University of Oxford research suggests that decarbonised energy systems could save the world at least $12 trillion compared to our current fossil fuel alternatives.
The peer-reviewed study identified that transitioning to clean energy systems results in lower overall costs than a fossil fuel system and provides more energy to the global economy, increasing energy access worldwide.
The research also revealed a realistic future in which the planet achieves a fossil-free energy system by 2050. This ‘Fast Transition’ would produce 55% more energy services globally than today by enhancing solar, wind, batteries, electric vehicles, and clean fuels such as hydrogen.
Dr Rupert Way, the lead author of the study and a 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.”
Current energy crisis challenges
Russia’s invasion of Ukraine has caused fossil energy prices to soar through inflation. This study was performed before the current crisis but takes such fluctuations into account using more than a century of fossil fuel price data.
The recent energy crisis reinforces the study’s findings and highlights the dangers of continuing to rely on expensive, insecure fossil fuels. The research outlines that the most effective way to overcome the energy crisis is to rapidly transition to low-cost, clean energy systems that provide benefits to the economy and the planet.
Clean energy cost savings
The team analysed thousands of transition cost scenarios from major energy models, utilising data on 45 years of solar energy costs, 37 years of wind energy costs and 25 years of battery storage.
The results showed that the actual cost of solar energy reduced twice as fast as the most ambitious projection in these models, showing that over the last 20 years, earlier models significantly overestimated the future costs of clean energy systems compared to reality.
Professor Doyne Farmer, who leads the team that conducted the study at the Institute for New Economic Thinking at the Oxford Martin School, said: “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.
“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.”
Additionally, the findings illuminated that the costs of essential storage technologies, such as batteries and hydrogen electrolysis, are likely to fall considerably.
Professor Farmer concluded: “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. 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.”