Report says targeted public spending and policy action will bring immediate jobs and boost GDP - provides recommendations how to maximise recovery while meeting climate goals

Governments can align immediate economic stimulus needs with medium to long-term decarbonisation and sustainable development objectives by targeting policy measures and public spending towards the energy transformation, a new report by the International Renewable Energy Agency (IRENA) published today finds.

Post-COVID recovery: An agenda for resilience, development and equality outlines immediate stimulus action for the next three years (2021-2023) as well as measures for a mid-term 2030 recovery perspective over the next decade. It provides practical insights and recommendations for governments as they drive investment and policy actions for post-COVID-19 economies. The report shows that on an annual basis, scaling-up public and private energy spending to USD 4.5 trillion per year would boost the world economy by an additional 1.3%, creating 19 million additional energy transition-related jobs by 2030. Jobs in renewables alone could triple to 30 million by 2030. Every million dollars (USD) invested in renewables would create three times more jobs than in fossil fuels.

“Renewables have proven to be the most resilient energy sources throughout the current crisis”, said Francesco La Camera, Director-General of IRENA. “This evidence should allow governments to take immediate investment decisions and policy responses to overcome the crisis. With today’s recovery plan for governments, IRENA uses its global mandate on energy transitions to inform decision-making at this critical time, while staying on course toward a fully decarbonised system by 2050.”

Doubling annual transition investments to USD 2 trillion over the next three years will provide an effective stimulus and can leverage private sector investments by a factor 3-4. Reforming fossil fuel prices, retiring fossil fuel assets, driving green financing and bailouts, and strategically investing in energy transition must be immediate priorities, IRENA’s report advises.

The annual USD 2 trillion invested would boost GDP by 1% and create additional 5.5 million transition-related jobs in three years. Underpinning labour and industrial policies are required to leverage local capacities and skills and create industries and jobs across the value chain.

Any recovery strategy should include innovative solutions and emerging technologies such as green hydrogen with the potential to eventually deliver a net zero energy system. By investing in their commercialisation, governments and businesses can ensure sustained long-term growth.

Renewable-based power generation would become the backbone of future energy markets, supported by transition-related industries like battery storage. But renewable heating and cooling must also be scaled up along with energy efficiency. Renewable-based transport can expand with incentives for electric vehicles (EVs) and continued infrastructure investment (including smart grids and EV charging stations), as well as emerging fuel solutions.

“Now is the time to invest in a better future”, said La Camera. “Government policies and investment choices can create the necessary momentum to enact systemic change and deliver the energy transformation away from fossil fuels. Driving a structural shift towards cleaner energy systems and more resilient economies and societies is more urgent than ever. Most of all, this is a global agenda, and we must leave no one behind.”

Rooted in IRENA’s first Global Renewables Outlook, which shows that transforming the global energy system in line with the Paris Agreement is possible, the new report focuses on how and where investments and policy interventions can accelerate economic recovery while simultaneously steering the way to a decarbonised energy system.

Increased uptake of renewables, energy efficiency and related energy-transition measures represent far-sighted investment amid the crisis set off by the COVID-19 pandemic. As part of short-term stimulus and recovery plans, the energy transition provides a crucial link to medium- and long-term global climate and sustainability goals.

This report from the International Renewable Energy Agency (IRENA) offers practical advice on key investment and policy decisions for the crucial post-COVID recovery. It is rooted in the comprehensive long-term energy transformation strategy provided by IRENA’s first Global Renewables Outlook.

Among other findings:

Post-COVID recovery measures could drive a lasting shift in the global energy mix.
Linking the short-term recovery to medium and long-term strategies is paramount to achieving the Sustainable Development Goals (SDGs) and the Paris Agreement on Climate Change.

National and regional energy transitions can help to build resilient economies and societies.
Energy transition investment can boost GDP and create jobs in the 2021-23 recovery phase.
Green investment will be vital to mobilise upfront finance for the transition.
Each million dollars invested in renewables or energy flexibility would create at least 25 jobs, while each million invested in efficiency would create about 10 jobs.
Compared to current plans, an accelerated energy transition could add 5.5 million more jobs by 2023.
Employment in all regions of the world, even where fossil-fuel jobs are now concentrated.
Immediate investment increases could put renewable power generation on track to grow five times faster.
Renewables, although affected along with the rest of the economy, appear more resilient than other parts of the energy sector.

Key policy recommendations for the 2021-23 recovery phase include:

Ambition: Raising national targets and enhancing climate pledges.
Public intervention: Securing strategic finance, investing in transition-related infrastructure, steering investment away from fossil fuels, and making bailouts conditional on climate action.

Power sector investment: Safeguarding existing renewable projects and ensuring stable policy frameworks for transition-related infrastructure.
Heating and cooling investment: Scaling up transition-related technologies through quotas and mandates and creating the infrastructure for district systems and green hydrogen.

Transport investment: Creating renewable-based, efficient infrastructure, incentivising electric vehicle and biofuel use, and promoting behavioural changes to reduce the impact of travel.

Employment: Protecting existing jobs, supporting workforce expansion in transition-related fields, co-ordinating with industries and developing education and training to minimise skills gaps.

Industry: Diversifying supply chains, developing local industries, providing finance and promoting supplier development programmes and industry clusters.

Access: Maintaining energy access initiatives, ensuring reliable power supply and supporting distributed renewable energy solutions to strengthen health, sanitation and other critical infrastructure.

Beyond renewables and decarbonisation, investments in the energy system in the wake of the COVID-19 pandemic can pave the way for equitable, inclusive and resilient economies.

About the International Renewable Energy Agency (IRENA)
IRENA is the lead intergovernmental agency for the global energy transformation that supports countries in their transition to a sustainable energy future, and serves as the principal platform for international co-operation, a centre of excellence, and a repository of policy, technology, resource and financial knowledge on renewable energy. With 161 Members (160 States and the European Union) and 22 additional countries in the accession process and actively engaged, IRENA promotes the widespread adoption and sustainable use of all forms of renewable energy in the pursuit of sustainable development, energy access, energy security and low-carbon economic growth and prosperity.