Decarbonization Costs Could Be Lower Than $1 Trillion Annually

The transition to a zero-emissions global economy might not be as expensive as commonly thought. Analysts’ projections of energy demand and technological costs are often inflated. Current estimates for the cost of decarbonization range from $3 trillion to $12 trillion annually. However, these figures are potentially overstated due to assumptions of rapid emissions cuts, high economic growth, and slow declines in clean tech costs. The actual incremental cost to meet Paris Agreement targets could be below $1 trillion yearly, representing less than 1% of global GDP. In 2024, global energy investment hit $3 trillion, with clean technology now receiving nearly twice the investment of fossil fuels. Despite these investments, achieving the 1.5°C warming limit seems unfeasible, but staying under 2°C is more practical, suggesting a less costly path for energy transition.

Source: The Economist