A new report suggests that $2.7 trillion yearly would be required to achieve net zero emissions by 2050.
Wood Mackenzie, a global insight business for renewables, energy, and natural resources, released an energy transition outlook on Thursday that found the world is not currently on track to reach the goals outlined in The Paris Agreement.
Simon Flowers, chairman and chief analyst at Wood Mackenzie, said, “The pathway to net zero was always going to be challenging, but Russia’s invasion of Ukraine has made it more difficult especially in the near term.
“The conflict quickly curtailed the global supply of energy and metals, amplifying the impact of underinvestment in the resources sector over the last decade. Supply security fears increased around the world, and higher prices across energy and mining commodities have fuelled inflation,” he added.
Wood Mackenzie’s ideal scenario requires that “the energy trinity challenges” — sovereignty, security, and sustainability — are each prioritized and “driven by new technologies and global cooperation.”
“Fossil fuels share in energy supply falls to around 20% by 2050 from 80% today, primarily driven by rapid electrification supplied by solar, wind, advanced nuclear, geothermal and hydrogen and its derivatives.”
Prakash Sharma, vice president of scenarios and technologies research at Wood Mackenzie, said, “Oil and gas still have a role to play as part of a managed transition.”
“There will be a natural depletion as low and zero carbon options develop but supply still needs to be replenished as we move towards net zero,” he added.
“Electricity will become the largest energy market, overtaking oil and gas as a fast-response, low cost, and efficient energy source.”
To reach net zero by 2050, Wood Mackenzie estimates that significant funding will be necessary.
Between 2023 and 2050, the firm estimates the outlined plan will cost roughly $75 trillion, averaging an annual cost of $2.7 trillion.
Flowers said many countries have pledged to reduce emissions substantially, but “no major country is on track to meet their 2030 emissions reduction goals, let alone net zero.”
“Policy landscape is shifting to direct incentives and targeted support to accelerate the development of new technologies, but countries need to urgently address obstacles including permitting restrictions and constraints in the electricity supply chain,” he added.