Renewable Resources: The Impact of Green Energy on the Economy

What is green energy?

Green energy is energy that is generated from renewable sources instead of limited sources, such as fossil fuels. Consumers, businesses and governments worldwide are shifting away from fossil fuel energy toward green energy to lessen the impact of climate change and pollution.

Renewable energy sources include solar, wind, water (hydropower, tides and waves), biomass and geothermal. Compared with fossil fuels, these sources generally lessen energy’s impact on the environment — and they’ll never die out because they’re replenished continuously.

What is green energy’s impact on the economy?

More than 100 countries — an even mix of developing and developed nations — have set renewable energy targets. The European Union, in particular, has defined an ambitious goal of acquiring 32 percent of its energy needs from renewable sources by 2030. 

The United States is focused on transforming toward a more energy-based economy as the reality of global climate change approaches rapidly. Significant economic changes are expected, including the following.

1. Renewable energy could add more jobs. 

Making the switch from fossil fuels to renewable energy sources could boost the economy. For example, according to a Labor Energy Partnership analysis, the passage of the Inflation Reduction Act alone is expected to create more than 1.5 million new jobs in the U.S. over the next decade.

Additionally, according to the International Renewable Energy Agency (IRENA) 2023 Renewable Energy and Jobs annual review, an estimated 13.7 million direct and indirect global renewable energy jobs existed in 2022, up from 7.3 million in 2012. Many millions more are expected in the coming years.  

2. Renewable energy can lower consumer expenses.

Renewable energy production usually is more efficient than traditional energy production. Households that have installed solar panels and live in places with net metering reduce their electric bills significantly, which translates to more savings if they purchase an electric vehicle (EV). 

For utilities, building a new solar or wind installation is less expensive than continuing to operate an existing coal-fired power plant. For consumers, driving an EV costs less than half as much per mile as driving a gasoline-powered car. 

If the U.S. invests in the clean energy programs outlined in the Build Back Better Bill, which passed in 2021, the average household could save $500 a year on energy costs.

3. Renewable energy makes good business sense.

Environmentalists have long argued for the adoption of renewable energy to replace traditional energy resources. Today, governments and corporations are singing the same tune because it makes good business sense.

Companies make money producing wind turbines and solar panels. For example, General Electric is the global leader in onshore wind energy equipment, a sector that has seen enormous growth. Global offshore wind investment hit an all-time high of $76.7 billion in 2023, according to BloombergNEF.

Other industries are thriving in this climate. For example, the construction industry benefits from building retrofitting while the automobile industry benefits from building mass transit and EVs. It’s less expensive for utility companies to build renewable power systems than to operate existing fossil fuel plants.

Investing in renewable energy can also have a massive impact on a government’s expenses. For example, Germany imports much of its oil and gas from Russia. As per estimations, the country could use only renewable energy by 2050, helping it save billions of dollars.

4. Renewable energy facilitates universal energy access.

Fossil fuel dependence distorts the energy market, resulting in a significant number of people without power access. The International Energy Association estimates that 775 million people worldwide had no access to electricity in 2022. 

Billions of people without electricity rely on traditional biomass for cooking. According to the National Institutes of Health, cooking with biomass fuel causes household air pollution, resulting in about 4 million premature deaths annually. The vast majority of these individuals were in Asia and sub-Saharan Africa. 

Renewable energy can reach even remote, deprived areas through decentralized solar and mini-grids, although it will require some investment from governments and nongovernmental organizations. 

5. Renewable energy is an ethical investment avenue.

The renewables sector is an ethical, attractive option for investors who want to look beyond traditional channels. Rising investments foster a healthy, positive outlook for the sector, creating an intangible impact on job creation and community cohesion. 

6. Renewable energy reduces disaster recovery and rebuilding costs.

In addition to the catastrophic suffering and loss of life caused by climate disasters such as wildfires, droughts and severe hurricanes and blizzards, governments spend enormous amounts of money on recovery and rebuilding. 

According to the National Oceanic and Atmospheric Administration (NOAA), the U.S. has experienced 383 weather and climate disasters since 1980, with overall damages exceeding $1 billion. The total cost of these events exceeds $2.72 trillion. 

NOAA data shows that in 2023 alone, the U.S. experienced 28 of these disasters, including one drought, four floods, 12 severe storms, five hailstorms, two tropical cyclone events, one wildfire and one winter storm, with a recovery cost of $94.2 billion. 

When economies shift from fossil fuels to green energy, climate-related disasters will become less frequent and severe.

What is the current and projected global market for energy?

We’ll examine the current state of fossil fuel-based energy and renewable energy in the global market. 

Fossil fuels and the global market

Fossil fuels dominate the power sector and will remain a significant energy source for at least the next 10 years. According to an IEA report, renewable energy provided 30 percent of total global energy generation in 2023 and is on track to grow to 37 percent by 2026. 

Renewable energy and the global market

According to Allied Market Research, the global renewable energy market is expected to reach $1,977.6 billion in 2030, growing at a compound annual growth rate of 8.4 percent from 2021 to 2030.

The IEA report cited above stated that in 2023, renewable energy constituted 30 percent of global energy production, including electricity, heating and transportation. Renewable energy generation is projected to grow 3.8 percent year over year from 2024 to 2028.

Here’s a look at renewable energy’s most significant sectors, according to the 2023 IEA Renewables report: 

• Hydropower: Hydropower is the most significant renewable energy source — its energy output is more than that of all other renewable energy sources combined. In 2023, hydropower supplied more than a third (36 percent) of the total renewable energy generated, down from 41 percent in 2022. This dip (the lowest as a percentage of total renewables in three decades) was due to droughts and other extreme weather. Its usage is projected to increase by an annual growth rate of 4.06 between 2024 and 2028. The most growth is expected in the Asia Pacific, Africa and the Middle East regions. The aging infrastructure in the U.S. and Europe is causing hydropower stagnation in those markets.
• Solar and wind energy: The most dramatic growth is expected from the solar energy sector. Nearly three-quarters of the energy capacity that was added in 2023 was solar. Together, solar and wind account for 2 percent of the world’s energy. This is projected to skyrocket to 33 percent or more by 2050. By the end of 2024, these two renewable sources of energy are expected to overtake hydropower. In the next five years, solar and wind are projected to account for 96 percent of renewable energy capacity growth.

Here’s how the globe’s major players stand in the renewable energy sector: 

• China has been a leading renewable energy producer and is responsible for generating 57.66 percent of hydroelectric power, 60.27 percent of wind energy and 53.04 percent of solar energy generated by the top 10 counties in each category. 
• The U.S. is also a big producer of renewable energy, producing 12.1 percent of solar energy, 20.19 percent of wind energy and 13.48 percent of hydroelectric power generated by the top 10 counties in each category.

What businesses use green energy?

Although many business types can use green energy in some form, it’s easier for some to make the switch to renewable energy and energy conservation:

• Warehouses, superstores and factories: Warehouses and factories with large buildings also have extensive roofs on which solar panels can be installed. 
• Businesses with vehicle fleets: If your business involves distribution, transportation, logistics or delivery, you have a fleet of vehicles. Switching to EVs involves a capital expense that can be amortized (and may qualify you for a tax break) and you will save on fuel costs.
• Farms and ranches: Organizations with large amounts of land, particularly in the West, can install wind turbines to generate renewable energy.
• Construction companies: Companies involved in new construction can incorporate green energy into the plans, including solar power and green building practices.
• Companies with stand-alone buildings: If your business has a brick-and-mortar storefront, you can install a micro wind turbine to generate power or a geothermal heat pump for your heating, ventilation, and air conditioning system.

How can companies take advantage of renewable resources?

There are many ways businesses — even small ones — can utilize renewable resources in their daily operations. 

Generate your own renewable energy

Companies with their own buildings have the most flexibility when it comes to generating and using green energy. For example, they can install solar panels, geothermal heat pumps or wind turbines. In addition to the savings on your electric bill, there are federal — and often state and local — tax incentives to invest in clean energy.

Support the generation of renewable energy

If you don’t have your own building, you can help your utility build green energy production. To help finance renewable energy installations, companies can sign a corporate power purchase agreement (CPPA), a long-term energy supply contract with a fixed price structure. CPPAs mandate that the company’s energy come from renewable sources and provide a fixed price structure, protecting the company from future price increases. 

Use electric-powered vehicles

Any company with vehicles can switch to EVs, which also saves on fuel. There is also a federal tax credit of up to $7,500 per vehicle, depending on the manufacturer, battery capacity and tax amount due.

Use recycled packaging

If you package your products for distribution, commit to eco-friendly packaging practices, such as using packaging materials made from recycled materials. You can also use materials with less plastic, such as inflated plastic bags, instead of bubble wrap. A nice bonus is that eco-friendly packaging is often lighter, so your shipping costs may be lower. You may also be able to take advantage of government tax credits.

Encourage reuse of packaging and products

Some companies incorporate multiuse packaging. For example, a candle manufacturer can use a glass vessel that can be repurposed as a bowl or vase when the candle is used up. Another strategy is to give customers a discount when they bring their own container or return your used packaging to you for reuse.  

The green energy movement in the corporate world

Sensitivity toward global warming is increasing worldwide and some big companies claim to be functioning entirely on green energy to reduce carbon emissions and do their part to save the planet. Here are some examples of companies that use renewable resources in their operations.

Intel

Intel plans to use 100 percent renewable energy in all its manufacturing facilities worldwide by 2030. Currently, it is at 82 percent globally, including 100 percent in the U.S., Europe, Israel and Malaysia. Intel has almost 100 alternative energy installations at 15 locations, including solar hot water systems, solar panel-covered parking lots, micro wind turbine array systems and mini geo-energy systems. It has committed to getting to net-zero greenhouse gas emissions by 2040 and has plans to invest $300 million in energy conservation at its facilities. 

Apple

Apple plans to be carbon neutral across its operations by 2030. It has installed more than 18 gigawatts of clean energy to power its global operations and manufacturing supply chain. This is three times the amount it had in 2020. It is also investing in solar power in the U.S. and Europe to offset the energy its customers use to charge their Apple devices. In addition, it has asked its suppliers to follow suit. Over 320 Apple suppliers, accounting for 95 percent of Apple’s direct manufacturing purchases, have added 16.5 gigawatts of renewable energy to its supply chain.

Microsoft

According to the United Nations Climate Change initiative, Microsoft will be carbon-negative by 2030 and will have removed all of the carbon it has ever emitted since its founding by 2050. Microsoft has been carbon neutral since 2012, primarily through buying carbon offsets. Determining that it was not enough to be carbon neutral, the company committed to being carbon neutral in 2020. It has used 100 percent green power in its U.S. operations since 2014 and has reduced its emissions by 20 million metric tons. Through its Climate Innovation Fund, Microsoft plans to invest $1 billion into new renewable energy and climate change-fighting technology worldwide.

Estée Lauder

In 2022, Estée Lauder announced a goal to transition its global corporate vehicle fleet to electric by 2030. The company constructed solar arrays at its facilities in the U.S., United Kingdom, Canada and Switzerland. It also purchases wind power from a wind farm in Oklahoma. It is part of the U.S. Department of Energy’s Better Plants program, which improves energy efficiency in factories and other industrial settings. It is investing in energy-efficient buildings for all new facility construction and has achieved zero industrial waste-to-landfill for all global manufacturing, distribution and research sites.

Google

Google’s goal is to achieve net-zero emissions across its global operations by 2030, including operating its offices and data centers 24/7 on carbon-free energy, including solar and wind. The company is investing in both retrofitting existing buildings and new construction to make them more energy-efficient and able to generate its own renewable energy. The company is switching fleet vehicles to electric and buying carbon-free energy from wind farms. It also requires suppliers to do their part, with 75 percent of specific key suppliers reporting meeting greenhouse gas emissions reduction targets.

Unilever

Unilever plans to reduce operational emissions by 100 percent by 2030. In 2024, Unilever announced a plan to reduce carbon emissions at its four U.S. ice cream factories. This involves replacing natural gas boilers with electric boilers and industrial heat pumps. It has been transitioning to sustainably sourced biofuels, phasing out high-impact hydrofluorocarbon refrigeration systems and increasing the use of renewable energy throughout its supply chain. It is also reducing its overall packaging material use, designing packaging for recycling and scaling up reusable packaging models.