CSH Researchers have developed a monitor that tracks how quickly companies are switching to climate-neutral energy – and have applied it in one country. Many firms are making progress; just as many are falling behind. And those firmly entrenched in fossil fuel structures face a particularly steep climb to change course.
THE STUDY IN A NUTSHELL
- Climate traget: Europe aims to be climate-neutral by 2050, yet actual progress in the economy has so far been barely measurable.
- The CSH Monitor is the first objective method for measuring the state of the energy transition at the company level.
- Example – Hungary:
- The researchers analyzed the energy consumption of 25,000 Hungarian companies between 2020 and 2024
- The energy transition is barely taking place in the business sector – around half of firms increased their share of low-carbon energy, the other half did not
- If current trends continue, the low-carbon energy share in 2050 would be only around 20%. If companies followed the strategies of the frontrunners in their sector, up to 70% would be achievable
- Need for action: Keeping the 2050 climate-neutrality target within reach will require comparable monitoring systems in as many countries as possible.
The EU is expected to achieve climate neutrality by 2050. How far along is it? “At its core, we simply don’t know. We have a good picture of the supply side – how quickly wind turbines are being erected, grids expanded, and storage capacity increased. But there are no official figures on how fast industry and firms are retrofitting, replacing their machinery, and electrifying their processes,” says CSH President Stefan Thurner.
Together with his team, he has now developed such a monitor. “By drawing on the energy consumption of nearly all relevant companies in a country – in this case Hungary, where these companies account for 75% of all firms’ gas consumption, 70% of electricity consumption, and 50% of oil consumption – we were able, for the first time, to develop an objective method to measure and monitor the state of the energy transition,” says Thurner.
ENERGY TRANSITION BARELY TAKING HOLD ON THE FIRM-LEVEL
The study, published in Nature Communications, shows that roughly half of the companies increased their share of low-carbon electricity from 2020 to 2024. The other half, however, showed a negative trend and continued to rely on fossil fuels. “It’s not the case that all companies are steadily increasing their share of renewable electricity. We were surprised by how large the share of companies is that are doubling down on gas and oil,” says study author Johannes Stangl of the CSH. “The energy transition is practically not happening in the Hungarian economy,” Thurner emphasizes.
WHICH COMPANIES ARE SWITCHING TO ELECTRICITY?
“What’s striking is that in nearly every subsector, there are companies that consume mostly low-carbon electricity, and others that consume almost none,” says Thurner, which suggests there is no fundamental technical barrier preventing entire industries from making the switch. So why do some companies switch and others do not?
The study found that companies spending a relatively large share of their revenue on fossil fuels are significantly less likely to switch to electricity. Conversely, the higher a company’s electricity costs as a proportion of revenue, the more likely it is to continue investing in electrification.
The researchers point to a possible lock-in effect where companies could find it difficult to move away from their current technologies because switching costs are too high or the investment is too risky. “This finding underscores how important it is to support companies with their initial investments while simultaneously setting a clear climate policy direction. In this way can companies gain the planning certainty needed to be confident that investments in climate-friendly technologies will pay off,” Stangl emphasizes.
HIGHER ENERGY CONSUMPTION, GREATER ELECTRICITY SHARE
Size also plays a role: smaller companies – measured by total energy consumption – are less likely to make the switch, while larger companies, those that consume more energy overall, tend to be more inclined to increase their share of electricity.
FUTURE SCENARIOS
Additionally, the researchers conducted a thought experiment: what if companies with a negative trend (those whose fossil fuel share has remained flat or increased since 2020) were to behave by 2050 the way comparable companies in the same subsector with a positive trend already do? In that scenario, the share of fossil energy could fall to between 30 and 45 percent by 2050; correspondingly, up to 70 percent of energy consumption could come from low-carbon sources.
If, on the other hand, everything stays as it is and companies continue on their current path, the fossil fuel share of companies would still stand at around 80 percent in 2050.
A MONITOR FOR AS MANY COUNTRIES AS POSSIBLE
For their calculations, the researchers reconstructed the energy consumption of over 25,000 Hungarian companies between 2020 and 2024. “It would be enormously important to have this kind of insight in as many countries as possible. That way, one could see how well the energy transition is actually progressing at the firm-level and intervene early where needed, so that the 2050 climate target remains achievable,” says Stangl. So far, however, this is possible primarily in countries where VAT data for every transaction is recorded automatically – such as Hungary, Belgium, Spain, Portugal, and Ecuador, for example.
“While a causal relationship cannot be established with certainty, the statistical associations are so clear and consistent across different sectors that they do point to which factors drive or hinder the switch to electricity in companies,” says Thurner.
“Since electricity from renewable sources is already cheaper today than fossil-based electricity, the power sector will be largely decarbonized within the foreseeable future. What matters, then, is which companies manage to shift their processes to electricity in time, and which continue to cling to fossil fuel technologies,” Stangl states.
“Our findings show that the energy transition in an EU country is currently barely happening – but they also show where potential levers exist,” says Thurner. “If the EU is to meet its 2050 targets, we need a company-level monitor for every EU country, so support can be provided when and where it is needed in a targeted way.”
BEHIND THE SCENES
How did the researchers do it? And where does the complexity lie?
The data foundation: The firm-level supply chain network of the Hungarian economy, reconstructed from VAT data.
The method in 8 steps:
- Drawing on VAT data collected by the Hungarian Tax and Customs Administration, the researchers reconstructed the supply chain network of the Hungarian economy at the company level. The data is anonymized – the researchers do not know the names of the companies.
- Because they do know the industrial classification of the firms, the team was able to identify those companies that supply energy (in the form of oil, gas, and electricity)
- The VAT records then reveal how much electricity, gas, and oil each company purchased from those energy suppliers per year.
- The monetary amounts were then converted into actual energy quantities (e.g., kWh) using Eurostat price data. “Because we use average prices, these are estimates. The actual values may differ, since we naturally don’t know the specific energy contracts of each company – but it’s as close as we can get,” says Stangl.
- They then calculated, for each company and each year, the share of CO₂-low electricity consumption, based on Hungary’s electricity mix.
- This allowed them to measure, for over 25,000 companies, whether the share of CO2-low electricity was rising, stagnant, or falling.
- The researchers then analyzed which companies were switching to electricity, based on five characteristics: revenue, number of employees, total energy consumption, electricity costs as a share of revenue, and fossil fuel costs as a share of revenue. The latter reveals structural dependency, the so-called lock-in effect: companies find it hard to break free from their existing technologies because switching costs are high or the investments are risky.
- Based on the observed trends, they simulated how the energy mix of these 25,000 companies would evolve
Where the complexity lies:
In this study, the energy transition is measured where it actually takes place: at the level of individual companies. These companies have their own development paths, make their own decisions, interact with one another, and are interdependent. Complexity science makes it possible to extract systematic patterns from this and derive general insights.
About the study
The study “Using firm-level supply chain networks to measure the speed of the energy transition“ by J. Stangl, A. Borsos and S. Thurner was recently published in Nature Communications (doi: 10.1038/s41467-026-69358-4).
