Rethinking the Cost of Energy: The True Price of Fossil Fuels vs. Renewable Alternatives

In a recent round table discussion at the Airports of Tomorrow conference organized by the World Economic Forum a question was posed that sparked a deeper reflection: When will renewable fuels decrease in price to match fossil fuels? This query, while common, might be framing the issue incorrectly. Perhaps the real question we should be asking is not why renewable fuels are expensive, but rather, why fossil fuels are unaffordable.

The Hidden Costs of Fossil Fuels

The Fifth National Climate Assessment by the US Government sheds light on the increasing direct costs of climate change. These costs are not just abstract numbers; they manifest in our daily lives and communities. Rising temperatures, extreme weather events, wildfires, vector-borne diseases, and food insecurity are just the tip of the iceberg. The impact on physical and mental health, ecosystem disruptions, water stress, and agricultural losses are profound. In the US alone, weather-related disasters currently generate at least $150 billion per year in direct damages, a figure projected to rise due to climate change.

Over the next few decades, we face the prospect of ecosystem disruptions, water stress, agricultural losses, relocation costs due to coastal flooding, major impacts on ecosystem services, substantial health costs, negative impacts on economic production, and a restructured investment landscape. Despite this knowledge, the debate often centers on the cost of renewable fuels rather than the unaffordable damage caused by fossil fuels.

The Economics of Carbon Reuse

Renewable fuels primarily reuse CO2 that was previously in the atmosphere, unlike fossil fuels, which add new greenhouse gases (GHGs) to our thin layer of air. Polluting our atmosphere with excess fossil CO2 has no cost. This fundamental difference is often overlooked in cost comparisons.

Historical Precedents for Change

History is replete with examples of harmful practices being banned through international cooperation, despite strong industrial opposition. The Montreal Protocol of 1987, which phased out CFCs, and the eventual banning of Tetraethyl lead in gasoline are cases in point. These changes faced fierce lobbying and disinformation campaigns but ultimately led to significant environmental and health benefits. After all, today we aren't debating going back to cheap CFCs and burning a hole in the ozone layer again. Nor are we talking about reintroducing leaded gasoline and literally poisoning our brains.

The Inconvenient Truth of Fossil Fuels

The link between the burning of fossil fuels and climate change is well-established. Reports suggest that ExxonMobil had internal forecasts as early as 1977 predicting global warming as a consequence of burning fossil fuels. Yet, disinformation and lobbying continue to obscure this reality. In recent decades the evidence has only been growing about this link. With the science continuously being tested, refined and improved over the years and reported on a regular basis by the Intergovernmental Panel on Climate Change.

The Utility and Cost of Fossil Fuels

Fossil fuels have undeniably transformed society. Their energy density, storability, and versatility ended the era of sailing ships, reduced reliance on animal power, and ended whaling for oil. Their utility is immense, but so is the cost of using our atmosphere as a dumping ground for pollution—a cost that is becoming increasingly undeniable and soon, unaffordable.

Social Justice and Energy Inequality

The energy landscape is also a canvas of stark social injustice. Consider that at least 80% of the world's population has never flown, yet the most frequent fliers, constituting only 1% of the world’s population, account for more than half of the carbon dioxide emissions from passenger air travel. High-income countries average 56,469 kWh of energy per capita annually, while low-middle-income countries use just 6,658 kWh, with parts of Africa using less than half of that. The cost of pollution from fossil fuels is borne by everyone, disproportionately impacting disenfranchised communities living near high sources of pollution such as ports, highways, airports, and petrochemical complexes.

Allocating True Costs

It's time to start allocating these environmental and health costs to fossil fuels. Many of these costs are already perversely borne by society and taxpayers in the form of higher medical expenses, extreme weather damage, flood defences, pollution cleanup, and even fuel subsidies, but many don’t even realise this.

The Promise of Renewable Fuels

Renewable fuels stand at the forefront of immediate, actionable solutions in the transition to a more sustainable energy future. As 'drop-in' fuels, they seamlessly integrate into existing engines and infrastructure, requiring no modifications. This is particularly crucial in hard-to-abate sectors like heavy-duty trucking and aviation. A prime example is Sustainable Aviation Fuel (SAF), which not only burns cleaner but can also reduce greenhouse gas (GHG) emissions by over 90% compared to traditional jet fuel. The potential for SAF extends even further. By utilizing waste feedstock, which would otherwise decompose into methane—a potent greenhouse gas—SAF could achieve net carbon-negative status. Today there are over 10 different processes for producing SAF; from hydroprocessing organic fats, oils and greases to synthetic kerosene made from green hydrogen. These innovative approaches underscore the transformative potential of renewable fuels in combating climate change and steering towards a greener future.

Conclusion

The question of when renewable fuels will match the price of fossil fuels is misleading. The real issue is recognizing the hidden, unaffordable costs of fossil fuels and valuing renewable energy sources for their true worth. As we stand at this crossroads, it's crucial to reframe our perspective on energy costs and make informed choices for a sustainable future.