Rural areas to the rescue: how rural renewables are driving the green transition

As global energy prices soar as a result of Russia’s large-scale aggression against Ukraine, the switch to renewable energy has taken on a new urgency. With ambitious new targets to cut reliance on Russian fossil-fuel imports and increase energy security, what will the transition mean for rural communities? How can they make the most of it?

Rural regions are major producers of renewable energy

Rural regions will be the primary beneficiaries of accelerated investments in renewable energy. Rural regions cover approximately 80% of OECD countries’ territory. They contain the vast majority of the land, water and other natural resources. These territories also offer elevated open spaces, agriculture and low population density. This allows for renewable energy production from wind, water and biomass. Already today rural regions produce 63% of renewable energy, with the majority of this (36%) coming from the most remote places.

There is huge potential to go further in the years to come. Thanks to technological advances, renewables are now a cheapsource of power. The cost of investment for photovoltaics decreased 82% over the last ten years, and the price of onshore wind by 39%.

Raising rural well-being through renewable energy

Investments in renewable energy projects can create new economic opportunities in rural areas. These include new jobs in the operation and maintenance of machinery. But it isn’t just about the upfront investment in renewables, its what you do with it and who benefits that counts. Across the OECD, we are finding many examples of ways in which rural communities are seizing the initiative to maximise the local benefits.

1. Rural places are looking to leverage the investment to create additional, higher value employment by nurturing innovation ecoystems around renewable energy investments. For example, in Canada, Nova Scotia has started to generate, store and export tidal energy. As tidal energy is still in the early stages of development, the region seeks to utilise the early adopter advantage in this industry. They are developing an ecosystem of service companies that export knowledge and experience on tidal energy development to other parts of the world.

2. Many rural municiplaities are looking at ways of retaining more of the proceeds of investment locally through decentralised energy co-operatives and other ownership models. Experience with other types of resource extraction, including mining, can offer inspiration. For example, benefit sharing agreements in Canada offer models in which local communities own companies or hold equity shares in enterprises involved in extracting or processing resources or enterprises providing services to the industry. Opportunities can be enhanced through governments setting requirements for fair and transparent processes and preferential contracting.

3. Regions need to up-skill their own workforce to take advantage of the opportunities – both in undertaking technical roles and in entrepreneurship to help local residents seize new opportunities. For example, Scotland has developed a Climate Emergency Skills Action Plan (CESAP) that provides new evidence on skills needs of a net-zero economy. It identifies opportunities for job growth across five areas of economic activity and includes Green Jobs Workforce Academy. The academy will support existing employees and those who are facing redundancy to assess their existing skills and undertake the necessary up-skilling and re-skilling needed to secure green job opportunities as they emerge.

4.  Support can be offered to local firms or municipalities seeking to navigate legal restrictions and planning procedures associated with renewable energy projects. Access to one-stop shops where small initiatives can submit relevant documentation and have access to technical information can support processes. Information sharing platforms and peer learning between rural regions can also help businesses and co-operatives overcome administrative hurdles.

These efforts can be supported through a coherent regional policy framework that promotes the development of renewable energy clusters and supply chains through supportive planning and infrastructure investments. The region Zealand in Denmark put in place a Energy Cluster that integrated public sector research bodies and private business. Furthermore, Friesland Province in the Netherlands supported the creation of innovation clusters in water and energy technology. It hosts academics working on water technology projects and a biannual race for solar-powered boats to catalyse innovation around electric boating manufacturing.

Setting up for success

Investment in renewables was a high priority for governments through COVID-19 recovery packages. OECD work shows that USD 611 billion of green recovery spending is directed towards the energy and transport sectors. It is an even higher priority now, given disruptions to global supplies of fossil fuels. To maximise its impact, that investment must be designed and delivered in partnership with rural communities to make the most of the opportunity for their people as well as for the planet.

Overall, there is a clear need to make the most of renewable energy investment for the benefit of rural communities. Through its Rural Agenda for Climate Action the OECD supports rural regions in managing the urgent energy transitions to their benefit.

Read about OECD work on rural policies.

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Lisanne RADERSCHALL is a Policy Analyst in Regional Development and Multi-level Governance Division - Regional and Rural Policy Unit of the Centre for Entrepreneurship SMEs, Regions and Cities of the OECD. Since joining the OECD in 2016, Lisanne has prepared advice to national and sub-national governments on rural and regional policies. She has conducted several reviews on multi-level governance systems for place-based policy making, covering topics such as Indigenous economic development, Island economies, mining  and climate change related challenges and opportunities in rural areas. She is currently leading the work on the OECD’s Rural Agenda for Climate Action and has also worked on the rural innovation project for Switzerland. Before joining the OECD Lisanne was set-up a social economy start-up in Berlin, which functions as a platform for migrant entrepreneurs, she also worked as a researcher at the Freie Universität Berlin (Germany) and with the private sector companies. Lisanne holds a Master’s degree from Freie Universität Berlin (Germany) and a Bachelor’s from the University of Maastricht (Netherlands) as well as the University of Sydney (Australia) in the fields of Sociology, Political Sciences and Foresight.

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Andres Sanabria is a policy analyst at the Centre for Entrepreneurship, SMEs, Regions and Cities at the OECD where he leads the Mining Regions and Cities Initiative. He has conducted economic and policy analysis for urban and regional studies, co-ordinated rural country reviews and supported the development of the OECD rural policy framework. Andres is also an invited lecturer on rural development in Paris-Dauphine University and Sciences Po, Paris. Prior the OECD, Andres worked as a principal economist in the financial and oil industry. He holds a Master’s degree on Public Affairs from London School of Economics and Sciences Po.