Empirically grounded technology forecasts and the energy transition

Abstract:

Decisions about how and when to decarbonize the global energy system are highly influenced by estimates of the likely cost. Most energy-economy models have produced energy transition scenarios that overestimate costs due to underestimating renewable energy cost improvements and deployment rates. This paper generates probabilistic cost forecasts of energy technologies using a method that has been statistically validated on data for more than 50 technologies. Using this approach to estimate future energy system costs under three scenarios, we find that compared to continuing with a fossil fuel-based system, a rapid green energy transition is likely to result in trillions of net savings. Hence, even without accounting for climate damages or climate policy co-benefits, transitioning to a net-zero energy system by 2050 is likely to be economically beneficial. Updating models and expectations about transition costs could dramatically accelerate the decarbonization of global energy systems.