The Netherlands leads the overall ranking, closely followed by Denmark and Estonia. The bottom three
performers are Lithuania, Bulgaria, and Cyprus. On a sub-regional level, Scandinavia performed best,
followed by Western Europe, the Baltic States, Eastern Europe, and Southern Europe.
On average, the overall GTI score for the 29 countries is 48.2.
Chart 3: Overall 2022 results Source: Oliver Wyman analysis
The Netherlands leads primarily for its stellar performance in the Utilities and Waste categories, where the country ranks first. In the Utilities category, it came in high in the three transition technologies: hydrogen projects that promote energy transition, battery storage, and carbon capture and storage (CCS) projects. A more detailed discussion is provided in the Utilities section. In Waste, the Netherlands achieved the highest score in its recycling efforts and ranked fifth in landfill waste per capita. Decisive government action laid the foundation for this success: In 2016, the Dutch government set a target of a 100% circular economy by 2050; by 2030 the country wants to achieve a 50% reduction in raw material consumption. To deliver on its targets, the country introduced in 2019 a regularly updated implementation program with action plans in five focus sectors: plastics, consumer goods, manufacturing, construction, and biomass and food. For instance, the Netherlands is working on Extended Producer Responsibility legislation for the textile industry that would make companies responsible for the garments they produce, even when they go to waste as well as bear the cost of waste management. This would not only give textile companies a financial incentive to produce higher quality products, but also increase reuse and recycling of apparel.[i] The Netherlands also performs well in the Transport category in CO2 emissions from new passenger cars and in adoption of EVs and other alternative-fuel passenger cars, although it is a distant second-place finisher to Norway. Oslo is known as the EV capital of the world because of the high adoption by Norwegians. But there is also room for improvement. For instance, in share of public transport, the Netherlands ranks in the bottom six, despite having the second-largest population density among the countries in the index. In the share of renewables in residential space and water heating, the Netherlands ranks fourth from the bottom for its dependency on gas as a heating fuel. When reviewing the performance of individual countries, some interesting regional patterns emerge: In the Economy category, Scandinavian countries perform better than most of their regional peers, thanks to superior performance in GHG emissions intensity, which is defined as the ratio of GHG emissions to GDP, and the value-added in the environmental goods and services sector (measured as the percent of total value-added in the economy). Eastern European countries, on the other hand, are at the bottom of the ranking, primarily because of lagging performance in GHG emissions intensity and energy intensity, which is defined as the ratio of total primary energy consumption versus GDP. In the Nature category, Scandinavia again tended to outperform other regions, thanks to higher scores in both urban population exposure to air pollutants PM10, which is population-weighted concentration of particulate matter less than 10 micrometers (< 10µm), and water exploitation, which is defined as total fresh water use out of total renewable freshwater resources. All Southern European countries, on the other hand, fall into the bottom half of the ranking, pulled down by low scores in water exploitation, urban population exposure to air pollutants PM10, and the share of protected marine and terrestrial areas as a percent of total country area. In the Utilities category, Western European and Scandinavian countries dominate, accounting for 11 of the top 14 rankings. Eastern European countries can be found towards the bottom, with less engagement in transition technologies and generally lower renewable energy supplies. In the Transport category, Eastern European countries rank highest, occupying five of the top six spots. They score particularly well in their share of public transportation in total passenger transport as well as the overall CO2 emissions intensity of household passenger transport, which is defined as CO2 emissions from household transport activities per capita. In the Buildings category, Baltic countries occupy three of the top six spots of the ranking. They perform well in both household electricity consumption per capita and the share of renewable energy sources in residential heating as they rely heavily on wood. Although classified as a renewable fuel, wood can be rather problematic for the environment. Western European countries, on the other hand, rank at the bottom, using a significant share of oil and gas for heating fuels. Scandinavian countries underperform because of their relatively large share of household electricity use. In the Waste category, Western European countries are ahead, thanks to a superior performance in the circularity rate and a lower share of municipal waste landfills per capita. The circularity rate of a country is defined as the percentage of material resources usage that came from recycled waste materials and the extent to which material is recycled and reused. Southern European countries, on the other hand, rank lower, with a higher share of municipal waste landfills per capita. In the Manufacturing category, the performance was quite varied across all regions. This was true for the overall category ranking as well as the three sub-category rankings. Overall, Western European countries tend to score higher with six of the top 12 countries from the region. Eastern Europe, on the other hand, tend to underperform with five countries of the bottom 10 from the region.
The journey to net zero requires huge investments. According to the International Energy Agency (IEA), current investment levels of around 2.5% of global GDP, or $2 trillion, must rise to $5 trillion, or 4.5%, of global GDP by 2030 to reach net zero by 2050. They also must remain at these levels until at least 2050.[i] Looking at Europe, the EC estimates that additional annual investments of €360 billion, on average, are required to meet its new 2030 target of reducing GHG emissions by 55% below 1990 levels. This raises the EC’s overall investments to an average of €1,040 billion per year.[i]
Given the enormous capital requirements, it would seem plausible that richer countries are further ahead on environmental sustainability. And indeed, when looking at the relationship of a country’s wealth, as measured by GDP per capita, and the performance in The Green Transition Index (GTI), the link is clear (see Chart 4). Richer countries with the financial means to invest in the transition tend to score higher than countries with lower economic performance.
However, two surprising clusters stand out. First, there are the rich underperformers, namely Norway, Ireland, and Luxembourg, which perform worse in the index relative to their wealth. Second, there are countries that are overperforming relative to their GDP per capita — Estonia, Italy, and Slovenia.Source: Eurostat, Oliver Wyman analysis
Let’s look at Norway, ranked ninth in the GTI. The country excels in many areas and has the highest share of renewables in its electricity mix — essentially calculated by the total generation by renewables and biofuels as a percent of total electricity production. Norway also has, by far, the lowest CO2 intensity, which is defined as carbon dioxide emissions per kilometer, for new passenger cars. It is the undisputed leader in electric vehicles as a percent of the total vehicle stock. Substantial incentives in the 1990s drove that growth by exempting EVs from value-added taxes, registration taxes, and road tolls. The country ranks second in public R&D for environmental objectives as a percent of GDP, it leads in the Water Exploitation Index, and it ranks third in urban population exposure to air pollutants PM10. But there are areas for improvement. For instance, the country ranks worst in electricity consumption by households per capita at about five times higher than the median of countries in the GTI index. The share of public transport in total passenger transport is the second lowest in the peer group — surprising considering that Sweden and Finland, both similar in population density, score significantly better in this metric.
Ireland, 16th in the GTI, leads in manufacturing GHG emissions intensity relative to the value-added of the country’s manufacturing sector and energy intensity, which is energy consumption relative to the value-added of the country’s manufacturing sector. Ireland benefits from its relatively low share of carbon-intensive manufacturing industries. But its share of renewables in residential heating is the lowest of countries in the index as it relies almost entirely on fossil energy for heating fuel. The share of the value-added in the environmental goods and services sector in the economy’s total value-added, is also the lowest across the index. Ireland ranks next to last in its circularity rate and third to last in public R&D spending towards environmental objectives.
As for GDP overachievers, Estonia, ranked third in the overall GTI index, is an interesting case. The country achieved the highest score in reducing both absolute GHG emissions and energy consumption over 2015 to 2020. It ranks second in the share of organic farming as a percent of total utilized agricultural area, the exposure of the urban population to air pollutants PM10 and the share of value-added in the environmental goods and services sector. But there are also areas of concern. The country’s hazardous waste intensity in manufacturing, measured as hazardous waste per the value add, is 100 times the median of countries in the GTI index, and six times the value of Cyprus, the second worst ranked of the countries. The lion’s share of this waste is from oil shale, which has been mined in Estonia for electricity generation since the 1950s and, more recently, has been used for diesel fuel production.
Italy, No. 10 in the GTI index, performs well in the Manufacturing category (No. 5), thanks to good scores in manufacturing emissions and energy intensity. Within the Waste category, it is among the top four countries in circularity rates, thanks to a series of legislative measures: In 2017, Italy introduced the Industrial Plan 4.0, which incentivized the reuse and recycling of packaging as well as the purchase of reusable or recyclable products. Moreover, in 2016, Italy became the first EU country to introduce a mandatory Green Public Procurement policy for government authorities. There is, however, also room for improvement. In urban population exposure to air pollutants PM10 and the Water Exploitation Index, Italy rests in the bottom quarter of the ranking.