Five key policies to unlock the socio-economic benefits of renewable energy in all regions
According to a new semi-systematic literature review conducted by IEEP, supported by five case studies, the single most important factor in unlocking local and regional socio-economic benefits of renewables is the degree of ownership of the resources within the region. This is a robust finding across many types of regions, technologies, and research methodologies.
The report shows that the deployment of renewable energy has potentially significant positive socio-economic effects at the regional level. These effects can be greatly enhanced by a supportive policy framework. Using these tools, even regions that face challenges in transitioning to renewable energy can ultimately benefit.
For example, one study found that wind energy projects with 100% local ownership generate twice the number of long-term jobs and 1–3 times the economic impact of absentee-owned wind projects.
Another study found that strategic re-investments of revenues from wind power in local social services generate about 10x additional employment and income impact compared with the impact of wind power production alone.
The Climate Law and its strengthened 2030 greenhouse gas reduction target require a substantial acceleration of renewable energy deployment in the EU in the next years. Ensuring socio-economic benefits for local communities will be key to the social and political acceptability of this rapid energy transition. If regions see only marginal benefits, or benefits which flow out of the region, the transition will be delayed and potentially jeopardized.
Given the huge inequality of emissions between the wealthy and the rest of the population, and growing wealth and income inequality, enhancing equitable local and regional ownership of new energy resources is a vital tool in the success of the future climate policy It can also be a key tool for pre-distribution to tackle wealth inequality in Europe with multiple benefits in terms of local acceptance of renewable energy projects, addressing the root causes of inequality, and promoting sustainable economic development.
IEEP proposes a number of policy levers that are necessary to ensure that all regions, regardless of their advantages and disadvantages in terms of renewable energy deployment, can benefit as much as possible from the potential of renewables to renew their economies.
- Alternative ownership models and community benefit sharing – Ensuring that local citizens and communities benefit directly from the renewable energy deployed near them
- Labour Market Policies – Supporting the transition for workers from carbon-intensive industries
- Industrial Strategy – Ensuring that more of the value chain, including R&D, and manufacturing is located regionally
- Regional governance arrangements – Avoiding bureaucratic delays and including communities in decisions around renewable
- Financing options – Ensuring that funding is available to support the above, and ensuring that smaller actors have access to renewables projects
Maximising the potential of energy communities, as provided for in the Renewable Energy Directive, will be one particularly important mechanism. Many Member States have not yet fully implemented the existing provisions to promote energy communities, and the current revision of the directive should be used to reinforce the policy, for example through mandatory targets for community ownership. However, there are some innovative examples of projects to expand the ownership stakes of citizens in modern, large-scale renewables projects being deployed at the rate needed to meet renewable energy targets.
For more details on the effects on employment, GDP, taxes, income, and tourism at a regional level, see our report and five supporting case studies, or the summary of the recommendations (attached to this page).