Ural and Saudi Researchers Co-Publish a Paper on Renewables' Economic Efficiency

13:26, March 15, 2021

Renewable energy sources will help stimulate economic growth

A high share of renewable energy sources in the total energy balance will help to increase the total factor productivity (TFP), and accordingly, stimulate economic growth in the long term. Important accompanying criteria are skilled human capital, innovation and trade openness. This conclusion was reached by a group of scientists from UrFU and the King Abdul-Aziz University (Saudi Arabia). Economists studied the performance of 25 member countries of the Organization for Economic Cooperation and Development (OECD) for 1980-2015 (Penn World Table version 9.1). Based on the data, the researchers have compiled models of economic development in the short and long term.

Data and findings were published in the Journal of Cleaner Production.

Efficiency wise, the change in the structure of energy consumption will have a significant impact on the relative permeability in several directions. First, through the development and implementation of renewable energy technologies. Secondly, it will create the preconditions for diversification and the creation of new jobs in related industries, will lead to an increase in the number of skilled labor, its mobility, increased competitiveness, improved infrastructure, increased market opportunities in terms of trade and attraction of investment in new projects. A shift to cleaner energy will also help mitigate the effects of oil price volatility and lead to a reduction in carbon emissions, which means less negative greenhouse gas effects.

In addition to the general risks that any new business initiative is exposed to, renewable energy projects face specific risks that should be mitigated through policies and appropriate instruments.

High technology production costs, equipment availability and the price of non-renewable energy sources can also hinder economic growth. Also, the production of renewable energy sources requires considerable investment, competing with other sectors of the economy and thus raising political concerns.