The ETI’s transition readiness sub-index is rooted in various factors, including the stability of the policy environment, the level of political commitment, the investment climate, access to capital, consumer engagement, and the development and adoption of new technologies. These elements collectively shape a country’s ability to steer its energy transition effectively. While some factors, such as skills or the quality of transport infrastructure, extend beyond the energy system, they significantly influence the trajectory and success of the energy transition and are explicitly acknowledged as part of the sub-index.⁸¹

Over the past decade, transition readiness has shown a positive trend, marked by notable advancements and strong year-on-year growth in key enablers such as regulation and political commitment, infrastructure, and education and human capital (Figure 15). In 2024, South Korea, Japan and China emerge, alongside leading advanced European economies, among the top 20 countries exhibiting the most enabling environment for the energy transition, while the Democratic Republic of the Congo, Venezuela, Yemen and Bangladesh rank in the lowest quartile.

Figure 15: ETI transition readiness trend, 2015-2024

Tangible progress is evident in enhancing transition readiness, particularly in regulation and political commitment, education and human capital, and infrastructure.

Regulation and political commitment, which is one of the direct enablers for the energy transition, has seen a notable increase, with two consecutive years of over 3% year-on-year growth in scores. Driven primarily by carbon pricing mechanisms and country commitments, the growth in this dimension underscores the impact of recent global policy focus on accelerating the energy transition. In 2024, Luxembourg, Denmark and Switzerland emerge as top performers in this regard. Additionally, South Korea and Canada along with a cohort of leading advanced European economies, demonstrate a strong enabling regulatory environment to accelerate the energy transition. Canada is committed to achieving net-zero emissions by implementing measures to cap and reduce emissions from the oil and gas sector by 2030. The Canadian government also introduced five investment tax credits to encourage capital investments supporting the energy transition.⁸²

Education and human capital have also experienced rapid growth over the years, particularly as the number of jobs in low-carbon industries surged. Clean energy jobs accounted for around 50% of total jobs in the energy sector in 2023.⁸³ As the global energy transition gains momentum, significant shifts are expected in the jobs landscape. While most regions saw growth in clean energy jobs over the
past three years, the Middle East, North Africa and Pakistan and emerging and developing Asia stand out as exceptions. Furthermore, China, currently housing the largest energy workforce globally, witnessed significant changes between 2019 and 2022. During this period, clean energy jobs in China increased by 2 million, while fossil fuel-related jobs decreased by 600,000. Today, 60% of the
country’s energy workforce is employed in clean sectors, largely attributed to the significant buildout of clean tech manufacturing, which has been a major driver of employment growth.⁸⁴ The US’s IRA has sparked an investment and manufacturing boom that is driving long-term economic growth across the country and creating jobs in underserved communities. Companies have committed over $242 billion in new investments to build the clean energy economy, including EVs, batteries and energy storage, clean energy manufacturing, and clean power generation, among others.⁸⁵ As of September 2023, more than 211,350 new clean energy jobs were created,⁸⁶ with projections indicating approximately 1.5 million jobs over the coming decade.⁸⁷

Renewable energy infrastructure has also witnessed growth. Globally, countries have added to their renewable capacities, driven by the widespread availability and maturity of renewable technologies. Notably, Brazil and Chile emerge as top performers in 2024, ranking among the top 20 countries in this regard, alongside leading advanced European economies. Brazil, known globally for having one of the cleanest electricity mixes, has seen continuous expansion in its renewable energy industry. Large hydropower plants play a significant role in the country’s domestic electricity generation, contributing to its global leadership in renewable energy deployment.⁸⁸ Similarly, Chile generates 35% of its energy from solar and wind,⁸⁹ evidenced by substantial infrastructure development and the emergence of a thriving renewable energy industry, which enjoys enduring political support and active engagement from established companies invested in its success.⁹⁰

However, there has been a decline in innovation growth, with companies and the public sector struggling to keep pace with the significant advancements required in research and development (R&D). Despite this downturn, emerging economies like China and India have demonstrated their ability to rapidly adopt and even lead in new energy technologies and value chains. China has seen significant growth in areas like batteries, EVs and high-voltage transmission, while India has substantially expanded its renewable energy capacity and made advancements in clean hydrogen. China continues to allocate the largest share of its GDP towards investments in renewables, followed by Finland, Poland, and Bosnia and Herzegovina.

Financing the transition, particularly in emerging and developing economies, is a significant focus, with a growing emphasis on exploring innovative methods.

The global energy future increasingly depends on the decisions made in emerging and developing economies. While energy consumption in these regions remains relatively low, without substantial action to transform their energy systems, these economies are likely to contribute to the bulk of emissions growth in the coming decades.⁹¹ Trillions of dollars of investments are needed annually to decarbonize emerging economies.⁹² Despite the higher growth rates and energy supply deficits prevalent in many parts of the emerging and developing nations, investment tends to be heavily concentrated in some advanced economies. According to S&P Global, “with $8 of every $10 of current renewable energy investment going to projects in developed economies plus China”, this leaves a significant portion of the global population behind.⁹³

Private sector investment hinges on attractive risk-adjusted returns and the bankability of projects, which depends on several factors. Among these, the cost of capital is crucial, with variations driven by factors like country and currency risks, as well as the policy environment. In many emerging and developing economies, debt and equity costs can soar up to seven times higher than those in
the US or Europe.⁹⁴ Additionally, investors face a lack of transparency regarding the actual cost, making it difficult for them to actually price risk and for policy-makers to take effective action.⁹⁵ When projects are not commercially viable, concessional finance, government support and guarantees from multilateral development banks (MDBs) can be instrumental in making them bankable. In the
Association of Southeast Asian Nations (ASEAN) region, despite substantial growth in energy demand, renewable power development lags due to inadequate policy and investment frameworks. According to the IEA, “regulatory barriers, incumbent interests and inflexible commercial arrangements have perpetrated the prioritization of fossil generation over renewable”.⁹⁶

The rising global focus on emissions reduction is driving the market for green bonds,⁹⁷ while energy efficiency also emerges as a cost-effective means to reduce energy demand.⁹⁸ De-risking initiatives play a significant role in unlocking private capital for sustainable energy projects. For instance, in Sub-Saharan Africa, the African Energy Guarantee Facility offers insurance against political risks for green energy projects aligned with EU guidelines. Similarly, in Nigeria, InfraCredit’s guarantees have facilitated access to local currency debt finance from the domestic bond market for energy infrastructure projects valued at $300 million.⁹⁹ Standardizing climate assessments at the national level in developing countries can further stimulate domestic private finance for energy transition projects.¹⁰⁰ Additionally, there is an opportunity to leverage philanthropies, development finance institutions and private capital to foster partnerships. Through these measures, stakeholders can enhance the financial viability of the energy transition and accelerate progress towards climate goals. The Network to Mobilize Investment for Clean Energy in the Global South is a unique World Economic Forum community of public and private sector stakeholders engaged in promoting knowledge exchange and developing practical solutions to unlock barriers and solutions to scale capital for energy transition in emerging and developing economies.