Wind and solar energy are already the cheapest options for new power projects. Picture: Armand Hough/ANA
Making the switch from dirty fossil fuels to cleaner renewable energy could save the world as much as $12 trillion (R220 trillion), a recent Oxford University study says.
The report said it was wrong and pessimistic to claim that moving quickly towards cleaner energy sources was expensive.
This comes as gas prices in Europe have soared on increased concerns over energy supplies, much of which come from Russia – now widely seen as a pariah state.
“Rapidly decarbonising the global energy system is critical for addressing climate change, but concerns about costs have been a barrier to implementation. Most energy-economy models have historically underestimated deployment rates for renewable energy technologies and overestimated their costs,” the researchers said.
The constantly decreasing cost of renewables is something that cannot be ignored any longer because it makes choosing green energy simply a good economic decision, the researchers said.
"Even if you're a climate denier, you should be on board with what we're advocating," Professor Doyne Farmer from the Institute for New Economic Thinking at the Oxford Martin School said.
"Our central conclusion is that we should go full-speed ahead with the green-energy transition because it's going to save us money," he said.
Researchers used historic price data for both renewables and fossil fuels to construct a model on how these are likely to change in the future.
Fossil fuel data goes back more than a century from 2020 and shows that, after accounting for inflation and market volatility, the prices of fossil fuels haven't changed much.
Researchers admitted that, owing to the widespread use of renewables being relatively recent, there isn’t as much data available as there is for fossil fuels, but over time the continual improvements in technology have meant the cost of solar and wind power have fallen rapidly, at a rate approaching 10% a year.
Researchers used a "probabilistic" modelling method to determine that the price of renewables will continue to fall. This made use of data on how massive investment and economies of scale have made other similar technologies cheaper.
"Our latest research shows scaling up key green technologies will continue to drive their costs down, and the faster we go, the more we will save," said Dr Rupert Way from the Smith School of Enterprise and the Environment, the report's lead author.
Although wind and solar energy are already the cheapest options for new power projects, questions remain over how to best store power and balance the grid when changes in the weather lead to a fall in renewable output.
In 2019, Philip Hammond, then the Chancellor of the Exchequer, wrote to the then British prime minister stating that the cost of reaching net-zero greenhouse gas emissions by 2050 in the UK would be over £1 trillion. This report says the likely costs have been overestimated and have deterred investment.
The research has been published in the journal Joule and is a collaboration between the Institute for New Economic Thinking at the Oxford Martin School, the Oxford Martin Programme on the Post-Carbon Transition, the Smith School of Enterprise & Environment at the University of Oxford, and SoDa Labs at Monash University.
Current Affairs