Switching to renewables could save a lot of money
According to a study by Oxford University, switching from fossil fuels to renewable energy could save the world up to $12 trillion by 2050.
This report argues that it is negative and pessimistic to say that a rapid shift to cleaner energy sources is expensive. Gas prices have risen sharply due to growing concerns about energy supply. But experts say going green now makes economic sense because of the falling cost of renewable energy.
According to Professor Doyn Farmer of the Institute for New Economic Thinking at Oxford’s Martin School, even those who reject climate-friendly activities should be on board with what researchers are advocating. It also describes that their main conclusion is that they should move quickly to green energy for the sake of saving money. The conclusions of the report are based on historical data on renewable and fossil fuel prices and then on modelling possible future changes. Data for fossil fuels go back more than 100 years from 2020 and show that after taking into account inflation and market volatility, the price has not changed much.
Renewables have only been around for a few decades, so there’s less data available. But during that time, continuous improvements in technology meant that the cost of solar and wind power dropped rapidly. The expectation that the price of renewables will continue to fall is based on possible modelling using data on how other similar technologies have become cheaper.
Wind and solar are already the cheapest option for new energy projects, but the question remains how best to store energy and balance the grid when climate change leads to a decline in renewable generation.
Net zero cost
In 2019, Philip Hammond, then Chancellor of the Exchequer, wrote to the Prime Minister that the cost of achieving net-zero greenhouse gas emissions by 2050 in the UK would be over £1 trillion. This report states that the likely costs were overestimated and discouraged investment.
It also states that the Intergovernmental Panel on Climate Change’s (IPCC) predictions that the cost of keeping global temperatures below 2 degrees would be equivalent to a loss of GDP by 2050 were too pessimistic and that a shift to renewables is likely to be a “pure economic benefit”.
The research was published in the journal Joule and is the result of a collaboration between the Institute for New Economic Thinking at the Oxford Martin School, the Oxford Martin Programme on the Post-Carbon Transition, the Smith School of Enterprise & Environment at Oxford University and the SoDa Labs at Monash University.