The energy transition will be much cheaper than you think

From The Economist

People who want to do more to fight climate change and those who want to do less tend to have one thing in common. Both sides agree that decarbonising the world economy will be dauntingly expensive. At this week’s annual UN climate summit, in Baku, Azerbaijan, the numbers being bandied around are in the tens of trillions of dollars.

Many see such spending as a colossal waste. Donald Trump, America’s president-elect, denounced the Paris agreement to cut global emissions, reached at the 2015 climate summit, as something that “hurts Americans, and cost a fortune”. He withdrew America from it in his first presidency. Because America has since rejoined, he is likely to do so again. Climate activists, for the most part, do not dispute the hair-raising price tag; they simply consider the expense worthwhile when weighed against the catastrophic damage unchecked climate change is likely to inflict.

Yet this one point of agreement between climate activists and carbon addicts is, in fact, wrong. Greening the world economy will be much cheaper than the two groups imagine. The Economist has looked at estimates of the global cost of an “energy transition” to a zero-emissions world from a range of economists, consultants and other researchers—the sort of estimates that routinely form the basis for policymaking. They range from around $3trn a year to almost $12trn a year, which is indeed a lot. But these figures are overblown in four important ways.