As economies develop and grow, energy needs change, and so do the types of fuel that power them, from firewood and other biomass to hydroelectricity, coal, oil and gas in the 19th century, and now renewables. Using renewables has many economic benefits beyond reducing greenhouse gas emissions and their negative effects on economic activity.
They’re Cheaper to Operate
As research and technology progress, the costs associated with renewable energy sources continue to decline. They are currently more economical to operate than fossil fuels in many regions of the world and are projected to surpass them shortly. Fossil fuels require the costly input of mined resources to function, which is a major factor in their high operating costs. Solar and wind, on the other hand, are free to harvest. They also have a much lower capital investment, and this helps keep them competitive in a rapidly evolving market. With the costs of solar, wind, and concentrated solar power (CSP) continuing to fall, they are expected to undercut fossil fuels sooner rather than later. Combined with the lower lifetime cost of operation, this will make the electricity produced by these technologies more affordable than traditional fossil fuels. This is particularly important for developing countries, which are highly dependent on expensive imports of fossil fuels. The shift to renewables can help avoid this dependence and create more sustainable economic development opportunities. For example, by using solar technology in rural and remote areas, communities can bypass the need for an extensive grid. This is especially valuable in places where many households still lack access to power. Additionally, renewable energy production can be centralized and closer to demand centers. This makes it easier for grid operators to control and save on expensive distribution infrastructure.
They’re More Competitive
Historically, fossil fuels have had the edge when it comes to price. But the importance of renewable energy is rapidly catching up. According to a recent report by the International Energy Agency (IRENA), electricity from solar photovoltaics, wind, geothermal and concentrated solar power has become cheaper than coal. Moreover, they offer a lower Levelised Cost of Electricity (LCOE) than nuclear and fossil fuels without considering the costs of backing up intermittent wind and solar generation with storage. However, renewables still need to be cheaper to replace fossil-fuel energy systems in the developed world completely. This is because of the added costs associated with dealing with the environmental side-effects of fossil fuels: pollution, climate change and water scarcity. To combat this, renewables are being supported by various policies–from prioritizing them in grid systems to providing subsidies. They are also helping to boost economies by reducing energy prices. But more importantly, the low prices of renewables drive investments into other parts of the economy. This is because, for example, farmers can make money from growing crops to be used as fuel for renewable plants. This helps offset their electricity cost while increasing profits and stimulating growth. It is estimated that a switch to renewables could provide a million additional jobs by 2050.
They’re Better for the Environment
The combustion of fossil fuels produces a huge amount of air pollution that leads to many harmful environmental impacts. This includes global warming, acid rain, smog, respiratory illness and other health problems. Many of these effects are externalities passed on to society as a whole. The costs of these externalities are estimated at 2.2-5 trillion dollars per year. Renewable energy sources emit no or very few pollutants and are, therefore, much better for the environment. They also use less material, making them cheaper for the consumer in the long run. In addition, renewables can be deployed more rapidly than fossil fuel power plants. Building a wind farm or solar plant generally takes less than two years. Increasing the share of renewables in our energy mix would allow the United States to become more energy independent. This can help lower our dependence on foreign oil and reduce our susceptibility to rising overseas prices.
Additionally, renewables provide an additional source of income for rural landowners and farmers. They can earn money from hosting wind farms on their land and growing crops such as corn for biofuels. These new revenue streams can increase household incomes and create positive ripple effects for local businesses.
They’re Good for Jobs
While we can argue about the merits of climate change policies, what we cannot deny is that switching to renewable energy will create jobs. It will make far more than fossil fuels can. Experts have long predicted that renewable power sources, like solar and wind, would eventually become cheaper than electricity generated from fossil fuels. That day has arrived, and it’s happening much sooner than most had expected.
This will help reduce our dependence on foreign oil and make us less susceptible to the ups and downs of international energy prices. It will also enable us to achieve energy independence — meaning that our country can meet all its energy needs without depending on the rest of the world. Furthermore, renewable energy jobs pay well and offer plenty of opportunities for advancement. In addition, many renewable energy firms are committed to regularly investing in and upskilling their employees.