At first glance, the subject of renewable energy seems like a truly controversial matter, eliciting conversations and debates between advocates of climate change action and those seeking to protect their economic advantage. In a broader sense, however, there appears to be a nexus between renewable energy and economic growth. For instance, India spent $11.8 billion on net import of oil and gas in October 2023 alone and has recorded an annual net import bill of more than $110 billion for three consecutive years, posting a bill of $68 billion between April and October 2023.
It’s a similar story in many other parts of the world where there is enormous reliance on crude oil and other fossil fuels like coal. This rising cost, coupled with a growing understanding of the adverse effects stemming from the by-products of these conventional energy sources, such as carbon emissions and greenhouse gases, is what is shifting the focus of global economies to cleaner and more sustainable energy sources, generally termed as renewable energy.
Renewable energy and the economy – Renewable energy refers to a class of energy sources that are sustainable due to their non-depletable nature. They include solar, biogas, hydropower, wind, and several others. However, there is a need to explore the impact that these sources can have on the economy.
In many nations of the world, especially among developing and underdeveloped economies, inadequate power supply often means that the conventional national grid cannot cater to the electricity needs of the entire nation. This shortfall often comes with economic consequences, making it difficult for businesses that rely on power to thrive. With alternative means like solar, these businesses can find the boost they need to perform and contribute to the community’s economy.
Similarly, electrifying hard-to-reach and previously ignored areas can help open up new vistas of opportunities for productive economic activities and impact. Besides, when local resources like water, wind, biomass, or even sunlight can be maximized to replace imported fossil fuels, a huge economic impact is achieved. Importing energy is tantamount to exporting huge foreign exchange, at the expense of the nation’s economy.
Beyond supporting the emergence and growth of new businesses, there is also the crucial aspect of government revenue. Green energy-producing businesses that provide renewable energy become corporate entities that pay taxes to the government and engage in corporate social responsibility initiatives as well. This boosts the revenue accruable to the country and supports growth and development.
Renewable energy and job creation – One of the most crucial gains of renewable energy is in employment generation. According to reports, renewable energy production is much more labor-intensive than conventional energy, meaning that there are more jobs available to the people. When a wind power farm, a solar farm, a water dam and hydro-generating power plant, or a large-scale biogas power plant is set up, lots of jobs are created and this helps to enhance the livelihoods of the local people.
Platforms like Greenjobs serve as a job portal dedicated to jobs in the renewable energy sector. Such new-age innovations have evolved into comprehensive databases for such employment opportunities. The surge in job creation not only amplifies spending capabilities but also stimulates increased economic activities within the country. In India, where the unemployment rate sits between 7 and 8%, there are indications that the growing renewable energy industry will, shortly, become a big employer of labor in the country.
Addressing Coal Sector Transition – It’s important to acknowledge that India’s significant reliance on coal for power generation translates to a large workforce employed in this sector. While the transition to renewable energy presents a path toward a sustainable future, as highlighted by a recent report, concerns exist regarding potential job losses in the coal sector.
By implementing measures like government-led reskilling and upskilling programs, early retirement incentives, and job placement assistance, India can ensure a just transition for coal sector workers, minimizing job losses and facilitating their integration into the growing renewable energy sector or other thriving industries.
Ripples of economic development – India has set a target to increase renewable energy capacity to 500 GW by 2030, which would mean half of all its electricity will be from non-fossil fuel sources. This is an ambitious target but policies and actions across many parts of the country reveal that it is doable. Renewable energy can help the nation reduce its reliance on fossil fuels like oil and coal, generate massive employment for the people, and significantly grow the nation’s revenue base.
