Winning the race against climate change will cost the world $2.7 trillion per year, energy bosses have been told.
The price of net zero covers more than a billion electric cars and enough wind and solar power for two thirds of the world’s needs.
The figure was calculated by analysts at Wood Mackenzie, which advises the energy sector, in a report published on Thursday.
They are looking to Cop28 in Dubai to “build consensus” around a vast revamp of the world economy towards renewables, hydrogen and carbon capture.
The UAE has made “fixing finance” and “fast-tracking the energy transition” two of its four priorities for the summit.
The global aim is to limit the rise in temperatures to 1.5°C. The scientific consensus is that climate change will be far more severe if the world gets any hotter.
“Achieving 1.5°C is going to be extremely challenging, but it is possible and greatly depends on actions taken this decade,” said Wood Mackenzie’s chief analyst Simon Flowers.
The research says current policies would lead to 2.5°C of warming. It says spending on net zero needs to more than double to bring that projection down.
Pledges in the lead-up to Cop28 could improve the forecast to 2°C but the amount of money being invested is half a trillion dollars short per year, according to Wood Mackenzie’s findings.
Plugging the gap is estimated to cost $2.7 trillion per year – more than the gross domestic product of most countries – or about $75 trillion between now and 2050. Most of the money is needed to run the world with clean power.
The projection is that solar and wind power would have to provide 63 per cent of our energy in a 1.5°C world, compared to 13 per cent now. The world would need to use half a billion tonnes of hydrogen, currently produced in small and expensive quantities.
The number of electric vehicles would have to rise from 43 million to well over a billion – a more than tenfold increase – with twice as much lithium needed to produce batteries.
Another aspect is carbon capture, which means trapping dirty gases before they reach the atmosphere and burying them deep underground or in the sea. This happens on a small scale today but seven billion tonnes of CO2 may need to be absorbed by 2050.
Prakash Sharma, the report’s lead author, said some oil and gas would still be used but would be surpassed by electricity as the world’s main energy market. He said there would be a “natural depletion” of fossil fuels as cleaner fuels develop.
Where to find the money to fund the net-zero push is sure to be a matter of debate at Cop28. The developing world has long campaigned for richer countries to shoulder more of the burden, citing their outsize historical contribution to climate change.
Wealthy nations say a long-delayed pledge of $100 billion a year for developing countries is finally on track to be delivered this year. There are calls to rethink the global banking system to unlock more funds.
“Sustained investment is critical for both the existing and new supply of zero and low-carbon energy sources,” Mr Flowers said.
“Cop28 can build the consensus for commitment amongst member states to meet the 1.5°C climate target and ultimately shape the outcome of the global energy transition.”
The talks in Dubai will see the world complete its first ever “global stocktake” of whether it is doing enough to keep global temperatures at or below the 1.5°C threshold, the goal set by the Paris Agreement in 2015.
A key UN report underpinning the stocktake says the world is off track and that “much more action” is needed. The UAE’s Cop28 presidency has called the document an “important reminder” of what needs to be done.
