2 weeks Ago By Stjepan Kalinic
The world might be late to achieve its climate goals by 2030, but meeting the 2050 net-zero emissions deadline might come with a hefty price tag. According to the latest Wood Mackenzie Energy Transition Outlook, a green energy transition might cost as much as $3.5 trillion annually or $78 trillion in total.
The report presents four pathways for transitioning the energy and natural resources sector toward a low-carbon future: the base case (2.5°C warming), country pledges (2°C), a net-zero 2050 scenario (1.5°C), and a delayed transition (3°C).
The firm sees global energy demand rising, driven by rising income, population growth, and new power demands, such as data centers and electric vehicles. These developments require substantial investments in power supply, grid infrastructure, and critical minerals—each integral to sustaining renewable energy sources and supporting the energy transition. To stay on track with the 1.
5°C pathway, renewable capacity must more than triple by 2030, an ambitious goal given the current pace of renewables expansion. "Despite strong growth in renewables, the transition has been slower than expected in certain areas because many low-carbon technologies are not yet mature, scalable, or affordable," said Wood Mackenzie's VP Prakash Sharma . Renewables play a critical role in all scenarios.
Solar, wind, and other clean energy sources are projected to rise from 41% of the power supply today to 90% by 2050. However, they face supply chain challenges, regulatory hurdles, and the need for vast amounts of metals like lithium, nickel, and cobalt. Meeting the commodity needs adds additional complexity owing to geopolitical issues and slow mining development.
iShares Global Clean Energy ETF ICLN , which tracks around 100 clean energy-related companies, is down 16.12% year-to-date. Oil and gas are expected to remain in the global energy mix until 2050, though the scale of reliance varies across pathways.
In a delayed transition, where low-carbon technology costs fall slowly, oil and gas demand stays high, peaking at around 106 million barrels per day by 2030 and remaining substantial until 2047. However, in a net-zero pathway, oil demand would rapidly decline to about 32 million barrels daily by 2050. To achieve the net-zero pathway, governments must enact strong policies, such as carbon pricing, regulatory streamlining, and incentives for technologies like carbon capture and hydrogen.
Furthermore, reassessing the nationally determined contributions (NDCs) in 2025 will be discussed at the COP29 meeting in Azerbaijan next month. "Strengthened NDCs and global cooperation will be crucial to mobilize US$3.5 trillion annual investment into low-carbon energy supply and infrastructure, including critical minerals.
If these challenges can't be overcome, the goal of net zero emissions by 2050 will not be achieved," Sharma warned. Read Next: Gold Hits Record Highs, Defies Market Gravity: Why The Precious Metal Is Decoupling From Treasury Yields Photo by SkazovD on Shutterstock © 2024 Benzinga.com.
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