The impact of the transition to net-zero emissions will be positive for the European economy as a whole, despite the significant additional investments it will require, the European Commission says in its 2050 climate strategy, unveiled on Wednesday (28 November).
“The EU economy is expected to more than double by 2050 compared to 1990 even as it fully decarbonises,” the Commission says in its long-term strategy for a “climate neutral economy”.
A transition to net-zero greenhouse gas emissions is expected to have “a moderate to positive impact on GDP with estimated benefits of up to 2% of GDP by 2050 compared to the baseline,” says the document, which sets a long-term vision for “a climate neutral economy” by mid-century.
“Very importantly, these estimates do not include the benefits of avoided damage of climate change and related adaptation costs,” the EU executive underlines. Swiss insurer Zurich estimates that the costs of extreme weather events amounted to $306 billion in 2017, well above the 10-year average of $190bn. And those costs are expected to rise as global warming continues.
Large-scale deployment of wind and solar power means electricity generation will “at least double” to reach 53% of the EU’s total energy demand by 2050, the Commission says in the document, which lists eight scenarios for the transition to low-carbon energy in Europe.
As more than 80% of electricity will be coming from renewable energy sources, “this will be the backbone of a carbon-free European power system,” the Commission adds, saying this assumes a slightly expanding nuclear power fleet meeting around 15% of the EU’s total energy demand.
The impact on jobs is also expected to be positive, despite losses in the fossil fuel sector.
Existing policies to implement the EU’s 2020 climate policy have already added between 1% and 1.5% to the EU labour force, the Commission stresses, saying this trend will continue. There are already 4 million ‘green jobs’ in Europe and the growth in low-carbon energy will spur more job creation, according to EU estimates.
The EU executive does acknowledge that the transition to a net-zero economy could be painful for some economic sectors, with coal mining, oil and gas exploration likely to be hit hardest. And energy intensive sectors such as steel, cement and chemicals as well as car manufacturing “will see a shift to new production processes with new skills required,” it says.
“Regions which depend economically on these sectors will be challenged,” many of which are located in Central and Eastern Europe, which tend to have a lower average income per capita than the EU average.
“Managing this change requires taking into account a possibly shrinking and ageing labour force in the EU and increasing substitution of labour due to technological changes including digitalisation and automation,” the EU executive notes.