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Europe: Overall positive economic benefit - Cost of the EU target

Reaching Europe's 2020 renewables targets will boost the number of jobs in the sector to 2.8 million and lead to a gross value added for the renewables industry of 1.1% of the EU's gross domestic product (GDP), according to a new study published by the European Commission.

The study, Employ-RES, was undertaken by six European research organisations, including Germany's Fraunhofer Institute and Ecofys of the Netherlands. It is the first in-depth look at the economic impact of supporting renewables as well as the effect on jobs. The report answers critics of renewables who highlight their higher cost. It shows that not only does increasing the use of renewable energy technologies not harm the economy, but actually benefits it by creating jobs and increasing GDP.

In 2005, 1.4 million were employed in the renewables sector, which generated EUR58 billion value added - contributing around 0.6% to gross domestic product (GDP). Under a "business as usual" scenario based on current policies, Europe will fail to reach its 2020 target of 20% of total energy from renewables, with renewables supplying just 14% of total energy. Nonetheless, jobs are expected to rise to around 2.3 million, with gross value added of the sector rising to EUR99 billion (0.8% of GDP).

With the stronger renewables support policies that will be needed to meet the 20% target, however, the sector will see an additional 410,000 jobs above the business as usual scenario and an extra 0.24% increase in GDP across the 27 EU countries. Looking further ahead, the gross value added of the sector could increase to EUR197 billion by 2030.

Despite the higher short-term cost of renewables compared with conventional generation which it replaces, the study finds a net positive effect from higher renewables deployment. This is mainly because of the large share of the global market, including Europe, that European renewables technology manufacturers hold. The report calls for policies to support technological innovation to help maintain Europe's competitive position.

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