IRENA’s analysis of the socio-economic benefits of renewables features in the report Perspectives for the Energy Transition: Investment Needs for a Low-carbon Energy System (IEA and IRENA, 2017), which looks at the macroeconomic impact of decarbonising the global energy sector in line with the Paris Agreement as far as 2050, with a major focus on renewables and energy efficiency.
The results show that decarbonising the energy sector will increase global GDP in 2050 by around 0.8% compared to the path set by current plans and policies. Accelerating renewables, therefore, would produce almost USD 19 trillion more economic activity between 2017 and 2050, similar to the combined market capitalisation of all the companies listed on the New York Stock Exchange.
The increased economic growth is driven by the investment stimulus generated by the capital-intensive nature of renewables and energy efficiency. It is also propelled by enhanced pro-growth policies – particularly carbon pricing – in which the income generated is fed back into the economy through lower income taxes, boosting consumption.
Improvements in human welfare, however, would go far beyond gains in GDP. IRENA analysis shows that the increase in welfare is close to 4%, compared to a rise of 0.8% in GDP. The savings in health and environmental externalities far offset the costs of the energy transition.