The Net-Zero Transition Equation

Although governments and companies are increasingly committed to actions against climate change, there are still significant challenges standing in the way.

The scale of the economic transformation that a net-zero transition would entail and the difficulty of balancing the substantial short-term risks of poorly prepared or uncoordinated action with the longer-term risks of insufficient or delayed action, are considered of major importance.

Capital spending on physical assets for energy and land-use systems in the net-zero transition between 2021 and 2050 would amount to about $275 trillion, or $9.2 trillion per year on average, an annual increase of as much as $3.5 trillion from today.

To put this increase in comparative terms, the $3.5 trillion is approximately equivalent, in 2020, to half of global corporate profits, one-quarter of total tax revenue, and 7 percent of household spending. An additional $1 trillion of today’s annual spend would, moreover, need to be reallocated from high-emissions to low-emissions assets.

The Net-Zero Transition Equation is not an easy one and requires charismatic leadership with strong problem-solving skills!

Read more HERE in this exceptional McKinsey report, a thorough analysis of 69 countries which demonstrates, beyond any doubt, that the challenges of the energy transition to zero carbon by 2050 are global.

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