‘Drill, baby, drill’ was so 2008. Now we need to invest in more affordable greener alternatives
Jory Cohen, Inspirit’s Director of Finance and Impact Investment, wrote an opinion editorial for the Toronto Star on the economics of energy production. Nowadays, renewable sources like solar and onshore wind projects are more cost effective than power produced through burning fossil fuels. Investing in cleaner forms of energy isn’t just about environmental impact, it’s about the financial bottom line too.
Read the full article here. Below is an excerpt.
According to the most recent report published by the International Renewable Energy Agency (IRENA), in 2023 the average cost of energy production via solar photovoltaic systems (aka solar panels) was less expensive than power produced through burning fossil fuels by more than half (56 per cent cheaper). The average cost of energy produced by onshore wind projects was only two thirds (67 per cent cheaper) the cost of energy powered by fossil fuels.
It wasn’t always like this.
More than a decade ago, when analyzing the short-term economics of fossil fuels, “drill, baby, drill” was at least financially defensible. In 2010, solar power cost more than five times energy produced by fossil fuels, and onshore wind was 23 per cent more expensive. (Although this calculation ignores the risk of future stranded assets if fossil fuel reserves are forced to be left untouched, becoming devalued and resulting in a liability on balance sheets).
Back then, the argument for fossil fuels could be rationalized, but these days, nodding to the chorus of “drill, baby, drill” is simply out of tune.