The most common concern about scrapping coal is that replacing it with renewable energy would be too expensive, but in current research that the economic benefits would far outweigh the costs.
FREMONT, CA: By achieving the energy transition from fossil fuels to renewables, the world can gain an estimated USD 78 trillion over the ensuing decades. International negotiators cannot agree on how to phase out coal due to hostility to carbon taxes. Now, even those that had been able to do so are going backwards as the conflict in Ukraine drives up energy costs.
The most frequent worry about replacing coal with renewable energy is that it would be too expensive. But it was recently demonstrated in a new study that the financial advantages of renewable energies would greatly outweigh the expenses.
The price of switching from coal to renewable energy sources and the positive effects on society. The advantages of ceasing coal use are preventing harm to public health and mitigating climate change, resulting in a net benefit for the world of almost USD 78 trillion by the end of this century. That would be roughly 1.2 per cent of yearly global economic output or nearly four-fifths of the global gross domestic product.
Businesses can determine the value of doing so by estimating the emissions decrease from the phase-out of coal and assigning a carbon price to those discharges. This, in turn, enables them to calculate the transition's economic benefit. The baseline estimate of the world's net gain from eliminating dependence on fuel is the difference between the value of the social benefits versus costs of replacement and compensation for missed coal profits.
The significant societal advantages of what would be considered a cheap insurance policy paying a premium to provide coverage for sizable potential damages are evident, even though conservative estimates are accompanied by an unavoidable degree of uncertainty given the decades-long timescale.
The gains could be so significant that world leaders should work toward a global accord to finance the phase-out of coal as an addition to carbon pricing or other policies that don't yet entirely mitigate the harmful impacts of emissions. They have made conservative choices for all of the criteria, including the social cost of carbon. For less cautious calculations, the carbon arbitrage may be even greater.
A study demonstrates that eliminating coal shouldn't be excessively expensive because it offers economic advantages from lower carbon emissions, such as avoiding climate change-related infrastructure damage. Investments in renewable energy also aid economic expansion and provide extra ancillary benefits from innovation.
The analysis demonstrates that the phase-out of coal is necessary for more reasons than only helping to keep the rise in global temperature to 1.5 degrees Celsius. Notably, the economic and public health advantages are so significant that they should work harder to promote international accords that unleash the full power of renewable energies. There would be significant net social benefits from a coal-scrapping pact if compensation were included, and creative financial solutions could encourage advanced, emerging, and developing economies to stop using fossil fuels.