Switching to renewable energy could save trillions

Switching to renewable energy could save trillions

Offshore wind farm

The cost of green energy, such as wind and solar, has been falling for decades

Switching from fossil fuels to renewable energy could save the world up to $12 trillion (£10.2 trillion) by 2050, according to an Oxford University study.

The report said it was wrong and pessimistic to claim that the rapid transition to cleaner energy sources was costly.

Natural gas prices have soared due to growing concerns about energy supplies.

But researchers say going green now makes economic sense because of the falling cost of renewable energy.

“Even if you’re a climate denier, you should agree with what we stand for,” Professor Doyne Farmer of the Institute for New Economic Thinking at the Oxford Martin School told BBC News.

“Our central conclusion is that we should go full speed ahead with the transition to green energy because it will save us money,” he said.

The report’s findings are based on examining historical price data for renewable energy and fossil fuels and then modeling how they are likely to change in the future.

Fossil fuel data from 2020 goes back more than 100 years and shows that after accounting for inflation and market volatility, the price hasn’t changed much.

Renewables have only been around for a few decades, so there is less data. But in that time, continuous improvements in technology have resulted in the cost of solar and wind power falling rapidly, at a rate approaching 10% per year.

The report’s expectation that the price of renewable energy will continue to fall is based on “probabilistic” modelling, using data on how huge investments and economies of scale have made other similar technologies cheaper.

“Our latest research shows that scaling up key green technologies will continue to drive down their costs, and the faster we move, the more we will save,” says Dr Rupert Way, lead author of the report from the Smith School of Enterprise and the Environment. .

Wind and solar power are already the cheapest option for new power projects, but questions remain about how best to store energy and balance the grid when changes in weather lead to less renewable energy production.

Net zero cost

In 2019 Philip Hammond, then Chancellor of the Exchequer, wrote to the Prime Minister to say that the cost of achieving net zero greenhouse gas emissions by 2050 in the UK would be more than £1 trillion. This report states that the potential costs have been overestimated and have deterred investment.

It also says that the Intergovernmental Panel on Climate Change (IPCC) projections that the cost of keeping global temperature increases below 2 degrees would correspond to a loss of GDP by 2050 were too pessimistic. The switch to renewable energy was, he says, likely to prove a “net economic benefit”.

The research was published in the journal Joule and is a collaboration between the Institute for New Economic Thinking at the Oxford Martin School, the Oxford Martin Program on the Post-Carbon Transition, the Smith School of Enterprise & Environment at the University of Oxford. and SoDa Labs at Monash University.

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