Researchers uncover unexpected factor holding back economic growth: ‘Weak policies’
April 4, 2025
Renewable energy is key to tackling rising global temperatures, but can clean energy also power a sustainable economy? Researchers may have found a surprising answer.
What is renewable energy’s impact on economic growth?
A recent study showed renewable energy made a positive impact on South Africa’s gross domestic product, at least in the short term, according to The Conversation.
This exciting development comes as South Africa faces numerous economic challenges — high unemployment, poverty, and inequality. The country relies on dirty energy despite efforts to increase renewable sources, such as wind and solar power.
Researchers set out to gauge renewable energy’s potential to replace sources such as coal and determine which would be best for economic development.
Why does renewable energy’s impact on economic growth matter?
To reduce planet-warming pollution, we need to ensure a smooth transition from dirty energy to clean energy while also growing economies. Concerns about the negative impacts of transitioning away from dirty energy, such as job losses, have sometimes prevented policymakers from fully embracing renewables.
Despite clean energy commitments, coal is South Africa’s dominant power source, producing around 85% of its electricity, per the International Trade Administration. The country released the highest amount of planet-heating carbon pollution in Africa, as of the 2024 study.
The report compared the impact of renewable and nonrenewable energy sources on economic growth between 1985 and 2022. The researchers found that after initiatives to decrease dirty energy in the 2000s, there was a nearly 25% increase in renewable energy use — as detailed in The Conversation. This sharp increase had an impact on short-term economic growth. However, researchers found that these policies were not strong enough to enable long-term economic growth.
“Overall, our findings highlight that policymakers have treated renewables as a ‘nice-to-have’ gesture for humanity, instead of a key driver of long-term economic growth,” explained Andrew Phiri, co-author of the study, per The Conversation. “This has led to weak policies, poor regulation, and under-investment in renewable energy. These have held the sector back from making a bigger contribution to economic growth.”
Researchers cited the failure to include renewable sources in the national power grid. Coal-fired electricity remains cheaper for households than purchasing clean-energy infrastructure such as solar panels.
Despite coal power’s dominance, it is worse for long-term growth, according to the study. Overreliance has resulted in increasing blackouts. These power interruptions have created millions in economic losses.
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Renewables could be a solution that provides reliable energy and sustainable growth.
How renewable energy’s impact on economic growth helps the climate
This new research shows that renewables could be a driving force for sustainable economic growth.
Enabled by the right policies, clean energy has the potential to replace dirty energy as an economic powerhouse, creating new jobs, and helping developing economies prosper. This positive economic activity can simultaneously reduce planet-warming pollution, ramping up the transition from dirty polluting sources.
It will require a buy-in from policymakers to remove the barriers that have held back renewables. While addressing critical climate issues can have upfront costs, the impacts of extreme weather, food shortages, and health hazards could be even more expensive.
As the study suggests, embracing the solution may offer long-term economic benefits and a cleaner, sustainable future for all of us.
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