outcomes. The establishment of good institutions, the authors note, does not always lead immediately to better outcomes; enforcement takes time and outcomes may improve only with a lag.
At the same time, some countries may have relatively good outcomes (in terms of energy or carbon intensity) despite a less advanced institutional structure. Albania, Bosnia and Herzegovina, Georgia, the Kyrgyz Republic and Tajikistan fit this pattern. This is due to these countries large endowments of renewable resources (particularly water, used extensively in hydroelectric generation plants) combined with their less energy-intensive industries and comparatively low level of economic output.
The Index of Sustainable Energy is a new and useful tool that reveals the urgency of improving institutions and market incentives now, as decisions taken today on technology, equipment and the entire energy infrastructure in the transition countries will affect energy efficiency and the ability to mitigate climate change for generations to come.
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