Decoupling economic growth from carbon emissions has emerged as a local and global policy priority in recent years, but worries about the cost of the transition continue to hamper bold decision. A new study, however, shows that the cost of inaction is far greater, arming changemakers with empirical data about the likely effect of ambitious action.
Published in Joule, a journal dedicated to energy that forms part of the authoritative Cell publication family, the study was conducted by the Oxford Martin Programme on the Post-Carbon Transition.
It provides evidence that a swift transition to green energy technologies such as solar, wind, and batteries, will likely save the world significant sums of money.
Significantly, the result is based purely on the economics of different energy technologies, without accounting for the costs of climate damages and climate adaptation that would be avoided by such an energy transition.
The research shows a win-win-win scenario, in which a transition to nearly 100 per cent clean energy by 2050 results in lower energy system costs than a fossil fuel system, while providing more energy to the global economy, and expanding energy access to more people around the world.
Whereas previous models to estimate green energy prices consistently overestimated the future costs of green energy, the team behind the latest study developed a probabilistic model to make more accurate forecasts.
They pointed out that such models have highly reliable real-world applications, most notably by the betting industry, that uses such models to set profitable odds.
Using these models, they found that the probability of further cost reductions in key green energy technologies is now so high that the world’s best bet is to push ahead rapidly with the energy transition.
“Since the future is uncertain,” the write, “all public policy and decision-making is ultimately a question of making the smartest bets we can, given the often precarious circumstances we face. Our results suggest that [rapid deployment of green energy technology] is a very good bet, both in terms of lowest costs and lowest emissions.”
The primary policy implication of the study’s results is that there are “enormous advantages” to rapid deployment of key green technologies, though achieving this is likely to require strong international policies for building infrastructure, skills training, and making the investments required to realize future gains.
However, all this will have a net economic benefit, raising future GDP by between €5 and €15 trillion, with an 80 per cent that it will be cheaper than continuing with a fossil fuel-based system.
The belief that the green energy transition will be expensive has been a major driver of the ineffective response to climate change for the past 40 years. The authors argue that this pessimism “is at odds with past technological cost improvement trends and risks locking humanity into an expensive and dangerous energy future”.
While arguments for a rapid green transition cite benefits such as the avoidance of climate damages, reduced air pollution, and lower energy price volatility, these benefits are often contrasted against discussions about the associated costs of the transition.
The study shows, using thorough data modelling, that such trade-offs are unlikely to exist: a greener, healthier, and safer global energy system is also likely to be cheaper.
Lead author Rupert Way said: “Only a few years ago, net zero by 2050 was believed to be so expensive that it was barely considered credible, yet now even the most pessimistic models concede that it’s entirely within reach. Accelerating the transition to renewable energy is now the best bet not just for the planet, but for energy costs too.”
Professor Doyne Farmer, another contributor to the study, added: “The world is facing a simultaneous inflation crisis, national security crisis, and climate crisis, all caused by our dependence on high cost, insecure, polluting, fossil fuels with volatile prices. This study shows that ambitious policies to dramatically accelerate the transition to a clean energy future as quickly as possible are not only urgently needed for climate reasons, but can save the world trillions in future energy costs, giving us a cleaner, cheaper, more energy secure future.”
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