Fast-tracking transition will make clean energy cheaper, more affordable: IEA report

IEA estimates that governments around the world spent a staggering $620 billion subsidizing fossil fuels in 2023, far more than the $70 billion that was spent on clean energy initiatives. (Representatie Image)

Speeding up the transition to clean energy can make energy more affordable and help ease the cost of living, the International Energy Agency (IEA) has said.

In its report, "Strategies for Affordable and Fair Clean Energy Transitions", released on May 30, the IEA outlines how moving towards net zero emissions by 2050 could save consumers and cut the operating costs of the global energy system by more than half over the next decade compared to sticking with current policies.

Clean energy technologies, such as solar and wind power, are already cheaper over their lifetimes than traditional fuels like coal, natural gas, and oil.

Solar panels and wind turbines are now the most cost-effective options for new electricity generation.

Electric vehicles (EVs), even when they have higher initial costs, often end up being cheaper to run than gas-powered cars. Similarly, energy-efficient appliances, like modern air conditioners, save money over time, the report says.

Achieving these benefits requires significant upfront investment, especially in developing countries where clean energy projects face financial hurdles. Existing subsidies for fossil fuels make it harder for clean energy investments to compete.

IEA estimates that governments around the world spent $620 billion subsidising fossil fuels in 2023, far more than the $70 billion spent on clean-energy initiatives.

Accelerating the transition to renewable energy, such as solar and wind, could lead to lower and more stable electricity prices for consumers.

Unlike oil prices, which can be very volatile, electricity tend to be more predictable. As the transition progresses, electricity will become the dominant energy source, replacing oil as EVs, heat pumps, and electric motors become more common, the report says.

“The data makes it clear that the quicker you move on clean energy transitions, the more cost effective it is for governments, businesses and households,” IEA executive director Fatih Birol said.

“If policy makers and industry leaders put off action and spending today, we will all end up paying more tomorrow.”

The first-of-a-kind global analysis shows that the way to make energy more affordable is to speed up transitions, not slow them down. Much more needs to be done to help poorer households, communities and countries to get a foothold in the new clean energy economy, he said.