What is clear is that the economic impact and benefits of renewable and clean energy are far ranging, and go deeper than just job creation.
In this guide, we list and explain the full range of economic benefits that renewable/clean energy provides, and can provide into the future.
Summary – Economic Impact & Benefits Of Renewable Energy & Clean Energy
Ultimately, the economic impact and benefits of different renewable and clean energy sources will differ between countries, states and regions because of the individual variables and factors in each location e.g. state of the economy, energy policy, investment in clean energy, energy infrastructure, and so on
But, some of the general economic benefits experienced worldwide or in specific countries has been …
- An increase in total jobs, as well as an increase in the range of jobs and quality of jobs
- A potentially better ROI on money invested in renewable energy compared to some fossil fuels
- Stimulation of the economy and growth of the GDP, as well as servicing specific regions, and rural locations
- Can lift poorer regions out of the poverty cycle (and provide more basic rights and ways of living to these regions)
- A lowering and stabilisation of the wholesale price of electricity for consumers when renewables are included in an energy mix with an inefficient fossil fuel source (like an old coal or natural gas power plant)
- Trade, import and export benefits
- National energy independence and control
- Creates additional income sources and economic opportunities for individuals
- Increases locally made and sourced goods and services
- Save costs on air pollution related health problems
- Save costs on addressing climate change and global warming
- Save costs on other environmental and social issues
- Save on energy costs with increased energy efficiency and reduced consumption
- Other indirect economic benefits
*Note – It would also be worthwhile to note that renewable energy and clean energy can extend from the commonly recognised areas like solar, wind, hydro, geothermal etc., to nuclear and even energy efficiency areas like building design, energy efficiency upgrades and other aspects of reducing energy use.
*It’s important to note the difference between direct and indirect, and full time and part time jobs.
It’s also important to look at how the number of jobs provided by each energy source, comparative to the installed capacity, production and consumption of each energy source.
But, job creation in renewable energy tends to be greater than fossil fuels across a range of measures, such as per dollar invested, and per MWh of electricity produced, just to name a few.
Jobs are across a range of areas, and can be safer, higher quality and sometimes higher paying.
Job growth also looks positive in the clean energy industries into the future with continued investment and continued clean energy friendly government policies. Several projections into 2030 and 2050 forecast that the number of jobs with an increasing electricity supply sourced from renewables will actually increase the total number of jobs vs if the energy mix was more fossil fuel heavy.
Read more in these guides:
- How Many Jobs Renewable & Clean Energy Creates?
- Does Renewable & Clean Energy Create More Jobs Than Fossil Fuels?
Other information on job growth and creation in renewables and clean energy are:
- Compared with fossil fuel technologies, which are typically mechanized and capital-intensive, the renewable energy industry is more labor intensive … This means that, on average, more jobs are created for each unit of electricity generated from renewable sources than from fossil fuels.
- … in 2017, wind power technician was the fastest growing job in the country
- [renewable energy jobs may also be safer and cleaner compared to coal mining or coal plants with coal dust, air pollution and coal ash waste present]
- … wind has the potential to support more than 600,000 jobs [nationally in the US] in manufacturing, installation, maintenance, and supporting services by 2050
- Ten of the 12 states in the US MidWest have more rural clean energy jobs than rural fossil fuel jobs
- [clean energy tends to produce more direct and indirect jobs than fossil fuel energy – more than three times the amount per $1 million invested]
- … substantially higher quality and higher pay nature of clean energy jobs relative to fossil fuel employment
- … energy efficiency investment of $1 million creates 66 job years (this includes both direct and indirect jobs)
- [more jobs are created for clean energy per GWh produced than fossil fuels]
- [other studies show renewable energy can create up to 6.7 more times than some fossil fuel energy sources]
- Clean energy jobs also generally are more distributed and are largely higher quality jobs
- [renewable energy] jobs are created in manufacturing, project development, construction and turbine installation, operations and maintenance, transportation and logistics, and financial, legal, and consulting services [and across a range of other areas]
- Among all renewable sources of energy, bioenergy arguably has the most lasting influence, locally and regionally. This could be due to the fact that the fuel is created, prepared and transported within a small area. It is also extremely labor-intensive.
- Hydropower and wind power constructions create most jobs during the project development and construction phase. After the system is completed and commissioned, only a few personnel are required to carry out the limited operational work.
- Data released by a trade association of wind and marine energy providers suggest that three to four indirect jobs were generated for every person employed directly within the wind industry.
Money Investment On Renewables Might Have Better ROI & More A Bigger Trickle Down Effect Across A Range Of Economic Areas
The ROI on renewable and clean energy can be higher per dollar invested, and there can be a trickle down effect from investors to cities/towns, businesses and individuals.
- [renewables] generally create more jobs per dollar invested than conventional electricity generation technologies
- In addition to the jobs directly created in the renewable energy industry, growth in clean energy can create positive economic “ripple” effects.
- For example, industries in the renewable energy supply chain will benefit, and unrelated local businesses will benefit from increased household and business incomes
Growing The Economy (Economic Stimulus) and GDP Country Wide, As Well As In Specific Regions, & Rurally
Renewable and clean energy can create large amounts of economic stimulus not only nationally, but in states and regions of a country where investment and clean energy friendly policy is in place.
Smaller communities and rural areas can benefit immensely from renewables like solar and wind which can provide economic stimulus where no other business or investment might be attracted to the area.
Not only does this support and bring energy to smaller communities and rural areas, but there are other benefits like more jobs in the area, and an increased ability to keep young people in the area (rather than them having to go out to cities to find jobs).
Economic stimulus from renewables and clean energy can affect some States more than others.
- … if we double renewable energy’s current share in the global energy mix, global gross domestic product (GDP) would increase by as much as 1.1 percent, or approximately $1.3 trillion, by 2030.
- Advanced energy — which includes solar, wind, energy efficiency, energy storage and EVs — contributed $1.4 trillion to the global economy in 2016. (The US portion of this amount was $200 billion.)
- … the 23 largest wind farms in Illinois … will add almost $6 billion to local economies over their lifetimes and have resulted in the creation of more than 19,000 jobs during the construction periods.
- The projects will also support 814 permanent jobs in the state
- [some sources report that in places like Zion, Illinois in the US, the closure of nuclear plants has resulted in fewer police patrols, higher taxes and less business investment and business activity in general – and, the loss of about $18 million annual income]
- [nuclear in the US is in the position though to offer good job growth in the US over the short term – roughly 23,000 jobs added over the next 5 years]
In the US, renewable energy can be stronger in some states compared to others:
- California, a state with robust renewable energy standards and installation incentives, had the highest rate of solar power jobs per capita. In 2016, roughly 84 of every 10,000 workers in the state held full- or part-time jobs in solar. Nevada came in a close second, followed by Hawaii, Vermont, and Massachusetts.
Also in the US, renewable energy employment can happen on a region and rural based level:
- [clean energy in the MidWest in the US is responsible for contributing jobs to the rural economies of 12 Midwestern states, where these locations might otherwise struggle to attract investment and economic stimulation]
Can Lift Poorer Regions Out Of Poverty Cycle
Worldwide, traditionally poorer countries and remote communities are benefitting from the fact that technology like solar and wind doesn’t need to be connected into the grid, and can start helping lift some of these places out of poverty and a range of other issues.
- … renewable energy is scalable in areas where there is very little or no electricity
- Even in the poorest countries, solar’s flexibility is making it desirable. In Bangladesh, more than 3.5m solar home systems have been installed in rural villages
Trade, Import & Export Benefits
Producing more renewable and clean energy locally or within a country can have a number of trade, import and export benefits.
Firstly, excess renewable energy can be exported.
Secondly, there is less of a need to import certain types of energies and fuels (and there can be a reduction in imported energy overall).
Thirdly, the savings and extra income from these changed importing and exporting scenarios mean that there is more money to invest locally.
These things can improve a country’s trade balance and leverage in different ways.
- Reducing fuel imports can improve trade balance and improve GDP.
- The EU33 improves its net exports by USD 15 billion when the renewables share is doubled and by USD 21 billion in the higher electrification case
- As countries develop their individual renewable energy sectors, localising different activities in the value chain can redirect investments. These are channelled into the local economy and would otherwise have been spent on importing fossil fuels or renewable energy goods and services
- China … Having pursued an aggressive industrial policy early on … has emerged as a major exporter of renewable energy. It exported over USD 10 billion in solar panels and cells, almost 80 times the value it exported only ten years earlier …
- Due to increased energy efficiency and an overall decline in energy demand, Germany will also save €3,5 bn in fuel imports
National Energy Independence & Control
Pretty straight forward – producing and using renewable energy nationally and locally increases a country’s independence and control over their own energy.
This is in stark contrast to having to depend on other countries to import fossil fuels like natural gas from (e.g. the countries who rely on countries like Russia or Norway for part of their natural gas supply).
Also, not being reliant on fossil fuels like foreign oil reduces a country’s vulnerability to fluctuating oil prices. (renewableenergymagazine.com)
Wholesale Price Of Electricity
This is country, state, city and region specific.
But, in some places in the world such as South Australia, renewable energy like wind and solar has already had the economic benefit of both lowering and stabilising electricity prices for consumers in an energy mix with natural gas. Parts of the MidWest in the US are seeing a similar trend.
Renewables have a lower operating costs for energy suppliers because they don’t have to purchase fuel.
Using more renewable energy can lower the prices of and demand for natural gas and coal by increasing competition and diversifying our energy supplies (ucsusa.org)
It also means the price of electricity isn’t susceptible to changes in the price of fuels, like it is with natural gas or coal (renewableenergymagazine.com)
Creates Additional Sources Of Income & Economic Opportunities For Individuals
Renewable and clean energy sources provide additional sources of income for individuals such as home and land owners, and in general, can provide more economic opportunities for everyone (not just energy suppliers and the government).
- In the MidWest in the US, wind energy and other renewable energy sources provide additional sources income for farmers and tax revenue for communities
- … wind farms in the U.S. provide around $222 million every year to rural landowners who host wind farms on their property.
- Farmers can also make money growing crops to be used as biofuels.
- … [solar panels on houses can also increase the value of the house]
- Local governments also benefit from clean energy, most often in the form of property and income taxes and other payments from renewable energy project owners.
- Owners of the land on which wind projects are built often receive lease payments ranging from $3,000 to $6,000 per megawatt of installed capacity, as well as payments for power line easements and road rights-of-way. They may also earn royalties based on the project’s annual revenues.
- Farmers and rural landowners can generate new sources of supplemental income by producing feedstocks for biomass power facilities.
Increase Locally Made & Sourced Goods & Services
Locally sourced and made goods and services are beneficial for economies.
It’s help more of a consumer’s money stay within the country, which adds to the ripple effect mentioned above in this article.
Renewable energy equipment in some countries is heavily manufactured at home as opposed to having to have to import equipment (although some countries still do import equipment like solar panels from countries like China).
- Now, more than 50% of a U.S.-installed turbine’s value is produced in America, a twelve-fold increase from just a few years ago. Some turbine manufacturers plan to make 100% of their components in America, and the trend is expected to continue.
- Currently, wind power contributes about $20 billion a year in value to the US economy, and it has been projected that amount will rise to $24 billion by 2020.
Save Costs On Air Pollution & Air Pollution Related Health Problems
Fossil fuels (the burning and combustion of) are one of the major causes for air pollution, and fossil fuels are often measured across different metrics as the most dangerous and harmful energy sources.
Burning fossil fuels like coal, natural gas and oil releases contaminants into the air, and humans can suffer a range of respiratory and heart related problems from breathing in this air frequently.
Renewables and clean energy emit less pollutants, and therefore leave us with cleaner air and better health (in theory).
This can help save billions of dollars worldwide in addressing air pollution, and treating air pollution related health problems.
- In China … reducing the use of coal and eventually eliminating it would save hundreds of billions of dollars of dollars a year in various societal costs. “The impacts found are damages due to climate change; public health damages from NOx, SO2, PM2.5, and mercury emissions; fatalities of members of the public due to rail accidents during coal transport; the public health burden in Appalachia associated with coal mining; government subsidies; and lost value of abandoned mine lands.”
- Coal’s impact in China is even greater. In a single year, about 670,000 premature deaths have been linked to coal emissions
- … 157 million people in China live in areas with harmful air pollution levels
- It has been reported that China will invest $361 billion by 2020 to combat [air pollution]
- The air and water pollution emitted by coal and natural gas plants is linked with breathing problems, neurological damage, heart attacks, cancer, premature death, and a host of other serious problems.
- The pollution affects everyone: one Harvard University study estimated the life cycle costs and public health effects of coal to be an estimated $74.6 billion every year.
Save Costs On Climate Change & Global Warming
Greenhouse gases from the burning of fossil fuels are seen as one of the human causes of climate change and global warming.
Climate change is seen to have a range of costs associated with it.
- … [the] climate benefit estimates [of solar and wind energy] ranged from $5 billion to $106 billion, with an additional $30 billion to $113 billion in air quality and public health benefits. And that’s just the estimated economic benefits of the averted 3,000 to 12,000 premature deaths—it doesn’t count things like sub-lethal medical issues and lost productivity, much less the personal benefits to individual lives.” On the low end, the combined values are $35 billion in benefits. At the top, it has the number at $219 billion
- The share of national GDP at risk from climate change exceeds $1.5 trillion in the 301 major cities around the world. Including the impact of human pandemics – which are likely to become more severe as the planet warms — the figure increases to nearly $2.2 trillion in economic output at risk through 2025
- … [this doesn’t even take into consideration factors like natural events and disease/virus outbreaks which can be linked to climate change]
- … climate change has cost the U.S. economy around $240 billion per year over the last 10 years.
- … another report … found that the U.S. economy will contract by up to 10 percent by the end of the century if climate change continues at its current pace.
- These economic losses are the result of extreme weather events, worsened air quality, rising sea levels and other effects
- … a 2009 UCS analysis found that a 25 percent by 2025 national renewable electricity standard would lower power plant CO2 emissions 277 million metric tons annually by 2025—the equivalent of the annual output from 70 typical (600 MW) new coal plants
- [a study exploring] the feasibility of generating 80 percent of the country’s electricity from renewable sources by 2050 … found that renewable energy could help reduce the electricity sector’s emissions by approximately 81 percent
Save Costs On Other Environmental & Social Issues & Problems
As mentioned above, there are other environmental problems associated with the use of fossil fuels for energy production and consumption. Water pollution is one such example, with ocean acidification, ocean warming, and acid rain being just a few others.
Mining of fossil fuels also comes with a range of potential environmental issues.
Social costs include health problems, questionable working conditions in mines, and being less able to service poorer regions without access to fossil fuel based energy.
Save On Energy Costs With Increased Efficiency & Reduced Consumption
Renewables and clean energy can have a net effect of more efficient energy production and consumption, and reduced overall energy consumption in total.
This can result in saved money, and less wasted energy.
- Due to increased energy efficiency and an overall decline in energy demand, Germany will also save €3,5 bn in fuel imports [in 2020 according to one study]
- … more efficient energy technology can reduce waste in current systems. “India has seen other benefits to renewable energy, too … Right now, the country loses about 30 percent of the energy it generates, because of transmission line losses. By having decentralized solar power and wind, they’ve cut these losses and seen big savings in energy and money.
Other Indirect Economic Benefits
- Saving of precious resources like water (which we use for other parts of the economy like agriculture and households) which fossil fuel plants use for cooling in significant amounts (ucsusa.org)
- Less chance of disruption to energy supply in the event of extreme weather and natural disasters or natural events (ucsusa.org). Losing power can be devastating for businesses in particular
- + many other indirect economic benefits