International governments will need to marshal a total capital spend of up to $130trn to decarbonise the world by mid-century, according to a new report from the International Renewable Energy Agency (Irena), but such an investment would be repaid in socioeconomic gains with a “massive” boost to global gross domestic product and a near quadrupling of jobs in the new energy sector to 42 million.

The Irena Global Renewables Outlook’s high-end “transforming energy” scenario found that “low-carbon climate-safe foundation for stable, long-term economic development [with] higher growth, cleaner living conditions and significantly improved welfare” could be achieved with an annual expenditure of $4trn, roughly double what is currently being invested yearly on the energy transition.

Irena director-general Francesco La Camera, in a statement released with the report, said national governments’ responses to the current coronavirus-spurred economic crisis “must align with medium- and long-term [climate change mitigation] priorities”.

“Governments are facing a difficult task of bringing the health emergency under control while introducing major stimulus and recovery measures. The crisis has exposed deeply embedded vulnerabilities of the current system,” he said.

“Our outlook shows the ways to build more sustainable, equitable and resilient economies by aligning short-term recovery efforts with the medium-and long-term objectives of the Paris Agreement and the UN Sustainable Development Agenda.

“By accelerating renewables and making the energy transition an integral part of the wider recovery, governments can achieve multiple economic and social objectives in the pursuit of a resilient future that leaves nobody behind,” said La Camera.

A strategy sketched out in the report – which built on five “pillars” ranging over areas including decentralised power grids, energy efficiency solutions, EV charging systems, energy storage, interconnected hydropower, green hydrogen and “multiple other” clean energy technologies – outlines a worldwide plan to shift from fossil-fuelled power production to renewables, making deep cuts to CO₂ emissions from heavy industry and so-called “hard-to-decarbonise” sectors in the process.

Low-carbon investment would “significantly pay off” by 2050, with 70% of the world’s energy-related carbon dioxide (CO ₂) emissions removed by 2050 and “savings eight times greater than costs when accounting for health and environmental externalities” influenced by oil, gas and coal use, according to Irena’s calculations.

The global report also breaks out energy and socioeconomic transition “paths” in ten regions, noting Southeast Asia, Latin America, the European Union and Sub-Saharan Africa are each poised to reach 70-80% shares in their total energy mixes by mid-century.

By 2050, all regions are expected to witness net job gains in their energy sectors despite drops in fossil fuel industry employment levels, the report highlights.

“Raising regional and country-level ambitions will be crucial to meet interlinked energy and climate objectives and harvest socioeconomic welfare. Stronger coordination on international, regional and domestic levels will be equally important,” said the report authors, “with financial support being directed where needed including to the most vulnerable countries and communities.”

La Camera said: “Stimulus and recovery packages should accelerate the shift to sustainable, decarbonised economies and resilient inclusive societies. The NDCs (Nationally Determined Contributions) to be presented by the end of this year, as required under the Paris Agreement, should be the backbone of the stimulus package.

“The nature of this crisis calls for a major state role in the response. This involves defining the strategies and initiating direct interventions for the way out. Expansionary budget policies may be envisaged to support this effort.

“With the need for energy decarbonisation unchanged, such investments can safeguard against short-sighted decisions and greater accumulation of stranded assets.”

Last autumn, Irena supported the launch of the Climate Investment Platform, a global initiative to mobilise large-scale investment in renewable energy to help accelerate progress toward global climate targets.

La Camera added that the Covid-19 pandemic “did not change the existential path required to decarbonise our societies and meet sustainability goals”, adding that by making the energy transition an “integral part of the wider recovery, governments can achieve a step change in the pursuit of a healthy, inclusive, prosperous, just and resilient future”.

Renewables accounted for nearly three quarters of global power capacity additions last year – half of which was switched on in Asia, according to latest Irena figures, with wind, solar, hydropower, bioenergy, geothermal and off-grid energy sectors together adding 176GW of new generating capacity worldwide in 2019, slightly lower than the 179GW added a year earlier.

Transition

Global decarbonisation would cost $130trn by 2050 but repay capital spend: Irena