The Low Costs of a Zero-Carbon Economy
The challenge in moving to a fully "green" economy now concerns harder-to-abate sectors such as trucking, shipping and aviation, steel, cement, and chemicals. To make the same rapid progress there that has been made in renewable-energy technologies requires the same type of forward-looking policies.
LONDON – When you buy your next automobile, would you pay $100 extra to ensure that the steel in it was made without producing carbon dioxide emissions?
My guess is that most readers will say yes. Most people in most countries, including the United States, accept the overwhelming scientific evidence that human-induced greenhouse-gas emissions are causing potentially harmful climate change. Most people with decent incomes are willing to pay some price to achieve the zero-carbon economy needed to reduce the risks posed by climate change. And there is growing evidence that the total costs of that transition will be far less than the 1-2% of GDP suggested by Nicholas Stern in his seminal 2006 report The Economics of Climate Change. But, despite low costs, change will not happen fast enough without forceful new policies.
Renewable electricity costs have fallen faster than all but the most extreme optimists believed possible only a few years ago. In favorable sunny locations, such as northern Chile, electricity auctions are being won by solar power at prices that have plummeted 90% in ten years. Even in less sunny Germany, reductions of 80% have been achieved. Wind costs have fallen some 70%, and battery costs around 80%, since 2010.