Faster energy transition reduces energy costs, says IEA

Accelerating the transition to clean energy technologies will make energy more affordable and ease cost-of-living pressures, not the other way around, according to a report released today by the International Energy Agency (IEA).

While aligning with net zero emissions by 2050 requires additional investment, this cuts the operating costs of the global energy system by more than half over the next decade compared to following current policy settings, the agency 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 stated, adding that “the way to make energy more affordable for more people is to speed up transitions, not slow them down.”

The report highlights a risk that needs to be addressed, namely that poorer households, communities and countries are excluded from the new clean energy economy because they cannot pay the upfront costs.

Clean energy technologies are often already more cost-effective over their lifespans than conventional fuels, with solar PV and wind the most economical options for new power generation, IEA says.

Its report, Strategies for Affordable and Fair Clean Energy Transitions, further notes that today’s global energy system is distorted by fossil fuel subsidies. In 2023, governments worldwide spent around USD 620 billion (EUR 571bn) on subsidising the use of fossil fuels, well above the USD 70 billion that was spent on support for consumer-facing clean energy investments.

At the same time, price spikes for fossil fuels during the global energy crisis meant that in 2022 consumers around the world spent nearly USD 10 trillion on energy, an average of more than USD 1,200 per person, even after taking into account subsidies and emergency support from governments. This is 20% more than the average over the previous five years.

(USD 1 = EUR 0.921)

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