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 many years

A switch from fossil fuels to renewable energy could save the world as much as $12tn (£10.2tn) by 2050, says an Oxford University study.

The report said it was wrong and pessimistic to claim that it was expensive to move quickly towards cleaner energy sources.

Growing concerns about energy supplies led to a sharp rise in gas prices.

But the researchers say it now makes economic sense to go green because of the fall in the cost of renewable energy.

“Even if you are a climate denier, you should be on board with what we are proposing,” said Professor Doyne Farmer from the Institute for New Economic Thinking at the Oxford Martin School BBC News.

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

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

The fossil fuel data from 2020 goes back more than 100 years and shows that, after accounting for inflation, and market volatility, the price has not changed much.

Renewables are only a few decades old, so there is less data. But during that time continuous improvements in technology have rapidly dropped the cost of solar and wind power, at a rate of nearly 10% per year.

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

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

Wind and solar are already the cheapest option for new power projects, but questions remain about how best to store power and balance the grid when renewable output drops due to weather changes.

Net-zero cost

Back in 2019 Philip Hammond, then Chancellor of the Exchequer wrote to the Prime Minister saying that the cost of achieving net zero greenhouse gas emissions in the United Kingdom by 2050 would be more than £1tn. This report says that the likely costs have been overestimated and have deterred investment.

He also says that predictions by the Intergovernmental Panel on Climate Change (IPCC) that the cost of keeping global temperature rises below 2 degrees corresponding to a loss of GDP by 2050 were too optimistic. He says the shift to renewable energy would likely be a “net economic benefit”.

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

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