This story was originally published on Inside Climate News. It is reproduced as part of Climate Desk’s collaboration. The cost of the global transition to clean energies is not as high as some people think. The differences are huge, amounting to trillions or even tens trillions of dollars.
As part of the Climate Desk collaboration, this article, which was first published by Inside Climate News, is reproduced below.
There is a cost associated with the worldwide shift to clean energy, but it might be much lower than the estimates that are occasionally made. The differences are significant, reaching trillions or perhaps tens of trillion dollars.
According to a recent analysis from the clean energy research and advocacy organization RMI, many of those estimates have what its authors claim to be their fundamental flaw: they do n’t fully account for the decline in fossil fuel spending.
According to Kingsmill Bond, a co-author of the report and an analyst for RMI whose work examines the financial aspects of energy transition,” this kind of narrative that there’s an enormous surge in capital required is essentially incorrect.”
According to the report, global capital spending on energy supply ( funds used for equipment and property, among other things ) is expected to reach$ 2.5 trillion by 2030, an increase from$ 2.2 trillion in 2023.
It’s 2 % annual growth, according to Bond. ” On a global scale, it’s never much.”
The RMI analysis ignores all of the economical advantages of reducing the effects of climate change, such as a decrease in heat-related health problems and property damage.
The report acts as a check against predictions made by companies like McKinsey &, Company and the International Energy Agency.
Spending on energy and land-use systems in the net-zero transition would cost an average of$ 9.2 trillion per year between 2021 and 2050, according to a report from McKinsey, the management consulting firm, which is an annual increase of about$ 3.5 trillion annually from what was then the spending level. The authors of McKinsey noted that this increase would be equivalent to 25 % of tax revenue and 50 % of global business profits.
That sounds frightful, and Bond claims that it is deceptive. According to him, McKinsey is drawing an unjust comparison because both the global economy and energy consumption are expanding and will continue to do so regardless of whether the system is based on fossil fuels or not.
A more accurate comparison, he said, would be between an economy that aims for net-zero emissions and one that has a “business as usual” scenario but moves more slowly toward fresh energy. The average annual increase for a net-zero scenario is about$ 1 trillion per year, according to McKinsey’s report, which includes this kind of comparison later on. ( McKinsey did n’t respond when asked for comment. )
According to the IEA, under the” net zero emissions” scenario, which is one of the many scenarios in its World Energy Outlook, capital spending on energy was$ 2.8 trillion in 2023 and will increase to more than$ 4 trillion by 2030. ( The IEA, based in Paris, conducts research to assist its 31 member nations, including the US, in planning and managing to meet their energy needs. )
Bond and his co-authors contend that because IEA lumps up various categories of capital costs, some of which are more appropriate to include than others, its estimates are inaccurate.
” The switch to clean energy is certainly a strange thing, but astronomical costs should be feared.” We are now on that track.
I requested a response from IEA.
Tim Gould, the chief energy economist for the IEA, wrote in an email,” It’s a little difficult to respond because many of the points are unclear or couched quite vaguely.”
He asserted that RM I’s criticism of this aspect is unwarranted because IEA clearly explains declines in fossil fuel capital spending.
The disagreement mainly concerns the planning and dissemination of those declines. I understand what RMI is saying and why IEA is certain of its strategy.
It is crucial to note that RM I’s report bases its analysis on IEA spending estimates, so the two share a lot of similarities. The distinction is that RMI is making what the authors claim are reasonable adjustments to the IEA’s numbers as part of a larger case that reducing fossil fuel spending should be seen as lowering the cost of the energy transition.
The way Bond frames this subject, including the notion that there is more than enough money in the world to fund a quick transition, strikes me as powerful.
Speaking thus broadly about a shift whose pace will vary greatly by country and region has some drawbacks, though. According to the report, it is impossible to estimate costs in emerging markets like those in Africa because there are n’t enough data available. The primary thrust of the report’s argument may be undermined if the transition there is exceedingly costly and slower.
In the areas where this information is frequently lacking, Bond said he and others at RMI are working to better understand costs.
The transition to clean energy is not some unusual thing with astronomical costs that should be feared, which is one of my key takeaways from this report. It’s the path we’ve now taken. The most important question is not where we are going, but how fast we will get there. The discussion we’re having and will continue to have is largely motivated by the fact that fossil fuel companies stand to gain greatly from a delayed transition. As part of the Climate Desk collaboration, this article, which was first published by Inside Climate News, is reproduced below. There is a cost associated with the global shift to clean energy, but it might be much lower than the numbers that are occasionally thrown about. The differences are significant, reaching trillions or perhaps tens of trillion dollars.
This story was originally published on Inside Climate News. It is reproduced as part of Climate Desk’s collaboration. The cost of the global transition to clean energies is not as high as some people think. The differences are huge, amounting to trillions or even tens trillions of dollars.
https://www.motherjones.com/politics/2024/01/clean-energy-transition-cheaper-cost-estimates/
