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A rapid transition to net zero could save $12 trillion in the coming decades.
With renewable technologies likely to become cheaper than fossil fuels within a decade, switching now will allow the world to have a greener and cheaper future.
Going green is no longer just the smart decision – it's also the most profitable one.
A team of researchers from Oxford University predict that a rapid transition to green energy sources such as wind and solar power could save anywhere between $5 to $15 trillion compared to taking no action.
This forecast held true in 80% of scenarios modelled by the team and could save even more money if green technology continues to improve.
Professor Doyne Farmer, who co-authored a paper detailing the findings, says, '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 and are already cheaper than fossil fuels in many situations. 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 findings of the study were published in the journal Joule.
The researchers analysed decades, and in some cases centuries, of data on the cost and output of a range of different energy sources, including coal, oil, gas, solar and wind to predict future trends to 2050. They also investigated developing technologies such as hydrogen-based fuels and batteries which can make use of power from renewable sources.
They found that the prices of fossil fuels, when adjusted for inflation, are relatively similar to their cost 140 years ago but with spikes in the past 40 years associated with geopolitical events. This pattern has been attributed to a 'running-to-stand-still' dynamic.
This describes how fossil fuels were much easier to find and extract over a century ago but are now increasingly scarce. While technology has improved extraction processes over this time, the increased cost to target less accessible fossil fuel deposits ensures that prices remain similar to their historic values.
In the meantime, the price of solar and wind power has dropped at an almost exponential rate. In the 1950s, solar power was as much as 10,000 times more expensive than coal and gas but is now cheaper than electricity from fossil fuels and is rapidly approaching parity with their primary costs, especially in light of the war in Ukraine.
As a result, renewable energy is now providing significantly more of the world's power than ever before. The production of solar energy has increased by an average of 44% a year for the past three decades, while wind power has increased by 23% a year.
While fossil fuels still produce more energy than renewables today, the researchers predict that they are likely to be overtaken within the next 10 years if current trends continue.
Not for much longer. Renewable energy is already cheaper than fossil fuels in a number of industries, and the researchers forecast that by 2050, almost all applications will be cheaper with renewables.
In this scenario, most buildings and vehicles will be powered by renewable energy, with the most energy intense forms of industry and travel making use of carbon neutral fuels produced using renewable power.
This prediction follows historic trends that reveal that the cost of solar power, for instance, has fallen by 15% per year on average - over 10 percentage points ahead of projections by the International Energy Agency.
Dr Rupert Way, the study's lead author, says this difference is a result of unrealistic costs used in other models.
'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,' Rupert says. '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 scientists examined how costs would change in the next 50 years using three different models, which looked at a fast transition to net zero, a slow transition, and no transition.
They found that at any reasonably expected discount rate - which is used to estimate how much something in the future would be worth in today's money - the fast transition is significantly cheaper than no transition in 80% of cases, with a most likely saving of $12 trillion.
Under the fast transition scenario, a Megawatt hour of solar energy is forecast to cost anywhere from $2 to $40 by 2050 while a barrel of oil will be anywhere from $20 to $110.
The researchers note that their model does not include other technologies, such as biomass generators and heat pumps, which may also play a role in the transition to net zero. They also do not forecast the deployment of renewable technology across the world.
They argue, however, that by sticking more closely to historic data, they are more able to make accurate forecasts of future costs. They add that by taking conservative predictions from their model, savings in reality could in fact be even higher than $12 trillion.
To ensure that their predictions can be given the opportunity to become a reality, the scientists have called for investment in renewable technology, as well as political support to expand green energy markets.
While this investment will be significant, with a fast transition energy network likely to cost around $140 billion a year more than a no transition network, the cost of energy will be around $400 billion dollars less per year, resulting in a significant net benefit for the fast transition pathway.
The scientists say that this pathway is achievable, affordable, and would be cost effective even if climate change were not a global crisis. It also includes a number of other benefits, such as lesser impacts on biodiversity and human health, that provide additional incentives to pursue it.
'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,' Doyne adds.
'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 and more energy secure future.'