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Global economy would save up to $160 trillion by shifting to renewables, electric cars

Imagine a world where 85% of all electricity comes from renewable sources, there are over one billion electric vehicles on the road, and we are on track to preserve a livable climate for our children and future generations.

The International Renewable Energy Agency (IRENA) reported this week that such a future is not merely possible by 2050, but thanks to plummeting prices in key clean energy technologies, the cost of saving the climate has dropped dramatically.

In fact, according to IRENA’s new report, the most cost-effective strategy to achieve a “climate-safe future” — keeping global warming below 2 degrees Celsius (3.6 degrees Fahrenheit) — is an accelerated energy transition to renewables and energy efficiency coupled with electrification of key sectors like transportation.

This Renewable Energy Roadmap (REmap) scenario “would also save the global economy up to USD 160 trillion cumulatively over the next 30 years in avoided health costs, energy subsidies and climate damages.”

At the same time, IRENA reports, “every dollar spent on energy transition would pay off up to seven times.”

IRENA’s reference case scenario, which incorporates current commitments under the 2015 Paris climate agreement, foresees flat energy-related CO2 emissions for the next three decades.

But those emissions must be reduced by 70% to have a good chance of keeping warming below 2 degrees Celsius. The REmap scenario achieves more than 90% of the necessary reductions through renewable energy and energy efficiency (see chart).


The centerpiece of this strategy is taking advantage of the plummeting cost of renewable energy — especially wind and solar power — to transform the electricity sector. As the IRENA report notes, “in the Power sector, solar and wind energy are on the path to dominance.”

And in their REmap case, wind and solar power by themselves account for the majority of electricity produced in 2050 (see chart).


Another core element of this rapid transition to a low-carbon global economy is to electrify as many of the sectors of the economy as possible — what IRENA calls “Deep Electrification” — to take advantage of the emergence of cheap renewables.

“Electricity would progressively become the central energy carrier,” the report explains, “growing from a 20% share of final consumption to an almost 50% share by 2050.”

One of the most important sectors to electrify in the coming decades is transportation, where improved performance and rapidly dropping prices for batteries have enabled an electric vehicle (EV) revolution in recent years. There are currently some five million EVs on the road today. IRENA projects that in their rapid transition case, which includes investing heavily in EV charging infrastructure, a billion EVs could be on the road in three decades.

Currently, renewables provide about one sixth of the world’s total final energy consumption. But with rapid penetration of both renewables and electrification technologies in key sectors, IRENA projects renewables could provide a remarkable two thirds of all energy consumed around the world.

Thus, another critical sector to decarbonize is heating, much of which is done by natural gas today. That requires a two-pronged strategy: a big push for solar thermal, including solar hot water heaters, and a 16-fold increase in high-efficiency electric heat pumps.

The third key component of the REmap case is a very large investment in energy efficiency in transportation, buildings, and industry. Important measures range from the very simple, such as increased insulation, to the more high tech, such as the use of the latest LED lighting technologies.

Previous research from the International Energy Agency found that the health and productivity benefits from green buildings and high-efficiency industrial processes actually exceeded the energy savings and could increase cumulative economic output through 2035 by $18 trillion.

Finally, IRENA examined the tremendous employment benefits that would come from an aggressive transition to a low-carbon economy.

The report finds “new jobs associated with the transition (i.e. renewable generation, energy efficiency and energy flexibility) significantly outweighing the jobs lost in the fossil fuel sector.” Total net new jobs would number 11 million. At the same time, significant resources should be devoted to helping those in sectors losing jobs.

The bottom line is that thanks to the remarkable innovation in key clean energy technologies in recent years, a transition to a low-carbon economy is not only feasible, it would have enormous benefits in improved health, reduced climate impacts, and employment.