Opportunities and benefits of accelerating the energy transition.

 As the previous section showed, the clean energy transition has made significant strides in multiple areas over the past decade. In this section, we explore six key dimensions of the socioeconomic benefits that can be gained by accelerating this transition beyond its essential role in driving rapid, deep, and sustained GHG emissions cuts to minimize climate damages and keep 1.5°C within reach. 

i) Energy security and sovereignty 

Around 74% of the global population currently lives in countries that are net importers of coal, oil, and gas, and one in four people live in countries that spend at least 5% of their annual GDP on fossil fuel imports. For oil and gas, as of 2022, 93 countries (out of 147 countries with reported data) are net importers, with 69 countries being fully reliant on imports to meet their domestic consumption (Figure 5). Dependence on fossil fuel imports creates vulnerability to volatile prices, supply disruptions, and geopolitical turmoil. According to the IEA’s assessment, energy markets began to tighten in 2021 primarily due to the rapid economic rebound following the COVID-19 pandemic, but the situation escalated dramatically into “a full-blown global energy crisis” following the Russian Federation's invasion of Ukraine.78 The price of natural gas — and consequently electricity prices in some markets — reached record highs, while oil prices hit their highest level since 2008. This directly increased the costs of heating, cooling, lighting, and mobility, and indirectly pushed up the costs of other goods and services throughout global supply chains, exacerbating the cost-of-living crisis in 2022. The IEA estimates that in 2022, consumers worldwide spent on average USD 1,200 per person on energy bills, even after considering the subsidies and emergency support mobilized by governments. This is 20% more than the average over the previous five years. Countries relying on high gas imports were hit particularly hard. For example, another study found that in the Republic of Korea, which has 100% reliance on gas imports, the cost of liquefied natural gas (LNG) for power generation was USD 17 billion higher in 2022 than 2021, translating to an average increase of USD 326 per person.81 In the UK, wholesale gas prices increased more than fivefold in 2022 compared to the 2016–2019 average, resulting in the average household spending GBP 800 (USD 990) more on energy bills, and the government GBP 50–60 (USD 62–74) billion more on gas imports. Were it not for renewables providing around 40% of the UK’s electricity, gas power generation could have been twice its actual level, dramatically increasing prices and household bills even further. Wholesale spot prices for natural gas also increased to record highs across European continental markets, leading to significant increases in wholesale electricity prices (Figure 6). According to one study, in 2021–2022 the rise in natural gas prices accounted for around 90% of the increase in wholesale electricity prices, while higher carbon prices in the EU Emissions Trading System accounted for the remaining 10%.

 ii) Energy affordability

 There are pervasive misconceptions that clean energy technologies are always more expensive than fossil fuel technologies, and that the energy transition and net-zero policies are driving up the cost of living. Yet, as the previous section demonstrates, renewables are now almost always the least expensive option for new and existing electricity generation. Other technologies such as EVs and energy-efficient appliances also typically result in cost savings over their lifetimes, even if they sometimes incur higher upfront costs. In fact, growing pressures on today’s cost of living stem in part from our continued fossil fuel dependency — directly through their volatile prices and impact on commodity prices as well as the high cost of maintaining fossil fuel subsidies, and indirectly through the mounting toll of fossil-fuelled climate disasters and disruptions. Even discounting abnormally high oil and gas prices, the cost competitiveness of renewables means they will yield energy cost savings in the near and long term — for both governments and consumers alike. According to IRENA, the deployment of renewable power since 2000 had cumulatively saved around USD 409 billion in fossil fuel costs for the electricity sector alone by 2023, with the highest savings occurring in Asia, followed by Europe and South America (Figure 7). 

Whereas importing fossil fuels entails a recurring expense, importing renewable technologies is a one-off investment. At 2024 prices, importing 1 GW of solar panels could lead to savings equivalent to 30 years of gas import costs over the average 30-year lifespan of solar panels. Heavy reliance on importing fossil fuels with high and volatile prices places a particularly heavy strain on government budgets and constraint on economic development in developing countries saddled with growing debt servicing costs. For example, around 60% of Small Island Developing States (SIDS), who are among the most indebted countries in the world, currently import over 90% of their fossil fuel supply for electricity generation, which on average costs around 10% of their GDP. The Seychelles’ fossil fuel imports cost almost 18% of the country’s GDP, while its debt amounts to almost 85% of GDP. The IEA’s Strategies for Affordable and Fair Clean Energy Transitions report details how, with targeted additional policies and investments, following a 1.5°C-aligned pathway towards global net-zero emissions by 2050 can reduce the operating costs of the global energy system by more than half over the next decade compared with a trajectory based on current policies. The net result is a more affordable energy system for consumers, businesses, and governments worldwide.

iii) Energy access 

By the end of 2023, almost 92% of the world’s population had access to electricity. Yet more than 666 million still lacked access, while some 2.1 billion people (26%) lacked access to clean cooking technologies, leading to significant negative environmental, public health, and human livelihood impacts. For example, the World Health Organization (WHO) estimates that around 3.2 million people die prematurely from illnesses attributable to household air pollution caused by the incomplete combustion of solid fuels and kerosene used for cooking. Energy access gaps are largest in Sub-Saharan Africa, where some 565 million people still had no access to electricity in 2023, accounting for 85% of the global population without electricity access. As a joint 2024 report by the IEA, IRENA, UN, World Bank, and WHO highlighted, achieving universal electricity access by 2030 will only be possible by deploying a combination of grid, mini-grid, and stand-alone off-grid solutions that leverage the faster deployment of distributed renewables to meet demand quickly, especially in difficultto-reach rural locations where eight out of 10 people without electricity access live. In 2022, 2.5 million households gained electricity access via solar home systems and smaller solar lighting systems. Stand-alone off-grid solar solutions were estimated to serve 490 million people in total. Access to energy brings with it many other benefits, and the implementation of small-scale renewable energy microgrids has been shown to significantly contribute to sustainable development by improving livelihoods, reducing poverty, and enhancing food security, health, and education. The World Bank has further highlighted how solar mini-grids could provide the least-cost solution to bring high-quality, uninterrupted electricity to 380 million people across Sub-Saharan Africa by 2030 — a region with the largest access gap and where development gains are most urgently needed. ILO, IRENA, and UNEP have also highlighted the importance of focusing more on renewablesbased rather than fossil fuel-based clean cooking solutions. Over the last decade, more policy and financing attention has been given to liquefied petroleum gas (LPG)-based solutions, through the support of large governmental contributions and programmes. As a result, LPG has accounted for over 70% of the progress made towards providing clean cooking access. However, guidelines for “clean cooking” fuels and technologies (unlike for “clean energy”) generally pertain only to fine particulate matter (PM2.5) and carbon monoxide emissions standards. LPG still emits GHG emissions and other harmful air pollutants such as nitrogen oxides (see Annex for further details). For example, the multi-stakeholder Solar-Electric Cooking Partnership, supported by UNEP, aims to provide affordable clean cooking solutions across the African continent through solar e-cooking. This not only reduces household air pollution and GHG emissions but also addresses gender-based violence and deforestation while fostering economic development. Both IEA and IRENA have developed global energy-transition pathways that are consistent with limiting long-term warming to 1.5°C and that also deliver universal clean energy for all by 2030 (SDG 7). At the country level, the World Bank has developed “Country Climate and Development Reports (CCDRs)” that explore how development goals can be aligned with climate mitigation and adaptation efforts for 72 countries and economies. Power-sector modelling in these CCDRs shows that solar and wind energy play a significant role in meeting the growing demand for electricity at the lowest cost to consumers, even without considering climate objectives and driven by economic considerations alone under current-policies scenarios. When climate objectives are considered in low-emissions development pathways, renewable energy plays an even larger role and represents almost all new capacity additions. For example, in Moldova, investing in renewables and energy efficiency is estimated to reduce energy import dependence from 78% to 40% by 2050. In fragile or conflict countries, such as the Republic of Yemen or Lebanon, distributed solar power can build community resilience by providing power for critical facilities, such as schools and hospitals. In most CCDRs, this transition towards renewable energy takes place with total electricity costs declining over time, providing a gain for households and businesses. 

iv) Power system resilience 

Power systems are increasingly under strain from extreme weather events, aging grid infrastructure, and growing electricity demand, which threaten the efficiency and reliability of power generation, as well as the physical resilience of energy infrastructure. While some have mistakenly blamed the increasing integration of variable renewables like wind and solar, the primary causes are aging grid infrastructure and growing weather extremes, as further discussed in the next section. Renewables-dominant power systems can come with high reliability with proper governance, while fossil fuels-dominant systems do not necessarily guarantee reliability. For example, in 2023, the shares of variable renewables in the electricity mix of Denmark, Germany, and the USA were 68%, 44%, and 22% respectively, and their average power outage rates were around 30, 13, and 366 minutes per consumer respectively.  Decentralized and diversified renewables-based power systems also have an inherent potential to provide more resilience in the face of growing extreme weather events. Many solar-andstorage microgrid initiatives are being developed throughout the Caribbean, a region highly susceptible to hurricanes. Decentralized renewable energy can provide both immediate disaster response and long-term climate resilience, especially in island contexts where traditional fossil fuel-dependent grid infrastructure remains vulnerable.  

Beyond extreme climate conditions, renewables also contribute to insulating power generation from external shocks, such as fossil fuel price fluctuations and international trade and supply chain disruptions. For example, a recent study found that if EU member states achieved their 2030 solar and wind capacity targets, the sensitivity of annual electricity prices to the cost of natural gas would be reduced by 29% on average. If solar and wind capacity installations were 30% higher than the 2030 targets, the sensitivity would be reduced by 65%. Furthermore, once installed, wind and solar power plants are shielded from supply chain disruption risks for the rest of their operating lifetime, unlike fossil fuel-fired power plants that usually have fuel reserves of a few months. 

v) Job creation, economic growth, and industrial competitiveness 

The implementation of climate policies to date has substantially boosted the amount of green FDI countries are able to attract. Policies to support green products also have a more prominent impact on competitiveness and innovation in these products than policies targeting non-green products. As previously discussed, green industries and green investments are already helping to boost economic development and jobs worldwide. The systematic adoption of renewables and improvements in energy efficiency, combined with progressive policies, can continue to lead to net gains in jobs and GDP as the transition progresses in the short, medium, and long term. Under IRENA’s 1.5°C Scenario for the global energy transition, the world could see an average annual increase in GDP of 1.5% between 2023 and 2050, compared to a current-policies (“Planned Energy”) scenario, due to macroeconomic effects such as greater levels of public and private investment.106 The annual average GDP increase for the Group of Twenty (G20) is estimated to be 1.3% — with individual increases of 1.3% for Brazil, 2.8% for India, 6.0% for China, and 8.3% for South Africa. Meanwhile, increases of 5.4–15.3% are estimated for different regions in Africa and 2.6% for Southeast Asia. (These estimates do not factor in avoided climate damages.) The renewable energy sector is predicted to grow significantly by 2050 under the 1.5°C Scenario, creating about 40 million direct jobs worldwide. Solar would make up nearly 66% of renewable energy jobs in the Middle East and North  Africa (MENA), 52% in Asia, 38% in Europe, 32% in North and South America, and 28% in Sub-Saharan Africa. Furthermore, ILO has assessed the employment potential of the wider green transition for select countries, and explored the social, economic, and employment impacts of green industrial growth opportunities for the MENA region. The assessment found that MENA countries may face welfare losses if they remain passive by-standers in the global energy transition. Conversely, active engagement could lead to 3.5% higher employment (with a net total of 6.6 million jobs created) and 4.8% higher GDP. This scenario implies strong industrial and just transition policies — including social protection and relocation programmes for fossil fuel workers — alongside enhanced climate policies, especially in solar power, electric mobility, and renewables-based hydrogen production. The World Bank’s CCDRs also explored opportunities for countries to increase their participation in key green technology value chains, creating new jobs while boosting incomes and exports. They found that short-term economic growth could be similar or even faster in lowemissions development scenarios than in currentpolicies scenarios in most countries, assuming well-designed policies and synergies between structural reforms and a supportive environment. The energy transition also offers opportunities to improve the gender balance of the energy workforce. Despite accounting for 39% of the global labour force, women made up less than 20% of the energy industry workforce in 2023.36 Globally, women form a greater share of the renewable energy workforce (32%) than that of the oil and gas industry (22%).  For example, decentralized solar PV employs 41% women in Kenya, 37% in Ethiopia, 35% in Nigeria, and 28% in Uganda. Nevertheless, their roles and participation across the renewable industry are not balanced. For example, the representation of women in senior management positions is very low in both the wind and solar PV sectors.  A robust supply of science, technology, engineering, and mathematics (STEM)- educated workers and a more equal treatment of women can also amplify the effectiveness of climate policies by preventing bottlenecks in the expansion of the workforce and boosting green innovation.

 vi) Additional socioeconomic and environmental benefits

 As the above assessments alluded to, the transition away from fossil fuels can help to deliver myriad other social, economic, and environmental objectives, including but not limited to poverty reduction, improved air quality and health, and enhanced economic development and resilience. For example, IRENA has found that, compared to a current-policies scenario, a systematic shift away from fossil fuels towards a renewablesbased energy system could lead to 6.4% higher GDP, 3.5% more economy-wide jobs, and 25.4% higher social welfare across Africa between now and 2050. Similarly, Southeast Asia could see 3.4% higher GDP, 1.0% more economy-wide jobs, and 10.9% higher social welfare. One of the social welfare metrics assessed by IRENA in the above studies is improved air quality and public health.xii Air pollutants are released at every stage of the fossil fuel lifecycle, from exploration and extraction to end-use combustion. Decades of epidemiological research has established that air pollution can cause, complicate, or exacerbate many adverse health conditions, leading to respiratory, heart, and neurological diseases and increasing the risks of cancer and pregnancy complications. Globally, outdoor PM2.5 pollution from fossil fuel combustion is estimated to cause over five million premature deaths each year — accounting for 82% of all premature deaths from outdoor PM2.5 pollution from human activities. Traffic-related air pollution from fossil fuel combustion is estimated to cause two to four million new cases of asthma in children each year. One study estimated the economic cost of air pollution from fossil fuels in 2018 to be USD 2.9 trillion, or 3.3% of global GDP. Moreover, oil and gas production activities release wide variety of harmful, toxic, and even radioactive air, water, and waste pollutants that are known to be carcinogenic or have adverse reproductive and developmental effects. As a recent OECD-UNDP report explores in detail, more ambitious climate policies can simultaneously accelerate inclusive economic growth and significantly reduce emissions through increased investment in clean technologies, improved energy efficiency, and the strategic reinvestment of revenues from carbon pricing or removal of fossil fuel subsidies.Compared to a current-policies scenario, enhancing climate action would boost global GDP by 0.1% in 2030 and by 0.23% in 2040 due to macroeconomic effects alone.xiii When some of the avoided climate damages are also accounted for in the longer term, such as physical impacts related to sea-level rise or on agricultural crop yields, the benefits are estimated to be 0.2–3% by 2050. Beyond GDP impacts, the OECD-UNDP report also shows that more integrated climate and development policies could help to advance climate action while also driving progress on other SDGs. The enhancedaction scenario envisions a new paradigm of energy security, with fossil fuel import volumes decreasing by 30% in high-income countries and by 17% in low-income countries in 2040 compared to current levels. As previously discussed, this would reduce exposure to volatile fossil fuel markets, lower import bills, stabilize energy prices, and enhance self-sufficiency. If investments in the energy transition are complemented by specific measures that deliver on food security, basic services access, and governance reforms, nine out of ten lowhuman-development countries could significantly improve development by 2050, lifting 175 million additional people out of extreme poverty while strengthening resilience and energy equity. Nevertheless, the clean energy transition will also entail adverse impacts that must be addressed, such as loss of jobs and revenues for fossil fuel-dependent workers and communities, and the social and environmental harms that can come from mining the critical minerals that are essential for renewable energy technologies. The next section explores some of these challenges in more detail, as well as the major barriers impeding a rapid and equitable transition.