Report: Global net zero transition requires £9.2 trillion annually
An additional £9.2 trillion is needed annually to limit the global temperature rise to 1.5C and end the climate crisis, according to a new report by McKinsey.
The influential consulting firm’s latest report – The net-zero transition – examines how demand, spending and jobs would need to change in order to reach net zero.
Although time is running out, reaching net zero carbon emissions by 2050 would give the world a chance of capping temperature rises at 1.5 degrees Celsius above pre-industrial levels – avoiding the worst fall-out from climate change.
The report says that achieving this would require spending on physical assets for energy and land-use systems of about $275 trillion, or $9.2 trillion per year on average – an annual increase of $3.5 trillion on current spending. The extra amount the world must spend to create a net zero emissions economy is equivalent to half all profits currently generated by companies globally.
McKinsey said that whilst its calculation is much higher than most other estimates by economists, it stressed such investments could be lucrative, and the long-term costs of not doing enough to tackle climate change would be greater.
The report also noted large uncertainties relating to how such a transition would play out and that some populations and sectors would be more exposed than others to disruption, notably poorer countries and those reliant on fossil fuels.
In publishing its findings, the report said: “The goal of this research is to provide stakeholders with an in-depth understanding of the nature and magnitude of the economic and societal adjustments a net zero transition would entail. The findings serve as a clear call for more thoughtful and decisive action, taken with the utmost urgency. Our hope is that this analysis provides leaders with the tools to collectively secure a more orderly transition to net zero by 2050.”
