Renewable energy to yield huge benefit by shifting from coal
By Jeph Ajobaju, Chief Copy Editor
Shifting from coal alone to renewable energy will yield $78 trillion profit for the global economy at the end of this century, the International Monetary Fund (IMF) says in a new projection aimed at weaning the world from fossil fuel.
The most prevalent argument about replacing coal with renewable energy is that it would be too expensive, but the new IMF study shows the economic advantages would considerably surpass the expenses.
“We analyse this great carbon arbitrage, as we call it, in a recent working paper that calculates the cost of replacing coal with renewables, as well as the social benefits of this important transition,” the IMF explained in a blog post titled, “How Replacing Coal With Renewable Energy Could Pay For Itself”.
“The benefits from ending coal use come from avoiding damage from climate change and harm to people’s health.
“Our estimate is that by doing so the world would yield a net gain of nearly $78 trillion through the end of this century.
“That’s around four-fifths of global gross domestic product now, and would be equivalent to about 1.2% of annual global economic output during the period.”
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Shift to renewable energy not too costly
Stopping coal use is not excessively expensive because it brings economic benefits from lower carbon emissions, such as preventing climate-related infrastructure damage, according to the IMF, per Nairametrics.
Renewable energy investments also stimulate economic growth and provide additional benefits from innovation.
The research demonstrates that phasing out coal is not only necessary but also essential because it would help keep global warming to 1.5 degrees Celsius.
The economic and health benefits are also substantial enough that countries should continue to press for global agreements that unleash the full potential of capital markets.
“It’s a sound economic logic to pay for the replacement of coal with renewables to reap a net social gain measuring in the tens of trillions of dollars,” the IMF said.
It added that public-private partnerships to finance the replacement of coal with renewables could accelerate the green transition and complement incomplete carbon pricing by helping to achieve the aim of the Paris Agreement to make finance flows consistent with a pathway toward low greenhouse gas emissions and climate-resilient development.