Increasing Renewable Energy Can Lead to Economic Growth and Lower Emissions

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by | Nov 23, 2021

(Credit: Pixabay)

Reducing emissions doesn’t have to mean reducing economic growth and there are five mechanisms to help make that a reality, according to new academic research.

The paper found that increased renewable and efficient energy was a primary driver in both decarbonization and economic growth. It also says the higher the carbon intensity and the lower the productivity of a country, the higher emissions rise.

As such, the authors of the paper say it is important to make decarbonization and productivity improvements first to see overall impacts in the area.

The drivers the paper lists as the ways to improve emissions, thus helping economic growth are increases in productivity, energy system decarbonization, electrification, winter warming and deindustrialization. The research looked at emissions and economic growth in 73 countries between 1970 and 2016.

Before accounting for the five mechanisms, the paper says a 1% increase in GDP was associated with a 1% increase in carbon emissions per capita. It says the intervening tools reduced emissions by 22 petagrams, especially during economic growth.

The paper found more than 80% of the emission reductions in deindustrialization was the result of using renewable energy. It says a 1% annual increase in renewable energy resulted in a 1.5% yearly decrease in carbon emissions per capita on average. Additionally, a 1% rise in productivity resulted in a 0.5% reduction in emissions.

The research also says moving to renewables is 1.5-times more effective in reducing carbon emissions than moving from coal to gas.

An analysis by the Energy Information Administration shows that renewable energy implementations are at an all-time high in the United States, led by solar and wind power, but that fossil fuels still dominate as the primary energy source. The European Union also pledged to ramp up its use of renewable energy sources as prices of fuel and electricity have soared this year.

Both instances show there is room for improvement in energy transition.

The paper also shows these findings can be a roadmap for developing countries to use the same tools to increase sustainability and economic growth. It shows that those countries see the similar benefits from electrification and decarbonizing energy systems, but that high emissions rates are established in how they have historically used energy.

A recent BloombergNEF and Climate Investment Funds report found that investing in renewable energy was key to helping developing nations transition their energy use. It says that while worldwide energy investment was at an all-time high, it actually has decreased in developing countries.

The paper also says that while policy changes, such as the Build Back Better Act or the $1 trillion infrastructure plan can help improve things in the area, they might not go far enough.

“A stimulus directed at construction and manufacturing cannot help in the required transition unless the expenditure is explicitly directed at mitigating steps such as building refurbishment and transmission grid upgrades needed to absorb higher shares of renewables,” the paper’s autors say.

The paper was written by Ranran Wang, an assistant professor at Leiden University in the Netherlands, Valentina A. Assenova, a Wharton management professor, and Edgar G. Hertwich, a professor of energy and process engineering at the Norwegian University of Science and Technology.

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