Encourage or discourage building solar panels, geothermal systems, and wind turbines. Renewable energy includes wind, solar, geothermal, hydropower, and other technologies that produce energy with little to no carbon dioxide emissions. Note that nuclear and bioenergy are considered separately.
- Governments offering tax incentives to families installing solar panels on their roofs.
- Farmers and landowners allowing the installation of wind turbines on their land.
- Research and development for improvements to renewable energy technologies in order to improve efficiencies and/or reduce costs.
- Businesses committing to powering themselves with 100% renewable energy.
Subsidizing renewable energy helps to limit coal and gas demand and reduce future temperature as it becomes the most affordable source of electricity.
Renewable subsidies can more significantly displace coal, oil, and gas demand when complemented with other actions, particularly the electrification of transport, buildings, and industry.
Impact. As you encourage renewables, watch demand for Renewables (in green) grow and the demand for Coal (in brown) and Natural Gas (in blue) reduce in the “Global Sources of Primary Energy” graph. Renewable energy is already growing steadily in the Baseline scenario, so the additional subsidies help reduce emissions but only so much.
Price-Demand Feedback. Subsidies to renewables decrease energy costs, which increase energy demand over what it would have been otherwise (people use more energy when it is cheap). This feedback effect somewhat reduces the positive impact of encouraging renewable energy. View this dynamic with the graph “Final Energy Consumption.” Learn more.
Delays. It takes time for the subsidies and encouragement of renewables to show up in installed capacity. New energy infrastructure is only added as demand grows or as the old infrastructure is retired and makes space for new infrastructure (this is known as “capital stock turnover delays”). The new infrastructure takes time to build. Subsidies and taxes are also phased in over 10 years, creating some of the delay in the speed at which actions make an impact.
Electrification to increase impact. Incentivizing electrification of buildings & industry and transport enables electricity from renewables to replace fuel (such as oil). Learn more.
Potential Co-Benefits of Encouraging Renewables🔗
- Decreased air and water pollution from switching away from fossil fuel fossil fuels: Coal, oil, and natural gas. Fuel derived from the remains of ancient plants and animals. sources can improve public health, worker productivity, and savings for governments and households.
- Renewables can help expand energy access during power outages.
- Renewable energy offers opportunities for high- and low-skilled employment.
- Although the price of renewable energy infrastructure continues to fall, many low-income communities remain unable to access the technology in both developed and developing countries. Working to ensure an equitable energy transition can help everyone to reap the benefits.1
- Policies in many developed countries limit solar and wind subsidy programs to homeowners, who often occupy higher income brackets.
The Renewables slider is divided into 4 input levels: taxed, status quo, subsidized, and highly subsidized. Each of the energy supply sliders (Coal, Oil, Natural Gas, Bioenergy, Nuclear, and Renewables) is set to reflect a similar percentage cost increase or decrease for each input level. The following table displays the numerical ranges for each input level of the Renewables slider:
|taxed||status quo||subsidized||highly subsidized|
|Change in price per kilowatt hour (kWh)||+$0.02 to +$0.01||+$0.01 to -$0.01||-$0.01 to -$0.02||-$0.02 to -$0.03|
|Cost increase or decrease||+30% to +10%||+10% to -10%||-10% to -30%||-30% to -60%|
This sector tracks the time it takes wind and solar installations to move through several stages – capacity under development, under construction, and actually producing energy.
The most important feedback loops in the renewables sector include:
- Overheating – costs go up when demand grows faster than the manufacturing and support industries can keep up.
- Site availability – efficiency goes down and costs go up when renewables are sited in less optimal locations (e.g., solar power in rainy climates).
- Learning effect – every doubling of cumulative production will bring costs down 20% (aka, the progress ratio). Costs come down as supply chains, business models, and production industries grow.
United States: Scaling up wind and solar energy sources is estimated to have avoided 7,000 premature deaths and saved $87.6 billion in health costs and climate impacts from 2007-2015.2
Benin: Solar-powered drip irrigation for women farmers was shown to increase household vegetable production and consumption, increase income level, and decrease food insecurity.3
Global: Increasing the share of renewable energy in the global energy supply to 65% could generate 6 million jobs and add $19 trillion to the world economy by 2050.4
Why doesn’t encouraging renewables with a big subsidy avoid much future warming alone?
- Renewables only reduce CO2 emissions when they displace fossil fuels. In some cases renewable energy just meets new energy demand and doesn't replace the demand met by coal and gas.
- There is a price-demand feedback effect – in order to grow, renewables are made less expensive. The drop in energy price boosts demand, undoing some of the positive effect.
How can I get renewables to grow faster?
- Discourage fossil fuels by taxing them individually or setting a carbon price.
- Adjust the "Renewables R&D breakthrough cost reduction" slider to simulate a sudden breakthrough that would dramatically lower the cost of renewable energy.
- Incentivize electrification of buildings & industry and transport, which enables electricity from renewables to replace fuel.
How do you handle the availability and cost of storage of electricity from renewables? The cost of storage for renewables is explicitly modeled in En-ROADS, and as renewables become a significant part of energy supply, storage must be cost effective to enable further expansion.
Please visit support.climateinteractive.org for additional inquiries and support.
: Millstein, D., Wiser, R., Bolinger, M., & Barbose, G. (2017). The climate and air-quality benefits of wind and solar power in the United States. Nature Energy, 2(9).
: Burney, J., Woltering, L., Burke, M., Naylor, R., & Pasternak, D. (2010). Solar-powered drip irrigation enhances food security in the Sudano–Sahel. Proceedings of the National Academy of Sciences, 107(5), 1848–1853.
: IEA & IRENA. (2017). Perspectives for the Energy Transition – Investment Needs for a Low-carbon Energy System.