Some simple economics of energy transition

Abstract

After explaining the current climate emergency, this survey article summarises financial cost estimates for transition to zero carbon by 2050, which even in the medium term, neglecting catastrophic climate collapse, are much less than the cost of ‘business as usual’ (BAU). Standard economic modelling of continued GDP growth with only minor costs of climate change and limited mitigation investment which still guides policy is shown to be completely unrealistic, simply ignoring current climate science and the welfare economics of economic growth and obsession with GDP. The global health benefits from phasing out fossil fuels will also exceed the costs of transition to renewable energy in the medium term, and these co-benefits are widely neglected. Finally policy issues including the various benefits of a green new deal, as well as growth and de-growth in relation to well-being, or happiness are summarised.