Energy Transition Could Add $32 Trillion To Global GDP By 2050 IRENA

(MENAFN- Trend News Agency) BAKU, Azerbaijan, October 19. The global energy transition could generate a cumulative increase of $32 trillion in global gross domestic product (GDP) between 2025 and 2050 compared with a scenario involving less extensive changes in the energy sector.

This is stated in the World Energy Transitions Outlook 2026 report published by the International Renewable Energy Agency (IRENA).

According to the report, global GDP will average 0.7% higher over the period than under the Planned Energy Scenario (PES).

“The cumulative economic impact is estimated at $32 trillion, exceeding the combined GDP of China, Germany, Japan, and India,” the report states.

IRENA identifies investment in renewable energy and improvements in energy efficiency, supported by appropriate government policies, as the main drivers of economic growth.

In 2050 alone, global GDP under the Decarbonized Energy Scenario (DES) is expected to be about $2.2 trillion higher than under the PES, equivalent to an increase of approximately 1%.

According to the forecast, investment will remain the main driver of economic growth through 2050. Between 2024 and 2030, its positive contribution is expected to raise GDP by approximately 1.4% above the level projected under the PES. This effect will moderate somewhat between 2031 and 2040 before strengthening again to around 1.35% in 2041–2050.

IRENA estimates that the positive impact of investment will offset the negative effect of a contraction in global trade activity on GDP.

“Household consumption expenditure is expected to decline during the first decades of the energy transition before returning to positive growth in the final decade of the projection period. This is because, in the initial stages, higher overall energy prices increase both households' direct energy costs and the prices of other consumer goods.

“Over time, technological advances and improvements in energy efficiency will help ease this pressure.

“At the same time, global trade is expected to face constraints, particularly during the final decade of the transition. This is attributed to a projected substantial decline in international trade in fossil fuels, which will reduce revenues for exporting countries,” the report states.

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