Doubling The Share Of Renewable Energy By 2030 Could Increase Global GDP By $1.3 Trillion

Economic growth and environmental sustainability have often be seen as mutually exclusive. It seemed like countries could not really boost their GDP without sacrificing a bit of sustainability.

A recent report by the Abu Dabhi based International Renewable Energy Agency (IRENA), tells a different story. According to the research, doubling the current share of renewable energy in the global energy mix would increase global GDP by up to 1.1 per cent, roughly US$ 1.3 trillion, by 2030. And it would reach that goal while increasing, at the same time, global welfare and quality of life.

To better highlight the scale of the financial impact, researchers point out that the amount would be more than the combined economies of Chile, South Africa and Switzerland as of today.

“The recent Paris Agreement sent a strong signal for countries to move from negotiation to action and rapidly decarbonise the energy sector,” said Adnan Z. Amin, IRENA Director-General in a statement. “This analysis provides compelling evidence that achieving the needed energy transition would not only mitigate climate change, but also stimulate the economy, improve human welfare and boost employment worldwide.”

Clearly, not everyone would gain economically, from such a transition: some sectors, like construction and engineering would benefit most, thanks to the increased demand for investment goods, growing, researchers say, between 1.3% and 2.4%. Conversely, fossil fuel industries, extraction, oil refineries and distribution chains would decrease the value level of their output.

Doubling share of renewables in the energy mix, to 36%, could indeed more than halve global coal imports and reduce the oil and gas sector’s imports by 7%. This would lead to a reduction in total fossil fuel imports of USD 104 billion in 2030, the report says.

Some countries also would benefit more than others: Japan would see the largest positive GDP impact (2.3 per cent) but also Australia, Brazil, Germany, Mexico, South Africa and South Korea would see a significant gain of more than 1 per cent each.

In terms of employment, while China would still hold the leadership as the largest renewable energy employer in the world India, Brazil, Indonesia and the US would also become key employers.

At the 2015 Paris Climate Change conference, India’s Prime Minister Modi committed to dramatically increase the deployment of solar power in the country to 100 gigawatts (GW) by 2022. That, alone, is expected to create 1.1 million jobs.

Brazil would continue to be focused on bioenergy feedstock harvesting and processing, while employment in the US would increase due to job gains in bioenergy as well as solar and wind energy.

That said, the benefits of renewable energies go well beyond job creation and economic performance. Their most important contribution would be the significant reduction of greenhouse gas emissions by 2030: scaling up renewable energy to 36% of the energy mix would provide about half of the emissions reductions needed to hold global warming below 2C, as agreed in Paris.

The scenario painted by IRENA could serve as an inspiration for political leaders to increase their efforts. Whether it could be achieved in practice or not, in fact, is mostly a matter of political will: at the current rate, renewables by 2030 would count for only 21 per cent of the energy mix, falling nine points short of target.

There are positive as well as negative signs, that show that progress in this field is far from granted. While it’s true that global cleantech investments attracted a record US$329 billion last year, as Bloomberg reported, some countries seem to be going in the opposite direction.

In the UK, the government seems to have abandoned its commitment to green energy in favour of fracking and nuclear power, while in Germany solar growth is at the lowest rate since 2007.