Overral, most studies tend to find a positive link between energy transition and economic growth. Is it true? Who will benefit from it?

First, let's talk about the energy transition

Energy transition refers to the process of shifting from a system of energy production, distribution and consumption that is heavily dependent on fossil fuels to one that is based on renewable energy sources. The goal of energy transition is to reduce greenhouse gas emissions and mitigate the impacts of climate change, while also ensuring that energy is accessible and affordable for all.

The energy transition typically involves a combination of policy measures, technological advancements, and changes in consumer behavior. Some of the key elements of energy transition include:

• the increased use of renewable energy sources such as solar, wind, and hydro power
• the development of energy storage systems
• the implementation of energy efficiency measures
• the electrification of transportation and other sectors.

Energy transition can also include the development of new business models, such as community-owned renewable energy projects, and the integration of digital technologies, such as smart grids, into the energy system.

Overall, energy transition is a complex process that involves many different stakeholders, including governments, businesses, and individuals, and it can take place at different scales, from local communities to national and international levels.

The link between energy transition and economic growth

The link between energy transition and economic growth is a subject of ongoing research and debate. Studies generally tend to find that transitioning to a low-carbon energy system can have positive economic benefits, including increased GDP and job creation, as well as reduced energy costs and dependence on foreign oil.

One of the main ways that energy transition can contribute to economic growth is through job creation. Transitioning to a low-carbon energy system can create jobs in the construction and operation of renewable energy projects, as well as in the manufacturing and installation of energy efficient technologies. According to the International Renewable Energy Agency (IRENA), the renewable energy sector alone could create up to 42 million jobs globally by 2050.

Another way that energy transition can contribute to economic growth is by reducing energy costs for consumers and businesses. Renewable energy sources such as solar and wind power have no fuel costs, which means that once they are built, the energy they produce is relatively inexpensive. Additionally, energy efficiency measures can help to reduce energy consumption and lower costs.

Energy transition can also contribute to economic growth by reducing the negative economic impacts of climate change. For example, investing in renewable energy and energy efficiency can help to mitigate the impacts of extreme weather events, such as heat waves and flooding, which can disrupt economic activity.

Overall, the link between energy transition and economic growth is complex and multifaceted. While there are many potential benefits to transitioning to a low-carbon energy system, there are also challenges, such as the need for significant investment and the potential for disruptions in the energy market (aka: killing lot of companies in the energy sector and creating many new ones)

Scientific studies about energy transition and economic growth

There are many studies that have been conducted on the relationship between energy transition and economic growth.

One of the most relevant is the one conducted by Jacobson et al. (2017), where roadmaps to transform the energy infrastructures were developed for 139 countries. The scenarios evaluated set the target of wind, water, and sunlight (WWS) over the total energy consumptions to be 80% by 2030 and 100% by 2050.

This study found that converting the energy infrastructure to 100% WWS may:

• create ∼24.3 million full-time jobs
• avoid ∼4.6 million/year premature air-pollution deaths
• avoid ∼$22.8 trillion/year (12.7 ¢/kWh-BAU-all-energy) in 2050 air-pollution costs;
• avoid ∼$28.5 trillion/year (15.8 ¢/kWh-BAU-all-energy) in 2050 climate costs
• reduce energy prices
• increase access to energy by decentralizing power

But there is the risk that energy transition may benefits mostly the upper classes of the society, perpetuating pre-existing sets of winners and losers, as has been pointed out by Carley et al. (2020).

Also, if we consider the main indicator of economic growth to be the increase in GPD (Gross Domestic Product), it may be impacted negatively from the energy transition, by directly reducing both the overral energy consumption and the energy cost, and indirectly reducing the costs associated to the healthcare and the avverse effects of climate change.

This is probably why Khan et al. (2021), Nieto et al. (2020) and other studies from literature founds that the energy transition may have a negative impact on the GDP / Economi growth, at least in the short term.

But the energy transition is and will remain one of the main tools we have at our disposal to decouple economic growth and the well-being of society from its environmental impact, as pointed out by Wang et al. (2020).

Conclusions

These are just a few examples of the many studies that have been conducted on the relationship between energy transition and economic growth. Overall, most studies tend to find that transitioning to a low-carbon energy system can have positive economic benefits, including increased GDP and job creation, as well as reduced energy costs and dependence on foreign oil.

References

• Jacobson, M. Z., Delucchi, M. A., Bauer, Z. A. F., Goodman, S. C., Chapman, W. E., Cameron, M. A., Bozonnat, C., Chobadi, L., Clonts, H. A., Enevoldsen, P., Erwin, J. R., Fobi, S. N., Goldstrom, O. K., Hennessy, E. M., Liu, J., Lo, J., Meyer, C. B., Morris, S. B., Moy, K. R., … Yachanin, A. S. (2017). 100% clean and renewable wind, water, and sunlight all-sector energy roadmaps for 139 countries of the world. Joule, 1(1), 108–121. https://doi.org/10.1016/j.joule.2017.07.005
• Carley, S., & Konisky, D. M. (2020). The justice and equity implications of the clean energy transition. Nature Energy, 5(8), 569–577. https://doi.org/10.1038/s41560-020-0641-6
• Khan, I., Hou, F., Zakari, A., & Tawiah, V. K. (2021). The dynamic links among energy transitions, energy consumption, and sustainable economic growth: A novel framework for IEA countries. Energy (Oxford, England), 222(119935), 119935. https://doi.org/10.1016/j.energy.2021.119935
• Nieto, J., Carpintero, Ó., Lobejón, L. F., & Miguel, L. J. (2020). An ecological macroeconomics model: The energy transition in the EU. Energy Policy, 145(111726), 111726. https://doi.org/10.1016/j.enpol.2020.111726
• Wang, Q., & Wang, S. (2020). Is energy transition promoting the decoupling economic growth from emission growth? Evidence from the 186 countries. Journal of Cleaner Production, 260(120768), 120768. https://doi.org/10.1016/j.jclepro.2020.120768