Shifting the world’s energy system from fossil fuels to green energy technologies could save at least US $12 trillion, according to a new study.
The study, published in the journal Joule, shows that transitioning to 100 percent clean energy by 2050 results in lower overall costs than a fossil fuel-based system. It will also allow more energy to be produced, making energy more accessible around the world.
Decarbonizing the energy sector is going to be crucial to fight climate change. But the move to clean energy technologies—which has also been shown to potentially save thousands of lives—is thought to have prohibitively high initial costs.
These cost predictions, though, have been incorrect, according to researchers at Oxford University. Past models have underestimated how quickly renewables will be deployed, and overestimated their costs. This has kept companies from investing in these technologies and governments from incentivizing the move away from fossil fuels, lead author Rupert Way said in a press release.
So the Oxford team turned to a different method, called a probabilistic model, which forecasts costs based more precisely on historical data. In a previous study, they validated this method for 50 different technologies, including oil, coal, gas, wind, solar, and nuclear. In reality, they found that the costs of wind, solar, batteries, electric vehicles, and green hydrogen have fallen much more sharply than key energy models predicted. The actual cost of solar energy fell twice as fast as even the most ambitious models estimated. Meanwhile, the price of fossil fuels has risen steeply.
In the present study, the team used data on 45 years of solar energy costs, 37 years of wind energy costs and 25 years for battery storage, and for electrolyzers that are used to produce green hydrogen from water.
They generated probabilistic cost forecasts for these technologies,and then estimated future energy system costs under three different transition scenarios to decarbonization: none, slow, and fast.
Based on their predictions, the cost of wind, solar, and green hydrogen will continue to fall. Compared to continuing with a fossil fuel-based system, they found that a fast transition to green energy will likely give a net savings of many trillions of dollars. Accounting for the price-tag of climate damages could bring even more savings.
Over two decades, all major energy models have consistently overestimated the costs of clean energy technologies, the researchers say. Renewables in some cases are already cheaper than fossil fuels, and scaling them up quickly will drive their costs down faster.
A rapid green transition is also expected to avoid climate damages, reduce air pollution, and lower energy price volatility. Yet “these benefits are often contrasted against discussions about the associated costs of the transition,” they write in the paper. “Our analysis suggests that such trade-offs are unlikely to exist: a greener, healthier, and safer global energy system is also likely to be cheaper.”
Source: Way, R. et al. Empirically grounded technology forecasts and the energy transition. Joule, 2022.