World Economy

Doubling Renewables Can Boost World Economy

Doubling Renewables Can Boost World Economy Doubling Renewables Can Boost World Economy

Dramatically scaling up renewables’ share of the global energy mix would deliver a massive boost to GDP, social welfare, and employment worldwide, according to a report released Saturday by the UN-backed International Renewable Energy Agency.

Doubling the world’s share of renewable energy by 2030 would increase global GDP between 0.6% and 1.1%, the report said–equal to gains of between $700 million and $1.3 trillion, BusinessGreen reported.

Rays, wind and gravity can boost incomes, welfare and trade balances. That’s the claim of the International Renewable Energy Agency as it sharpens the macroeconomic case for ramping up clean energy like solar, wind and hydropower in its new report.

It shows the benefits of ditching coal, oil and gas for domestic resources that counter climate change and spur national employment and health. The newly-inked Paris agreement commits the world to phase down greenhouse gases by the end of the century.

Meanwhile, global welfare, including health, education and the benefits from an improved environment, would be increased by up to 3.7%, the report said, while employment in the renewables sector would more than double from 9.2 million jobs today to more than 24 million by 2030.

 Win-Win Scenario

“Mitigating climate change through the deployment of renewable energy and achieving other socio-economic targets is no longer an either or equation,” said Adnan Z. Amin, director-general of IRENA, in a statement. “Thanks to the growing business case for renewable energy, an investment in one is an investment in both. That is the definition of a win-win scenario.”

The UK would receive an economic boost equal to 1% of GDP, the report argued, as well as a boost of over 2% in social welfare benefits.

 Winners and Losers

The report also predicted increasing the share of renewables in the global energy mix would more than half global imports of coal and reduce oil and gas imports, cutting costs for large importers such as Japan and India, while benefitting exporting countries by helping to diversify their economies.

Ukraine, Japan and India are big gainers from scaled up investment. But oil and gas exporters like Nigeria and Saudi Arabia face GDP declines as oil demand is displaced by renewables’ greater share in heat and transport. Under the first scenario, GDP grows slower – by 0.6%. Under the second it’s $1.3 trillion–the size of Mexico’s economy.

The European Union alone would save $15 billion in export costs by reducing fossil fuel imports, the report said.

 Outweighing Costs

The report provides the first global analysis of the impact of renewable energy deployment on the global economy, and argues that the benefits of scaling up renewable energy far outweigh any costs relating to the short term impact on competitiveness of switching to renewables.

“The recent Paris Agreement sent a strong signal for countries to move from negotiation to action and rapidly decarbonize the energy sector,” said Amin. “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.”

 Trade Cools Off

The global export value of all goods and services drop from $50 billion in the reference case to $40 billion–comparing business-as-usual figures with a renewables scale-up. That’s due to reduced shipments of fossil fuels. Coal imports would fall 50%; oil and gas 7%. Yet the capital required to make renewable energy creates new markets.

Fossil fuel imports would plunge $104 billion by 2030, and a further $181 billion in the case of higher electrification of heat and transport. This assumes an oil price of $129 a barrel, the International Energy Agency’s reference forecast. Saudi Arabia and Venezuela, where oil exports make up a quarter of GDP stand to do worst.

The launch of the report comes as IRENA prepares to hold its annual general assembly in Abu Dhabi, marking the first major inter-governmental meeting to take place following the agreement of the UN climate deal in Paris last month.