The trillion dollar paradox - George Zaidan
Let’s Begin…
Global warming is very, very expensive: extreme weather, rising sea levels, crop failures, health issues, and industry disruptions all cost money. So, what’s the best way forward? Is the estimated trillion-dollar price tag that comes with transitioning the world to clean energy worth the cost of investment? George Zaidan explores what it would take to become a green economy.
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The Hidden Costs of Fossil Fuels
Fossil fuels are often framed as the cheaper energy option—but this view hides their true costs. Yes, the market price of coal, oil, and gas may appear relatively stable when adjusted for inflation, but the externalities—the costs not captured in the sticker price—are massive.
A 2020 report by the International Monetary Fund (IMF) estimated that fossil fuel subsidies globally amounted to $5.9 trillion in 2020, including implicit costs like air pollution and climate impacts (IMF, 2021). These hidden costs affect public health, agriculture, infrastructure, and disaster response.
Take air pollution, for example. The World Health Organization (WHO) attributes 7 million premature deaths per year to pollution, a large portion from fossil fuel combustion. Add to that the increasing financial toll from fossil fuel-driven climate disasters, and the balance sheet tips heavily in the wrong direction.
The Long-Term Savings of Renewable Energy
The upfront costs of solar panels, wind turbines, and energy storage may seem steep—but renewables are proving to be an economic win over time. Once infrastructure is built, the primary “fuel” sources—sunlight, wind, and water—are free and limitless.
Consider solar energy: In the early 2000s, estimates for solar hovered around $157 per megawatt-hour (MWh). Today, utility-scale solar costs as little as $20–30 per MWh in some regions (Lazard, 2023), cheaper than new coal or natural gas plants. This is largely due to economies of scale, government subsidies, and technological innovation driven by countries like Germany and China, which invested heavily in solar R&D and manufacturing.
Meanwhile, onshore wind is now one of the cheapest sources of new electricity globally. According to the International Renewable Energy Agency (IRENA), renewables added in 2022 saved $55 billion in global energy generation costs.
Climate Change Is Already Costing Us
Extreme weather events—wildfires, floods, droughts, and hurricanes—are growing more frequent and intense due to climate change, and their costs are staggering. In the U.S. alone, the National Oceanic and Atmospheric Administration (NOAA) has documented over 400 climate disasters exceeding $1 billion in damages since 1980. The total price tag? Over $2.8 trillion.
Globally, the 2023 floods in Libya, heatwaves in Europe, and wildfires in Canada and Australia show that no region is immune. Traditional economic models like the DICE model (Dynamic Integrated model of Climate and the Economy) assume a smooth, gradual increase in costs based on temperature rise. But newer models and climate scientists argue this is far too conservative.
For instance, tipping points like Greenland ice melt or Amazon rainforest collapse could cause sudden, irreversible changes, triggering feedback loops that spike costs dramatically. These are low-probability but high-impact risks that traditional models often ignore—but the latest IPCC reports stress their growing likelihood.
Invest Now, Save Soon
The old narrative around renewables was about sacrifice—pay now to protect future generations. But recent data flips that script. A 2022 study from Oxford University’s Institute for New Economic Thinking concluded that a fast transition to clean energy could save the world up to $12 trillion by 2050 compared to staying on fossil fuels.
These savings stem from reduced operating costs, healthcare savings, energy security, and climate mitigation. The idea that we must wait decades to see the benefit is no longer true: countries already investing in clean energy are seeing returns now.
Take Portugal, which ran entirely on renewable electricity for several days in 2016. Or Costa Rica, which routinely gets more than 98% of its electricity from renewable sources like hydropower, wind, and geothermal.
Challenges Ahead: Infrastructure, Politics, and Equity
Despite the clear logic and long-term benefits, the transition to renewable energy faces several hurdles:
- Upfront Infrastructure Costs: Building new grids, storage systems, and electrified transportation takes capital and time.
- Political Resistance: Fossil fuel interests remain powerful, lobbying against regulation and renewable investment.
- Energy Access and Equity: Not all countries or communities have equal resources or access to technology. A fair transition must include financial and technical support for the Global South and vulnerable communities.
That said, several countries show what’s possible:
- Denmark leads in wind energy, producing over 50% of its electricity from wind as of 2022.
- Germany continues to invest heavily in its Energiewende (energy transition), despite setbacks.
- India is rapidly expanding its solar capacity through initiatives like the International Solar Alliance.
- Uruguay, without major subsidies, transitioned to over 95% renewable electricity in under 15 years.
Fossil fuels are often framed as the cheaper energy option—but this view hides their true costs. Yes, the market price of coal, oil, and gas may appear relatively stable when adjusted for inflation, but the externalities—the costs not captured in the sticker price—are massive.
A 2020 report by the International Monetary Fund (IMF) estimated that fossil fuel subsidies globally amounted to $5.9 trillion in 2020, including implicit costs like air pollution and climate impacts (IMF, 2021). These hidden costs affect public health, agriculture, infrastructure, and disaster response.
Take air pollution, for example. The World Health Organization (WHO) attributes 7 million premature deaths per year to pollution, a large portion from fossil fuel combustion. Add to that the increasing financial toll from fossil fuel-driven climate disasters, and the balance sheet tips heavily in the wrong direction.
The Long-Term Savings of Renewable Energy
The upfront costs of solar panels, wind turbines, and energy storage may seem steep—but renewables are proving to be an economic win over time. Once infrastructure is built, the primary “fuel” sources—sunlight, wind, and water—are free and limitless.
Consider solar energy: In the early 2000s, estimates for solar hovered around $157 per megawatt-hour (MWh). Today, utility-scale solar costs as little as $20–30 per MWh in some regions (Lazard, 2023), cheaper than new coal or natural gas plants. This is largely due to economies of scale, government subsidies, and technological innovation driven by countries like Germany and China, which invested heavily in solar R&D and manufacturing.
Meanwhile, onshore wind is now one of the cheapest sources of new electricity globally. According to the International Renewable Energy Agency (IRENA), renewables added in 2022 saved $55 billion in global energy generation costs.
Climate Change Is Already Costing Us
Extreme weather events—wildfires, floods, droughts, and hurricanes—are growing more frequent and intense due to climate change, and their costs are staggering. In the U.S. alone, the National Oceanic and Atmospheric Administration (NOAA) has documented over 400 climate disasters exceeding $1 billion in damages since 1980. The total price tag? Over $2.8 trillion.
Globally, the 2023 floods in Libya, heatwaves in Europe, and wildfires in Canada and Australia show that no region is immune. Traditional economic models like the DICE model (Dynamic Integrated model of Climate and the Economy) assume a smooth, gradual increase in costs based on temperature rise. But newer models and climate scientists argue this is far too conservative.
For instance, tipping points like Greenland ice melt or Amazon rainforest collapse could cause sudden, irreversible changes, triggering feedback loops that spike costs dramatically. These are low-probability but high-impact risks that traditional models often ignore—but the latest IPCC reports stress their growing likelihood.
Invest Now, Save Soon
The old narrative around renewables was about sacrifice—pay now to protect future generations. But recent data flips that script. A 2022 study from Oxford University’s Institute for New Economic Thinking concluded that a fast transition to clean energy could save the world up to $12 trillion by 2050 compared to staying on fossil fuels.
These savings stem from reduced operating costs, healthcare savings, energy security, and climate mitigation. The idea that we must wait decades to see the benefit is no longer true: countries already investing in clean energy are seeing returns now.
Take Portugal, which ran entirely on renewable electricity for several days in 2016. Or Costa Rica, which routinely gets more than 98% of its electricity from renewable sources like hydropower, wind, and geothermal.
Challenges Ahead: Infrastructure, Politics, and Equity
Despite the clear logic and long-term benefits, the transition to renewable energy faces several hurdles:
- Upfront Infrastructure Costs: Building new grids, storage systems, and electrified transportation takes capital and time.
- Political Resistance: Fossil fuel interests remain powerful, lobbying against regulation and renewable investment.
- Energy Access and Equity: Not all countries or communities have equal resources or access to technology. A fair transition must include financial and technical support for the Global South and vulnerable communities.
That said, several countries show what’s possible:
- Denmark leads in wind energy, producing over 50% of its electricity from wind as of 2022.
- Germany continues to invest heavily in its Energiewende (energy transition), despite setbacks.
- India is rapidly expanding its solar capacity through initiatives like the International Solar Alliance.
- Uruguay, without major subsidies, transitioned to over 95% renewable electricity in under 15 years.
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About Earth School
We can save the world. Speed and Scale shows us how to unlock a cleaner, healthier and safer future by laying out a roadmap that will get us to net-zero carbon emissions by 2050. How’s it going to work? We need to electrify transportation, decarbonize the grid, fix food, protect nature, clean up industry and remove carbon. To learn how we’re going to do all that - and to learn how you can take action now - explore this page.
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