Emerging economies ditch sustainable energy transition, but why?

Suborna Barua*

This book chapter is forthcoming in the book titled "Growth Nexus in Era of Globalization: New Directions and Future Prospects", Elsevier, the Netherlands (2020) with a title 'Green growth and energy transition: An assessment on selected emerging economies'.

Driven by an urge to achieve faster economic growth, limited financial capacity and lack of research and innovation, sustainable energy transition and green growth remains a daunting task in emerging economies. 

In this chapter, an assessment is carried out on 10 emerging economies - that are most cited across a number of country rankings including the ones reported by the International Monetary Fund (IMF), the HSBC, the MSCI, JP Morgan, S&P and Columbia University.

The chapter evaluates green growth performance of the selected countries using data from the World Bank, the Organization for Economic Cooperation and Development, and the Global Green Growth Institute. 

Based on Green Growth Index and World Economic Forum's Energy Transition ranking, Table 1 shows that the all of the 10 emerging economies are labeled as moderate or low in terms of green growth performance while their status of energy transition toward sustainable sources remain poor with ETI scores looming around 50 only.  Most countries are in a poorly ready for sustainable energy transition. 

Table 1: Green growth performance of selected emerging economies

Country	Transition Readiness (%)	2020 ETI score (%)	2020 ETI rank*	GGI score	GG performance level
Poland	48	52.90	69	62.00	High
Turkey	48	42.90	38	39.22	Low
Vietnam	50	53.50	65	39.05	Low
Brazil	46	57.90	47	49.82	Moderate
Morocco	51	56.50	51	42.61	Moderate
Philippines	49	55.30	57	55.54	Moderate
Indonesia	44	52.40	70	40.81	Moderate
India	49	51.50	74	40.81	Moderate
China	52	50.90	78	55.41	Moderate
Bangladesh	43	48.40	87	*	*

Source: author developed based on Green Growth Index 209 and Energy Transition Index 2020

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A detailed assessment finds that in contrast to encouraging energy transition, the economies show a persistently increasing reliance on fossil-fuels and a declining trend of renewable energy supply. Figure 1 shows that in each of the 10 countries, the share of renewable energy total primary energy supply keeps consistently declining over the last 20 years. As an example, the share of renewable electricity in total electricity generation nosedives in all economies. 

Figure 1: Renewable energy supply keeps declining in emerging economies

Source: author developed based on OECD and World Bank Data

 

Furthermore, energy inefficiency and fossil-fuel supports relative to renewables consistently increase in these economies. 

The chapter outlines several challenges that prevent emerging economies from progressing towards sustainable energy driven green growth such as lack financial and economic capacity, market imperfection and failure, fragile economic system with poor governance and institutional structure, the lack of priority and innovation in research and innovation, insufficient regulatory and policy frameworks, and the lack of awareness and education among stakeholders. 

Since emerging economies are expected see the largest growth in the next few decades and lead the world economy, it is essential to ensure that they do it a sustainable manner. They must recognized that green growth supported by sustainable energy is no more a choice rather a necessity.

*Assistant Professor of Finance, Department of International Business, University of Dhaka 

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