Decarbonised energy could save $12 trillion by 2050

The research shows a scenario in which rapidly transitioning to clean energy results in lower energy system costs than a fossil fuel system, with the added benefit of providing more energy to the global economy and expanding energy access to more people globally.  

The study’s ‘Fast Transition’ scenario shows a realistic possible future for a fossil-free energy system by around 2050, providing 55 per cent more energy services globally than today by increasing solar, wind, batteries, electric vehicles, and clean fuels such as green hydrogen.

In a statement, lead author Dr Rupert Way, postdoctoral researcher at Oxford's Smith School of Enterprise and the Environment, said: “Past models, predicting high costs for transitioning to zero carbon energy, have deterred companies from investing, and made governments nervous about setting policies that will accelerate the energy transition and cut reliance on fossil fuels. But clean energy costs have fallen sharply over the last decade, much faster than those models expected.

“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. Accelerating the transition to renewable energy is now the best bet not just for the planet, but for energy costs too.”

The researchers analysed transition cost scenarios produced by major energy models and used data on 45 years of solar energy costs, 37 years of wind energy costs and 25 years for battery storage.

They found the real cost of solar energy dropped twice as fast as the most ambitious projections in these models, revealing that previous models over the last 20 years overestimated the future costs of clean energy technologies.

“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,” said Professor Doyne Farmer, who led the team that conducted the study at the Institute for New Economic Thinking at the Oxford Martin School.  

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“Renewable costs have been trending down for decades. They are already cheaper than fossil fuels in many situations and, our research shows, they will become cheaper than fossil fuels across almost all applications in the years to come. And, if we accelerate the transition, they will become cheaper faster. Completely replacing fossil fuels with clean energy by 2050 will save us trillions.”

The study showed the costs for storage technologies, including batteries and hydrogen electrolysis, are also likely to fall markedly. The costs of nuclear have consistently increased over the last five decades, making it highly unlikely to be cost competitive with renewables and storage. 

“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,” said Prof Farmer. “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.” 

Since Russia’s invasion of Ukraine, the costs of fossil energy have risen steeply, causing global inflation. This study, conducted before the current crisis, is said to account for such fluctuations using over a century’s worth of fossil fuel price data.

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

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