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Shifting away from fossil fuels in energy generation is becoming a necessity for both environmental and economic reasons. If Poland stuck with coal, the price of electricity on the wholesale market in the years 2030-2060 would be higher on average by up to 120 percent compared to a scenario where the development of renewable energy sources would accelerate – says a report by the Polish Economic Institute (PIE) and the Polish Development Fund (PFR) titled “The Cost of not Decarbonizing the Economy.”
Experts from PIE emphasize that continuing the current pace of the energy transition with the construction of large-scale nuclear power will mean an increase in energy costs by 58 percent. Decarbonization also has a positive impact on the development of the economy – every dollar spent on renewable energy sources means approx. 150 percent profit for the economy, 3 times more than for investments in the field of fossil fuels.
Investments in renewable energy increase GDP and employment
The PIE report shows that spending one dollar on renewable energy sources brings a 150 percent return to the economy, and investment in nuclear energy brings a return of up to 400 percent. According to forecasts by the International Renewable Energy Agency, doubling the share of renewable energy sources in the global energy mix by 2030 compared to 2015 would result in an additional GDP growth of 1.1 percent.
Investments in low-carbon energy sources also create jobs. The RES sector employed 12.7 million people worldwide in 2021.
“Progress in the energy transition is driven by both environmental and economic benefits. In the current climate of high volatility of commodity prices and rising CO2 emission allowance costs around the world, it is becoming increasingly popular to invest in low-carbon technologies to provide cheap electricity for businesses, increase economic competitiveness and local investment attractiveness. The RES sector employed 126,000 people in Poland in 2021. The majority of the workers are employed in the solid biomass (33,000) and photovoltaic (58,000) sectors, which is due to the significant growth of the Polish photovoltaic market in the last 5 years (from 611 MW at the beginning of 2019 to 15.5 GW in September 2023),” points out Adam Juszczak, advisor at the Climate and Energy team of the Polish Economic Institute.
Sticking with coal will be more expensive
According to the Institute, when the energy industry is based on fossil fuels, the cost of running a business is higher. Electricity prices for companies and industry in the European Union in mid-2023 increased by up to 120 percent compared to 2021.
“The increase in energy costs in European economies resulted from the energy crisis that was caused by, among others, the Russian attack on Ukraine in 2022 that hiked the prices of energy commodities on international markets. The embargo on oil, petroleum products and gas from Russia has forced EU countries to look for alternative sources of supply, and international supply chains have been disrupted in some cases. The EU electricity and gas market today is characterized by much higher volatility than before the war in Ukraine due to a higher share of imports of energy raw materials from global markets instead of local ones,” points out Klaudia Kania, a specialist in the Energy Transition Department at the Polish Development Fund.
PIE points out that the least economically advantageous scenario is coal. Electricity prices are unlikely to return to pre-crisis levels, and electricity generation from coal is burdened by high volatility of energy commodities prices and rising CO2 charges. The total cost of implementing a coal-based scenario by 2060 would be PLN 2 trillion 144 billion.
