The World Economic Forum publishes a report every year that examines the global energy production in several different nations. The Global Energy Architecture Performance Index Report was created to rate the effectiveness of both national and international energy architecture.
What is energy architecture?
It’s a broad idea that encompasses everything from the sluggish currents of international politics to the constantly shifting financial markets anything that determines or affects where, how much, and how well the world’s energy is produced.
The “transition,” in report parlance, from fossil fuels to alternative forms of energy generation is foremost among these effects. Many nations are making strides in reducing their reliance on fossil fuels, and the use of renewable energy sources, such as solar, wind, hydro, and biomass, is on the rise.
In addition, the United States domestic output has doubled, which has resulted in a decline in oil prices that has altered the supply and demand dynamic. While increased instability in major regions like Europe, Russia, and the Middle East poses a threat to international security, the spread of digital technology also seems set to destabilize the energy markets.
The emergence of renewable energy, competitive market forces, technological disruption, and geopolitical security can be considered as the four pillars that support and guide the development of energy systems. But energy architecture is more than just solid structures.
Energy Architecture Performance Index worldwide
Economic growth, environmental sustainability, and energy security have also been highlighted as three more pillars in the asymmetric structure of energy performance by the Global Energy Architecture Performance Index, or EAPI.
1. Economic development and growth
Oil and energy prices have decreased mostly as a result of supply outpacing demand. This indicates that oil companies are lowering operational costs and making fewer investments in brand-new oil and gas projects, a move that poses a threat to the world’s remaining oil supplies.
This will have repercussions. For instance, Saudi Arabia’s national debt has been downgraded and payments to government contractors have already been delayed. The geopolitical relationships in the region and beyond will be significantly impacted by this new economic position and the altered supply patterns.
2. Environmental stewardship
Emissions pledges, or Intended Nationally Determined Contributions (INDCs), are a variety of proposed commitments, including emission reduction objectives, renewable energy targets, and carbon capture. They have been known by this name since the Paris Climate Change Conference in 2015.
The production of power from renewable energy is now dominated by this technology, which demonstrates how far it has progressed. In fact, it is predicted that renewable energy sources would outweigh conventional ones three to one in just 15 years.
The purpose? Business models are being tested, and the energy infrastructure we now use is changing. These “transitions” from conventional to sustainable energy sources produce a rocky and unfamiliar terrain that will be difficult for governments to manage and for energy enterprises to survive intact.
3. Access and security
The biggest influence on energy security and a country’s ability to get enough energy to meet its fundamental needs comes from geopolitical instability.
However, as new players enter the scene and key players come under pressure, international relations are changing nearly daily. For example, the diplomatic ties between Europe and Russia, which trade oil and gas, respectively, are precarious. The cohesiveness of the EU member states in Europe is under threat from the expanding refugee issue. Threats to global stability are numerous, ranging from the financial shock of decreasing oil prices to the development of fanaticism. As ISIS earns $1 million per day from smuggled oil.
What makes energy architecture crucial?
Governments and the international community must reexamine energy security, sustainability, and economic feasibility as energy markets shift. What impact, for instance, will the digital transformation have on the supply of essential electricity to our homes and businesses? If the global economy depends on energy, then governments and businesses must keep an eye on the situation. Making policies that can evolve to meet the world’s future energy needs is, therefore, part of energy architecture.
How are results evaluated?
The World Economic Forum and the multinational professional services firm Accenture created the EAPI, which is in its fourth year. Since its inception, the index has evaluated and contrasted many national energy systems, highlighting current energy concerns and offering suggestions on how to improve the efficiency of energy transitions.