Economic Aspect of the Transition to Sustainable Energy

Development

Laila Gazieva

, Diana-Madina Gudaeva and Zelimkhan Anzorov

Kadyrov Chechen State University, 32 Sharipov Street, Grozny, Russia

Keywords: European economy, economy transformation, sustainable energy development, carbon balance.

Abstract: Energy production is one of the most important sectors of the economy that needs to be transformed into new

forms of sustainable energy development. Modern research should be focused on finding the economics of

transforming current energy production into the development of new renewable energy sources, which will

provide a comprehensive environmental impact and ecological balance. The development of new renewable

energy sources and the restoration of the ecological balance are the primary tasks of Russia and other

European countries. The study will show how the transition to sustainable energy development affects

economic growth and development in Europe. However, this study will look at the benefits of moving towards

sustainable energy development in the economy. The main question for the study is what economic benefits

can be gained by the EU from the transition to sustainable energy development through the provision of

renewable energy production.

1 INTRODUCTION

The global economy relies on the use of fossil fuels

to produce energy. As the global population continues

to increase, so does the standard of living along with

the demand for energy consumption. As a result,

energy consumption demand is expected to grow by

21% by 2030 to meet growing consumer demand,

according to IEA forecasts (IEA, 2020). At the same

time, climate change has caused the world to pay

great attention to greenhouse gas emissions. This

growing concern has many impacts on the

environment, prompting the government to make

decisions to reduce serious environmental impacts

such as gas emissions. The government’s decision on

the energy sector is strongly connected to its

sustainability for having long-term economic

benefits. At the same time, decisions on sustainable

investments in the energy sector focus on climate

change in order to reduce growing concerns about

climate.

The fact is that the transition to sustainable energy

development has become a focus in many countries

to reduce environmental pressures and increase

economic efficiency. Transformative energy

development is an emerging issue that can ensure

https://orcid.org/0000-0002-0080-1401

sustainable development and growth without

damaging the environment. Ensuring sustainable

development is bound to boost economic

development, also known as an eco-friendly or green

economy. The transition to sustainable energy

development will have knock-on effects on the

economy. Making energy supplies more sustainable,

cost-effective, safe, reliable and environmentally

sustainable can ensure long-term economic growth.

The recent shift towards sustainable energy

development has increased significantly due to the

reduction of adverse climate impacts and sustainable

energy supply facilities. This shift towards energy

development has been strengthening its

socioeconomic benefits over a long period of time.

The transition to sustainable energy development

depends on reducing fossil energy consumption by

increasing the development of renewable energy

sources such as solar, wind, and biomass. This

renewable energy has no impact on the environment

and makes a significant contribution to the economy.

While traditional energy production accelerates the

use of natural resources, it also affects our

environment and takes a huge toll on human-caused

natural disasters. Conversely, ensuring sustainable

energy development accelerates sustainable

278

Gazieva, L., Gudaeva, D. and Anzorov, Z.

Economic Aspect of the Transition to Sustainable Energy Development.

DOI: 10.5220/0011570300003524

In Proceedings of the 1st International Conference on Methods, Models, Technologies for Sustainable Development (MMTGE 2022) - Agroclimatic Projects and Carbon Neutrality, pages

278-281

ISBN: 978-989-758-608-8

 2023 by SCITEPRESS – Science and Technology Publications, Lda. Under CC license (CC BY-NC-ND 4.0)

production, ensures stable growth, creates long-term

economic benefits, creates new jobs, and improves

living standards (Mentsiev et al., 2020).

There is no doubt that the transition to sustainable

energy development is the most important issue in

ensuring sustainable economic growth in both

advanced and emerging countries. The energy sector

is one of the most important sectors of the economy

and needs to be transformed into new forms of

sustainable energy production. In this regard, the

research will focus on finding the economic features

of transforming current energy production into new

renewable energy development, which will ensure a

comprehensive environmental impact and ecological

balance. The research will recognize how the

transition to sustainable energy development affects

economic growth and development in Europe.

However, this study will investigate the benefits of

shifting sustainable energy development in the

economy. Therefore, the main question for the study

is therefore to what extent the EU can benefit

economically from the transition to sustainable

energy development by ensuring the production of

renewable energy.

2 MATERIALS AND METHODS

The methodology of the research is the process of

designing the research which includes the collection

of data, measuring the data, and analysis of the data

on the basis of the research questions. The study will

investigate the economic advantages of transitioning

to sustainable energy development in the EU

economy by securing renewable energy production.

Data will be collected from various published sources

such as articles, research papers, sustainable energy

development reports, government reports, and so on.

The data will then be systematically analyzed to

determine the economic impact of formulating such

energy development policies. The research will

follow the descriptive qualitative approach to find the

research answer.

Therefore, the research project will follow an

experimental study on the European Union. The study

will determine the economic impact of shifting

energy development towards renewable energy

production. The study will use non-probability

sampling techniques to collect data from numerous

sources, including local development reports,

academic research, professional journal articles,

government reports, and existing published academic

research papers.

In this research, the study will follow the

“Preferred Reporting Items for Systematic reviews

and Meta-Analyses” PRISMA analysis to identify the

sources and evidence. Then, in order to collect the

data, the SLR (Systematic Literature Review)

approach to the literature review was to look for the

economic advantages of the transition to sustainable

energy development in the EU economy. The data

will then be critically analyzed in economic terms to

discover the economic benefits of this transition.

Economic growth depends on the mobilization of

resources through the industrial revolution, maximum

capital mobilization, technological advancement, and

strategic change which will ensure economic

development. Energy consumption is one of the main

economic factors of an economy, and economic

growth depends to a large extent on how much energy

a country can produce to ensure proper development.

The energy consumption will change the pattern of

the level of development. The U.S. Energy

Information Administration projects that energy

consumption will increase by more than 50 percent

by 2050. Most developing countries are expected to

develop their energy consumption that does not

belong to the OECD. Economic growth has a huge

impact on rising costs due to environmental impacts.

The use of the conventional energy production

process affects the environment which will increase

the carbon footprint. Most countries use only fossil

fuels to produce energy and meet huge demands that

are not sustainable for the environment. This

unsustainable production process will reduce a

significant portion of GDP due to environmental

impacts (EIA, 2021).

Many countries have adopted sustainable energy

development strategies to achieve the Sustainable

Development Goals. Germany, for example,

launched the Energiewende project in 2010, shutting

down coal-fired power plants and starting to invest in

wind power plants, a shift aimed at enabling

renewable energy. In fact, in 2018, the plant has

become Germany's most important source of energy.

In 2020, countries generate nearly 55.8% of the

energy from renewable sources, where they produce

wind energy with nearly 30.6% of the total energy

according to the “Fraunhofer Institute for Solar

Energy Systems (ISE)” (Fraunhofer Institute for

Solar Energy Systems ISE, 2021).

According to “European Union’s European Green

Deal” the EU set the goal in 2019 to make the climate

of Europe natural by 2050 where every country is

promised to phase out the use of fossil fuel by

installing green technology to promote a green

environment. Under this promise, Austria closed its

Economic Aspect of the Transition to Sustainable Energy Development

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last coal energy plant in 2020, and Portugal phased

out its last gas energy production plant in June 2020.

Consequently, the EU reduced its gas emissions by

3.7% after switching energy production to natural

energy production, resulting in a 1.5% increase in

GDP (European Commission, 2021). This is one of

the most unusual examples of the rest of the world

increasing GDP by reducing gas emissions from

energy production.

While developing countries are far from these

changes, Nepal has already set an example in terms

of clean energy production. Nepal forecasts the

potential of hydropower in energy production to be

close to 43.3 GW. Bangladesh has a huge potential

for generating 50.2 GW of energy from the solar

system which is connected to the national grid.

Correspondingly, Albania also has the potential to

generate 16.5 GW of energy from renewable sources.

On the other hand, developing countries such as India

are investing heavily in coal energy production. If this

expansion could be translated into hydro and solar

production, it could reduce gas emissions and the

impact on the environment. These developing

countries could follow the example of the NordLink

power development project, in which a wind energy

production company is linked to a Norwegian

hydroelectric power plant. The project produces

renewable energy and is shared between the two

countries so that they can benefit together. Thus, this

event is another example of multilateral cooperation

between the two countries to increase renewable

energy production and reduce carbon emissions

(Adhikari, 2021).

The transition to sustainable energy development

can have sustainable effects on economic growth. In

2006, Berkeley Kammen examined the economic

revenue consequences of the U.S. economy's shift to

renewable energy development. Research shows that

they are achieving sustainable development by

promoting renewable energy production, earning

income, ensuring social well-being, and maintaining

the environment. Another study on the “The

economics of solar energy as renewable energy and

the economic effects of its investment in Egypt” was

conducted by Fawaz in 2014, which concluded that

the conventional system of energy production

through consuming fossil fuels will not meet the

growing demand of the energy. Hence, the study also

shows that there is a growing demand for renewable

energy sources, which will meet the demand for

renewable energy sources such as solar energy

(Salman and Hosny, 2021).

3 RESULTS AND DISCUSSION

To achieve sustainable energy production, countries

need to convert their energy production to renewable

energy. The commercial, household, transportation,

and industrial sectors should ensure the use of clean

and renewable energy. It is well known that the

domestic sector is a key sector that can be improved

through the consumption of renewable energy such as

solar energy. A sustainable energy development

policy ensures economic growth by mobilizing

resources through industrial insurrection,

technological advancement, and strategic changes.

Energy production is one of the main economic issues

of an economy, and growth depends on energy

production. The level of energy consumption will

definitely change the development pattern of the

entire economy. Shifting the energy sector to

sustainable energy consumption will ensure

economic growth by minimizing environmental

costs. It is well known that the domestic sector is a

key sector that can be improved through the

consumption of renewable energy such as solar

energy (Bulatova and Amirova, 2020).

A sustainable energy development policy ensures

economic growth by mobilizing resources through

industrial insurrection, technological advancement,

and strategic changes. Energy production is one of the

main economic issues of an economy, and growth

depends on energy production. The level of energy

consumption will definitely change the development

pattern of the entire economy. Shifting the energy

sector to sustainable energy consumption will ensure

economic growth by minimizing environmental

costs. Many tropical countries are increasing their

backup plans for natural biogas digesters caused by

human activities. To that end, the economy affects

this environmental cost and affects overall growth.

Sustainability ensures economic benefits in a number

of ways, such as saving the economy for

environmental costs, contributing to low-cost energy

supply, contributing long-term benefits to GDP,

conserving natural resources, and building a strong

sustainable economy. Correspondingly, sustainable

energy development policies have many benefits,

such as helping to increase employment opportunities

in the long term, which has become a major concern

in developing countries.

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4 CONCLUSIONS

Though there has been much debate on the subject, it

is clear that with sustainable policies, it is possible to

change the current energy production by using fossil

fuels for sustainable energy production. It will

certainly change the environmental effect as well as

increase economic contribution in numerous ways,

such as GDP growth, reduce natural cost, increase job

offers, and ensure sustainable development.

Renewable energy production will improve overall

social welfare and human well-being, more than add

to GDP. If existing renewable energy production

could be doubled globally, GDP would be

significantly affected. It shows that a renewable

energy development strategy is economically viable

and able to contribute to a major part of the economy.

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