Economic Impact of Renewable Energy: Projection 2023
February 3, 2023 • DE Energy
Renewable energy will have significant economic impact in 2023 and the future. Switching to renewables can bring individual energy costs to near zero in the long run. It also helps unstable economies to achieve energy independence, creates jobs in the local market with locally available resources.
Cheapest Form of Energy
In many parts of the world, renewables might just be the cheapest source of energy. There are a lot of regions that lack access to the conventional energy grid. It would do well for countries to capitalize on the current fall in prices of renewable energy infrastructure.
The costs of Solar electricity fell about 85% in the decade between 2010 and 2020. They are predicted to lower further in 2023. The price of electricity from onshore wind fell about 56% and offshore wind fell about 48%. The falling costs make renewables an attractive option for developing nations, where the energy demand is high. There is huge potential for low and middle income nations to be powered by low-carbon energy sources in the future. This is fuelled by the renewable competitiveness against the sharply rising prices of gas and coal.
Impact of Renewables on the Job Market
1 USD invested in the renewable energy market can create 3 times more jobs than in the fossil fuel industry. The International Energy Agency predicts that about 5 million jobs will be lost in Fossil fuel production by 2030. However, the renewable energy industry will create 14 Million jobs, with a net total of 9 million new jobs.
The allied economics of renewable energy includes innovative technology in EV production, energy storage, energy-efficient appliances, etc. These sectors could create an additional 16 million jobs. Thus clean energy, including its infrastructure and all low-emission technology will create a total of 30 million jobs by 2030.
Cost Savings in Climate Change
The climate change has cost the USA roughly 240 billion USD per year in damages. If climate change proceeds at the same pace, then it will increase by 10% in the coming years. The fossil fuel industry received about 5.9 Trillion USD in the form of subsidies, tax breaks, and damages, in 2020. In order to achieve net-zero emissions by 2050, we need to invest at least 4 Trillion USD till 2030. This includes research and implementation of renewable technology and infrastructure.
Countries with limited resources might find it daunting to meet these investments, but the funding will translate into significant savings. It can save up to 4.2 Trillion USD per year by 2030, in pollution and other climate crisis mitigation measures.
The investment will reduce market shocks and improve resilience in energy systems. The diversification of energy sources reduces the economic strain on fossil fuel imports.
Impact on Global GDP
An economic fragility arises from high dependency on oil and gas. IRENA states that doubling the share of renewables will increase the global GDP by 0.6% to 1.1% in 2030. This translates into an amount of 706 Billion USD to 1.3 Trillion USD.
Countries like Japan, India, South Africa, the USA, and Australia showed a large positive impact in GDP. Oil & Gas is fast facing a GDP decline with the electrification of transport and heat, both private and commercial.
The commercials involved in Renewables go towards the initial infrastructure and minimal maintenance costs. There are no long-term fuel costs like fossil fuel based energy systems. To avoid locking up valuable funding in fuel imports, it is wiser to invest in renewables now. Developing nations look at crowdfunding renewable energy as a viable solution. The power sector attracts the maximum of this investment. The projected increase in the investments will yield a global economy rise to the tune of 3.1%.
Majority of the renewable energy investment is expected to come from private sources, unlocking a pipeline of projects. The effects of this will be felt both at global GDP level and sectoral levels.
Impact on Global Trade
A key enabler of economic development has been the global market for goods and services. The large economies like Japan and India spend about 7% of their GDP on energy imports. The proliferation of renewable energy would reduce these imports, and open new trade markets for renewable energy infrastructure.
The economies can grow to meet the global scale up in trade in associated goods and services. Countries exporting fossil fuel and its by products will see a reduction in demand. Increase in renewables trade will improve trade balance. Additional benefits will include relief from fluctuating fossil fuel prices, and greater energy security.
Distributed Energy is an experienced platform aggregator that enables renewable energy projects in underserved economies. The team leverages its technical expertise in optimizing clean energy production. With projects spread across Asia and Africa, businesses and investors can choose to help inch the planet towards net-zero. Talk to us today to become a crucial part in the energy conservation conversation. Visit www.de.energy to learn more.