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Brussels in brief, WW200905

Commission releases study on economic impact of renewables

19.05.2009

A new study has been released on behalf of the European Commission’s Directorate-General Energy and Transport that assesses the economic effects of supporting renewable energy sources (RES). Overall, it finds that policies that support renewable energy sources give a significant boost to the economy and the number of jobs in the EU.

The report centres on two different scenarios. Firstly, there is a B usiness As Usual (BAU) scenario, which would lead to 14% renewable energy in 2020 and 17% in 2030. Secondly, an Accelerated Deployment Policy scenario (ADP) leading to a 20% RES share in 2020 and 30% by 2030. These two are then combined with a further three scenarios for European shares in future RES world markets, a pessimistic, a moderate (ME) and an optimistic (OE) export scenario.

 

Value added

The total gross value added generated by the RES industry reached €58 billion in 2005, equal to 0.58%of EU Gross Domestic Product (GDP). Assuming Business As Usual polices and moderate export expectations (BAU-ME), the total gross value added of the RES sector in the EU-27 in 2020 would amount to €99 billion (0.8% of total GDP), according to the study. With the Accelerated Deployment Policy scenario and moderate export expectations (ADP-ME) the value would go up to €129 billion (1.1% of total GDP).

 

Employment

In 2005, the RES sector employed roughly 1.4 million people, equal to 0.65% of the total EU workforce. Meeting the ADP scenario would provide a net effect of about 410,000 additional jobs by 2020.

Total gross employment in the RES sector in the EU-27 in 2020 would amount to 2.3 million people under the BAUME scenario and 2.8 million under the ADPME scenario. Total gross employment in the RES sector may increase by up to 3.5 million people by 2030 if there is an accelerated deployment policy combined with optimistic export expectations (ADPOE).

 

GDP

In comparison with a hypothetical scenario in which all RES support policies are abandoned, the net GDP change due to RES policies in 2020 is expected to amount to 0.11% - 0.14% by 2020 (BAU-ME scenario) or as much as 0.23% - 0.25% (ADP-ME scenario) for the EU-27. Assuming an accelerated deployment policy combined with optimistic export expectations, (ADP-OE) net additional GDP compared to the no-policy scenario would go even higher - to 0.44% of GDP in 2030.

 

For the future

The study makes certain recommendations for the future. It says that EU policies need to be improved in order to reach the agreed target of 20% renewable energies in Europe by 2020 and increase the significant current economic benefits of RES sector even further. Moreover, it warns that it is necessary to uphold and improve the competitive position of European manufacturers of RES technology and to reduce the costs of renewable energies. This should be coupled with an improved international RES policy framework. Finally, the report stresses the need to include the environmental and security of supply benefits of RES in future economic analyses.

 

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