The Economic Benefits of Renewable Energy

The Economic Benefits of Renewable Energy

Written by: Hailey Maynard

In regards to switching to renewable energy in the United States, you’ve probably heard that the prospect is economically inefficient and extremely costly. Despite the climate crisis, many people oppose this energy transition. However, since the U.S. relies heavily on fossil fuels (coal, oil, and natural gas) for energy, the question isn’t necessarily about whether we will switch to renewable energy, but when. Fossil fuels only form over geologic time -- the course of billions of years -- and we are burning them at a rate roughly a million times faster than they are regenerating. 

According to researchers at the Yale School of the Environment, it would cost roughly $4.5 trillion to replace fossil fuels and nuclear power with hydroelectricity, geothermal, wind, and solar power. To break that large price tag down, it would cost $1.5 trillion for a massive buildup of wind and solar electricity. $2.5 trillion would go towards adding 900 gigawatts of battery storage. And lastly, the U.S. will need to double its transmission lines from 200,000 to 400,000 miles in order to handle the new distributed power system, which would cost about $700 billion. 

While that’s a daunting price tag, it is logistically attainable to switch to one hundred percent clean energy in the next decade because the cost of switching to renewable energy is comparable to the cost of building new coal and nuclear capacity. 

The graph below shows the cost of each energy source as of 2019. Evidently, the cost of utilizing solar power plummeted by 2016, and the most expensive energy source is actually coal. While natural gas remains the cheapest, it’s important to recognize that the prices of implementing renewable energy sources are competitive with fossil fuel prices, without the extensive environmental and human health costs. 

Additionally, making the transition to renewable energy would stimulate the economy. According to science writer Bob Homes, “switching to renewables requires far less investment into your power sector than if you were to build new coal or nuclear power plants. That means a lower electricity price, and that has impacts on everything in the economy”. To elaborate, lower electricity prices equate to lower production costs, which increases profit. This helps families too because they can reallocate the money that they would have spent on power toward other necessities. 

Furthermore, this transition would create millions of new jobs from technological advancements and the implementation of new infrastructure. The solar and wind sectors show promising job growth, as they expanded by 24.5% and 16% from 2016 to 2017. Also, renewable energy jobs outnumber coal and gas jobs in 30 states. While the transition would cause frictional unemployment, if the world limits global warming to 2℃ (per the Paris Agreement), an estimated 8 to 14 million more energy jobs would be created by 2050. 

As you can see in the graph above, the use of renewable energy directly correlates with job growth. If employment in the renewable energy sector grew by roughly 5 million jobs between 2012 and 2020, it’s safe to assume that the creation of 8 to 14 million jobs from the energy transition by 2050 is entirely feasible. 

Lastly, as our population expands and consumption rises, total energy demand is expected to increase by 21% in the next 8 years. The monetary costs associated with the transition to 100% renewable energy aren’t small, but in the big picture, the implicit costs associated with fossil fuel use, like respiratory issues and global warming, are much greater.

Works Cited

Ferroukhi, Rabia. “Renewable Energy Benefits: Measuring the Economics.” International 

Renewable Energy Agency, 2016, 

https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2016/IRENA_Measuring-the-Economics_2016.pdf 

Hockenos, Paul. “Shifting U.S. to 100 Percent Renewables Would Cost $4.5 Trillion, Analysis 

Finds.” Yale Environment 360, Yale University, 28 Jun. 2019, 

https://e360.yale.edu/digest/shifting-u-s-to-100-percent-renewables-would-cost-4-5-trillion-analysis-finds 

Holmes, Bob. “Why green energy finally makes economic sense.” Knowable Magazine, 14 Jan. 

2020, https://knowablemagazine.org/article/sustainability/2020/cost-of-renewable-energy#:~:te

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\0increases%20profit 

Shenette, Ellen. “Clean energy is building a new American workforce.” Environmental Defense 

Fund, Jan. 2018, https://www.edf.org/energy/clean-energy-jobs 

Shreve, Dan. “Energy Transition: Deep decarbonisation -- the multi-trillion-dollar question.” Wood 

Mackenzie, 27 Jun. 2019, 

https://www.woodmac.com/news/feature/deep-decarbonisation-the-multi-trillion-dollar-question/?utm_source=gtmarticle&utm_medium=web&utm_campaign=wmpr_griddecarb 

Timmons, David. “The Economics of Renewable Energy.” Global Development and 

Environment Institute, 2014, 

https://www.bu.edu/eci/files/2019/06/RenewableEnergyEcon.pdf