A new University of Oxford report finds a rapid switch to renewables could double energy-sector productivity in low-to-middle income economies within 25 years. In many countries, this would result in a GDP boost by mid-century of around 10%.

"Opting for clean energy could be an economic boon for solar-rich countries such as Burundi, DR Congo and Mozambique," says Professor Sam Fankhauser, Interim Director of Oxford Smith School of Enterprise and the Environment. "For context, 10% of GDP is roughly the amount countries typically spend on public health. These productivity gains are unprecedented, and it could be the developing countries that benefit the most."

The importance and benefits of a clean energy transition

Renewable energy boosts productivity in two ways: more electricity is generated per dollar invested, with fewer losses (for example to heat) compared to fossil fuels, and renewable energy is cheaper - enabling households, businesses and industries to run for longer at lower cost. The report quantifies this gain over the next 25 years and finds that renewable energy productivity gains are much higher in the Global South, resulting in an important advantage in the growing net zero economy. Renewables could finally start to close the income gap between rich and poor countries, say the authors.

The report, part of a three-year research programme funded by energy company SSE, also investigates how renewable energy investment has already boosted GDP in low and middle-income countries as compared to fossil fuels. Spending on renewables gets multiplied in the local economy much more than fossil fuels - along the supply chain and through local wages. The analysis shows that from 2017-2022 this has boosted the GDP of the 100 largest developing countries (excluding China) by a combined US$1.2 trillion - the equivalent of 2 to 5% of GDP for most nations. In COP30 host Brazil, renewable investments raised GDP by US$128 billion.

However, the authors caution that the economic benefits of renewables do not automatically flow to host communities. Instead, deliberate benefit-sharing mechanisms such as community benefit funds and co-ownership are needed.

The report concludes by emphasising the potential of distributed renewable energy for accessibility and inclusion. "The success of the renewable energy transition will depend not only on lower costs and higher productivity - both of which are now all but guaranteed - but on our collective ability to ensure that its benefits are fairly and widely shared, leaving no community behind," says Professor Fankhauser.

Rhian Kelly, Chief Sustainability Officer at SSE, comments:

"Meaningful consultation must sit at the heart of every approach to community engagement. The most successful models go well beyond minimum requirements, reflecting the priorities and context of local people. By sharing learnings, we can identify what works best - and ensure that dedicated community funds are transparent, flexible, truly responsive to local needs. In the UK and Ireland, these funds have already supported more than 12,000 projects. With clear policy frameworks - including minimum contribution thresholds and standardised benefit-sharing agreements - we can build on this success and deliver lasting benefits for communities."

The report will be uploaded here:

https://www.smithschool.ox.ac.

uk/research/economics

sustainability

About the Smith School of Enterprise and the Environment

The Smith School of Enterprise and the Environment at the University of Oxford equips enterprise to achieve net zero emissions and the sustainable development goals, through world-leading research, teaching and partnerships.

https://www.smithschool.ox.ac.

uk/

See more breaking stories here.