By Jory Cohen
“Drill, baby, drill!” is a quote most of us attribute to President Donald Trump during his inaugural address in January of this year, but it first made headlines in 2008 as a Republican campaign slogan.
While the environmental benefits of renewable energy production relative to fossil fuel energy generation are hard to ignore, what often gets overlooked are the financial advantages of cleaner sources of energy.
According to the most recent report published by the International Renewable Energy Agency (IRENA), in 2023 the average cost of energy production via solar photovoltaic systems (aka solar panels) was less expensive than power produced through burning fossil fuels by more than half (56 per cent cheaper). The average cost of energy produced by onshore wind projects was only two thirds (67 per cent cheaper) the cost of energy powered by fossil fuels.
It wasn’t always like this.
More than a decade ago, when analyzing the short-term economics of fossil fuels, “drill, baby, drill” was at least financially defensible. In 2010, solar power cost more than five times energy produced by fossil fuels, and onshore wind was 23 per cent more expensive. (Although this calculation ignores the risk of future stranded assets if fossil fuel reserves are forced to be left untouched, becoming devalued and resulting in a liability on balance sheets).
Back then, the argument for fossil fuels could be rationalized, but these days, nodding to the chorus of “drill, baby, drill” is simply out of tune.
People tend to point their finger at subsidies as the reason for greener power cost efficiencies, but that argument just doesn’t hold up. In the most recent report focused on energy subsidies, with data from 2017, IRENA estimated global subsidies to the energy sector to be at a minimum, $634 billion (USD). Approximately 70 per cent of this total supported fossil fuel production, while 20 per cent was directed at renewables. The balance was allocated to biofuels and nuclear.
Subsidies simply aren’t the reason why clean energy is now the more affordable option.
Technology advances and manufacturing efficiencies, coupled with low operational and on-going maintenance expenses relative to fossil fuels, have led to drastic cost reductions when producing cleaner forms of energy, in particular from solar and onshore wind sources.
The global average cost of installed solar panels was $130 USD per watt way back in 1975. It was $6.41 per watt in 2000 and $0.31 in 2023.
Whether you roll your eyes at the term global warming or you’re David Suzuki himself, the economics of renewable energy generation should be a breath of fresh air – literally. The Intergovernmental Panel on Climate Change, a body of the United Nations, reported that approximately 89 per cent of CO2 emissions globally were the result of fossil fuels (2017 data).
Does this mean that we should immediately drop fossil fuels altogether? We can’t.
According to the International Energy Agency, renewable electricity generation was about 30 per cent of total global energy production in 2023. Turning away from fossil fuels suddenly would cripple the world, but the transition to cleaner sources is essential from both a financial and environmental perspective.
The notion of “drill, baby, drill” turns a blind eye to the bottom line and the health of our planet.
We know now that renewables are more financially viable than fossil fuel alternatives, and significantly more environmentally conscious too. The cost to produce clean energy, in particular, from solar and onshore wind sources, has decreased dramatically over the past decade.
Our world is powered by energy. We might as well invest in the more affordable greener alternatives, especially given their beneficial effects on the environment.
“Drill, baby, drill” was so 2008.
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About Jory Cohen
Jory Cohen is the director of finance and impact investment at Inspirit Foundation.
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This post was previously published on Quoimedia.com and is republished here under a Creative Commons license.
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The post ‘Drill, Baby, Drill’ Is Outdated appeared first on The Good Men Project.