Decarbonisation of the global energy system away from fossil fuels to renewables could generate $98 trillion (Dh360tn) in cumulative growth between now and 2050, adding an extra 2.4 per cent to gross domestic product, according to the International Renewable Energy Agency.
A deep overhaul of fossil fuel-wired economies to function on cleaner energy sources could require as much as $130tn in spending, Abu Dhabi-headquartered Irena said in its first global renewables outlook.
Job creation in the renewables sector is likely to quadruple to 42 million by 2050, according to the agency.
Addressing the coronavirus pandemic, which has hammered the global fossil fuel industry, pushing oil prices down as much as 70 per cent from peaks in January, Irena called for stimulus measures to target an inclusive energy system.
"Stimulus and recovery packages should accelerate the shift to sustainable, decarbonised economies and resilient, inclusive societies," said Irena director-general Francesco La Camera.
Increased participation from governments is needed to addressing the economic impact of the pandemic, and expansionary budget policies should recognise the renewables sector's importance.
"Economies need more than a kick-start. They need stable assets, including an inclusive energy system that supports low-carbon development," said Mr La Camera.
"Otherwise, even with the global slowdown momentarily reducing carbon dioxide (CO2) emissions, the eventual rebound may restore the long-term trend," he added.
With countries under lockdown, global air travel has come to a standstill, ground transportation has slowed and factory activity has declined leading to a fall in emissions.
Airline emissions could fall by as much as 38 per cent in 2020, according to a study by the Australian Institute. Greenhouse gas emissions reduction strategies are also likely to receive a boost, noted the institute, which expects airlines to use 2020 as a baseline to offset future emissions.
Irena's calls for a balanced approach towards stimulus for the economy follows the exclusion of the sector from the $2tn stimulus package passed by the US senate last month.
The measures agreed by Congress did not extend tax credits or make provisions for the wind and solar energy industries. The exclusion of renewables from the package was one of the sticking points holding up negotiations in the run-up to the record stimulus announcements, as Senate Democrats tried to lobby on behalf of the clean energy industry.
Investment in low-carbon technology would provide a significant pay-off, with savings eight times higher than the costs incurred if damage to health and the environment is accounted for, the report said.