- Climate change is estimated at $ 9.2 trillion annually
- Economic volatility and risk of reaction with poor management
- Social shifts and funding require more attention than technology
LONDON, Jan 25 (Thomson Reuters Foundation) – The big shifts in thinking and large-scale funding needed for a rapid global transition to a climate-smart economy are far behind schedule, even though most of the necessary technology already exists, political officials and analysts warn.
About $ 9.2 trillion will need to be spent on new energy infrastructure alone and changes in land use and agriculture each year by 2050, up from $ 5.7 trillion today, researchers at McKinsey & Company said Tuesday.
The annual increase of $ 3.5 trillion is equivalent to half of global corporate profits, a quarter of total tax revenue and 7% of household spending in 2020, the report said, calling it a “call to action.”
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“In essence, we plan to rebuild an economy that took one or two centuries to build over the next three decades,” said Dean Piner, McKinsey Sustainability’s world leader and co-author of the report.
“Something of this magnitude – scale and speed – is underestimated,” he added.
But gaining public recognition for climate change – including among affected workers and those who pay their electricity bills – and managing it in a way that avoids backlash can be as big a challenge as raising new funding.
The economy, which uses renewable energy sources, must grow at the same pace as fossil fuel economy contracts to keep jobs and energy prices stable, Piner told Thomson Reuters.
“If you don’t, the likelihood of volatility, supply shortages, rising prices and system shocks will be much higher,” he said in a telephone interview.
About 90% of the world’s economy is now covered by commitments to reduce climate-changing emissions to zero by about the middle of the century, according to the nonprofit Net Zero Tracker.
But translating these promises into action will be a much more challenging task, which will require intensifying global cooperation, stronger monitoring, more funding and ensuring that vulnerable people do not remain in the process.
“No one is moving fast enough. The world really needs to pick up pace,” US climate envoy John Kerry said at a World Economic Forum (WEF) event last week, calling for “drastic changes in the way governments behave and how the world behaves.” myself. “
Fatih Birol, executive director of the International Energy Agency, said about $ 1 trillion a year is invested in clean energy, carbon capture technologies and energy efficiency, which should grow to about $ 3 trillion a year.
Transforming energy systems soon enough will be “very, very difficult, but not impossible,” he said, adding that the only other choices are more extreme weather and other deadly climate impacts.
But while the risks of inaction on the climate are becoming more apparent due to floods, forest fires, storms, droughts and heat, emissions that are forcing them to continue continue to rise, said UN Secretary-General Antonio Guterres.
Scientists say greenhouse gas emissions should be reduced by 45% by 2030 to stay on track towards zero targets, but instead they should increase by 14%, which is “mind-boggling,” Guterres said.
“Turning this ship will require tremendous willpower,” he said at a separate WEF event.
Another problem is the fundamental disagreement over the right way to achieve climate goals.
Saudi Arabia’s oil-rich energy minister said last week that his country sees a way forward in removing fossil fuel emissions rather than eliminating them.
“It must be left to all countries to choose their right choice,” said Prince Abdullaziz bin Salman.
Vicki Hollub, CEO of Occidental Petroleum, said her company, like others, is looking for ways to “reduce” oil and gas emissions and is investing in carbon dioxide (CO2) suction directly from the air.
“We all understand that climate change is real, it will happen, it is happening today, and we must do everything we can to mitigate it,” she said during the WEF event.
But researchers say while the technology exists to capture and store or use carbon emissions from power plants or from the air, it remains expensive and too little capacity is being built to meet demand.
This suggests a high reliance on technology to rapidly reduce emissions and contain climate change is unlikely to succeed.
Of the 46 technologies, from battery storage to direct CO2 capture that are seen as critical to reducing emissions by almost half of this decade, 44 are “not moving fast enough,” Kerry said.
“Governments are investing too little in clean energy technology itself,” he said.
Part of the problem is cost, with poor countries especially facing the high initial costs of switching to solar or wind energy, even if in the long run it produces cheaper energy, the McKinsey report said.
LOSSES OF WORK
Social barriers to a climate-friendly economy are equally complex, McKinsey researchers say.
They found that the transition to a clean energy economy could lead to an increase of about 200 million jobs and the loss of about 185 million direct and indirect jobs by 2050.
But these changes may be concentrated in multiple geographic areas rather than spreading across the country, as in the case of shifts due to automation or globalization, said Mekala Krishnan, author of a report with the McKinsey Global Institute.
At least seven counties in the U.S. state of Texas, for example, receive 20% or more of their oil and gas production income, the report said, which could provoke resistance to change without good economic transition plans.
Krishna said investors with fossil fuel assets that could fall in value as a result of the transition to energy could also block change if they are not offered incentives to mitigate losses.
To ensure a fair, efficient and rapid transition, “government and business … must act with unity, determination and ingenuity,” the McKinsey report said.
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Lori Goering’s report @lauriegoering; edited by Megan Rowling. Please note the Thomson Reuters Foundation, a Thomson Reuters charity. Visit http://news.trust.org/climate
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