Energy transformation will increase GDP by 2.5 per cent by 2050: IRENA

The energy transformation brought about by low-carbon technologies will lead to economic improvements, says IRENA in their report, Global energy transformation: A roadmap to 2050. In the next three decades, global gross domestic product (GDP) is expected to increase by 2.5 per cent. This is US$99 trillion more than the forecasted GDP for 2050 in the scenario the energy landscape maintains the status quo.

However, in order to enjoy this economic growth, a substantial amount of additional energy sector investment is needed.

• An additional US$15 trillion of investment. From now till 2050, investments in renewable energy, electrification technologies and efficiency must increase by 16 per cent. Total investment in the energy system would need to reach US$110 trillion by 2050.
• The additional investment needs to be front-loaded. As energy infrastructure investment has long-term consequences, delaying any decisions today will lead to more emissions being produced over time. Therefore, most of the investment will be required in the early stages of the transition – before 2030. Less investment will be needed in the later decades as technology develops and electrification increases.   
• Additional investment needed is 40 per cent lower than last year’s estimate. This is due to the rapidly falling costs of renewable power and emerging electrification solutions that are cheaper and more efficient.

Nonetheless, the global energy transformation makes socio-economic sense. As the energy mix shifts to make way for more low-margin renewable power, the need for energy sector subsidies also decreases. By avoiding subsidies and reducing the effect of health and environmental damage, successful energy transformation is expected to save as much as US$160 trillion by 2050. This comes up to savings of US$7 for every US$1 invested.

For a deeper perspective on the energy transition, read the full report, Global energy transformation: A roadmap to 2050.