by Agnieszka Gajewska, Eric Janson and Jeroen van Hoof
In 2015, 195 parties adopted the Paris Agreement, pledging to put the world on a path to reduce carbon emissions and limit global warming to no more than 1.5°C above pre-industrial levels. Every year, world leaders assemble at a Conference of the Parties (COP) to assess global progress towards the goals of the Paris Agreement. But here’s the reality. We’re not engaged in a single, unified energy transition. Rather, because progress and strategies generally take place at the national level, we’re engaged in a multitude of transitions. Among the many factors influencing these transitions: the complexities of geopolitics, an increase in energy usage in emerging economies, the rapid growth of data centres, concerns over affordability, and the importance of energy to national security. And given that global energy demand continues to grow—it’s up 2.2% year-over-year in 2024, according to the International Energy Agency—the urgency of understanding the local dynamics of these transitions, and how they contribute to the global transition, is also growing.
Some clean energy technologies and solutions can be applied anywhere. However, there is no uniform strategy that every country can and should employ to decarbonise. Each nation plays a distinct role in the global energy system. And each faces a distinct set of challenges and is endowed with distinct resources. It’s those combinations of circumstances and capabilities that dictate the trajectory and pace of the transition. To understand how each country can make the best of its current situation and continue to progress, PwC collaborated with Oxford Economics in creating the Changing Energy Order Index. We drew on data from sources such as the United Nations, the OECD, the World Bank and the International Monetary Fund, along with Oxford Economics’ own forecasts. This index of G20 countries was compiled by evaluating 14 variables spread across five key areas: transition progress, investment and financing ability, economic and political stability, transition resources and policy ambition.
We present the data in two ways. First, we highlight the aggregate scores for each country in the G20. Countries are assigned a score between 0 and 100 based on their available data. The goal isn’t to rank one country against others. Rather, each country is uniquely situated based on its resources, its capacity and the position it holds in the global energy system. For example, these aggregate scores are also impacted by the role that some individual countries play in supplying the world with the energy it needs today, and in contributing to the global energy transition as we move forward.
Next, we look at groups of countries that are aligned across the five key themes. Doing so enables us to get a granular view of a nation’s strengths and vulnerabilities, and identify opportunities for it to evolve and contribute to the world’s energy systems. By understanding the factors that inhibit progress and the levers available to accelerate potential solutions, leaders in government and business can more effectively plot the next stages of their energy transition.
Several key insights emerge in our analysis:
- Given how significant policy and politics are to the energy transition, public opinion plays an important role. Four of the five highest measures of positive public opinion towards the transition are in Europe: in Italy, Spain, France and the UK. These countries might thus choose to be more proactive in implementing policies that support the energy transition.
- Economic separation (a measure of an economy’s independence from fossil fuels) is quite high across the board. It’s highest in Europe, but also very high in Asia and North America. Key factors for improving scores on this pillar include strong public support and ambitious policies in Europe, and technological advancements in Asia and North America. Countries that are more reliant on fossil fuels face a stark challenge in transitioning their economy towards other sectors.
- Geopolitics could influence the energy transition: access to critical natural resources is dependent on trade, with no country possessing all the required materials. Larger nations such as China, Australia and the United States have more favourable endowments, but still lack some of the resources they’ll need. The findings highlight the geopolitical complexities in acquiring the materials that are vital for renewable technologies, such as rare earth elements and lithium, and China’s strategic efforts to invest in and secure these assets.
- Necessity is the mother of invention: the four countries that score highest on technology and innovation (Germany, the UK, South Korea and Japan) simultaneously rank among the lowest for renewable energy potential. Their resourcefulness illustrates how countries can invest heavily in research and development to overcome their geographic and environmental limitations, leading to innovations that could benefit the broader global energy transition.
Groups of nations
After examining each country, we found it useful to analyse groups of countries that had common characteristics—both in their economy and national resources, and in the way they score across the five broad themes mentioned above (transition progress, investment and financing ability, economic and political stability, transition resources, and policy ambition). Together, these five themes provide a comprehensive picture of an individual country’s transition progress. Each theme is calculated from the discrete elements of a successful transition, as listed below.
- Transition progress: Emissions and energy intensity; sectoral electrification, fuel mix and renewable energy capacity; population growth; and economic reliance on fossil fuels.
- Investment and financing ability: The government sector’s capacity to pay (debt levels, reserves, credit ratings, tax rates and revenues, interest rates, and old-age dependency ratios) and the private sector’s capacity to pay (corporate profits and borrowing rates, household incomes, reliance on government subsidies, and spending on energy).
- Economic and political stability: Risks related to sovereign default, market functionality, currency and political instability.
- Transition resources: Renewable energy potential, technological innovation (R&D), the business environment (investment, education, infrastructure and urbanisation) and access to critical natural resources.
- Policy ambition: Political ambition (climate-policy ambition, forecasted emissions reductions, carbon pricing and climate targets) and public opinion on the energy transition.
Six significant country groupings emerge when we study the data—each group is made up of countries that have common obstacles to achieving a full energy transition and common attributes to help them overcome those obstacles. The grouped countries have similar index scores in the five themes we identified. Each is making headway with the energy transition in ways that account for the specific challenges it faces—even as geopolitical uncertainty is driving all nations to place an increased emphasis on short-term energy security and improve their energy resilience. As they grapple with those same global pressures, the 20 countries in our group analysis can take specific strategic actions to maintain momentum.
Advanced extractors: Australia, Canada, Saudi Arabia and the US
In theory, the countries in this group are among those best suited to spearhead the energy transition while also enjoying short-term energy security. They all possess large, resource-rich industrialised economies with deep fossil fuel ties. And they command access to ample financing and have a strong and stable business environment. The energy transition within this group is fundamentally about industrial policy and diversification. Advanced extractors have large deposits of many of the raw materials required for the transition—enough to both export materials and to meet their own needs. They also have robust natural resources for the deployment of renewable technologies.
Because these economies have long been powered by fossil fuels, decarbonising will involve not just structural but also societal and cultural shifts, an ambition that requires political willpower and appetite for change. Where the countries in this group differ is in policy ambition. Australia and Canada have strong commitments to renewable energy. Saudi Arabia’s economy is still deeply tied to fossil fuel extraction, but it’s also channelling investment into areas like chemicals, manufacturing and hydrogen clusters to diversify. The US is in a period of flux, as the federal government and numerous states are on divergent paths regarding fossil fuels. We should note that the data underlying this study was gathered in January 2025, before a series of significant US federal policy changes were enacted—which highlights the ways in which political changes can influence the direction and pace of the energy transition.
Strategic imperatives. Advanced extractors need a coherent energy strategy—one that takes a holistic view of all their energy systems. The approach shouldn’t demonise fossil fuels; instead, it should acknowledge their current role in facilitating the transition. These countries must fast-track new energy projects, including the construction of needed renewable and clean capacity—solar, wind and nuclear, for example—and design economic incentives to accelerate the transition. Collaboration through joint government strategies, including renewable technology sharing and trade facilitation, can help accelerate the energy transition. Investment in infrastructure and strategic AI deployment will also be vital in order to improve efficiency and reduce costs.
Policy drivers: France, Germany, Italy, Spain and the UK
The five large European economies in this group have invested heavily in clean energy technologies, even as their general business outlook continues to be fragile. And, notably, it is in this group that public opinion on the transition is the most favourable. They’ve all made good headway on reducing emissions intensity in recent years, but they must balance further progress against the need to shore up short-term energy resilience and security with fossil fuels. France, alone among this group, has a mature and expansive nuclear industry, which puts it at the low end of emissions intensity in the electricity mix.
The traditional financial strengths of the UK and Germany suggest they may play a future role as creditors for other nations’ climate efforts. And though productivity across these five economies has been lacklustre in recent years, new clean energy and infrastructure industrial initiatives offer an avenue for development—even as access to natural resources remains a challenge. At the same time, rising consumer costs for energy have the capacity to influence public opinion and may increase the need for subsidies.
Strategic imperatives. Policy drivers should offer more ‘carrots’ in the form of business incentives and fewer ‘sticks’ such as taxes and rules. Transition growth can be supported by simplifying and accelerating permits and licensing for green energy projects, which will boost investor confidence. Financial instruments such as green bonds can be made more attractive to investors through greater visibility into regulations and laws.
Technological innovators: Germany, Japan, South Korea, the UK and the US
This group includes two of the policy drivers, one of the advanced extractors and two mature Asian economies. They’re all proven leaders in clean energy technology and innovation and are supported by a strong business environment and a wealthy private sector that provides ready access to high levels of investment. But individual conditions and opportunities vary significantly. Japan has substantial advanced nuclear technology and infrastructure, and has been expanding its renewable energy potential; the US and UK have more powerful profiles for solar and wind, respectively.
Ageing populations in all the countries in this group (especially in Japan and South Korea) will put a strain on government finances and may affect their ability to remain technology pioneers. And an even greater threat to the energy transition could come from global trade decoupling, which has the potential to reduce technology knowledge sharing and access to raw materials. Of this group of countries, only the US has a plentiful supply of the natural resources needed for the transition.
Strategic imperatives. Technological innovators must focus on short-term cost efficiency and investment realisation rather than on pursuing emerging technologies that might support the transition but have a risk–reward profile that deters major private-sector funding. Now is the time for industry to demonstrate that carbon capture, utilisation and storage (CCUS) can be successful at scale. Likewise, companies and governments can employ artificial intelligence to make energy demand more efficient, though those gains will have to be measured against the large amount of energy AI requires. Governments should support the widespread deployment of proven low-cost technologies and foster process innovation, including optimising energy grid utilisation, green finance hubs, and transition-focused start-up ecosystems.
Investment-ready countries: Mexico, South Africa and Türkiye (Turkey)
All three of the developing countries in this group need to attract investment to make progress on long-term energy transition policy ambitions. Their economies and political systems are reasonably stable. Yet each one faces individual challenges that are holding it back.
Mexico lacks natural resources (apart from its impressive solar capacity), and its relatively weak business environment is a barrier to attracting investment for the transition. South Africa has aggressive policy goals but lacks the corporate or private wealth needed to fund the transition, and international investors have been discouraged by outbreaks of civil unrest. Türkiye (Turkey), meanwhile, has improving business stability but is dependent on importing the natural resources needed for its energy transition.
Strategic imperatives. Investment-ready countries should focus on establishing the reliable legal and regulatory infrastructure that will give investors confidence, because the opportunities for clean energy growth are enormous. Drawing on their ample renewable energy capacity, and knowing that clean energy costs are tumbling, these nations could quickly reduce their dependency on fossil fuels—but only if they take a pragmatic approach to importing the technology and natural resources they currently lack.
Coal-fired emergers: China, India and Indonesia
The three populous, rapidly industrialising economies in this group are a crucial part of the global energy transition puzzle. Though heavily dependent on coal to provide the stable power generation needed for their economic development, they also have the potential to undertake the transition.
China leads this group in transition progress due to its wealth of natural resources, investment in technology, and proven capacity and ability to manufacture renewable infrastructure. India’s need to support industrial development for its 1.4 billion people keeps it tied to fossil fuels in the near term, though its investments in renewable energy will increase in the medium term. Indonesia has a solid economic foundation for energy transition; its lack of policy ambition could be addressed by greater international investment in clean energy opportunities.
Strategic imperatives. One option for coal-fired emergers that want to transition away from dependence on fossil fuels while supporting economic development might be to shift to less-carbon-intensive natural gas. But as renewable energy becomes ever more cost-competitive, an economic case can be made for establishing a comprehensive renewable infrastructure. Each country in this group will also have to attract vast amounts of foreign capital and show that its legal and regulatory frameworks are consistently enforced so that investors stay in control of deployed capital.
High-risk, high-reward countries: Argentina, Brazil and Russia
This grouping is not as clear-cut as some others. Each of these countries is uniquely situated, and each plays a distinctive role in the global energy landscape. Russia is in a fundamentally different situation from Argentina and Brazil, even though its scores are similar. It’s both economically tied to fossil fuels and currently considered off-limits for most international investment because of the war in Ukraine. At the same time, it’s a key supplier of oil for India and China. Though each country in this group has the potential to play a significant role in the energy transition, they lack the policy ambition and the levels of political and economic stability needed to attract investment.
Brazil’s renewed commitment to protecting the Amazon rainforest, along with its embrace of renewable power generation and biofuels, highlights the potential among this group. Yet there is still much room for improvement in industrial electrification and the adoption of electric vehicles. Investment in Argentina has been hamstrung by a prolonged period of economic and business instability.
Strategic imperatives. Progress for the high-risk, high-reward countries will come from a focus on domestic energy security led by both government and the private sector. Brazil has been innovative in developing a mix of low-carbon fuels, including biomass and biofuels—by-products of existing industries’ processes—rather than focusing purely on new solar and wind production. Given the lack of global private-investor confidence, these three countries should work with international governments and multilaterals to secure support for the energy transition.
Government imperatives
Governments can take several key steps, regardless of their grouping in this exercise, to accelerate progress.
Build short-term resilience for a successful long-term transition. Many countries have built out clean energy supply capacity but haven’t given sufficient consideration to their growing energy consumption, the stability of their energy grid and their storage capacity. Policymakers can create a cohesive and resilient approach by addressing all of these elements under the same energy transition umbrella.
Focus on affordability and economic benefits. The economic benefits of the energy transition are so compelling that they can transcend political divisions and provide a persuasive driver of investment. At the same time, affordability of energy is a significant global concern. In the geographies where investing in renewables can reduce costs and increase competitiveness, governments need to demonstrate the economic positives and shift the energy transition debate away from the valid but less tangible debate about saving the planet.
Highlight security impacts. In an increasingly uncertain world, faith in the resilience of the energy supply is a key pillar of national security. Whatever the level of national development, governments need secure energy supplies to support society. Focusing now on energy resilience and diversification can lay the groundwork for the energy transition and create a stronger and better-protected nation.
Make regulations transition-friendly. Regulations and permitting processes that prevent innovation and clean energy deployment represent a major hurdle for many countries. Streamlined requirements are needed, as is continued protection of stakeholders and better collaboration between local and federal government agencies and ministries.
Scale up blended finance. Despite the opportunities in green finance, the risk factor in some countries remains too high to attract international investment. Governments and multilateral organisations can fill this gap or work with the private sector to develop blended finance solutions that spread the risk, guarantee returns and accelerate the transition.
Plotting your own path
Regardless of their country’s own strategic imperatives, leaders must act with a sense of urgency. Our current innovation abilities, resources and technologies can make a major difference if deployed efficiently and at scale. Governments should focus on making the best use of what we already have—even if it’s only 80% effective—rather than trying to perfect systems, policies and regulations that will soon have to evolve.
Every country must plot its own course towards decarbonisation, but it must do so while securing the resilience of its energy supply and maintaining its own economic development and the well-being of its society. That will involve relying on a mix of energy sources—fossil fuels and renewables—but embracing a strategy of decarbonisation over time.
Most significantly, because the energy transition is such a multifaceted and difficult problem, it requires a team approach. Making progress in the changing energy order is dependent upon the collaboration of regulators, capital providers, technology specialists and business. No one industry or sector has the capacity and resources to fully address these issues on its own.
Global perspectives on the energy transition
Views from around the PwC network
- Incentivising investment in Argentina
- A just transition in Brazil
- Building momentum in Germany
- India’s renewable energy potential
- Japan’s essential transformation
- Accelerating away from coal in South Korea
Incentivising investment in Argentina
‘Argentina leverages its vast and cost-efficient natural gas reserves as a transitional energy source, along with its vast wind and solar resources. Large projects are underway to develop lower-emissions LNG [liquefied natural gas] exports, and the country can supply the growing global demand for critical minerals necessary for the energy transition: copper and lithium. These opportunities require massive investments, and the new government has launched an important tax breaks programme to incentivise large investments in energy, mining and infrastructure, among other sectors.’
A just transition in Brazil
‘Brazil holds a unique position in the global energy transition, with its already high share of renewables, particularly hydropower and bioenergy. The challenge ahead lies in expanding clean generation while modernising the grid and attracting sustainable investment. With its vast natural resources, innovative energy ecosystem and growing green finance market, Brazil has the potential to lead a just and inclusive energy transition in the Global South.’
Building momentum in Germany
‘Germany is a global leader in the energy transition, with impressive successes in expanding renewable energy resources. But it has massive investment needs in infrastructure. And, as the study shows, political support is stagnating, and complex economic challenges are on the rise. The affordability of green hydrogen and industrial decarbonisation are essential to maintain momentum, which must be supported by a continued strong focus on innovation. Political stability is one key factor that will enable Germany to stay attractive to investors to continue attracting the capital necessary to fund the energy transition.’
India’s renewable energy potential
‘As the world’s most populous country, India holds a critical position in driving the global energy transition, leveraging its substantial renewable energy potential, especially in solar, wind and nuclear. The goal of reducing the economy’s carbon intensity by 45% from a 2005 baseline is powering the scaling up of renewable capacity to 500 gigawatts by 2030 from around 220 gigawatts currently, and growing nuclear tenfold to 100 gigawatts by 2047. Policies, regulatory frameworks and market mechanisms are getting recast to stimulate investments—upgrading technology and grid systems, building capacity and managing just-transition issues.’
Japan’s essential transformation
‘Japan is navigating a critical energy transition by balancing decarbonisation, energy security and affordability. With a strategic focus on maximising renewables and nuclear as decarbonised power sources, we are committed to transforming our energy systems through innovation, partnerships and long-term investment. This transformation is essential [if we are] to ensure sustainable growth and meet the evolving needs of society and industry in a rapidly changing global landscape.’
Accelerating away from coal in South Korea
‘In 2024, the share of renewable energy in Korea surpassed 10% of total energy generation for the first time, and coal-fired generation, the long-time number-one energy source, dropped to third, behind nuclear and gas. Korea’s shift to clean energy is expected to accelerate further in the future. The Government in February 2025 passed three energy laws, which aim for grid expansion and upgrade, the stable growth and operation of nuclear power, and the facilitation of offshore wind-power development.’
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