The net-zero transition will cost $275 trillion globally by 2050 as low-emission activities are ramped up and high-emissions activities decrease, according to a new report from consultancy McKinsey & Company.
The increase in capital spending on physical assets for energy and land-use equates to an average $9.2tn per year or an increase of $3.5tn on today’s annual spending, McKinsey found in its latest study: The net-zero transition: What it would cost, what it could bring.
The transition will also lead to extensive labour reallocations, with about 200 million direct and indirect jobs added to the labour market by 2050, making up for the 185 million positions lost over the same period, the report found, which assessed sectors that produce 85 per cent of overall emissions, with a detailed assessment of 69 countries.
“The net-zero transition will amount to a massive economic transformation,” said Mekala Krishnan, a partner at the McKinsey Global Institute and lead author of the report.
“Actions by individual companies and governments, along with coordinated support for more vulnerable sectors, countries, and communities, would facilitate the economic and societal adjustments that will be required.”
The $3.5tn increase in spending is equivalent to half of global corporate profits in 2020, one-quarter of total tax revenue or 7 per cent of household spending in the same year, according to McKinsey.
While today 65 per cent of energy and land spending goes to high-emissions products, in the future this trend would reverse with 70 per cent going to low-emissions products and enabling infrastructure.
“Accounting for expected increases in spending, as incomes and populations grow, as well as for currently legislated transition policies, the required increase in spending would be lower, but still about $1tn,” McKinsey added.
The spending shift would also be front-loaded, the report found, rising to 8.8 per cent of global gross domestic product today to as much as 6.8 per cent of GDP between 2026 and 2030 before falling.
While these spending requirements are large and financing has yet to be established, many investments have positive return profiles and should not simply be viewed as costs, McKinsey said,
“Moreover, technological innovation could reduce capital costs for net-zero technologies faster than expected," the company added.
While the effects of the transition will be felt globally and sector-wide, the impact will be uneven with the sectors most exposed set to be those working with high-emissions products or operations.
Lower-income countries and those with large fossil fuel resources will also be heavily hit, along with communities whose local economies depend on exposed sectors.
The most exposed sectors currently account for about 20 per cent of global GDP, with another 10 per cent of GDP is in sectors whose supply chains have high emissions, such as construction.
Meanwhile, low-income households across the globe would be disproportionately affected, due to upfront costs associated with buying new heaters or electric cars.
Last week, research company Wood Mackenzie warned that an accelerated energy transition to mitigate climate risk could shave $75tn off global GDP between 2022 and 2050 as countries push to meet their climate commitments.
The global economy is set to double in size in real terms, rising to $169tn by mid-century from the current $85.6tn, Wood Mackenzie said, adding that it expects temperatures to reach 2.5-2.7°C above pre-industrial levels by mid-century.
The energy transition must accelerate to cap levels at the 1.5°C agreed in the Paris Climate Accord, but while measures to lower temperature will boost global GDP, on aggregate, by 1.6 per cent by 2050, the actions required could slash output by 3.6 per cent, leading to a net drop of about 2 per cent by 2050.
McKinsey said that a poorly managed transition comes with risks, such as energy supply shortages and price increases, particularly if the shift to net zero is delayed or abrupt, which could lead to "asset stranding and worker dislocations".
A well-co-ordinated transition. on the other hand. could deliver long-term rewards, such as a decline in energy costs, improved health outcomes, and natural capital conservation.
Areas for growth would be more efficient operations from decarbonisation and the creation of new markets for low emissions goods, but most importantly, reaching net-zero emissions and limiting warming to 1.5°C " would prevent the most catastrophic impacts of climate change".
“A more orderly transition would not only avoid the worst impacts of climate change, but also have enormous benefits such as lower energy and production costs in the longer run,” said Hamid Samandari, a McKinsey senior partner.
“And the unity of intent and action it will require bodes well for solving other global problems. At the same time, the short-term risks of a poorly-thought transition must be reckoned with.”
Ultimately, the net-zero transition will depend on the engagement of businesses, governments, institutions and individuals across the globe, McKinsey said, with “a wholesale shift in mindset” required.
“The question now is whether the world can act boldly and broaden the response and investment needed in the upcoming decade," said Dickon Pinner, senior partner at McKinsey and co-leader of McKinsey Sustainability.
What is graphene?
Graphene is extracted from graphite and is made up of pure carbon.
It is 200 times more resistant than steel and five times lighter than aluminum.
It conducts electricity better than any other material at room temperature.
It is thought that graphene could boost the useful life of batteries by 10 per cent.
Graphene can also detect cancer cells in the early stages of the disease.
The material was first discovered when Andre Geim and Konstantin Novoselov were 'playing' with graphite at the University of Manchester in 2004.
PREMIER LEAGUE FIXTURES
Saturday (UAE kick-off times)
Watford v Leicester City (3.30pm)
Brighton v Arsenal (6pm)
West Ham v Wolves (8.30pm)
Bournemouth v Crystal Palace (10.45pm)
Sunday
Newcastle United v Sheffield United (5pm)
Aston Villa v Chelsea (7.15pm)
Everton v Liverpool (10pm)
Monday
Manchester City v Burnley (11pm)
The biog
Marital status: Separated with two young daughters
Education: Master's degree from American Univeristy of Cairo
Favourite book: That Is How They Defeat Despair by Salwa Aladian
Favourite Motto: Their happiness is your happiness
Goal: For Nefsy to become his legacy long after he is gon
'Joker'
Directed by: Todd Phillips
Starring: Joaquin Phoenix
Rating: Five out of five stars
MATCH INFO
Syria v Australia
2018 World Cup qualifying: Asia fourth round play-off first leg
Venue: Hang Jebat Stadium, Malayisa
Kick-off: Thursday, 4.30pm (UAE)
Watch: beIN Sports HD
* Second leg in Australia on October 10
The specs
Engine: 3.9-litre twin-turbo V8
Power: 620hp from 5,750-7,500rpm
Torque: 760Nm from 3,000-5,750rpm
Transmission: Eight-speed dual-clutch auto
On sale: Now
Price: From Dh1.05 million ($286,000)
England squad
Joe Root (captain), Alastair Cook, Keaton Jennings, Gary Ballance, Jonny Bairstow (wicketkeeper), Ben Stokes (vice-captain), Moeen Ali, Liam Dawson, Toby Roland-Jones, Stuart Broad, Mark Wood, James Anderson.
Favourite things
Luxury: Enjoys window shopping for high-end bags and jewellery
Discount: She works in luxury retail, but is careful about spending, waits for sales, festivals and only buys on discount
University: The only person in her family to go to college, Jiang secured a bachelor’s degree in business management in China
Masters: Studying part-time for a master’s degree in international business marketing in Dubai
Vacation: Heads back home to see family in China
Community work: Member of the Chinese Business Women’s Association of the UAE to encourage other women entrepreneurs
2024%20Dubai%20Marathon%20Results
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Racecard:
6.30pm: Mazrat Al Ruwayah (PA) | Group 2 | US$55,000 (Dirt) | 1,600 metres
7.05pm: Meydan Sprint (TB) | Group 2 | $250,000 (Turf) | 1,000m
7.40pm: Firebreak Stakes | Group 3 | $200,000 (D) | 1,600m
8.15pm: Meydan Trophy | Conditions (TB) | $100,000 (T) | 1,900m
8.50pm: Balanchine | Group 2 (TB) | $250,000 (T) | 1,800m
9.25pm: Handicap (TB) | $135,000 (D) | 1,200m
10pm: Handicap (TB) | $175,000 (T) | 2,410m.
The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
ACL Elite (West) - fixtures
Monday, Sept 30
Al Sadd v Esteghlal (8pm)
Persepolis v Pakhtakor (8pm)
Al Wasl v Al Ahli (8pm)
Al Nassr v Al Rayyan (10pm)
Tuesday, Oct 1
Al Hilal v Al Shorta (10pm)
Al Gharafa v Al Ain (10pm)
MATCH INFO
Syria v Australia
2018 World Cup qualifying: Asia fourth round play-off first leg
Venue: Hang Jebat Stadium (Malacca, Malayisa)
Kick-off: Thursday, 4.30pm (UAE)
Watch: beIN Sports HD
* Second leg in Australia scheduled for October 10
Match info
Uefa Nations League A Group 4
England 2 (Lingard 78', Kane 85')
Croatia 1 (Kramaric 57')
Man of the match: Harry Kane (England)
The specs
Engine: 2-litre or 3-litre 4Motion all-wheel-drive Power: 250Nm (2-litre); 340 (3-litre) Torque: 450Nm Transmission: 8-speed automatic Starting price: From Dh212,000 On sale: Now
What can victims do?
Always use only regulated platforms
Stop all transactions and communication on suspicion
Save all evidence (screenshots, chat logs, transaction IDs)
Report to local authorities
Warn others to prevent further harm
Courtesy: Crystal Intelligence
MATCH INFO
Uefa Champions League, last-16. first leg
Atletico Madrid v Juventus, midnight (Thursday), BeIN Sports
UAE currency: the story behind the money in your pockets
UAE currency: the story behind the money in your pockets
How to wear a kandura
Dos
- Wear the right fabric for the right season and occasion
- Always ask for the dress code if you don’t know
- Wear a white kandura, white ghutra / shemagh (headwear) and black shoes for work
- Wear 100 per cent cotton under the kandura as most fabrics are polyester
Don’ts
- Wear hamdania for work, always wear a ghutra and agal
- Buy a kandura only based on how it feels; ask questions about the fabric and understand what you are buying
Napoleon
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Dubai works towards better air quality by 2021
Dubai is on a mission to record good air quality for 90 per cent of the year – up from 86 per cent annually today – by 2021.
The municipality plans to have seven mobile air-monitoring stations by 2020 to capture more accurate data in hourly and daily trends of pollution.
These will be on the Palm Jumeirah, Al Qusais, Muhaisnah, Rashidiyah, Al Wasl, Al Quoz and Dubai Investment Park.
“It will allow real-time responding for emergency cases,” said Khaldoon Al Daraji, first environment safety officer at the municipality.
“We’re in a good position except for the cases that are out of our hands, such as sandstorms.
“Sandstorms are our main concern because the UAE is just a receiver.
“The hotspots are Iran, Saudi Arabia and southern Iraq, but we’re working hard with the region to reduce the cycle of sandstorm generation.”
Mr Al Daraji said monitoring as it stood covered 47 per cent of Dubai.
There are 12 fixed stations in the emirate, but Dubai also receives information from monitors belonging to other entities.
“There are 25 stations in total,” Mr Al Daraji said.
“We added new technology and equipment used for the first time for the detection of heavy metals.
“A hundred parameters can be detected but we want to expand it to make sure that the data captured can allow a baseline study in some areas to ensure they are well positioned.”
