We all know the science. The United States and the world as a whole must reduce its greenhouse gas emissions by 80 percent or more by 2050 in order to significantly reduce the risks posed by unabated climate change. Intensifying droughts and heat waves, inundation of coastal economies brought on by sea level rise, and increasing wildfires and extreme weather events across the United States are only some of those intensifying risks.
While an 80 percent reduction may sound like a Herculean task, a new report from the Risky Business Project, From Risk to Return: Investing in a Clean Energy Economy, finds that achieving that reduction is both technically and economically feasible—and creates a huge business opportunity. WRI led the analysis underlying the report.
In reducing the country’s emissions and capitalizing on the clean energy transition, the United States needs to move from its heavy dependence on fossil fuels towards wide-scale use of electricity wherever possible --and generate that electricity from low- and zero-carbon sources of energy, like wind and solar. Doing so has to be done with energy efficiency as a pillar of this change – making more out of less.
So how much would all of this cost?
We would need to invest an average of about $320 billion a year from 2020 to 2050, but the benefits would far outweigh these costs. For example, we would see returns in the form of:
Lowering the country’s fossil fuel bill. We would spend less on fossil fuel costs – about $65 billion per year less in the 2020s, growing to nearly $700 billion per year in the 2040s.
More jobs. A clean energy economy could generate roughly one million additional jobs in the decades ahead, with some of the biggest gains coming in construction and utilities.
Cleaner air, protected environment. Not only would we reduce climate risks, we would also dramatically reduce air pollution from burning fossil fuels.
Figure: Average Annual Additional Capital Investments and Change in Fuel Expenditures by Decade
How Do We Get There?
The new report presents three pillars for how to transition to a clean energy economy:
Use electricity instead of fossil fuels. This includes a gradual transition to electric cars; switching to electric heat pumps and water heaters in our buildings; and converting more industrial processes to use electricity instead of burning fossil fuels. We can also use electricity to produce clean-burning hydrogen for transportation and industry.
Generate electricity from low- and zero-carbon sources. The cost of renewable electricity has dropped dramatically in the past decade, paving the way for rapid expansion of zero-carbon sources like solar and wind energy. Nuclear power can also play a role, along with technologies that capture and safely store carbon emissions from fossil fuel plants.
Use all energy more efficiently. We can get more “work” - or greater output - from each unit of energy we use by applying the most efficient technologies in our vehicles, buildings and factories.
The new Risky Business analysis shows that achieving the 80 percent emissions reduction is possible with technologies that are already commercial or near-commercially available. We have the tools now to get there, and we’re bound to see additional breakthroughs in the future to make the job even easier.
Figure: Three Pillars of a Clean Energy Economy: Strategies and Metrics
What’s Needed from Business and Government?
While the wheels of a clean, low carbon economy in the United States are already in motion, we have to see its acceleration in order to avoid the dangerous and damaging risks from climate change.
Given a clear and consistent policy and regulatory framework from government, businesses can make a clean energy economy a reality. That framework must send a clear, consistent and long-term market signal on the necessity of climate action, and provide incentives for innovation and deployment of clean energy systems.
In the past, transformative investments in railroads, rural electricity, interstate highways, telecommunications and other industries have unleashed a wave of innovation and growth for American business. We need a new wave of transformative investment in this century aimed at securing a safe and stable climate. As this report shows, investing in clean energy can ensure American economic security and competitiveness for decades to come. But we must act now.