Green Shift to Sustainability: Co-Benefits & Impacts of Energy Transformation on Resource Industries, Trade, Growth, and Taxes
In the run-up to 2017's G20 under Germany's presidency, IDDRI contributed to the G20 Insights Initiative, a platform gathering the analyses and recommendations of more than 170 international think tanks from G20 Member States, as well as to the F20 Platform, an alliance of foundations and philanthropic organisations.
Recommendations dealing with climate poliies, ecological transition and Sustainable Development Goals have therefore been forwarded directly to the G20 in preparation of the Hamburg Summit taking place on July 7-8.
Energy transformation towards 100% renewable energy is economically inevitable, and socially and environmentally desirable, yet it may produce negative signals in outdated statistics as fossil trade diminishes and the sector shrinks. This paradoxon should be addressed in a joint report by, e.g., IRENA, IMF, OECD, and the World Bank, and the Task Force on Climate-Related Financial Disclosures.
Fossil fuel extraction and commodity trade will end, and fossil asset values erode. The industry's role in capital formation, international trade, economic activity (GDP), and government revenue will decline. New energy systems, based on efficiency, renewables, storage, and smart management are cheaper to build, run and maintain. Growth of electricity use stimulates innovation, value creation, and growth in consumer rent, as renewable energy technologies harvest free environmental flows that are not traded and often for self-consumption. Total utility will grow while trade, GDP and the tax base may shrink. Reports should inform G20 Leaders, Ministers of Finance and Central Bank Governors on the true costs and benefits, and alert them to misleading signals.