For decades we have known that the transition from fossil fuels to a decarbonized economy is vital to the health of our planet and future generations. It’s almost impossible to overstate what’s at stake if the world continues to burn fossil fuels at a steady or increasing rate. Experts say that in a business-as-usual scenario, ecological and economic devastation is not just a threat, it’s an inevitability. So why has the clean energy transition been so slow, piecemeal, and controversial? A big part of the problem is the simple momentum of the status quo. The world already operates on a carbon-based economy, and turning this established system on its head will take a tremendous amount of time, effort and investment. Indeed, the initial price of redesigning and redesigning the world’s energy sector and all associated carbon-based supply chains is daunting to say the least, especially for developing countries. However, it is wrong to think that the clean energy transition will be a costly and overall expensive endeavor. In fact, it is the only plan that makes economic sense in the medium or long term.
Brand new Empirically based report from the University of Oxford finds that switching from fossil fuels to renewable energy could save the world a whopping $12 trillion by 2050. For years scientists have reported that the renewable revolution will save money overall – lots of money – over a long time frame given the devastating negative externalities of climate change, but that amount has only grown as the cost of renewable energy technologies has continued to fall.
The cost of solar energy alone has fallen sharply 80% since 2010and renewables overall were the cheapest source of energy in the world in 2020. In fact, the cost of renewable energy has been falling faster than experts predicted, making the renewable energy revolution even cheaper than expected. While renewables have not been spared the rising prices and supply chain issues that have plagued the energy sector this year, they are also far from being the worst offenders, and in many cases have been failsafe for energy security amidst the crisis fueled by Putin’s war in Ukraine. Actually in the context of the energy crisis in Europe, “new renewable sources based on off-market contracts are providing electricity at less than a quarter of current and projected wholesale electricity prices.”
“Even if you’re a climate denier, you should be on board, which we advocate,” Prof Doyne Farmer, of the Institute for New Economic Thinking at Oxford Martin School, told BBC News. Clean energy will continue to be the cheapest option in the future, whether you consider external environmental influences or not. But when you factor them in, oh boy, it’s a no-brainer. Insurance giant Swiss Re reckons that climate change could cost the global economy $23 trillion in 2050. A April analysis The United States Office of Management and Budget has calculated that climate change could cost the United States alone $2 trillion annually by the end of the century.
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The report also found that the federal government “could spend an additional $25 billion to $128 billion annually in areas like coastal disaster relief, flood insurance and crop insurance.” In fact, just this week the Biden administration pledged that the federal government will cover 100% of the cleaning costs in Puerto Rico after Hurricane Fiona invaded the US island territory. This is just on the heels of $12 billion already granted — the largest single inversion ever granted by FEMA — to Puerto Rico to rebuild a more resilient energy infrastructure after Hurricane Maria devastated the island’s power grid exactly five years ago.
These types of climate-related crises are only going to get more frequent, powerful and costly. For every additional tonne of carbon dioxide equivalent emitted into the atmosphere, the price of delaying the clean energy transition increases. The Oxford report empirically underscores the fact that decarbonization is not only an economic imperative, but the faster we do it, the more money we will save. The models are clear: time flies.
By Haley Zaremba for Oilprice.com
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