From Cost to Value

To make a real difference, we need to shift political focus from cost to value

We no longer live in an age where net-zero carbon solutions can be achieved simply through economic growth and sustainable policies that give rise to clean industries.

Policymakers must make decisions based on system value to realistically measure the impact of policies by taking into consideration not just the cost of energy, but also the broader impacts, encompassing emissions, water footprint, air quality and human health, job creation, energy access and resilience.

Adopting the System Value Approach gives us a more holistic evaluation of the economic, environmental, social and technical outcomes of policies and investments decisions.

Studies undertaken by WEF’s Electricity Industry Action Group, proves that an acceleration of a Sustainable Energy Transition can really pay off by delivering a higher net benefit than continuing on our current path.

Cost focus is not enough

To get serious about mitigating the climate crisis and to render societies more resilient to future challenges, we cannot afford to base decisions on imminent costs.

It is now more important than ever to consider the broader impacts of our decisions on society and planet – monetary or not.

Embrace value

Opting for renewables entails a higher upfront investment and will require grid upgrades. However, wind is free and abundant, while fossil fuel prices vary. Renewables displace carbon emissions, air pollution, and reduce water consumption.

Netting positive and negative impacts out – a sustainable energy transition has a higher societal return on investment than business-as-usual.

Invest to maximize societal return

IRENA estimates that a renewable-based Clean Energy Transition will grow employment by 14% and add 2.5% to global GDP compared to current plans.

Furthermore, every dollar spent delivers a societal return of three to seven dollars in fuel savings, elimination of fossil fuel subsidies and drastically reduced health and environmental damage.

Source: Irena, Transforming the energy system, 2019