International policymakers are unable to reach an agreement on how to cut out coal, in part due to resistance to carbon prices. And, as the war in Ukraine escalates fuel prices, even countries that were able to forgo the resource are undoing their gains.
The most widespread concern about substituting coal with alternative electricity is that it would be too pricey. However, new analysis shows that the economic advantages would far surpass the drawbacks.
According to a new report, nearly all coal-fired energy facilities cost more to maintain than the price of replacing them with renewable energy facilities. The cheapest renewable solution is at least one-third less expensive than maintaining the coal facility it would substitute.
The benefits of eliminating coal use include preventing climate change damage and harm to people’s quality of life. According to one estimate, doing so would result in a net gain of roughly $78 trillion by the conclusion of this century. This equates to around 1.2 percent of yearly global economic production over the period.
The cost estimate excludes compensation for displaced workers, which is projected to be minor in comparison to the overall net advantages from the shift. Additional compensation to facilitate the transition to renewables could be provided as long as the societal advantages of cutting out coal outweigh the more complete range of expenses.
This estimate is generated by calculating the reduction in emissions caused by the phase-out of coal and assigning a carbon price to any of those discharges. This allows for an estimate of the economic advantage of the change.
The gap between the worth of the social benefits minus the costs of substitution and compensation for lost coal profits is used to calculate the world’s positive return from finally abandoning its reliance on the dirty fuel.
The costs of these renewable energy resources have dropped dramatically, with solar prices decreasing by 90% and wind costs decreasing by 72%. The move to renewable sources of electricity illustrates the evolving electricity sector and the commitment to lowering greenhouse gas emissions.