From water shortages to severe weather events, the global impact of human-caused climate change can no longer be easily dismissed by those with a vested interest in maintaining the status quo. The most widely-accepted scientific models show that climate events making the news recently are only the beginning, and that dramatic changes must be embraced by the global public and private sectors in an attempt to stave off the worst of the consequences. Many governments and companies are pledging to achieve net-zero greenhouse gas emissions by 2050—a noble goal to be sure, but one that comes with a significant price tag according to a recently-released report by McKinsey & Company.
The consulting firm’s report is unwavering in its position that dramatic changes will be required, declaring the need for a fundamental transformation in the global economy, public policy, and consumer preferences. The costs will be substantial, with an estimated $9.2 trillion in global investment needed to limit temperature rises to 1.5°C and stabilize the situation. The number is a roughly 60% increase from current investment levels and represents half of corporate profits worldwide.
McKinsey’s authors do not tiptoe around the sheer breadth of change required to achieve net zero pledges by 2050, nor their impact on the global economy. They predict oil and gas production volumes will drop by over 50 percent, and coal production for energy generation will almost completely end. There will also be a near-total transition to 100 percent electric vehicles. The outlined changes are expected to drive growth in sectors such as hydrogen and biofuel energy generation, as well as carbon capture and management technologies and shifts in job allocation and employment levels.
Dickon Pinner, a senior partner at McKinsey and co-leader of McKinsey Sustainability, commented on the release of the report, saying, “The economic transition to achieve net-zero will be complex and challenging, but our findings serve as a clear call for more thoughtful, urgent, and decisive action, to secure a more orderly transition to net zero by 2050. The question now is whether the world can act boldly and broaden the response and investment needed in the upcoming decade.”