Transition to cleaner energy could save world $12 trillion by 2050, study says

The world moving away from fossil fuels will be beneficial not only for the environment but also for the global economy. A peer-reviewed paper from researchers at Oxford University published today reveals that the switch to a decarbonized energy system by 2050 could also yield a saving of $12 trillion.

The shift to renewable energy has been procrastinated for long since previous studies have predicted the transition to be a costly affair. This has not only deterred companies from investing but has also made governments nervous about setting policies that would reduce reliance on fossil fuels.

With renewable energy prices now hitting parity or even falling below the prices of energy generated using fossil fuels, the question that needs to be answered is whether we need to accelerate the switch to cleaner energy. Researchers at Oxford university dug deep into historical data about energy prices to find out that the answer is a resounding yes.

What did the researchers find?

Researchers at Oxford's Smith School of Enterprise and the Environment and the Institute of New Economic Thinking at the Oxford Martin School analyzed thousands of transition cost scenarios that have been used in the past. This included 45 years of solar energy costs, 37 years of wind energy costs, and 25 years of battery storage data to find that all these previous models have failed to predict the future costs of energy and consistently ended up overestimating them.

The data analysis revealed that over the last two decades, the cost of solar energy dropped twice as fast compared to the most ambitious projections in these studies.

"‘There is a pervasive misconception that switching to clean, green energy will be painful, costly and mean sacrifices for us all – but that’s just wrong," said Doyne Farmer, a professor at the Institute for New Economic Thinking, who led the study.

The researchers also found that renewable energy prices have been trending downward for decades and will beat fossil fuels across all applications in the near future. Accelerating the shift to renewables will also make them cheaper and faster, leading to financial savings in the near term. This also includes the prices of key storage technologies such as batteries and hydrogen.

Interestingly, the study also said that costs of nuclear power have consistently risen over the past five decades and technology is unlikely to be cost-competitive in the future. Something for Elon Musk to ponder over.

What does it mean in today's context?

The study published today was carried out prior to Russia's invasion of Ukraine which sent the price of fossil fuels rocketing across the globe. Countries are busy fighting the resultant inflation while being worried about an energy crisis, even as the damage caused by climate change looms large.

The researchers attribute these problems to our dependence on fossil fuels which are not just polluting but also have high price volatility. Instead, a shift to clean energy will help us slow down climate change while also addressing energy concerns in a reliable way.

The findings were published in the journal Joule.