McKinsey, a global management consulting firm, has released an elaborate report extensively studying the topic of achieving net zero and has provided valuable insights and recommendations on the matter.
Though there has been meaningful momentum, the world is not on track to achieve the goal set out in the Paris Agreement of limiting warming to well below 2°C or ideally 1.5°C. To meet that goal, countries and companies have committed to reaching net-zero emissions of CO2 and reducing emissions of other greenhouse gases. But there has not been enough progress. The share of primary energy produced by renewable sources, for example, has risen slowly, from 8 percent in 2010 to 12 percent in 2021. If emissions stay on their current trajectory net zero would not arrive even by the end of the century.
McKinsey says that a successful net-zero transition will require achieving not one objective but four interdependent ones: emissions reduction, affordability, reliability, and industrial competitiveness. A poorly executed transition could make energy, materials, and other products less affordable, compromising economic empowerment. It could also make the supply of energy and materials less secure and resilient, and it could render some countries and companies less competitive. If that happened, progress toward net zero itself could stall.
Their research has found practical ways to address those objectives simultaneously. Seven principles can help stakeholders successfully navigate the next phase of the transition. For example, deploying lower-cost solutions and driving down the cost of more expensive ones could bolster affordability. Managing existing and emerging energy systems in parallel could make access to energy more reliable. Seeking opportunities by using comparative advantage as a guide could help countries bolster their competitiveness.
McKinsey examined the potential implications of applying two principles: deploying more lower-cost solutions and using R&D and other measures to double the expected rate of cost declines. Their illustrative analyses found that doing so could substantially improve the current trajectory of emissions and help limit warming to what the Paris Agreement envisions. Capital spending on low-emissions technologies would potentially be one and a half to two times as large as it is now—as opposed to about three times, as might be the case if the two principles were applied less extensively.
News Source: McKinsey
