# Using firm-level supply chain networks to measure the speed of the energy transition

## TL;DR

This study uses supply chain data from 25,000 Hungarian firms to track progress in adopting low-carbon energy, finding mixed results and untapped potential for faster decarbonization.

## Contribution

The novel use of firm-level supply chain networks to measure and analyze the speed of the energy transition at scale.

## Key findings

- Half of firms increase low-carbon energy shares, while 50% reduce it.
- Current trends suggest only 20% low-carbon energy by 2050, but could reach 70% with better strategies.

## Abstract

International climate targets rely on the success of the energy transition, however systematic monitoring on how the economy adopts low-carbon energy remains underdeveloped. Here we use nationwide supply-chain network data to reconstruct energy portfolios for 25,000 Hungarian firms between 2020 and 2024, covering 75% of gas, 70% of electricity, and 50% of oil consumption. This allows us to quantify the speed of the energy transition -the transition towards low-carbon electricity- on the firm level. We find substantial heterogeneity in decarbonization progress: half of firms increase low-carbon energy shares, but 50% reduce it. Energy cost structures are closely associated with transition behavior, indicating technology-related lock-in effects. Extrapolating current trends yields an aggregate low-carbon share of 20% by 2050, highlighting ineffective decarbonization efforts. If firms strictly adopted strategies of decarbonization frontrunners within their industry sectors, a low-carbon share of 70% could be achieved by 2050, putting climate targets within reach.

Monitoring how the energy transition unfolds remains a challenge. This study uses firm-level supply chain data to track decarbonization rates in a national economy, revealing little progress, but also untapped potential to accelerate the transition.