IRENA’s energy transitions re-writes net zero narrative
Analysis undertaken by the International Renewable Energy Agency (IRENA) shows that by accelerating energy transitions in a sustainable manner, the world’s economy could expand by 2.4% over the next decade.
In addition, the Abu Dhabi-based Agency foresees the creation of up to 122m energy-related jobs in 2050, more than double today’s 58m.
Renewable energy will account for more than a third of all energy jobs employing 43m people globally, supporting the post-COVID recovery and long-term economic growth.
IRENA’s research highlights business opportunities in renewable energy
According to IRENA, phasing out coal, limiting investments in oil and gas to facilitating a swift decline and a managed transition as well as embracing technology, policy and market solutions, will put the global energy system on track for a 1.5°C pathway.
By 2050, a total $33t of additional investment will be required into:
- End-use electrification
- Power grids
- Hydrogen and innovations
The benefits, however, greatly exceed the costs of investments.
When air pollution, human health and climate change externalities are considered, the payback is even higher: with every dollar spent on the energy transition, adding benefits valued at between $61t and $164t by the mid-century.
IRENA’s analysis sees energy transition as a big business opportunity for multiple stakeholders including the private sector, shifting funding from equity to private debt capital. The latter will grow from 44% in 2019 to 57% in 2050, an increase of almost 20% over planned policies.
Energy transition technologies will find it easier to obtain affordable long-term debt financing in the coming years, while fossil fuel assets will increasingly be avoided by private financiers and therefore forced to rely on equity financing from retained earnings and new equity issues.
Renewable energy offers a fighting chance
“This Outlook represents a concrete, practical toolbox to total reorientation of the global energy system and writes a new and positive energy narrative as the sector undergoes a dynamic transition,” said Francesco La Camera, IRENA’s Director-General. “There is consensus that an energy transition grounded in renewables and efficient technologies is the only way to give us a fighting chance of limiting global warming by 2050 to 1.5°C. As the only realistic option for a climate-safe world, IRENA’s vision has become mainstream.”
The next decade will be decisive to achieve the Paris and Sustainable Developments goals. IRENA sees any delay as a danger to causing irreversible economic and humanitarian consequences.
“Energy transformation will drive economic transformation,” continued La Camera. “Energy transition is a daunting task but can bring unprecedented new possibilities to revitalise economies and lift people out of poverty. IRENA’s Outlook brings unique value as it also outlines the policy frameworks and financing structures necessary to advance a transition that is just and inclusive. Each country will define what is the best for them, but collectively, we must ensure that all countries and regions can realise the benefits of the global energy transition for a resilient and more equitable world. We have the know-how, we have the tools, we need to act, and do so now.”