According to research conducted at Oxford University, the global economy might benefit by as much as $12tn (£10.2tn) by 2050 if we switch from fossil fuels to renewable energy. The analysis concluded that the claim that switching to cleaner energy sources fast would be costly was inaccurate and gloomy.
Because of growing anxiety over the availability of fossil fuels, gas prices have skyrocketed. However, due to the decreasing prices of renewables, the researchers argue that going green is now economically viable.
Prof. Doyne Farmer of the Institute for New Economic Thinking at the Oxford Martin School told BBC News, “Even if you’re a climate skeptic, you should be on board with what we’re advocating.” Our primary finding is that we must rush ahead with the transition to green energy because of the financial benefits.
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The report’s conclusions are based on an analysis of past price data for renewable and fossil fuels and forecasting their likely future evolution. After adjusting for inflation and market volatility, the data on the price of fossil fuels shows that it hasn’t changed much from 2020 all the way back to the beginning of the record, which is more than a century ago.
Fewer statistics are available because renewables have only been around for a few decades. However, the price of renewable energy sources like solar and wind has been steadily declining at a rate of about 10% per year because to ongoing technological advancements.
“Probabilistic” modeling, drawing on information about how large investments and economies of scale have lowered the price of other similar technologies, supports the report’s prediction that the price of renewables will continue to fall. “Our latest analysis demonstrates scaling-up important green technologies will continue to bring their costs down, and the faster we move, the more we will save,” says Dr. Rupert Way, the report’s principal author from the Smith School of Enterprise and the Environment.
Even if wind and solar are the most cost-effective choice for new power plants, there are still open questions about the most efficient ways to store energy and maintain system stability when weather fluctuations reduce renewable energy production.
Zero-sum cost
The cost of achieving net zero greenhouse gas emissions in the UK by 2050 is estimated to be more than £1tn, as stated in a letter from then-Chancellor of the Exchequer Philip Hammond to the prime minister in 2019. According to the article, potential investors have been put off by the high estimates of future expenses.
It also claims the IPCC was excessively negative when it predicted that the cost of limiting global temperature rises to 2 degrees Celsius would translate to a loss of GDP by 2050. There would be a “net economic benefit” from switching to renewable energy sources, it claims.
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This study, a product of a partnership between the Smith School of Business and the Environment at the University of Oxford, the Oxford Martin Programme on the Post-Carbon Transition, and SoDa Labs at Monash University, was just published in the journal Joule.
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