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Socio-economicfootprintoftheenergytransition

SOUTHAFRICA

©IRENA2023

Unlessotherwisestated,materialinthispublicationmaybefreelyused,shared,copied,reproduced,printedand/orstored,providedthatappropriateacknowledgementisgivenoftheauthor(s)asthesourceandIRENAasthecopyrightholder.Materialinthispublicationattributedtothirdpartiesmaybesubjecttoseparatetermsofuseandrestrictions,andappropriatepermissionsfromthesethirdpartiesmayneedtobesecuredbeforeanyuseofsuchmaterial.

ISBN:978-92-9260-556-8

Citation:IRENA(2023),Socio-economicfootprintoftheenergytransition:SouthAfrica,InternationalRenewableEnergyAgency,AbuDhabi.

AboutIRENA

TheInternationalRenewableEnergyAgency(IRENA)servesastheprincipalplatformforinternationalco-operation,acentreofexcellence,arepositoryofpolicy,technology,resourceandfinancialknowledge,andadriverofactiononthegroundtoadvancethetransformationoftheglobalenergysystem.Anintergovernmentalorganisationestablishedin2011,IRENApromotesthewidespreadadoptionandsustainableuseofallformsofrenewableenergy,includingbioenergy,geothermal,hydropower,ocean,solarandwindenergy,inthepursuitofsustainabledevelopment,energyaccess,energysecurityandlow-carboneconomicgrowthandprosperity.

Acknowledgements

ThisreportwasdevelopedundertheguidanceofRabiaFerroukhi(ex-Director–KnowledgePolicyandFinanceCentre)andMichaelRenner(Head–PolicyandSocio-economics),andwasauthoredbyBishalParajuliandGondiaSokhnaSeck(IRENA),XavierCasalsandÁlvaroLópez-Peña(consultants).ThemodellingresultswereprovidedbyAlistairSmith,HaBui,JamiePirieandJonStenning(E3ME,CambridgeEconometrics).

Thereportbenefitedfromthereviewsandinputsfrominternalandexternalexperts:AsamiMiketa,JarredMcCarthy,LarissaPinheiroPupoNogueira,NolwaziKhumaloandOmarMarzouk(IRENA),Prof.RichardCalland(UniversityofCapeTown).Thereportwascopy-editedbyErinCrum.

IRENAwouldliketothanktheGovernmentofDenmarkforsupportingIRENAwiththeworkthatformedthebasisofthisreport.

Forfurtherinformationortoprovidefeedback:

publications@

Disclaimer

Thispublicationandthematerialhereinareprovided“asis”.AllreasonableprecautionshavebeentakenbyIRENAtoverifythereliabilityofthematerialinthispublication.However,neitherIRENAnoranyofitsofficials,agents,dataorotherthird-partycontentprovidersprovidesawarrantyofanykind,eitherexpressedorimplied,andtheyacceptnoresponsibilityorliabilityforanyconsequenceofuseofthepublicationormaterialherein.

TheinformationcontainedhereindoesnotnecessarilyrepresenttheviewsofallMembersofIRENA.ThementionofspecificcompaniesorcertainprojectsorproductsdoesnotimplythattheyareendorsedorrecommendedbyIRENAinpreferencetoothersofasimilarnaturethatarenotmentioned.ThedesignationsemployedandthepresentationofmaterialhereindonotimplytheexpressionofanyopiniononthepartofIRENAconcerningthelegalstatusofanyregion,country,territory,cityorareaorofitsauthorities,orconcerningthedelimitationoffrontiersorboundaries.

AllimagesinthisreportweregeneratedusingMidjourneyAI-©

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01

02

03

04

Contents

Figures04

Tables05

Boxes05

Abbreviations06

Executivesummary07

Introduction14

ContextualisingSouthAfrica’senergysectorandtheneedfor

energytransition20

2.1Energysectortrends21

2.2SouthAfrica’senergytransitionchallengesandinitiatives22

Socio-economicimpactoftheenergytransition28

3.1Economicimpacts,asmeasuredbyGDP29

3.2Employment34

3.3Welfare42

Summaryandwayforward48

References52

Appendix:Carbonpricing,internationalcollaboration,

subsidies,progressivefiscalregimes

56

Figures

FIGURES1:Grossvalueadded(GVA)evolutionbetweenPESand1.5˚CScenario

inUSD2019million(leftpanel),inpercentage(rightpanel),bysector.09

FIGURES2:Percentagechangeinemployment,1.5°CScenariocomparedwiththePES,

bysector,2030,2040and205010

FIGURES3:OverviewofenergysectorjobsinSouthAfricaunder1.5°CScenarioandPES,

bysector,20195011

FIGURES4:RenewableenergyjobsinSouthAfricainthePESand1.5°CScenario,

2019,2030and205012

FIGURES5:WelfareIndexbydimensionforthe1.5°CScenario(left)anddifferenceinwelfare

betweenthe1.5°CScenarioandthePES(right),205013

FIGURE1:Socio-economicassessmentframework16

FIGURE2:Reducingemissionsby2050throughsixtechnologicalavenues17

FIGURE3:SouthAfrica’stotalenergysupplybyenergysource21

FIGURE4:Powercapacity(GW)inSouthAfrica,2000-202222

FIGURE5:SectorcontributiontotheGDP,1990-202223

FIGURE6:Valueaddedbysectorsininthe4thquarterof2022,whencompared

with2019/pre-pandemiclevels29

FIGURE7:SouthAfrica’sGDP,percentagedifferencebetweenthe1.5°CScenario

andthePESbydriver,2021-205031

FIGURE8:Grossvalueadded(GVA)evolutionbetweenPESand1.5˚CScenario

inUSD2019million(leftpanel),inpercentage(rightpanel),bysector.33

FIGURE9:JobsbysectorinSouthAfrica(left),anddifferenceinemployment

betweenthe1stquarterof2022andthe1stquarterof2023(right)35

FIGURE10:Percentagechangeinemployment,1.5°CScenariocomparedwiththePES,

bysector,2030,2040and205036

FIGURE11:EmploymentinSouthAfrica,percentagedifferencebetweenthe1.5°CScenario

andthePESbydriver,2021-205036

FIGURE12:OverviewofenergysectorjobsinSouthAfricaunder1.5°CScenarioandPES,

bysector,2019-5038

FIGURE13:RenewableenergyjobsinSouthAfricainPESand1.5°CScenario,

2019,2030and205039

FIGURE14:StructureofIRENA’sEnergyTransitionWelfareIndex42

FIGURE15:WelfareIndexbydimensionforthe1.5°CScenario(left)anddifferenceinwelfare

betweenthe1.5°CScenarioandthePESin2050(right),205043

FIGURE16:TotalGHGemissions,includingLULUCF,1990-201946

Tables

TABLE1:GDP,labourforceandpopulationgrowthprojectionsunderthePES18

TABLE2:Challenge-opportunityframeworkforSouthAfrica50

Boxes

BOX1:WorldEnergyTransitionsOutlook:1.5°CPathway17

BOX2:IRENA’sclimatepolicybaskets19

BOX3:DriversofGDPgrowth31

BOX4:Driversofemploymentgrowth36

BOX5:Localsmallandmediumenterprisedevelopment:Twocasestudies41

Abbreviations

BECCS

CAGR

CCS

CO2

CO2eq

CSP

EMP

EU-27

EV

FISIM

G20

GDP

GHG

GtCO2

GW

INEP

IPP

IRENA

IRP

JET

JETIP

kWh

LULUCF

Mt

bioenergywithcarboncaptureandstorage

compoundannualgrowthrate

carboncaptureandstorage

carbondioxide

carbondioxideequivalent

concentratedsolarpower

ElectrificationMasterPlan

economiesoftheEuropeanUnion

electricvehicle

financialintermediaryservices

indirectlymeasured

Groupof20

grossdomesticproduct

greenhousegas

gigatonneofcarbondioxide

gigawatt

IntegratedNationalElectrificationProgramme

independentpowerproducer

InternationalRenewableEnergy

Agency

IntegratedResourcePlan

JustEnergyTransition

JETInvestmentPlan

kilowatthour

landuse,land-usechangeand

forestry

milliontonnes

MW

NDC

OECD

P2X

PES

PJ

PPP

PV

RDP

REIPPP

SACREEE

SADC

SAREM

SMEs

t

TES

TFEC

USD

ZAR

megawatt

NationallyDetermined

Contribution

OrganisationforEconomicCo-

operationandDevelopment

power-to-X

PlannedEnergyScenario

petajoule

purchasingpowerparity

photovoltaic

ReconstructionandDevelopment

Programme

RenewableIndependentPower

ProducerProgramme

SADCCentreforRenewable

EnergyandEnergyEfficiency

SouthernAfricanDevelopment

Community

SouthAfricanRenewableEnergy

Masterplan

small-andmedium-sized

enterprises

tonne

totalenergysupply

totalfinalenergyconsumption

UnitedStatesdollar

SouthAfricanrand

Unlessotherwisestated,theexchangeratefromUSdollars(USD)toSouthAfricanrand(ZAR)usedthroughoutthisreportisthatgivenbythe1August2023UNoperationalratesofexchange–i.e.USD1=ZAR17.644;unlessotherwisestated,allUSDfiguresareatUSD2019values.

07

Executivesummary

Overthelasttenyears,theRepublicofSouthAfrica'seconomyhasexperiencedagrowthrateofapproximately1%annually.Thecountryisstillfacedwiththelingeringeffectsofapartheidandanunevensocio-economictransition,resultinginitbeingthemostunequalnationgloballyaccordingtotheGinicoefficient(WorldBank,n.d.).Theunemploymentratereached34.9%attheendofSeptember2021.Asaresult,povertyrateshaverisentolevelsnotseenformorethanadecade,reversingyearsofprogress.

TheimpactsofclimatechangeexacerbateexistingpovertyandinequalityinSouthAfrica.Low-incomehouseholdsaredisproportionatelyaffected,astheyaremoreexposedtopollutionandextremeweatherevents,havelimitedaccesstoqualitypublichealthservices,andpossessfewerfinancialresourcestocopewithrelateddamage.SouthAfricaishighlyvulnerabletothephysicalimpactsofclimatechange,experiencingwarmingattwicetheglobalaverage.Thecountryfacesincreasingrisksofaridity,droughtsandextremestorms,whichalreadymanifestineventssuchasthewateremergencyinCapeTownandunprecedentedfloodsinDurban.Transitioningtoalow-carbonandclimate-resilientenergysectorisessentialforprotectingtheenvironment,humanhealthandtheeconomy,whilealsoaddressingsocialinequities.

SouthAfricahasadoptedseveralpoliciesandinitiativestoachievetheenergytransition.InSeptember2021,thecountryupdatedits2015NationallyDeterminedContribution(NDC).Inthisupdate,thecountrychoseabolderdecarbonisationpathway,reducingthetargetemissionsupperrangeby17%for2025and32%for2030.SouthAfricademonstratesitscommitmenttointernationalco-operationonajustenergytransitionbyactivelyparticipatinginanewlyformedJustEnergyTransition(JET)Partnership.Thisambitiousandlong-termcollaborationinvolvesthegovernmentsofSouthAfrica,France,Germany,theUnitedKingdomandtheUnitedStates,aswellastheEuropeanUnion.Thepartnership’sprimaryobjectiveistoexpeditethedecarbonisationofSouthAfrica’seconomy,placingparticularemphasisonitselectricitysystem.Carbonpricinghasbeenpartofthecountry’senergypolicysincetheintroductionoftheCarbonTaxActinMay2019.

08

Tosupporttransitionplanningandinformedpolicymaking,IRENAanalysesthetransition’ssocio-economicfootprintusingamacro-econometricmodeltomeasureimpactsongrossdomesticproduct(GDP),employmentandhumanwelfare.Thisprocessprovidesinsightsintohowthetransitioncanbeplannedtomaximisebenefits.

InIRENA’sPlannedEnergyScenario(PES),1SouthAfricaisexpectedtoexperiencesignificanteconomicgrowthbetween2021and2050asenvisionedinthebaselineassumptionoftheE3MEmodel.2RealGDPinthePESisassumedtogrowwithacompoundannualgrowthrateof2.7%peryearbetween2021and2030,by3.0%peryearinthe2031-2040periodandby3.5%peryearfrom2041-2050.Thisisin-linewiththenationalIntegratedResourcePlan(IRP)upperforecastof3.2%annualGDPgrowthto2050(MinistryofEnergy,2019).

Underthe1.5°CScenario,SouthAfricaisexpectedtoimproveitsGDPbyanadditional7.8%onaverageoverthe202150periodcomparedwiththePES,resultinginsubstantialeconomicgains.TheindustriessectordemonstratesnotableimprovementswhencomparedwiththePES,withpercentageincreasesof14.5%in2030,6.7%in2040and2.7%in2050(FigureS1).Thisgrowthcanbeattributedtoprivatesectorinvestmentinenergyefficiencyandelectrification,increasedglobaldemand,andanimprovedtradeposition.Thesectorplaysacrucialroleasasupplierofbasicinputstoothersectors,bothdomesticallyandinternationally.Privatesectorinvestmentinenergyefficiencyandrenewables,alongwithincreasedexportvaluesdrivenbyglobaldemandandimprovedtradeperformance,contributetothepositiveperformanceofengineeringandbasicmanufacturingsectors,surpassingtheprojectedoutcomesunderthePES.WhencomparedwiththePES,theservicessectoroverallshowsthehighestpercentagechanges,with8.8%in2030,14.4%in2040and12.9%in2050(FigureS1)

1“Currentplansandpolicies”meansthoseinplacebefore2020.

2Baselineforecastsareconstructedusingacomprehensivesetofinternationaldatasources.ThemainsourceforpopulationdataistheUnitedNations(WorldPopulationProspects).ThemainsourceforGDPforecastsistheInternationalEnergyAgency(WorldEnergyOutlook).ThesedataaresupplementedwithdatafromtheInternationalLabourOrganization,theOrganisationforEconomicCo-operationandDevelopment(OECD)(STANdatabase),theWorldBank,theAsianDevelopmentBankandtheEuropeanCommission(AMECO,Eurostat,ECannualageingreport,EUReferenceScenarioreports).E3MEisaglobal,macro-econometricmodelownedandmaintainedbyCambridgeEconometrics:

.

09

Services

Industry

Agriculture

EXECUTIVESUMMARy

FigureS1:Grossvalueadded(GVA)evolutionbetweenPESand1.5˚CScenarioinUSD2019million(leftpanel),inpercentage(rightpanel),bysector.

GVAchanges(USD2019million)GVAchanges(%)

0200004000060000800000%5%10%15%20%

203020402050

Breakdownoftheindustrysector(GVAchangesin%)

-80%-60%-40%-20%0%20%40%60%80%100%

Construction

Otherutilities

ElectricitysupplyEngineering&transportequipment

Basicmanufacturing

Mining&manufacturedfuels

Note:GVA=Grossvalueadded;PES=PlannedEnergyScenario.

Intermsofemployment,SouthAfrica’slabourmarkethashistoricallybeenmarkedbyanunemploymentrateconsistentlyabove20%.ThispersistentissuewasfurtheraggravatedbytheCOVID-19crisis,whichexposedthelabourmarket’slimitedresilience.

Underthe1.5°CScenario,employmentis,onaverage,0.2%higherthaninthePESoverthe2021-2050period.Sectorssuchasbasicmanufacturing,engineeringequipment,electricitysupplyandutilities,andconstructionexhibitvaryingdegreesofjobgrowth,albeitwithadecreasingtrend(FigureS2).

10

Services

Construction

Electricitysupplyandutilities

Engineeringequipment

Basicmanufacturing

Miningandmanufacturedfuels

Agriculture

FigureS2:Percentagechangeinemployment,1.5°CScenariocomparedwiththePES,bysector,2030,2040and2050

-70%-60%-50%-40%-30%-20%-10%0%10%20%30%

203020402050

Intheenergysector,thenumberofjobsintheenergysectorremainssteadyataround1millionunderthe1.5°CScenario(FigureS3).However,thisfigureis0.1millionlowerthantheprojectedjobsunderthePES.Thisoutcomeisaresultnotonlyoffront-loadedconstructionofnewtransition-relatedtechnologies,particularlyenergyefficiency,butalsoanoverallincreaseinlabourproductivitythroughoutthesector,asmoreoutputisachievedwithlessinputandhumanresources,thankstoautomationandadvancedtechnologies.

UnderthePES,approximately70%oftotalenergysectoremployment(0.75millionjobs)willstilldependonfossilfuels.However,underthe1.5°CScenario,thispercentageissignificantlyreducedto20%(0.2millionjobs),indicatingasubstantialshifttowardscleanerenergysources.Whiletheshareofenergyefficiencyjobsremainsrelativelystableataround13-14%(equivalentto0.14millionjobs),thereisanotableuptickintheproportionofjobsrelatedtopowergridsandflexibility.Thiscategoryexperiencesasignificantincreasefrom5%(or0.06millionjobs)inthePESto12%(0.11millionjobs)underthe1.5°CScenario.Underthe1.5°CScenario,renewablesrepresent51%ofenergysectorjobsin2050–thehighestshare–amountingto0.5millionpositions.Thiscompareswitha12%share(0.13millionjobs)inthePES,demonstratingasubstantialgrowthinrenewableenergyjobopportunities.

11

Jobs(million)

EXECUTIVESUMMARy

FigureS3:OverviewofenergysectorjobsinSouthAfricaunder1.5°CScenarioandPES,bysector,201950

1.2

1

0.8

0.6

0.4

0.2

0

2019PES

1.5-SPES

1.5-S

2050

2030

Renewables

Energyeiciency

Powergridsandenergyflexibility

Vehiclecharginginfrastructure

Nuclear

Hydrogen

Fossilfuel

Note:1.5-S=1.5°CScenario;PES=plannedenergyscenario.

Thegrowthinrenewableenergyjobsismorepronouncedunderthe1.5°CScenario,surpassingthePESprojections(FigureS4).Anestimated500000jobsareexpectedintherenewableenergysectorby2050underthe1.5°CScenario.Solartechnologies(i.e.photovoltaic[PV]andconcentratedsolarpower[CSP]areexpectedtodominatetherenewableenergyjobmarketinSouthAfrica,withapproximately245000jobsinboth2030and2050.Bioenergyalsoplaysasignificantrole,creatingnearly100000jobsin2030underthe1.5°CScenario,increasingto166000by2050.Additionally,solarwaterheaterscontributearound45000jobsin2050,hydroanother25000jobs,andwindover21000jobs.

12

Jobs(thousand)

FigureS4:RenewableenergyjobsinSouthAfricainthePESand1.5°CScenario,2019,2030and2050

600

500

400

300

200

100

0

2019PES1.5-SPES1.5-S

2050

2030

Wind

Solarwaterheater

Solar(PVandCSP)

Hydro

Geothermal

Bioenergy

Notes:PES=PlannedEnergyScenario;1.5-S=1.5°CScenario.

Welfareimprovesbyover99.8%underthe1.5°CScenarioby2050comparedwiththePESledbythesocialanddistributionaldimensions(rightpanelinFigureS5).FurthermeasureshavethepotentialtobringaboutevengreaterincreasesinwelfareinSouthAfrica.Thedetailedresultsprovideclearindicationsofwheretofocuspolicyactiontoimprovewelfare(leftpanelinFigureS5).Thegreatestpotentialforimprovementexistsinthesocialdimension,withafocusontheintroductionofmeasurestoraisefundingforsocialprogrammes.

13

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

120%100%80%60%40%20%

0%

-20%

EXECUTIVESUMMARy

FigureS5:WelfareIndexbydimensionforthe1.5°CScenario(left)anddifferenceinwelfare

betweenthe1.5°CScenarioandthePES(right),2050

Welfareindexbydimensionin2050

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

Diferenceinwelfarebetween1.5˚CScenarioandPESin2050(in%)

EnvironmentalEconomicDistributionalSocialAccess

Notes:Leftpanel:Thefivepetalsareonascalefrom0to1andrepresenttheabsolutevaluesofthefivedimensionsoftheWelfareIndex.Thenumberinthecentreisalsoonascalefrom0to1andrepresentstheabsolutevalueoftheoverallWelfareIndex.PES=PlannedEnergyScenario.

Toachieveandmaximisethosesocio-economicbenefitsinthecountry,bringingenergyjusticetoall,theenergytransitionpolicyframeworkshouldbeholistic.Theenergytransitionisagradualprocess,andpolicymakerswillneedtostriveforharmonybetweenenergypolicyandotherareasofnationalpolicyoveranextendedperiodtoensureaninclusiveandjusttransition.Aninclusiveandjustenergytransitionmustkeeppeopleatitsheartandembracediversityandinclusionacrossseveralpopulations(e.g.women,youth,olderworkers,peoplewithdisabilities,migrantworkers,indigenouspeople,unemployedpeople,vulnerableworkers).Astheenergytransitionadvances,theworldisbeginningtoseethebenefitsofbasingfutureenergysuppliesonrenewablesandlimitingenergydemandthroughgreaterefficiency.AcountrylikeSouthAfrica,wherehighinequalityandafossilfuel-basedeconomyarekeychallenges–willbenefitimmenselyfromtheopportunitiescreatedbytheenergytransitiongivensupportfromtheinternationalcommunityandsupportivepolicies.

Introduction

15

SouthAfricaaimsforsignificantdevelopmentadvancesbutgrappleswithongoingeconomicandsocialissues,whichareworsenedbyrecentevents,includingtheCOVID-19pandemicandtheenergycrisisoverandabovethethreatsposedbyclimatechange.Overthelasttenyears,theeconomyhasexperiencedagrowthrateofapproximately1%annually.SouthAfricaisstillfacedwiththelingeringeffectsofapartheidandanunevensocio-economictransition,resultinginitbeingthemostunequalnationgloballyaccordingtotheGiniindex(WorldBank,n.d.).Theunemploymentratereached34.9%attheendofSeptember2021.Asaresult,povertyrateshaveremarkablyrisentolevelsnotseenformorethanadecade,reversingyearsofprogressandleadingtocallsfortheintroductionofbasicincomesupport.Thishasalsocausedsocialexclusion,inequality,crimeandsocialinstability,andtheirinfluenceontheeconomyhasthebiggestimpact.Theglobalpandemic’seffectsarestillbeingseenincertainsectors,includingthetourismindustry,whichisnotexpectedtoreturntopre-pandemiclevelsuntil2024(althoughabetterrecoverywasrecordedin2022)(OECD,2022).Additionally,thecountrymustconfrontescalatingclimatechangerisks.

SouthAfrica’seconomicrecoveryhasbeenhighlyuneven.Ithaslargelybeendrivenbytheglobaleconomicenvironment,particularlyfavourablecommoditypriceswhichhavesupportedgrowthinthegrossdomesticproduct(GDP)andfiscalrevenues.Althoughhouseholdconsumptiongrowthhasbouncedbacksincetherecessionof2020(WorldBank,n.d.),thedeterioratinglabourmarketmayhinderamoredynamicandsustainablegrowthtrajectory.Investmentremainsweakduetoongoingstructuralissuessuchaspoweroutageswhichdestabilisetheentireeconomy.

Thegovernmenthasimplementednumerousboldstrategiesandlegislativemeasurestotacklethesechallenges.InAugust2022,SouthAfricaintroducedaJustTransitionFrameworktoalignitsdevelopmentandclimateobjectives.Toexpeditethealignmentofthenation’sambitiousdevelopmentandclimatetargetsandtheirimplementation,severalcriticalquestionsneedfurtherexamination.TheseincludeSouthAfrica’svulnerabilitytoclimatechange,theintensityofitsadaptationefforts,thefeasibilityofachievingnet-zeroemissionsby2050,andassociatedcosts.Otherconsiderationsinvolvemobilisingpublic,privateandexternalresourcestosupportclimategoals;managingtrade-offsbetweeneconomicprosperity,povertyreduction,andthedistributionalimpactsofclimatechange.

Thisreportwilldelveintothesecomplexissues,evaluatingthesocio-economicconsequencesoftransitionpathwaysatdifferentlevelsofambition.Throughitsanalysisofkeydriversandimpacts,theInternationalRenewableEnergyAgency(IRENA)hasofferedinsightsthatsupportenergytransitionplanningandimplementationattheglobal,regional,andnationallevelssince2016(IRENA,2016,2018,2019a,2019b,2020,2021,2022a,2022b,2023a,2023b).Fortheenergytransitiontobeeffectiveandbroadlybeneficial,IRENAhasstressedtheimportanceofaholisticglobalpolicyframework(Figure1).Tohastenthetransition,ensureitsadvantagesarewidelysharedandminimiseitsdifficulties,severalpolicyaspectscomplementandsupportoneanother,spanningawiderangeoftechnological,socialandeconomicchallenges.

16

Policymeasures

Socio-economicfootprint

GDP

Energytransitionroadmap

Employment

Welfare

Socio-economicsystemoutlook

Figure1:Socio‑economicassessmentframework

Energy-economy-

environment

model

Thesocio-economicanalysisisconductedusingamacro-econometricmodel(E3ME)3thatintegratestheenergysystemandglobaleconomiesintoasinglequantitativeframework.Themodelshedslightonthetrade-offsbetweeneconomicprosperityandemployment,whileexaminingwelfareaspects,includingthedistributionalimplicationsofthesepolicychoices.Policymakersneedtobeawareofhowsuchchoiceswillaffectpeople’swell-beingandoverallwelfareandofthepotentialgapsandhurdlesthatcouldaffe

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