Investing in the energy transition improves affordability and alleviates pressure on the cost of living.

According to a new report from the International Energy Agency (IEA), accelerating the transition to clean energy technologies can improve the affordability of energy and alleviate pressure on the cost of living.

The report, titled "Strategies for Affordable and Just Energy Transitions," highlights that the path to net zero emissions by 2050 requires additional investments; investments that, however, will lead to a reduction in the operating costs of the global energy system by more than half over the next 10 years compared to current policies.

Energy Transition: The Economic Viability of Clean Energy

Many clean energy technologies are already more cost-effective than fossil fuels such as coal, natural gas, and oil. Solar photovoltaic and wind energy are the cheapest options for new power generation.

Even electric vehicles, despite high initial costs, are often more economical over time due to lower operating expenses. High-efficiency appliances, such as air conditioners, offer similar economic benefits over their lifetime.

However, realizing these advantages requires a significant increase in initial investments, especially in emerging and developing economies where investments in clean energy are hindered by real or perceived risks.

Additionally, fossil fuel subsidies distort the market, favoring traditional fuels and making investments in clean energy more challenging. In 2023, governments worldwide spent about $620 billion on fossil fuel subsidies, compared to only $70 billion for clean energy.

A faster energy transition and greater adoption of renewable energies, such as solar and wind, could reduce operating costs and stabilize electricity prices. Currently, about half of consumer energy spending is on petroleum products and one-third on electricity.

With a rapid transition, electricity would become the primary energy source, largely replacing petroleum products by 2035.

Energy Transition: The Impact of the 2022 Energy Crisis and the Importance of Incentives

In 2022, during the global energy crisis, consumers spent nearly $10 trillion on energy, an average of over $1,200 per person, despite government subsidies. This 20% increase compared to the average of the last 5 years particularly affected the most vulnerable.

The report emphasizes that targeted incentives and support, especially for low-income households, can promote the adoption of clean energy technologies, allowing all consumers to benefit from the savings and contributing to the achievement of international energy and climate goals.

Fatih Birol, Executive Director of the IEA, stated, "The faster we move towards clean energy transition, the more affordable it will be for governments, businesses, and households. Delaying adoption today means paying more tomorrow. Our analysis shows that accelerating energy transitions makes energy more accessible to more people."