A five-year delay to decarbonization efforts could see global average temperatures rising to 3 degrees Celsius above pre-industrial levels and result in a 55% fall in global average spending, a report by consultancy Wood Mackenzie showed.
Why it’s important
The impact of a five-year delay to a move to low-carbon energy sources could result annual average spending to fall to $1.7 trillion, 55% lower than what Wood Mackenzie estimates is needed to reach net zero emissions by 2050.
Total investment could fall to $48 trillion with such a delay, compared to $75 trillion needed to reach net zero.
Context
Wood Mackenzie published its most recent energy transition outlook in Sept. 2023. Since then, the risks of delays in the transition to low-carbon energy have grown, amid political uncertainties, inflation and elections across the world.
At UN climate talks last year, countries agreed to begin reducing global consumption of fossil fuels so as to achieve net zero emissions by 2050. They had already agreed to keep global warming to within 1.5C above pre-industrial temperatures.
Key quote
“With half of the global population heading to polls in 2024, political realities and climate scepticism in the major emitting countries, such as the US and Europe, could reduce the support for the transition as voters seek economic security and price stability,” said Prakash Sharma, vice president, scenarios and technologies at Wood Mackenzie.
By the numbers
Sector Capex (2023-2050) under delayed transition Capex (2023-2050) under net zero scenario
Upstream oil & gas $15 trillion $5 trillion
Power generation $17 trillion $30 trillion
Power grid & EV infrastructure $12 trillion $29 trillion
Metals & mining $2.75 trillion $4 trillion
Hydrogen & CCUS $1.25 trillion $7 trillion
(By Nina Chestney)
