Green Transition for Turkey: Growth, Employment, and Trade Deficit Effects

Abstract

This study examines the potential economic impacts of Turkey's energy transition by focusing on the effects of solar and wind energy investments. With Turkey aiming for "net zero" emissions by 2053, this research evaluates the impacts on total emissions, economic growth, employment, and the trade deficit under various scenarios. Utilizing input-output analysis and the employment factor approach, we analyze the macroeconomic and emission outcomes of a 10-year clean energy investment project targeting the transformation of the energy sector. Our findings indicate that investing in solar and wind energy could reduce Turkey's greenhouse gas emissions by 28-77 percent of 2020 emission levels. These investments are projected to enhance economic growth, contributing an additional 0.6%-1.8% of 2020 GDP annually on average. The employment effects are also significant, with total potential job creation amounting to a total of 1.3%-3.4% of Turkey's labor force in 2020. Furthermore, the investments are expected to improve the trade balance by 6.9-14.6 billion dollars over 10 years. The results suggest that green energy investments can simultaneously achieve environmental goals and promote economic stability through job creation and improve trade balances.