McKinsey: fundamental transformation of global economy needed for net zero

theguardian.com:

Reaching net zero climate emissions by 2050 will require a “fundamental transformation of the global economy”, according to a report by McKinsey, one of the world’s most influential consulting firms.

It estimates that $9.2tn will need to be invested every year for decades to limit the global temperature rise to 1.5C and end the climate emergency. The sum is a 40% increase on current investment levels and equivalent to half of global corporate profits.

The report warns that the economic transformation will affect every country and every sector, with those most reliant on fossil-fuel-burning experiencing the most change. McKinsey, which advises many governments and large companies, also says the transition will be front-loaded with, for example, the cost of electricity rising before falling later.

However, the report says reaching net zero is vital to avoiding the most catastrophic impacts of global heating, which would harm billions of people, and that many low-carbon investments are opportunities for economic growth and would lead to a lower-cost, more efficient economy. It also says the transformation becomes more expensive the longer action is delayed.

“$9.2tn is a very big number – big enough for anybody to pay attention to,” said Jonathan Woetzel at the McKinsey Global Institute, the consultancy’s in-house thinktank, and an author of the report. “But it’s not an impossible number. It’s not like we haven’t [made transformations] before in other ways”, such as the global shift to urban living.

The economic transformation is from an economy that did not include the costs of environmental and social damage to one that does, according to Woetzel. “There will only be a sustainable economy, we won’t have any other kind.”

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