Creating A Green Planet: The Macroeconomic Impacts Of Adopting Renewables Globally

The International Renewable Energy Agency (IRENA) has released a very insightful, inspiring, and interesting report titled, Renewable Energy Benefits: Measuring the Economics, regarding the macroeconomic impacts of doubling the global fraction of renewables in the energy mix by 2030. IRENA describes the report as the first quantification analysis of the impacts of the deployment of renewables in the global economy and its interrelated markets and sectors. The good news is that the report indicates that renewables will produce significant positive impacts in all the economic sectors and markets that were studied during the research. For environmentalists, this is a triumphant report card that will help silence skeptics and green energy critics all over the world. For political and business leaders, especially those in energy guzzling countries like the United States, this is a wake-up call to implement proactive policies that will enhance the renewables drive — if they want to reap some of the economic benefits highlighted below. Ordinary individuals will also be elated to learn that green energy is not only good for the environment, but also for their pockets. Incidentally, a greener planet will be a better place to live due to the following macroeconomic improvements.

Economic Growth

Without going into specifics (due to space limitations), the study reported that increasing the share of renewables in the global energy mix will increase global GDP significantly. Essentially, the reported economic gain will be caused by an increase in investment in the renewable energy sector. Mostly, additional investments will flow towards the deployment of renewable energy, especially in the sectors that manufacture renewable equipment, sectors that are in the supply chain for renewable equipment and the services sectors. Despite a drop in the investment in nonrenewables, green energies will still accrue positive net economic growth.

New Job Opportunities

Again without going into specifics: Increasing the adoption of renewables across the globe will increase direct and indirect employment in the clean energy sector significantly. The resultant employment increase will offset any job cut backs in the fossil fuel industry. Therefore, Floridians, for example, can rest assured that solar companies in Orlando are capable of creating enough jobs to cater for any retrenchments in the nonrenewable energy sector. This is because renewables are typically distributed and labor-intensive; hence more employment opportunities. Generally, renewable jobs will increase across all technologies, particularly the technologies that are already dominant today, which are hydroelectric, solar, and biomass. Amazingly, most renewable energy jobs will be along the value chain, such as fuel supply (biomass) and equipment manufacturing and installations.

Improve Human Welfare

A significant increase in the worldwide adoption of green energy will improve human wellbeing and welfare far beyond GDP gains. This means that in addition to uplifting the global economic standards, renewables will enhance global welfare by a significant factor. The improvements will include positive economic impacts on global consumption and investment, positive social impacts on health and education expenditure, and positive environmental impacts on greenhouse gas emissions and materials consumption.

Better Trade

Finally, the deployment of clean energy will affect the trade of energy equipment, products and services both in the renewable and nonrenewable energy sectors. Trade in renewables will increase significantly, while trade in fossil fuels will shrink considerably. Luckily, the net global trade shift and effect will be positive. Trade shifts will occur to both importers and exporters of fuels. However, importers of fossil fuels will benefit from an early adoption of green energy; whereby they will enjoy economic gains and improved energy security. On the other hand, fossil fuel exporters might suffer severe economic repercussions due to their over-reliance on oil-driven GDP growth and sustenance. Advisably, they should adopt renewables early to ensure economic diversity and competitiveness in the new energy markets.