It takes money to make money—and few things encompass that lesson better than climate change. The Inflation Reduction Act’s $300 billion investment in fighting climate change was seen as the most significant climate reforms ever. Experts agree that decarbonizing our energy sector and switching to renewable sources is the best thing we can do to mitigate climate disaster down the road. But the perceived initial costs of that goal have caused many world leaders to drag their feet at a pivotal moment.
A new study argues that these cost predictions have been vastly inflated, and that a fast switch to carbon-neutral energy production is actually the most cost-efficient. The research, published on Tuesday in the journal Joule, looks at decades of historical predictions in hindsight, and finds that they were wildly inaccurate.
“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,” J. Doyne Farmer, a U.K. economics researcher at the University of Oxford who led the study, said in a press release. Renewables, in fact, are already cheaper than fossil fuels in many instances, and fully switching to them by 2050 will save trillions of dollars, he added.
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Farmer and his team measured the cost of more than 50 different energy technologies and incorporated the biggest players—like oil, coal, gas, wind, solar, and nuclear—into a model that made predictions. Importantly, their model learned from historical overestimates of renewable energy costs to predict its future cost under fast, slow, and no transitions to decarbonization.
All else being equal, the researchers found that expenses from a fast transition to renewable energy would be a trillion dollars lower than those from a slow transition or none at all by 2040. The key principle at play, the researchers wrote, is that a fast transition increases the likelihood of cost-lowering advances in green technology even sooner, allowing us to reap these benefits for longer. Ultimately, the payoff of a quick switch would be between $5 trillion and $15 trillion.
And of course, that’s not even considering the costs of protecting ourselves and dealing with the fallout from unmitigated global warming: “When climate change is taken into account, the benefits of the Fast Transition become overwhelming,” wrote the researchers.
The next step, they argue, is making big bets on renewable technology that has a high probability of becoming even more affordable in the coming years. While the researchers found that the cost of energy production for most renewable technologies decreased in the years since becoming commercially available, they found a few exceptions. The cost of carbon capture, for instance, has plateaued, and nuclear energy costs have increased over the last five decades. Based on their predictions, the cost of hydrogen electrolysis, solar, and wind will continue to shoot downward in the future.
“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,” Farmer said. “This study shows ambitious policies to accelerate dramatically 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.”
