You may not know it from the headlines, but there is some good news about the global fight against climate change.
A decade ago, the cheapest way to meet growing electricity demand was to build more coal or natural gas power plants. No longer. Solar and wind energy are not only better for the climate; In addition, they are now cheaper on a utility scale than fossil fuels and less harmful to people's health.
Nevertheless, renewable energy projects are encountering headwinds, including in the world's rapidly growing developing countries. I study energy and climate solutions and their impact on society and see opportunities to address these challenges and expand renewable energy – but this requires international collaboration.
Falling prices for clean energy
As their technologies have matured, solar and wind power have become cheaper than coal and natural gas for utility-scale electricity generation in most areas, in large part because the fuel is free. Total global electricity generation from renewable sources saved $467 billion in avoided fuel costs in 2024 alone.
Due to falling prices, over 90% of all new power generation capacity added globally in 2024 came from clean energy sources, according to the International Renewable Energy Agency.
At the end of 2024, renewable energy accounted for 46% of the world's installed electricity capacity, with a record 585 gigawatts of renewable energy capacity added that year – about three times the total generating capacity in Texas.
Health benefits of eliminating fossil fuels
Affordability aside, replacing fossil fuels with renewable energy is healthier.
Burning coal, oil and natural gas releases tiny particles into the air in addition to toxic gases; These pollutants can make people sick. A recent study found that fossil fuel air pollution causes an estimated 5 million deaths annually worldwide, based on 2019 data.
For example, using natural gas to fuel stoves and other appliances releases benzene, a known carcinogen. The health risks of this exposure have been found to be comparable to secondhand tobacco smoking in some households. Burning natural gas has also been linked to asthma in children, with one study finding an estimated 12.7% of childhood asthma cases in the United States can be attributed to gas stoves.
Fossil fuels are also the main sources of climate-warming greenhouse gases. When burned to generate electricity or to power factories, vehicles and equipment, they release carbon dioxide and other gases that accumulate in the atmosphere and trap heat near the Earth's surface. This accumulation has increased global temperatures and led to more heat stress, respiratory illnesses and the spread of disease.
Electrifying buildings, cars and devices and powering them with renewable energy will reduce these air pollutants while slowing climate change.
So what's the problem?
Despite the proven economic and health benefits of the transition to renewable energy, regulatory inertia, political gridlock and a lack of investment are slowing the deployment of renewable energy in much of the world.
In the United States, for example, permitting large energy projects takes an average of 4.5 years, and permitting new transmission lines can take a decade or longer. The vast majority of planned new energy projects in the U.S. use solar power, and these delays are slowing them down.
The Energy Permitting Reform Act 2024, introduced by Sens. Joe Manchin, a Democrat from West Virginia, and John Barrasso, a Republican from Wyoming, to speed up permits, did not pass. Manchin called it “just another example of politics getting in the way of what’s best for the country.”
An even greater challenge faces developing countries whose economies are growing rapidly.
These countries must meet increasing energy needs. The International Energy Agency assumes that emerging markets will account for 85% of additional electricity demand from 2025 to 2027. But in most of them the development of renewable energies is lagging behind. The main reason is the high cost of financing renewable energy construction.
In many developing countries, wind and solar projects are more expensive to finance than coal or gas. Fossil fuel projects have a longer history, and financial and policy mechanisms have been developed over decades to reduce lender risk on these projects. These include government payment guarantees, stable fuel contracts and long-term revenue contracts that help ensure lender repayment.
Both lenders and governments have less experience with renewable energy projects. Therefore, these projects often come with weaker government guarantees. This increases risk for lenders, causing them to charge higher interest rates, making renewable projects more expensive up front, even if the projects have a lower overall cost.
To reduce borrowing costs, governments and international development banks can take steps to make renewable projects safer for investors. For example, they can keep energy policy stable and cover part of the lenders' investment risk with public funds or insurance.
When investors trust they will be paid, interest rates drop dramatically and renewable energy becomes a cheaper option.
Without international cooperation to reduce financing costs, developing countries could miss out on the renewable energy revolution and suffer decades of rising greenhouse gas emissions from fossil fuels, which would worsen climate change.
The path ahead
To avoid the worst effects of climate change, countries have agreed to reduce their greenhouse gas emissions over the next few decades.
Achieving this goal will not be easy, but it is significantly easier because renewable energy is more affordable than fossil fuels in the long term.
By switching the world's electricity supply to renewable energies and electrifying buildings and local transport, today's greenhouse gas emissions could be reduced by around half. The other half comes from sectors where it is more difficult to reduce emissions – steel, cement and chemical production, aviation and shipping, and agriculture and land use. Solutions are developed but take time to mature. Good governance, policy support and accessible finance will also be crucial for these sectors.
In addition to reduced climate risks, the transition to renewable energy offers major economic and health benefits – if countries can overcome political obstacles at home and work together to expand financing to developing countries.
Author: Jay Gulledge, Visiting Professor of Practice in Global Affairs, University of Notre Dame; University of Tennessee
This article is republished from The Conversation under a Creative Commons license. Read the original article.