The Clean Energy Transition Enters Hyperdrive: Researchers argue that the shift to carbon-free energy is gaining momentum, largely because of economic benefits — Inside #Climate News

A solar-covered parking lot at the plant of Anhui Quanchai Engine Co., Ltd. in Chuzhou, China. IMAGINECHINA VIA AP IMAGES

From Inside Climate News (Dan Gearino):

After decades in which governments and industry groups have often assumed that the shift to renewable energy will be a financial burden, economists and analysts are increasingly making a case that the opposite is true: The transition will lead to cost-savings on a massive scale that will add to its momentum.

A recent paper by University of Oxford economists and mathematicians finds that a rapid transition to renewable energy would lead to global savings of $26 trillion compared to the costs of maintaining the current energy mix.

Another recent paper, published by the International Renewable Energy Agency, or IRENA, looks at previous technological revolutions to help understand the implications of rapid growth and falling costs of renewable energy.

The findings are providing some analytical heft to ideas that clean energy advocates have long argued about how the transition will lead to vast economic benefits as renewable energy continues to get cheaper.

The researchers who wrote the Oxford paper looked at how wind and solar power have gone from some of the world’s most expensive energy sources to some of the cheapest, and extrapolated those results to chart a future in which prices continue to plummet…

The paper’s authors sought to understand why so many high-profile forecasts have underestimated the pace of cost decreases for renewable energy, especially solar power. They found that most economic models do not adequately grasp the tendency of technologies to get much cheaper at times of rapid expansion and competition, and that models tend to be built in ways that are more likely to show gradual change.

The underlying idea is based on Wright’s Law, a concept developed by engineer Theodore Wright in the 1930s who wrote about how the costs of a technology declines as production increases.

“The more you deploy, the more the costs come down,” said Matthew Ives, an Oxford economist and co-author of the paper. “You get a feedback dynamic, which is runaway change.”

Forecasts that show a slow and expensive transition are harmful because they help to reinforce the idea that fossil fuels will continue to dominate our global energy supply for decades, Ives said. This idea can steer decisions for governments, companies and institutional investors.

Ives and three of his colleagues wrote the paper for the Institute for New Economic Thinking at the Oxford Martin School. It is a working paper, which means it has not yet gone through peer review.

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