Would living standards decline if the global economy transitioned to renewable energy?

Thursday, July 14, 2022
By Jacob Alabab-Moser

A transition to renewable energy would elevate living standards worldwide across indicators such as health, the economy and quality of life.

The International Renewable Energy Agency compared a business-as-usual energy scenario with a more sustainable energy scenario and found that the latter would produce 2.5% more GDP growth, seven million more jobs and a 13.5% higher welfare indicator, reflecting improved health from reduced air pollution. The International Energy Agency estimated that achieving net zero emissions by 2050 would prevent 1.9 million premature deaths from household air pollution each year between 2020 and 2030. The cost of the transition would be more than offset by the economic benefits, with every dollar spent bringing returns between three and eight dollars, according to IRENA.

Financial services firm Deloitte reported in May that inaction on climate change could cost the global economy $178 trillion by 2070, with global warming "leading to loss of productivity and employment, food and water scarcity, worsening health and well-being, and ... an overall lower standard of living." In contrast, "the global economy could gain US$43 trillion over the next five decades by rapidly accelerating the transition to net-zero."

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