The world may gain an estimated $78 trillion over coming decades by making this energy transition.

International negotiators can’t agree on how to phase out coal, in part because of opposition to carbon taxes, and now even countries that had been able to abandon the fuel are reversing that progress as the war in Ukraine raises energy prices.

The most common concern about scrapping coal is that replacing it with renewable energy would be too expensive, but we show in new research that the economic benefits would far outweigh the costs.

We analyze this great carbon arbitrage, as we call it, in a recent working paper that calculates the cost of replacing coal with renewables, as well as the social benefits of this important transition. The benefits from ending coal use come from avoiding damage from climate change and harm to people’s health. Our estimate is that by doing so the world would yield a net gain of nearly $78 trillion through the end of this century.

That’s around four-fifths of global gross domestic product now, and would be equivalent to about 1.2 percent of annual global economic output during the period.
It’s sound economic logic to pay for the replacement of coal with renewables to reap a net social gain measuring in the tens of trillions of dollars.