Lauren Haar

University of Brighton, UK

Title: RENEWABLE ENERGY AND ECONOMIC DEVELOPMENT: ENABLER OR OBSTACLE

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Biography

Abstract

In the latest COP 28 UN Climate Change Conference held in December 2023, signatory countries promised a transition from carbon energy sources “in a just, orderly and equitable manner” (UNFCC, 2023) to mitigate, accordingly, the worst effects of climate change, and reach net zero carbon emissions by 2050 primarily through reducing the use of fossil fuels.  Focusing upon developing and middle-income countries of the global south, researchers from policy institutes, academic institutions and NGOs have devoted significant efforts to promoting the economic benefits of transitioning to ‘renewable’ energy and pursuing the commitments made under the auspices of the UN climate change agreements.  Accordingly, for these countries, supporting and favouring reliance upon renewable energy through both market and non-market mechanisms, economic growth may be strengthened, the trajectory of economic development may be enhanced and cyclic disturbances reduced.  Themes common to such research and advocacy include:

• That energy security will be enhanced through the renewable energy;

• That renewable energy will help the environment by reducing so-called greenhouse gases (GHG);

• That the cost of energy will be reduced through reliance upon solar photovoltaic (PV) and wind-turbine generated electricity; and

• That the financial economics of renewable energy are sound, yielding enduring benefits for businesses, consumers and society.

In this research, we critically examine the economics of such claims and the scope for economic growth under different degrees of GDP energy intensity. Using stereotypical examples abstracted from World Bank data, we consider alternative economic growth trajectories under different assumptions with regard energy intensity and reliance upon renewable energy versus fossil fuels.  Our analysis takes into account both the direct and indirect costs of alternate energy sources and how they may impact economic growth trajectories and transitions from primary to secondary and tertiary industries.  Would reliance upon renewable energy hasten the transition from primary energy intensive extractive industries to secondary and even tertiary industries including service sectors?  Or, would enhancing the use and dependence upon renewable energy penalise domestic consumers reducing the scope for such transitions?  As we discover, the results depend heavily upon how the indirect costs of renewable energy are allocated, the quality of corporate governance and the use of markets to direct resources.