Doubling of renewables will add $A1.9 trillion to global economy by 2030

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ABU DHABI: A doubling in the world-wide deployment of renewable energy could deliver $A1.9 trillion of economic benefits by 2030, and could boost the economies of major fossil fuel exporters such as Australia, according to a major new report.

A detailed study by the International Renewable Energy Agency says that a doubling in renewable energy around the world to 36 per cent of electricity by 2030 would not just get the world halfway to its climate goals – as it suggested in a separate study last year – it would also deliver substantial benefits elsewhere.

The global economy could be boosted by $US1.3 trillion ($A1.87 trillion), with Japan leading the way in terms of economic benefits, potentially obtaining economic growth of 2.3 per cent above the reference case (business as usual).

irena briefing

Australia, despite an expected fall in coal exports that a push into renewables would undoubtedly cause, also ranks as one of the major beneficiaries of such an energy switch, and could see its economy grow 1.7 per cent above the reference case.

That is a very different scenario to what is often painted in conservative political circles, and of course by the energy incumbents. Both suggest wrack and ruin from lost jobs, collapsing businesses and soaring prices.

Australia’s Coalition government has used this argument in rejecting Labor’s proposal for a 50 per cent renewable energy target by 2030, and The Greens policy of 90 per cent renewable energy. It describes the Labor policy as “reckless” and “incredibly expensive”.

But Adnan Amin, the executive director of IRENA, which is based in the oil emirate of Abu Dhabi, says a rapid deployment of renewables, as IRENA set out last year, was “not a message of doom and gloom. It’s not a message that we do not need to sacrifice anything.

“We can transform our economies with a positive economic outcome and tackle climate change at the same time,” Amin told journalists at the launch of the report, which coincides with the IRENA-hosted summit in Abu Dhabi, the first major summit since the Paris climate deal was signed six weeks ago.

The report finds that losses in fossil fuel trade would be replaced by increased trade in renewable energy technologies and know-how. Jobs in the renewable energy sector would jumpt to more than 24 million, from 9.2 million now. Welfare benefits  woud jump 3.7 per cent over the base scenario.

This includes health benefits, from the reduced  impact of air pollution and greenhouse gas emissions reductions, but also significant cuts in water use for power, including for Australia. There are also significant energy security benefits, and the opportunity to address both sluggish economic growth and reduce carbon emissions.

“Those who make argument that moving away from fossil fuels will have negative job impacts, will need to take into account our research,” Amin said.

But it follows real-world experience elsewhere, Last week, in his State of the Union address, President Barack Obama hailed the huge surge in jobs in the solar industry in particular.

Research suggests a similar outcome is possible in Australia, but large scale renewable energy is at a standstill in Australia, as confirmed last week, and the Australian government has sent only local embassy staff to the IRENA conference, while 58 other countries have sent ministers.

Amin says the rapid growth in deployment of renewable energy, and the major cost reductions in wind and solar energy in particular in recent years is taking everyone by surprise, its supporters as well as its detrators..

“Renewable energy production is soaring, growing far more quickly than many predicted, and mainstream projections for its future envisage a profound impact on the global energy mix,” Amin said.

“Renewable technologies have snowballed from niche to a rising global industry with a speed and intensity that has side-swiped supporters and sceptics alike. “

Cost declines in solar nnd wind will make them even more competitive, Amin said. And, he warned, ‘this transition could move in a way that creates risk of stranded assets in new investment in fossil fuel generation.”

He said that this was a very hard message for fossil fuel incumbents to take, but the incredible quick uptake of distributed energy, such as rooftop solar, and the “democratization” of energy had led to radical change in the industry.

Big utilities in Europe had last half their market value, and they now found that they had to adapt to service-based economic odels. “The future is not going to be centralized generation,” Amin said, echoing the views of many in Europe, from E.ON, to RWE and Engie, to the likes of NRG in the US.

Last year, IRENA produced a study that suggested a rapid uptake of renewables, and increases in investment in energy efficiency, could deliver much of the task limiting global warming to 2C.

Rainer Bakke, the assistant minister of energy in Germany, and the man now responsible for that country’s “energiewende”, or energy transition, said that the Paris agreement would not have been possible without success storie of renewable energy in last 15 years.

“When we reached the Kyoto agreement (Protocol), renewable energy was looked upon as luxury, as very expensive, and something that only rich countries could afford,.

“That has changed completlely,” he said. He pointed to the huge growth in investment in developing countries such as China and India, but also Mexico, Morocco, and South Africa. “They now run the show. Costs keep falling, and amazingly, we are seeing little negative impact (on this growth) from low fossil fuel prices.”

Bakke noted that Germany’s share of renewables had jumped from 27 per cent to 32 per cent, a growth of five percentage points that was unrivalled. “Such a leap has never been before,” he said.

Last year, IRENA produced a study that suggested a rapid uptake of renewables, and increases in investment in energy efficiency, could deliver much of the task limiting global warming to 2C.

The latest IRENA report said renewable energy could prove an answer to both the challenges of sluggic economic growth and the mounting need to decarbonise the global economy,

“Countries are looking for solutions to improve their economic performance while minimising further greenhouse gas emissions.

“Given this context, renewable energy is emerging not only as a solution to meet growing energy demand while sharply reducing carbon emissions but also as a potential engine for economic growth and diversification.”

On water, the IRENA analysis of selected  countries (UK, US, Germany, Australia and India) finds that increasing renewables penetration significantly reduces water use in the power sector.

On the back of a substantial scale-up of renewable energy deployment, especially solar PV and wind, water withdrawals in 2030 could decline by nearly half for the UK, by more than a quarter for the US, Germany and Australia, and over 10 per cent in India.  

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  • onesecond

    Only the fossils are standing in the way. Time is pressing to finally get them out of power.

  • Phil Gorman

    Is our government mad, bad, or just plain stupid? The whole coalition and half the Labor party should be sued for conflict of interest leading to the gross detriment of the people.