A new international analysis from the Institute for Energy Economics and Financial Analysis (IEEFA) has dispelled the widely held belief that cutting emissions raises energy costs. The report demonstrates that all major pathways to improve energy affordability—across electricity and gas—either directly support or are neutral to achieving global net-zero targets.
The study concludes that the lowest-cost global energy future is one built on renewables, efficiency, electrification, and competitive markets, rather than extending ageing coal and gas systems.
Clean Power Now the Lowest-Cost Option Worldwide
IEEFA finds that replacing ageing fossil-fuel assets is unavoidable worldwide, but the choice of replacement technology determines affordability. Globally:
- Renewables backed by storage and grid upgrades are now the cheapest form of new electricity generation, with costs falling rapidly across all regions.
- Persisting with ageing coal fleets raises price volatility and reliability risks, as breakdowns increase.
- Gas has become less competitive due to high fuel prices, depleted low-cost fields, and rising transport costs.
- Nuclear remains significantly more expensive than renewable alternatives in most markets.
Efficiency and Electrification Offer the Largest Savings
Across continents, households and industries can achieve dramatic bill reductions by adopting clean technologies:
- Modern electric appliances, heat pumps, rooftop solar, and batteries can cut net household energy costs by as much as two-thirds.
- Industrial electrification and efficiency upgrades can halve operating costs, often with payback periods measured in months, not years.
- Distributed solar and demand-shifting technologies can prevent billions in grid and generation spending globally.
Market Failures, Not Renewables, Drive High Energy Prices
The report stresses that renewables are not responsible for rising electricity prices. Instead, high costs are driven by:
- Uncompetitive or concentrated energy markets
- Inefficient regulation and slow approval processes
- Volatile global gas and coal prices
- Ageing, failure-prone fossil-fuel infrastructure
Periods of high renewable generation consistently correlate with lower wholesale prices across major global markets.
The Global Conclusion: Affordability and Net Zero Are Aligned
IEEFA’s overarching message is unequivocal:
The cheapest path to lower global energy bills is the same path that delivers climate stability.
By accelerating renewable deployment, reforming markets, and enabling energy-efficient technologies, countries can simultaneously cut emissions, reduce consumer bills, and strengthen energy security.
