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Calculating the Hidden Costs of Decarbonization
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Calculating the Hidden Costs of Decarbonization

Aug 05, 2022

By Raj Shah and Mrinaleni Das

We must decarbonize human activity if we are to stave off the worst effects of manmade climate change, say scientists and environmentalists. To contain the environmental impacts of the greenhouse gases we produce and support the switch to zero-emissions transport requires a rapid transition to sustainable, renewable sources of energy, such as wind, solar, nuclear and hydrogen.

Even so, most parts of the world still rely on fossil fuels for electricity and transport, and the switch may have negative impacts on their economies and the environment. Indeed, many policymakers oppose proposals for decarbonization because of the associated economic cost. To ensure global decarbonization by 2050, governments need to spend about U.S. $275 trillion on new infrastructure to hit the zero-emissions target. This is equivalent to 7.5% of GDP from 2021 to 2050. 

We looked at a number of studies that looked at the effects of current decarbonization plans and those that model the outcomes in the future. Most studies found that one of the primary drivers of decarbonization is the expectation that it will lead to a “greener” and cleaner world. But the benefits rely on the technologies used to exploit these green energy sources and strategies to counter the social and economic side effects. 


An often overlooked side effect of this transition is the possibility of significant unemployment and the need for this unutilized workforce to relocate and retrain. These include people in the fossil fuel extraction and processing industries, which would include lubricant and chemical companies, as well as thermal power generation, transport, shipping, chemicals, agriculture and a host of other industries, including of course the lubricant industry.

Indeed, all the industries listed above are consumers of lubricants, as well. Reduced economic activity is bad for the lubricants industry, beyond the decarbonization of lubricant raw materials themselves. 

Between 2010 and 2015, the Chinese government embarked on a five-year plan to increase the capacity of renewable energy to 504 gigawatts from 249 GW. To keep their commitment to the Paris Agreement, China’s policymakers are introducing frameworks to boost the market for “green jobs.” 

One study by Tsinghua University, Beijing, and University of California Berkley looked at the effects of renewable energy developments on direct and indirect employment. It concluded that new wind and solar projects would have a positive effect on the creation of construction, operation and maintenance jobs but only if the number of projects was “aggressive.” Conversely, without government subsidies, the opposite would be the case. 

The Chinese would have to spend almost U.S. $15 billion to address the induced negative economic impact of decarbonization. 

But what strategy might work for China may not be viable in Western democratic societies, where heavy-handed government intervention in the markets would be discouraged.

The Economy

Researchers from Argentina’s Bariloche Foundation and CIRED in France developed two “deep decarbonization” scenarios. They modelled and compared outcomes of the Paris Agreement pledges and the United Nations 17 Sustainable Development Goals.

They found that the UN 17 SDGs do not translate into an energy transition. Rather, they limit the diversification of fossil fuel sources. In their two scenarios, employment went up in energy, they went down in agriculture and transport. The two deep decarbonization scenarios would also increase national debt by 0.6 percentage points of gross domestic product and 1.6 pts, respectively, in 2050.

Some researchers voiced concerns that renewable energy only addresses climate-related issues and ignores environmental damage caused by land use and, as with wind turbines, the equipment’s physical size and propensity to disrupt wildlife. 

Renewable energy infrastructure can also cause air, water and land pollution. By doing so, it poses some serious environmental threats, which is an important point to consider before radical transition. 

Water Supply

Many power plants use fresh water for cooling, causing significant amounts of water withdrawal from normal supplies and thermal pollution from discharged cooling water. These can have a long-lasting impact on the environment. This led Oliver Fricko of the International Institute for Applied Systems Analysis, Austria, to look at the sustainability of using large volumes of fresh water to generate power.

Fricko concluded that freshwater use will continue to rise until 2100. Hydroelectric and nuclear power stations consume ever-growing quantities of freshwater, but are still promoted as environmentally friendly, in reality they consume ever-growing quantities of freshwater as demand increases. Shockingly, green energy policies increase water use by 611% and thermal pollution by 638%. Using seawater is an effective alternative and could potentially reduce freshwater consumption by 63%, but only reduces thermal pollution to 311%. High temperature cooling water discharged into the ocean causes stress in the aquatic system, while inconstant water flow from hydroelectric dams spoils adjacent agricultural land. 

Renewable Pollution

Another study found that hydroelectric plants emit a significant amount of carbon dioxide and methane. Strange as this may sound, rotting vegetation in the water emits about 1 billion tons of greenhouse gas per year, equivalent to 1.3% per year of anthropogenic emissions.

Solar power is a dependable and well-stablished source of renewable energy. But solar can be responsible for habitat loss, an increase in heat emission and disruption to wildlife. One of the main concerns associated with solar energy is waste by solar plants and the use of environmentally hazardous materials during the manufacturing process.

In recent years, the use of highly reactive materials such as lead, tin, bromine and iodine in the production of halide perovskite photovoltaic cells can lead to direct or indirect pollution of the environment. Yet halide perovskite is touted as the next generation of PV cells. Similarly, cadmium telluride in thin-film PV cells can also leach into the environment. Cytotoxicity tests have revealed that if ingested, cadmium telluride can give rise to a host of illnesses in nearby wildlife. 

Carbon Free

Total decarbonization is feasible but requires complex policy packages to best utilize investments. Governments would need to offer subsidies to ease the financial burden from consumers’ shoulders.

Policymakers should also be ready to face a significant increase in unemployment, as carbon-intense industries lay off workers. They should consider whether such models are sustainable in the long run. 

The hope is that decarbonization will lead at least to a slowing of the effects of climate change – rising sea levels, global warming, water scarcity, extreme weather and wildlife extinctions. However, depending on the technology used to generate power, there could be an adverse impact on wildlife and the environment in general. Because of the potential adverse environmental impact of decarbonization, the question remains, how green is green energy?

We need to be cautious while adapting and expanding decarbonization policies.

Raj Shah is a Director at Koehler Instrument Company based in New York. Mrinaleni Das is enrolled in Koehler’s internship program company and is a student of chemical engineering at State University of New York, Stony Brook, where Dr. Shah currently heads the external advisory board of directors.

The authors’ full analysis can be downloaded from this link.