It is time to build a global energy system that is fit for the future. By making strategic investments and policy choices that focus on transitions to renewables, efficiency and greater electrification, we can strengthen the economic recovery, bolster sustainable development and set the course for a fully decarbonized system by the middle of this century. While Covid-19 may be the most urgent threat today, we cannot forget that climate change remains the biggest threat facing humanity over the long term. Our response to the two crises must be mutually reinforcing. Linking the short-term economic recovery to medium and long-term strategies is paramount to stimulate our economies and get people back to work—while simultaneously aligning with the UN Sustainable Development Agenda for 2030 and the climate goals set out in the Paris Agreement.
What is needed to speed up the decarbonization process
We have entered a decisive phase in the global energy transformation. IRENA’s (International Renewable Energy Agency) first definitive Global Renewables Outlook showed how to transform the global energy system over the long term in line with the Paris Agreement. It demonstrates how energy-related CO2 emissions could be reduced by 2050, while driving broad socio-economic development, boosting GDP growth, creating more jobs and broadly improving people’s welfare. This long-term vision also guided our Post-COVID Recovery Agenda.
Today’s government policies and investment choices can create the momentum to enact systemic change and deliver the global energy transformation. The word “investment” is meaningful—these are not simply costs, but investments in our collective future and key enablers of economic growth, much-needed jobs as well as social resilience and welfare.
The capital needed to invest and build the future is available. Around USD 10 trillion of unsustainable energy related investments are planned between now and 2030. UN Secretary-General Antonio Guterres said the recovery from the coronavirus crisis must not just take us back to where we were. I could not agree more and would add in my own words: Let’s not retrofit the past, but instead design a possible and brighter future.
We believe that an energy transition investment worth USD 2 trillion can boost the economy over the 2021-23 recovery phase and create investor confidence to mobilize private sector funding (Figure 1). Innovation is key in this process and investments to foster innovation for the energy transition will bring substantial local as well as global benefits. Interesting new technologies now exist with the potential to lead us to a net zero energy system by mid-century. Green hydrogen for example, complementing renewables and bioenergy, represents one of the major strategic opportunities in the coming years.
The burden would not fall on public finances alone. Government funds can leverage private investments by a factor of 3-4 and should be used strategically to nudge investment decisions and financing in the right direction. As technologies keep developing and renewable power costs fall further, renewable energy is increasingly the cheapest source of new electricity, offering tremendous potential to stimulate the global economy. Similarly important, stimulus investments will directly result in rapid job creation. Today, over 11 million people work in the renewable sector worldwide, and with the immediate investment we have outlined, an additional 5.5 million jobs will be created by 2023 (Figure 2). In the next decade, annual public and private energy spending rising to USD 4.5 trillion per year could boost the world economy by an additional 1.3 percent and create an additional 19 million transition-related jobs by 2030 (Figure 3).
The pandemic shows that firm action can be taken
Stimulus measures can accelerate positive ongoing tends. The Covid-19 crisis has in some ways provided an unexpected foreshadowing of the mounting climate emergency. But it has also shown that collectively and with a common purpose, we are able to act decisively. We are at a crossroads, but the challenges are clear. It is not just a choice of various technologies. It is a choice in favor of an energy system that is surely cleaner, but also more resilient, prosperous, just and capable of tackling the challenges ahead of us.
The author: Francesco La Camera
He is the Director-General of the International Renewable Energy Agency (IRENA). He has more than thirty years of experience in the fields of climate, sustainability, and international cooperation. He formerly served as Director-General of Sustainable Development, Environmental Damage, EU and International Affairs at the Italian Ministry of Environment.
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