Renewable targets and SDG-aligned policies could save the energy sector US$20tn

Renewable energy targets coupled with policies aligned with the Sustainable Development Goals (SDGs) could unlock more than US$20 trillion of savings for the energy sector, according to a new report.

The study, conducted by the United Nations Development Programme (UNDP), University of Denver’s Pardee Institute and Octopus Energy, has found that time-bound renewable energy targets backed by coherent policies and financing mechanisms would dramatically cut emissions, boost economies and lift 193 million people around the world out of extreme poverty.

The calculation is based on a scenario where policies, targets and investments are aligned with the UN’s Sustainable Development Goals (SDGs): in comparison to a business-as-usual trajectory, this scenario would achieve universal access to electricity and clean cooking, as well as increasing GDP by 21% and average per capita GDP by US$6,000 by 2060.

Clean energy investments are expected to reach a record-breaking US$2.2 trillion in 2025, outpacing fossil fuels for the second year in a row – but fossil fuels still make up over 70% of global energy supply, with governments continuing to subsidise the sector.

“Today, the world faces a dual challenge: advancing human well-being while mitigating the environmental impacts of fossil-fuel-driven development,” said Cassie Flynn, Global Director of Climate Change at UNDP. “This study shows us that a clean energy future is possible – but we must choose to embed renewable ambition into climate plans linked to inclusive development policies.”

Current ambition doesn’t go far enough

The research aimed to quantify the benefits of renewable energy development, energy efficiency and sustainable development policy measures including the Nationally Determined Contributions (NDCs) due to be submitted by countries ahead of COP30.

It simulated three scenarios: in the base case, the world continues on a business-as-usual pathway and reliance on fossil fuels remains moderately high at around 50% of production by 2060. This would push global warming towards 2.6°C and threaten progress on energy access, education, safe water, sanitation and nutrition.

The second scenario takes into account the current ambition to triple renewable energy, double energy efficiency and “transition away” from fossil fuels: here, fossil fuels would still cover 12% of primary energy production by 2060, and the world would be on track to limiting global average temperature rise to below 2°C.

Balancing renewable and sustainable development goals

The third, high-ambition scenario would see the world achieve both renewable energy and sustainable development goals, leading to major social and financial benefits: cumulative savings of US$20.4 trillion, with US$8.9 trillion coming from energy efficiency and another US$11.5 trillion coming from lower renewable energy costs.

"To build the future our children deserve, we must be thoughtful and strategic in our priorities,” added Jonathan Moyer, Director of the Pardee Institute. “This research shows it is possible to balance global development with environmental protection while managing the inherent trade-offs. The imperative now falls to global leaders to embrace these strategies and act."