Measuring the socio-economic footprint of the energy transition

Abstract

The energy system is often treated as a self-contained system, disconnected from the broader socio-economic structures it is built upon. Understanding the enabling environment and structural elements will help to maximize the benefits of the transition and increase awareness of potential barriers and necessary adjustments along the way. IRENA has developed a methodology to measure the socio-economic footprint of energy transition roadmaps using the E3ME macro-econometric model, which evaluates the likely impacts in terms of gross domestic product (GDP), employment and human welfare. It is based on well-established historical databases and has a proven track record of policy applications. The presented socio-economic footprint analysis is based on the IRENA REmap energy transition roadmap 2018 that explores a higher deployment of low-carbon technologies, mostly renewable energy and energy efficiency. The results show that, with appropriate policies in place, reducing over 90% of the energy-related carbon dioxide emissions from the reference case via renewables and energy efficiency coupled with deep electrification of end-uses, results in consistently positive global GDP impacts across the period of analysis from 2018 to 2050. Across the world economy, the transition case leads to a relative increase of employment by 0.14% over the reference case throughout the analysed period from 2018 to 2050. In addition to GDP and employment growth, the energy transition can offer broader welfare gains. However, not all countries and regions around the world benefit equally, and just transition policies must be included to ensure all regions and communities are able to take advantage of the energy transition.