Global carbon pricing will have to increase more than seven-fold to contain global warming to pre-industrialisation levels of 1.5°C under the Paris Agreement, according to consultancy Wood Mackenzie.
Carbon prices would need to rise to $160 per tonne of carbon dioxide by 2030, up from the current global average of $22 per tonne to support the "1.5-degree pathway", said Prakash Sharma, head of markets and transitions for Asia-Pacific at Wood Mackenzie.
The Paris Agreement provides a mandate for countries to lower their carbon emissions to well below 2°C above pre-industrial levels, preferably about 1.5°C.
Around $50 trillion in capital expenditure is required to reach the 1.5°C goal, with $27tn to come from the deployment of new power capacity, energy storage, electrolysers and carbon capture by 2050, Wood Mackenzie's head of markets and transition for Americas, David Brown, said.
The remaining $23tn would be needed to cover associated infrastructure, battery metals and hydrocarbons, he added.
Governments need to prioritise production of low-carbon hydrogen as part of their abatement strategies, as well as pursuing strategies to deliver negative emissions.
Carbon prices, direct incentives and tax policies could help meet some of the abatement costs, Wood Mackenzie said.
Carbon capture, utilisation and storage, which is favoured by several oil producers to green their processes, could also form a significant part of the abatement strategy, the report said.
"Getting to 1.5 degrees will be impossible without capturing, storing and using huge volumes of carbon dioxide," said Tom Heggarty, principal analyst, energy transition practice at Wood Mackenzie. "Capture and storage of carbon dioxide is only one part of the equation. There are opportunities to commercialise and use captured carbon."
Industries such as cement, methanol and fertilisers could make use of the strategy to reduce the energy intensity of their production facilities, the Edinburgh-based firm said in its report.
Power and industrial sectors will also play a key role in decarbonisation towards the 1.5°C range, it said
Last month, the US rejoined the Paris Agreement and revived an Obama-era metric to compute the social cost of carbon.
The world's largest hydrocarbons producer and the second-biggest emitter set the social cost of carbon at $51 per tonne of carbon dioxide.
The figure is temporary and is expected to rise to $125 per tonne after a thorough analysis, according to Michael Greenstone of the Energy Policy Institute in Chicago.
