An International Renewable Energy Agency study commissioned by Germany for the German government says investments into renewable energy and energy efficiency could bolster the global economy by US$19 trillion by 2050.
The report, titled “Perspectives for the Energy Transition: Investment Needs for a Low-Carbon Energy System“, was prepared with collaboration from the International Energy Agency in advance of upcoming Group of 20 meetings.
The meetings are being held to help support goals established in the Paris Climate Agreement, through which governments have vowed to limit global warming to within 2 degrees Celsius of pre-industrial conditions.
According to IRENA, renewables — which it defines as hydroelectricity, ocean energy, geothermal, biomass, solar and wind — made up 15% of all global power generation in 2015, but would need to increase at a rate of about 2.5% annually through 2050 to meet the target.
Achieving this goal would “require an unparalleled ramp up of all low-carbon technologies in all countries,” IRENA said in the report, while also providing for “improvements to energy and material efficiency.”
The shift would cause fossil fuel use drop by two-thirds from present levels, the study said, with coal and oil losing the most market share.
Still, the economic upside would be significant, IRENA said, with the energy transition leading to a global gross domestic product boost of about 0.8% — or $19 trillion — by 2050, with economic growth “driven by the investment stimulus and by enhanced pro-growth policies, in particular the use of carbon pricing and recycling of proceeds to lower income taxes.”
This boom would create an estimated six million jobs, according to the report, with all job losses in fossil fuel industries to be fully offset by new jobs in renewables.
“Improvements in human welfare, including economic, social and environmental aspects, will generate benefits far beyond those captured by GDP,” IRENA said.