Exploring case studies on positive externalities and socioeconomic impacts of renewable energy investment

In the synthesis report of the United Nations published in COP27, it stresses the pertinence of reducing greenhouse gas emissions to meet the targets of the Paris Agreement. Nationally Determined Contributions (NDCs) facilitate this emissions reduction but are voluntary commitments with limited incentive. Renewable energy will play a significant role in reducing global greenhouse gas emissions. This paper presents Iceland and Costa Rica, and the development narrative of their renewable energy sources. This paper argues that there are socio-economic benefits to investing in domestic renewable energy, on top of working towards climate action. Investment in local supply chains, boosting domestic tourism, and social benefits such as labor capital and energy independence are examples of some positive externalities stemming from a domestic renewable energy policy. Although hydropower and geothermal resources have been the base of renewable capacity expansion historically, the falling costs of renewables and availability of funding should make investment in renewables more accessible to more countries. The stories of Iceland and Costa Rica should be seen as examples, not models, of developing domestic energy sources. Further research can explore a deeper quantitative and analytical analysis of the economic benefits or investigate other countries and their development narratives.