Fostering Effective Energy Transition 2025
Fostering Effective Energy Transition 2025” report by the World Economic Forum
The 2025 Energy Transition Index (ETI) reveals that global energy transition momentum is rebounding amid geopolitical tensions, economic fragmentation, and accelerating energy demand, especially from AI-driven electrification.
Global energy demand rose by 2.2%, CO₂ emissions reached a record 37.8 billion tonnes, and clean energy investment exceeded $2 trillion—double 2020 levels, yet still far below the $5.6 trillion annual need through 2030.
The global average ETI score increased by 1.1%, the fastest since 2020. While 65% of countries improved their ETI scores, only 28% improved across all three pillars: security, equity, and sustainability.
🔅Equity rebounded most (+2.2% YoY), aided by easing energy prices and subsidy reforms.
🔅Sustainability continued its upward trend (+1.2% YoY), driven by lower energy and emissions intensities.
🔅Security stagnated (+0.4% YoY) due to persistent vulnerabilities such as low diversification and import dependence.
Transition readiness, which includes regulation, infrastructure, education, innovation, and finance, grew only 0.8%, down from the 10-year average of 1.2%, highlighting slow progress in critical enablers.
Top Performers and Regional Trends
🔅Sweden, Finland, and Denmark led the ETI due to strong policy stability, clean energy integration, and innovation ecosystems.
🔅China ranked 12th, with the world’s highest clean energy investment and innovation capacity.
🔅The US ranked 17th, leading in energy security.
🔅India improved through gains in energy efficiency and investment capacity.
🔅Latvia, Nigeria, and UAE showed some of the fastest improvements, emphasizing the power of targeted reforms.
Energy System Performance (2016–2025)
🔅Security improved by 3.4% over the decade but remains the weakest due to grid inflexibility and import risks.
🔅Equity rose by 1.5%, but access gaps remain, especially in developing economies.
🔅Sustainability improved by 5.3%, but fossil fuels remain dominant, and clean energy represents only 14.8% of the global primary energy mix.
Challenges and Pressures
2024–2025 was marked by:
📍Ongoing conflicts disrupting supply chains.
📍Economic protectionism and trade tariffs (e.g., US’s 10% universal tariff).
📍Inflation and capital cost hikes, with clean energy financing costs in emerging markets up to 7x higher than in developed ones.
📍AI and data center growth increasing grid demand—data centers may contribute to 10% of power demand growth by 2030.
Key Recommendations (five priority actions):
1. Adopt stable and adaptive policy frameworks to attract long-term capital.
2. Modernize infrastructure, especially grids and storage.
3. Invest in skilled talent to accelerate innovation and delivery.
4. Scale clean technologies, particularly in hard-to-abate sectors.
5. Mobilize capital in developing economies to close the $2.2 trillion annual investment gap.
Source:
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