Economic and Environmental Impacts of Renewable Energy Systems

Renewable energy systems have reshaped the global energy landscape by offering pathways to decarbonise power generation, enhance energy security and stimulate economic growth. Economically, falling costs of solar, wind and electrolysis technologies have attracted substantial investment, created new employment opportunities and diversified energy supply. Market mechanisms such as auctions, feed-in tariffs and carbon pricing have further accelerated uptake, improving competitiveness relative to fossil fuels. Environmentally, large-scale deployment of renewables drives significant reductions in greenhouse-gas emissions and air pollutants, mitigates climate risks and reduces reliance on finite resources. Life-cycle assessments reveal that cradle-to-grave emissions for solar and wind are markedly lower than those for coal or gas, even when accounting for manufacturing and end-of-life processes. Yet, challenges remain in integrating variable output into power systems, managing land and resource footprints and addressing materials supply chains. Co-benefits extend to public health through improved air quality and to social equity by supporting just transitions in regions dependent on conventional energy industries. Looking ahead, hybrid systems, energy storage and green hydrogen production promise to bridge intermittency and unlock deeper decarbonisation, while policy frameworks and market design will determine the pace and distribution of economic and environmental benefits.

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Economic and Environmental Impacts of Renewable Energy Systems publication trend

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Technical terms

Levelised Cost of Energy (LCOE): The average lifetime cost of producing one unit of electricity, including capital, operation and maintenance.

Carbon intensity: The mass of CO₂ emissions released per unit of energy generated or consumed.

Green hydrogen: Hydrogen produced by water electrolysis powered exclusively by renewable electricity, yielding near-zero operational emissions.

Blue hydrogen: Hydrogen derived from natural gas reforming with carbon capture and storage applied to mitigate associated CO₂ emissions.

Emissions abatement potential: The quantified reduction in greenhouse-gas emissions attributable to a specific energy measure or technology per unit output.

References

1. On the cost competitiveness of blue and green hydrogen. Joule (2024).
2. Carbon pricing and emissions: Causal effects of Britain's carbon tax. Energy Economics (2023).
3. Climate, wind energy, and CO 2 emissions from energy production in Denmark. Energy Economics (2023).