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While investments in technologies like solar and wind farms,
advanced batteries will generate jobs, the transition will also
likely cause a loss of jobs and tax revenues in fossil fuel
production, said the report called "No Pain, No Gain: The
economic consequences of accelerating the energy transition".
"It's by no means a way to say that we shouldn't pursue
transition or slow it down," said Peter Martin, WoodMac's chief
economist. "This pain in the short-term will pay off in the
long-term."
Benefits from limiting the rise in temperatures to 1.5 degrees
Celsius, as called for by the United Nations, could boost global
GDP, on aggregate by 1.6% in 2050, the report said. But actions
required to spur the transition to keep temperatures from going
above that level could cut 3.6% from GDP in 2050, resulting in
the 2% hit, the report said.
The impacts will not be felt evenly. China will feel about 27%
of a cumulative $75 trillion economic hit to global GDP by 2050,
while the United States will see about 12%, Europe will
experience 11% and India about 7%.
Economies such as Iraq that do not have financial reserves to
invest in non-fossil fuel sectors could suffer the biggest
losses in economic output, it said.
Wealthy economies with deep capital markets that already have
big investments in energy transition technologies, or a
propensity to invest in new technologies, will be better
positioned. France and Switzerland, for example, will likely
enjoy a modest boost to economic growth.
The economic benefits of the energy transition should start to
show after 2035 and lost economic output would be eventually
recouped before the century's end, the report said.
(Reporting by Timothy Gardner; Editing by Himani Sarkar)
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