When shipping through the Strait of Hormuzground to a halt in March, energy importers relearned an old lesson: a country that buys its energy as fuel, cargo by cargo, also imports every price shock. The consequences of how governments respond to this truth will soon reverberate beyond energy markets. Decisions made today to secure more reliable energy may help determine where factories are built, which countries manufacture the technologies powering the global economy, and how vulnerable nations remain to the next disruption in oil and gas supplies.
These decisions will define which countries emerge as electrostates, with the power to shape and control future economies. New analysis by We Mean Business Coalition published today looking at electrification across 16 countries reveals how unevenly this transformation is progressing. The United States is doubling down on domestic oil and gas production, while China is rapidly electrifying its economy and consolidating its lead in electric technology manufacturing.
Others are now moving in China's direction. France plans to lift electricity's share of final energy from 27% to 38% by 2035, Canada to double its electricity supply by 2050, and Europe wants to become the world's first “electro-continent.” Rather than simply ranking countries, the Electrification Competitiveness Index maps two dimensions: the deployment and market uptake of electric technologies, and the policies and conditions supporting further progress. Across the 16 economies, the median score for enabling conditions is 67%, compared with 45% for deployment and market conditions.
In other words, in most countries, policy is running ahead of the market. Part of that gap is a time lag, but it also shows the distance between preparing for electrification and achieving it at scale. Successful electrification requires not simply more policies, but better-aligned policies that reinforce one another and give businesses the confidence to invest.
China scores highest on deployment, with extensive electric vehicle adoption and an industrial base producing much of the equipment the world needs to electrify. It already manufactures more than 80% of global battery cells. But its transition extends well beyond transport: electricity's share of China’s final energy consumption has doubled since 2005, with electrification spreading across industry, buildings, and transport.
Although much of its electricity (54%) is still generated from coal, the plan is to replace that with clean power. What’s more, given China’s manufacturing dominance, as other countries electrify, they must make a choice: where to compete in electric technology manufacturing and where they might gain more from cheaper imported equipment. Europe is one region trying to revive industrial competitiveness while reducing its exposure to imported fossil fuels, a vulnerability the Hormuz crisis has brought sharply back into focus.
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