(Photo by American Public Power Association on Unsplash)
A new report from the International Energy Agency (IEA) finds that getting on track for global net-zero emissions by 2050 would require additional investment, but could reduce the operating costs of the global energy system by more than half over the next decade compared to the current trajectory.
The forecast in the report, Strategies for Affordable and Fair Clean Energy Transitions, was made based on current policy settings across the globe.
In many cases, IEA said, clean energy technologies are already more cost-competitive over their lifespans than those reliant on conventional fuels like coal, natural gas, and oil. Solar PV and wind are the least expensive options, but electric vehicles and energy efficiency upgrades, while requiring upfront costs, are often cheaper to operate.
“The data makes it clear that the quicker you move on clean energy transitions, the more cost-effective it is for governments, businesses, and households,” said IEA executive director Fatih Birol. “If policymakers and industry leaders put off action and spending today, we will all end up paying more tomorrow. The first-of-a-kind global analysis in our new report shows that the way to make energy more affordable for more people is to speed up transitions, not slow them down. But much more needs to be done to help poorer households, communities, and countries to get a foothold in the new clean energy economy.”
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More upfront investment is needed, IEA said, especially in emerging and developing economies. Fossil fuel subsidies will also remain an obstacle. Governments worldwide collectively spent around $620 billion in 2023 subsidizing the use of fossil fuels – far more than the $70 billion that was spent on support for consumer-facing clean energy investments, according to the IEA report.
IEA argues cost savings from renewable energy would filter down to consumers. Retail electricity prices are typically less volatile than oil product prices, which could provide more predictable costs.
The report sets out a series of measures, drawing on proven policies from countries around the world, that IEA says governments can deploy. These include delivering energy efficiency retrofit programs to low-income households; obliging utilities to fund more efficient heating and cooling packages; making highly efficient appliances more readily available; providing affordable clean transport options, including more support for public transport and second-hand EV markets; replacing fossil fuel subsidies with targeted cash transfers for the most vulnerable; and using carbon price revenues to tackle potential social inequities that may arise during energy transitions.
