A dramatically increased share of renewables and higher energy efficiency have the potential to create benefits of up to $10 trillion annually by 2050, compared to estimated incremental system costs of decarbonization of $1.8 trillion annually, according to a new report by the International Renewable Energy Agency (IRENA) and the International Energy Agency (IEA).

Global GDP could be boosted by around 0.8 percent in 2050, or $1.6 trillion, while the cumulative gain through increased GDP from now to 2050 will amount to $19 trillion, the two agencies said in their joint report ‘Perspectives for the Energy Transition - Investment Needs for a Low-Carbon Energy System’, which was prepared at the request of the German government to provide input for the G20 presidency.

However, the IEA noted that limiting the global mean temperature increase to below 2°C with a probability of 66% would “require an energy transition of exceptional scope, depth and speed”.

According to the IEA, the longer-term climate goals can be achieved if emissions peak before 2020 and drop by more than 70 percent below current levels by 2050. In addition, by 2050, almost 95 percent of the world’s electricity would need to be low-carbon, compared to around one-third today. Furthermore, 7 out of every 10 new cars would need to be electric, compared with 1 in 100 today, the IEA said.

According to the agency, fossil fuels would still be needed in 2050 – especially natural gas – and are expected to account for 40 percent of energy demand, around half of today’s level. The long-term climate goal achievement would also need on average $3.5 trillion in energy-sector investments each year until 2050, which is around twice the current level of investment.

According to IRENA’s input in the report, the energy transition is affordable, but it will require additional investments in low-carbon technologies. Cumulative additional investment would still need to amount to $29 trillion over the period to 2050. This is in addition to the investment of $116 trillion already envisaged in the Reference Case, IRENA said.

This article was originally published on Oilprice.com.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.