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    Energy transition will bring crises before gains, says report

    January 20, 2022 - CE Noticias Financieras


      The transition to clean energy, needed to keep temperatures from rising rapidly, may reduce global GDP (Gross Domestic Product) by 2 percent by 2050 but may be recoverable before the end of the century, a report by natural resources consultancy Wood Mackenzie said Thursday (20).

      While investments in technologies such as solar and wind farms and advanced batteries will generate jobs, the transition is also expected to cause job losses and tax revenues in fossil fuel production, said the report titled "No pain, no gain: the economic consequences of accelerating the energy transition."

      "This is by no means a way of saying we shouldn't pursue the transition or delay it," said Peter Martin, chief economist at WoodMac. "That pain in the short term will be rewarded in the long term."

      Wind power generation turbines in Inchy-en-Artois, France - Pascal Rossignol - Nov.1, 2021/Reuters

      The benefits of limiting temperature rise to 1.5 degrees Celsius, as called for by the United Nations, could boost global GDP by 1.6 percent by 2050, according to the report. But the actions needed to stimulate the transition to prevent temperatures from exceeding that level could cut 3.6 percent from GDP in 2050, resulting in a 2 percent impact, according to the document.

      The impacts will not be felt evenly. China will feel about 27 percent of the cumulative $75 trillion economic impact on global GDP by 2050, followed by the United States at about 12 percent, Europe at 11 percent, and India at about 7 percent.

      Wealthy economies with deep capital markets that already have large investments in energy transition technologies, or a propensity to invest in new technologies, will be best positioned.

      The economic benefits of the energy transition should begin to appear after 2035, and the lost economic output would eventually be recouped before the end of the century, according to the report.


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