Economic Analysis of Energy Transition: Costs and Benefits of Shifting to a Low-Carbon Economy

Joshua Kurutsi Tabki

Abstract


The paper reviews the multifaceted economic implications of transitioning from a fossil-fuel-based energy system to a low-carbon economy, a precondition for taming global climate change and fostering sustainable growth. On that premise, the cost-benefit analysis framework will form the backbone on which appraisal is made of immediate and long-term financial needs, infrastructural investments, and possible transitions in economic structure toward a low-carbon economy. It also measures the economic benefit of reduced greenhouse gas emissions, a healthier general population, environmental sustainability, and a workforce employed in new green industries. This study combines quantitative cost estimates with qualitative assessments-including policy analysis and stakeholder impacts from various sectors of the economy-through the combined-method approach. Data are obtained from international energy and economic databases, government reports, and in-depth case studies of countries at various stages of energy transition. The methodology given the direct and indirect benefits and externalities related to a low-carbon economy presents a detailed analysis of the economic trade-offs being considered. The findings highlight how government policy, regulatory frameworks, and financial incentives are indispensable in keeping transition costs in check while optimizing long-run economic dividends. Among these drivers, they have identified technological innovation in scaling up more efficient and cost-effective renewable energy options to reduce reliance on fossil fuels. As such, the analysis also identifies international cooperation supported by financial assistance to be particularly invaluable for those developing economies that face much more significant non-financial barriers to adjustment in low-carbon energy systems. Based on this perspective, from a cost-benefit point of view, economically speaking, this study develops a holistic view whereby the transition to low carbon could meet not only the imperatives of the environment but also add to sustainable economic growth across various regions.


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References


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