《麦肯锡:一条经济实惠、可靠、有竞争力的净零之路(2023)(英文版)(48页).pdf》由会员分享,可在线阅读,更多相关《麦肯锡:一条经济实惠、可靠、有竞争力的净零之路(2023)(英文版)(48页).pdf(48页珍藏版)》请在三个皮匠报告上搜索。
1、 An affordable,reliable,competitive path to net zeroNovember 2023AuthorsMekala KrishnanHumayun TaiDaniel PacthodSven SmitTomas NauclrBlake HoughtonJesse NoffsingerDirk SimonEditorBenjamin PlotinskyContentsAt a glance 2There has been meaningful momentum toward net zero 4Nevertheless,the world is not
2、on track to reach net zero by 2050 5A poorly executed transition could compromise affordability,reliability,and competitivenessand slow progress toward net zero 9A well-managed transition would follow seven principles 14An illustration shows how following those principles could accelerate the worlds
3、 current trajectory 36Embracing a change of mindset can help the world move closer to its net-zero goals 41Technical appendix 43Acknowledgments 46Cover image:Sam Falconer All interior images:Getty ImagesCopyright 2023 McKinsey&Company.All rights reserved.Confidential and proprietary.Any use of this
4、material without specific permission of McKinsey&Company is strictly prohibited.An affordable,reliable,competitive path to net zero Though there has been meaningful momentum,the world is not on track to achieve the goal enshrined in the Paris Agreement of limiting warming to well below 2C or ideally
5、 1.5C.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 t
6、o 12 percent in 2021.If emissions stay on their current trajectory,estimates from various sources suggest,net zero would not arrive even by the end of the century.A successful net-zero transition will require achieving not one objective but four interdependent ones:emissions reduction,affordability,
7、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 le
8、ss competitive.If that happened,progress toward net zero itself could stall.Our 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 dr
9、iving 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.Following thos
10、e principles could substantially improve the worlds current trajectory.We 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.Our illustrative analyses found that doing so cou
11、ld 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 nowas opposed to about three times,as might be the case if the t
12、wo principles were applied less extensively.Embracing a change of mindset can help the world move closer to net zero.In addition to global commitments to reach net zero in the future,stakeholders should commit to making more and more progress every year and doing so in a way that addresses all four
13、objectives.At a glance2An affordable,reliable,competitive path to net zeroToday,the world is undertaking the net-zero transition,an ambitious effort to reach net-zero emissions of CO2 and reduce emissions of other greenhouse gases(GHGs).The goal of the transition is outlined in the Paris Agreement a
14、dopted at the United Nations in 2015:to limit global warming above preindustrial levels to well below 2.0C,and ideally to 1.5C.Doing so would reduce the odds of initiating the most catastrophic impacts of climate change.1 According to the Intergovernmental Panel on Climate Change(IPCC),limiting warm
15、ing to 1.5C would require reducing GHG emissions by 43 percent between 2019 and 2030 and cutting net emissions of CO2 to zero by around 2050.2But the effort to meet the goals of the Paris Agreement is not currently on track,as a recent report from the United Nations shows.3 Many public and private a
16、ctors,aspiring to meet those goals,are working to usher in the transitions next phase,one in which more capital flows toward the transition and the deployment of necessary technologies expands substantially.Often,the transition is envisioned as a single great challenge:reducing emissions from energy
17、,materials,and land-use and other systems.In practice,it consists of four objectives:emissions reduction,affordability,reliability,and industrial competitiveness.4 If achieving the first of those objectives risks compromising the other three,momentum toward net zero could be derailed.In this report,
18、we outline principles that can guide stakeholders in addressing all four objectives simultaneouslyand even help accelerate the progress of the transition.51 See Global warming of 1.5C,Intergovernmental Panel on Climate Change(IPCC),2018.2 Climate change 2022:Mitigation of climate change,IPCC,2022.3
19、See Technical dialogue of the first global stocktake:Synthesis report by the co-facilitators on the technical dialogue,United Nations Framework Convention on Climate Change,September 2023.4 Affordability is a particularly important priority.Recent research from the McKinsey Global Institute(MGI)has
20、found that 4.7 billion people are not yet economically empoweredthat is,they cannot meet essential needs and begin to achieve financial security.For details,including more about that definition of economic empowerment,see From poverty to empowerment:Raising the bar for sustainable and inclusive grow
21、th,McKinsey Global Institute,September 2023.5 This research focuses on the net-zero transition.Adaptation to climate change is another important part of the climate agenda.The subject is outside the scope of this report but will be explored in upcoming research by MGI.Introduction3An affordable,reli
22、able,competitive path to net zeroThere has been meaningful momentum toward net zeroThe world has made headway in reducing emissions.Today,net-zero commitments have been made by more than 8,000 companies and by countries representing 90 percent of global GDP;also,150 countries have pledged to reduce
23、methane emissions.6 Climate policy and legislation have become increasingly ambitious.And calls are growing to keep the transition from disproportionately affecting the developing world and vulnerable communities.7The good news is not limited to commitments and laws;solid,measurable progress is bein
24、g made as well.Innovation has made many new technologies more viable.For example,solar power and wind power account for more than 10 percent of electricity generation and 75 percent of new electricity-generating capacity.8 Electric vehicles(EVs)make up about 15 percent of new vehicle sales,and the r
25、ange of the average EV has increased nearly three times during the past decade.9 Large-scale plants are being built for such newer technologies as low-emissions steel production and carbon capture,utilization,and storage(CCUS).Businesses are starting to reallocate resources from high-emissions to lo
26、w-emissions products.10 Climate-related venture capital investments reached$70billion in 2022,almost double the 2021 amount.11 The global financial sector is strengthening its response to climate change;annual global investment in transition technologies has doubled,from$660 billion in 2015 to more
27、than$1 trillion today.12 And new market instruments,such as advance market commitments,are emerging to spur innovation.136“Race to zero campaign,”United Nations Framework Convention on Climate Change,2023;”Data explorer,”Net Zero Tracker,2023;“Global methane pledge:From moment to momentum,”US Depart
28、ment of State,November 2022.7 For example,see“UNCTAD urges channelling net-zero finance to support the energy transition in developing economies,”United Nations Conference on Trade and Development,October 17,2023.8“Growth in renewables achieved despite energy crisis,”International Renewable Energy A
29、gency,March 2023;and“Renewables,”International Energy Agency,July 2023.9“Electric vehicles,”International Energy Agency,July 2023;and Global EV outlook 2022,International Energy Agency,May 2022.10 Rob Bland,Anna Granskog,and Tomas Nauclr,“Accelerating toward net zero:The green business building oppo
30、rtunity,”McKinsey&Company,June 2022.11“Defying gravity,2022 climate tech VC funding totals$70.1B,up 89%on 2021,”HolonIQ,January 3,2023.12 Global landscape of renewable energy finance 2023,International Renewable Energy Agency and Climate Policy Initiative,2023.13 For example,Frontier Climate has alr
31、eady helped put in place prepurchase agreements for CO2 removals that will,once the technologies are developed,remove more than 200,000 tons of CO2 emissions.4An affordable,reliable,competitive path to net zeroNevertheless,the world is not on track to reach net zero by 2050Despite all that good news
32、,numerous estimates,including a recent one from the United Nations,show that emissions are not on track to reach net zero emissions of CO2 by 2050which,most estimates suggest,would be needed to limit warming to 1.5C.14 We examined 23“current policy”scenarios from the IPCC,McKinseys Global energy per
33、spective 2023,the Network for Greening the Financial System(NGFS),and the International Energy Agency(IEA).15 In none of the scenarios do global emissions of CO2 reach net zero,even by the end of the century(Exhibit 1).In the IPCC scenarios,the median level of warming by the end of the century is 2.
34、9C,and in the more recent McKinsey,NGFS,and IEA scenarios,it is 2.3C,2.8C,and 2.4C,respectively.1614 Technical dialogue of the first global stocktake:Synthesis report by the co-facilitators on the technical dialogue,United Nations Framework Convention on Climate Change,September 2023.The IPCC has fo
35、und that to limit global warming to 1.5C with no or limited overshoot(with a greater than 50 percent probability),GHG emissions would have to be reduced by 43 percent by 2030 and carbon dioxide emissions by about 100 percent by 2050 in relation to modeled 2019 emissions levels.(Each of those values
36、is the median of the estimates in various scenarios.)See Climate change 2022:Mitigation of climate change,IPCC,2022.15 See“AR6 Scenario Explorer and Database hosted by IIASA,”International Institute for Applied Systems Analysis,2022;Global energy perspective 2023,McKinsey&Company,October 2023;NGFS c
37、limate scenarios for central banks and supervisorsPhase IV,Network for Greening the Financial System,November 2023;and World energy outlook 2023,International Energy Agency,October 2023.16 The IPCC scenarios represent policies as of 2020.The McKinsey,NGFS,and IEA scenarios represent more recent poli
38、cies.Other research by the IPCC,reporting the median of warming outcomes in 29 scenarios,has found that warming by the end of the century could reach 3.2C above preindustrial levels.See Climate change 2023 synthesis report,IPCC,2023.5An affordable,reliable,competitive path to net zeroOne reason the
39、net-zero transition has been slower than hoped is its unprecedented complexity.It calls for transforming not only energy systems but also materials,land-use,and other systemsin short,the global economyand doing so in a coordinated and integrated way(Exhibit 2).17 To successfully meet the global goal
40、s enshrined in the Paris Agreement will require a vast increase in total capital spent each year,from$5.7 trillion spent on low-and high-emissions technologies 17 See The net-zero transition:What it would cost,what it could bring,McKinsey Global Institute,January 2022.Exhibit 1A wide range of scenar
41、ios shows that if the world stays on its current trajectory,net zero will not arrive during this century.Global CO emissions by scenario,metric gigatonsMcKinsey&CompanyNote:Each line in the chart,other than IEA Net-Zero Emissions by 2050(World energy outlook 2023)and NGFS Net Zero(Phase IV),correspo
42、nds to a current policy scenariothat is,a scenario that tries to show what will happen under policies implemented as of 2020 or later and with expected improvements in low-emissions technologies.Unlabeled lines represent scenarios identified as“implemented policies”in the Intergovernmental Panel on
43、Climate Changes Sixth Assessment Report.In the IEA scenarios,we added emissions from agriculture,forestry,and other land use,using the IEAs stated assumptions for each of those scenarios.Net emissions of CO from energy,materials,land-use,and other systems.Source:Publicly available data from Internat
44、ional Energy Agency(IEA),Network for Greening the Financial System(NGFS)Phase IV,and“AR6 Scenario Explorer and Database hosted by IIASA,”International Institute for Applied Systems Analysis,2022;McKinseys Global energy perspective 2023(GEP);McKinsey analysis00607080902203020402
45、0502060207020802090Projected warming above preindustrial levels,C3.03.52.5 to 3.02.0 to 2.51.5NGFS Current Policies(Phase IV)IEA Stated Policies(World energy outlook 2023)McKinsey GEP Current Trajectory(Global energyperspective 2023)NGFS Net Zero(Phase IV)IEA Net-Zero Emissions by 2050(World energy
46、outlook 2023)Range of current policy scenariosNet-zero scenariosActualProjected6An affordable,reliable,competitive path to net zeroExhibit 2The transition calls for transforming the energy,materials,land-use,and other systems that emit greenhouse gases.McKinsey&CompanyNote:Industry includes emission
47、s from industrial processes for cement,chemicals,metals,and mining,as well as oil and gas processes such as upstream processes,refining,and pipeline transportation.Power includes emissions from electricity generation and heat generation.Transportation includes emissions from road vehicles,rail,aviat
48、ion,and maritime transportation.Buildings includes emissions from cooking and heating in commercial and residential buildings.Agriculture includes crop residues,enteric fermentation,fishing,manure,on-farm energy use,rice,and synthetic fertilizers.Forestry and other land use includes emissions from d
49、rained organic soils,net forest conversion(the anthropogenic conversion of sitting forest land to other land uses or vice versa),fires in organic soils,and fires in humid tropical forests.It does not include emissions from other forest fires(in unmanaged lands),which represent roughly 0.2 metric gig
50、aton of GHG emissions.It also does not include negative emissions from existing forestland,which represent a CO sink of approximately 2.6 metric gigatons.Waste includes emissions from the biological treatment of solid waste,solid waste disposal,wastewater treatment and discharge,and the incineration
51、 or open burning of waste.COe,or carbon dioxide equivalent,includes not only carbon dioxide but also other greenhouse gases.COe is calculated with a measure called global warming potential,which indicates how much energy the emissions of one ton of a greenhouse gas will absorb in relation to the emi
52、ssions of one ton of CO over a given periodin this case,100 years.Source:Food and Agriculture Organization of the United Nations,“FAOStat”;McKinsey EMIT database(2021);McKinsey analysisEnergy and materials systemsLand-use and other systemsIndustry32Power24Transportation15Buildings5Agriculture12Fores
53、try and other land use8Waste4Share ofglobal annualCOe emissions,2019,%7An affordable,reliable,competitive path to net zerotoday to as much as$9.2 trillion,on average,spent over the next three decades.18 During that period,the low-emissions part of that spending would need to grow from approximately$
54、1.5trillion per year now to about$7.0 trillion,on average.19The problem is not just the scale of spending on low-emissions technologies but also what it would fund.Our past research has found that partly because many low-emissions technologies will not be cost competitive by 2030 under current polic
55、y frameworks,only 50 percent of the capital spending on those technologies needed by then to eventually achieve net zero could occur without additional societal commitment.20 Examples of such commitment include new public spending(which may be difficult)and additional policy measures,such as carbon
56、prices.Furthermore,the transition would rebuild in about three decades efficient systems that took centuries to build,carrying out a massive physical transformation.Consider that most proposed pathways to net zero envision making the power system three times larger than it is now and electrifying ma
57、ny end uses of energy,such as transportation and heating.Yet even though solar power,wind power,and other renewable sources of energy are becoming much more common,the share of primary energy that they produce has risen only slowly,from 8 percent in 2010 to 12 percent in 2021.21Finally,the transitio
58、n would require actions to be taken now in exchange for benefitsin particular,avoided physical damage from climate changethat would mostly appear in future decades.22 And the costs of those actions,in terms of spending and transformation today,would not be borne evenly by all stakeholders.18 Even af
59、ter expected increases in spending resulting from current policies and income growth are accounted for,the necessary increase in total high-and low-emissions spending would be large at$1 trillion.The$9.2 trillion estimate is based on a net-zero scenario from the Network for Greening the Financial Sy
60、stem(NGFS)that limits warming by 2100 to 1.5C above preindustrial levels.In quantifying investment,we include what is typically considered investment in national accounts,such as investment in solar and wind power capacity,as well as some spending on what are typically considered consumer durables,s
61、uch as electric vehicles.The investment numbers take into consideration energy,materials,and land-use systems that account for roughly 85 percent of overall CO emissions today.These estimates are higher than others in the literature because we have included spending on high-emissions technologies,ag
62、riculture,and other land use and have also taken an expansive view of the spending required in end-use sectors.Our analysis distinguishes high-emissions assets and technologies from low-emissions ones.Low-emissions assets emit relatively low amounts of GHGs but are not necessarily carbon neutral.Exa
63、mples of low-emissions assets are solar and wind farms and electric vehicles.In some cases,we also include enabling infrastructure,such as the transmission and distribution infrastructure needed for renewable power or the charging infrastructure needed for electric vehicles.Examples of high-emission
64、s assets are fossil fuelbased power and vehicles with internal combustion engines.In the NGFSs scenario,some spending on high-emissions assets continues,particularly in the early years of the transition.For more details,see The net-zero transition:What it would cost,what it could bring,McKinsey Glob
65、al Institute,January 2022.19 Recent research from MGI estimated the spending needed on low-emissions technologies at$55 trillion cumulatively from 2021 to 2030,an increase of$41 trillion over the amount that would result if spending in 2020 took place in every year from 2021 through 2030.The$55 tril
66、lion estimate works out to$5.5 trillion annually,on average,and that$5.5 trillion estimate differs from the$7.0trillion cited here because it covers a different period and applies in a scenario of high GDP growth.For further details,see From poverty to empowerment:Raising the bar for sustainable and
67、 inclusive growth,McKinsey Global Institute,September 2023.20 From poverty to empowerment:Raising the bar for sustainable and inclusive growth,McKinsey Global Institute,September 2023.That 50 percent includes both a continuation of todays spending levels and increased spending likely under current p
68、olicy frameworks.21“International,”US Energy Information Administration,2023.Primary energy refers to the total amount of energy that is available in natural resources before any conversion or transformation takes place.The percentage contributions that different energy sources make to total primary
69、 energy may be different from the percentage contributions that those sources make to energy consumed by end users because different uses lead to different amounts of conversion loss.22 Other potential benefits include improved air quality,water quality,and biodiversity.See“Costs and benefits of a n
70、et-zero target for the UK,”in Net zero:The UKs contribution to stopping global warming,Committee on Climate Change,May 2019.8An affordable,reliable,competitive path to net zeroA poorly executed transition could compromise affordability,reliability,and competitivenessand slow progress toward net zero
71、The net-zero transition is too often regarded as a singular problem.In fact,it is four connected challenges(Exhibit 3).Reducing emissions of GHGs is indeed at the heart of the transition.23 But if the transition is poorly executed,it could compromise three other important objectives:affordability,re
72、liability,and industrial competitiveness.Those objectives enhance economic well-being on their own;moreover,compromising them would make the emissions reductions themselves less likely to endure.24That outcome is not inevitable.If the net-zero transition is managed well,there are many ways in which
73、it could further affordability,reliability,and industrial competitiveness over time.The most obvious is that the world would have to spend less on adapting to climate change and withstanding the damage it causes.25 Also,provided that cost declines continue at expected rates and that manufacturing ca
74、pacity is scaled up effectively,more and more low-emissions technologies could soon become cost competitive with traditional technologies in various markets on a total-cost-23 This report focuses on net zero,but other sustainability objectives exist,such as improving the quality of air and water and
75、 managing nature-related risks.Similarly,the report does not consider adaptation actions to manage rising physical risks posed by climate change,which is another important part of the climate agenda.24 Other researchers have also highlighted potential tensions between the transition and other object
76、ives,such as addressing climate change,affordability,availability,security,equity,environmental justice,and employment.See,for instance,World energy trilemma index 2022,World Energy Council,2022;Haiying Liu et al.,“Roles of trilemma in the world energy sector and transition towards sustainable energ
77、y:A study of economic growth and the environment,”Energy Policy,volume 170,November 2022;and A.G.Olabi,“Energy quadrilemma and the future of renewable energy,”Energy,volume 108,August 2016.25 The Network for Greening the Financial System estimates that global GDP in 2100 could be up to 18 percent lo
78、wer in a scenario in which current policies continue than in a baseline in which there were no physical risks from climate change or risks posed by the transition.It also estimates that in a scenario in which warming was 1.5C above preindustrial levels,GDP in 2100 would be 3percent lower than in tha
79、t baseline.See NGFS Climate Scenarios for central banks and supervisors,Network for Greening the Financial System,September 2022.That analysis leads to two conclusions.First,over time,the transition will lead to higher GDP than in a scenario with high physical risks.Second,the transition will lead t
80、o slightly lower GDP than in the baseline scenario.See Climate change 2022:Mitigation of climate change.Contribution of Working Group III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change,IPCC,2022.9An affordable,reliable,competitive path to net zeroof-ownership basis.2
81、6 Energy security could benefit as well in some ways,because the transition could lead to more domestic generation of electricity(for example,from solar and wind)and less dependence on imported energy.And there will be many opportunities to compete to provide materials,manufactured goods,and service
82、sindeed,whole new industriesfor the transition.But it is nevertheless the case that a poorly executed transition could impair affordability,reliability,and industrial competitiveness.Start with affordability.As previous work by McKinsey has pointed out,both the net-zero transition and economic empow
83、erment are urgent and simultaneous goals.27 But there are several ways that the net-zero transition,if not executed well,could make energy,materials,and other products less affordable than traditional alternatives.28 Even though wind and solar generate electricity more cheaply than fossil fuels do,t
84、hey will require additional spending as their share in the overall generation mix risesfor storage;other“firming capacity,”which is electricity that can be used at times when solar and wind are not providing enough energy;and grid infrastructure.If the costs of technologies,such as batteries,do not
85、decline as expected,or if grids are not designed thoughtfully,the delivered cost of electricity could rise.For materials,decarbonizing the production of steel,aluminum,and cement could increase production costs by 26 See,for example,The future of heat pumps,International Energy Agency,December 2022.
86、Technologies relative cost-competitiveness also depends on other factors,such as how energy prices and interest rates evolve.27 From poverty to empowerment:Raising the bar for sustainable and inclusive growth,McKinsey Global Institute,September 2023.28 This discussion does not account for any role t
87、hat a carbon price might play.Exhibit 3Emissions reductionIndustrial competitivenessAfordabilityReliabilityReducing emissions of greenhouse gasesEnsuring that individual countries,regions,and companies remain competitive and beneft from opportunities during the transitionEnsuring that energy,materia
88、ls,and other products remain afordable and cost competitive with traditional alternativesEnsuring that energy,materials,and other products are supplied securely during the transition and that energy systems are resilientA successful net-zero transition will require achieving not one objective but fo
89、ur interdependent ones.McKinsey&CompanyThis report focuses on the net-zero transition,but other sustainability objectives exist,such as improving the quality of air and water and managing nature-related risks.Similarly,the report does not consider adaptation actions to manage rising physical risks p
90、osed by climate change,which is another important part of the climate agenda.Source:McKinsey analysisInteractions exist across objectives10An affordable,reliable,competitive path to net zero15 percent or more by 2050.29 If costs of energy and other products were to rise,economic growth could suffer,
91、posing a particular problem for developing countries.30 And as we mentioned above,the scale of spending needed for the transition could stretch public finances.31A poorly executed transition could also compromise the reliable supply of energy and the resiliency of energy systems,and it could affect
92、the inputs needed for the transition itself.For example,when solar and wind power are lowsuch as at night or on windless dayspoorly designed energy systems might not provide regions with enough storage,firming capacity,or other ways to meet demand reliably.Also,the transition will require many physi
93、cal inputs:materials and manufactured goods,water,land,infrastructure,and labor.If the transition is not well executed,especially in the near term,the supply of those inputs could be insufficient for what is needed,leading to shortages and slowing the growth of new energy systems.Past McKinsey resea
94、rch has found that shortages of many minerals used in making EV batteries,wind turbines,and other low-emissions technologies could begin before 2030,caused by rapidly growing demand from the transition and the long time it takes to bring new mines on line(five to 15 years,in some cases).32 The short
95、ages could also have price implications;research estimates that if they are not addressed,the price of nickel,cobalt,and lithium could increase by several hundred percent from 2020 levels in a net-zero scenario over the next decade.33 Furthermore,the supply of raw materials is often concentrated,cre
96、ating potential risk from supply chain disruptions.Three countries or fewer account for the extraction of 80 percent or more of several critical minerals.Refining is often even more concentrated.34 And long approval times can slow deployment;in the United States,the typical electrical power project
97、requesting connection to the grid took an average of five years in 2022.35For individual countries and companies,the transition could also threaten competitiveness if it is not well conceived.Of course,affordability and competitiveness are tightly interlinked;for example,if one countrys emissions-re
98、duction initiatives pushed up production costs,its products could become less competitive in global markets.36 Some countries or regions could be especially vulnerable to the effects of rising production costs.Asia,for example,is where much of the worlds manufacturing takes place,so if production th
99、ere became more expensive,it might be disproportionately affected.37 But there are other ways that competitiveness could be harmed.During the transition,some legacy industries and natural endowments could lose relevance,affecting jobs and communities.38 Without robust planning,workers may find it ha
100、rd to move to new jobs and build new skills.And as many countries adopt assertive industrial policy for climate technologies,they run the risk,if they do not design that policy carefully,of affecting businesses incentives to innovate and produce efficiently,hurting productivity.29 Making net-zero st
101、eel possible,Mission Possible Partnership,September 2022;Making net-zero aluminum possible,Mission Possible Partnership,April 2023;Mission Possible sectoral focus:Cement,Energy Transitions Commission,January 2019.30 In this report,we use the term“developing countries”to mean those that the World Ban
102、k classifies as low-or middle-income.31 See also From poverty to empowerment:Raising the bar for sustainable and inclusive growth,McKinsey Global Institute,September 2023.32 The net-zero materials transition:Implications for global supply chains,McKinsey&Company,July 2023.33 Nico Valckx,Andrea Pesca
103、tori,and Lukas Boer,“Metals may become the new oil in net-zero emissions scenario,”VoxEU,November 5,2021.34 Mineral commodity summaries 2023,US Geological Survey,January 2023.35 Joseph Rand et al.,“Queued up:Characteristics of power plants seeking transmission interconnection as of the end of 2022,”
104、Lawrence Berkeley National Laboratory,April 2023.36 Researchers have examined the impact of environmental regulation on competitiveness as measured by such factors as trade,industry location,and productivity.They find that such measures have led to statistically significant adverse impacts,but small
105、 ones.They add,however,that more research is needed to understand why the impacts have been small,and they conjecture that one reason might be that environmental policy has been strategically set to limit the impact on competitiveness.See Antoine Dechezleprtre and Misato Sato,“The impacts of environ
106、mental regulations on competitiveness,”Review of Environmental Economics and Policy,volume 11,number 2,summer 2017.37 For more details,see Asia on the cusp of a new era,McKinsey Global Institute,September 2023.38 Our past research has shown that job losses during the net-zero transition would be con
107、centrated in certain sectors and regions.For instance,more than 10 percent of jobs in 44 US counties are in fossil fuel extraction and refining,fossil fuelbased power,and automotive manufacturing.For further details,see The net-zero transition:What it would cost,what it could bring,McKinsey Global I
108、nstitute,January 2022.11An affordable,reliable,competitive path to net zeroAffordability,reliability,and industrial competitiveness are independently important objectives.But if the transition risks compromising them,a separate problem could result:a derailing of momentum toward net zero(Exhibit 4).
109、Affordability may be the most important objective in that respect.Citizens may be less willing to embrace the transition if energy becomes less affordable.Some consumers and companies may not want to switch to low-emissions products if they are unfamiliar or more expensive.Conversely,the more cost c
110、ompetitive the technologies needed for net zero become in relation to traditional,established alternatives,the easier it will be to fund and build them.But reliability and competitiveness matter too.If the transition were to challenge the secure supply of energy and materials,or the availability of
111、jobs and economic opportunity,it could be harder to sustain momentum toward net zero.If,however,emissions can be reduced while affordability,reliability,and industrial competitiveness are advanced,the transitions momentum could be boosted.For example,if more low-emissions technologies become cost co
112、mpetitive,capital will be likelier to flow to them.And if investing in the transition creates more opportunities for countries and companies to compete,they could be more likely to embrace the transition.A successful net-zero transition will therefore require achieving not one objective but four int
113、erdependent ones.12An affordable,reliable,competitive path to net zeroExhibit 4Emissions reductionReliabilityAfordabilityIndustrialcompetitivenessEmissions reductionReliabilityAfordabilityIndustrialcompetitivenessEmissions reduction could derail or boost its own momentum,depending on how it afects a
114、fordability,reliability,and industrial competitiveness.McKinsey&CompanySource:McKinsey analysisDerailed momentumBoosted momentumCompromisingefectsComplementaryefects13An affordable,reliable,competitive path to net zeroA well-managed transition would follow seven principlesHow can the world reduce em
115、issions in line with the Paris Agreement and do so while maintainingand potentially improvingaffordability,reliability,and industrial competitiveness?To start answering that question,we have identified seven principles that describe how decision-makers should approach this next phase of the net-zero
116、 transition(Exhibit 5).The first three of those principles show how the world can undertake actions now to reduce the spending needed for a given amount of abatement and thus make the transition more affordable.The next two show how to redesign physical and financial systems in ways that can protect
117、 affordability and reliability over time.And the last two show how preparing for risks and opportunities can further all three objectives.The principles do not provide one-size-fits-all answers to all the questions that stakeholders will confront.Rather,they provide a framework that can guide stakeh
118、olders as they navigate the next phase of the transition.Allocating spending effectivelyOur first three principles involve ways to allocate spending on the net-zero transition as effectively as possible.Deploying inexpensive solutions now would result in faster abatement of GHG emissions now.Driving
119、 down the cost of expensive solutions would make them ready to deploy when the time comes.And building effective financial mechanisms would help move capital where it is needed to fund the transition.Later in this report,we describe an experiment that we performed to explore the possible results of
120、applying the first two principles.Doing so,we find,might be able to improve the worlds current emissions trajectory 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 14An affo
121、rdable,reliable,competitive path to net zeroExhibit 5Seven principles could help the world reduce emissions while protecting afordability,reliability,and industrial competitiveness.McKinsey&CompanySource:McKinsey analysisNavigating risks and opportunitiesAllocating spending efectivelyRedesigning phy
122、sical and energy systemsCreate incentives to deploy lower-cost solutionsDrive down costs of expensive solutionsBuild efective fnancial mechanisms to drive capital where it is neededAnticipate and remove bottlenecks for materials,land,infrastructure,and laborManage existing and emerging energy system
123、s in parallelCompete for opportunities created by the transition,using comparative advantage as a guideRevamp energy markets and planning approaches for an electrifed world 1234567nowas opposed to about three times,as might be the case if the two principles were applied less extensively.Such an appr
124、oach may therefore warrant closer examination and more exploration.Principle 1:Create incentives to deploy lower-cost solutions.The world currently emits about 55metric gigatons of CO2e per year,a quantity that will keep growing if action is not taken.39 The IPCC estimates that by 2030,solutions tha
125、t are relatively cheapthat is,costing less than$20 per metric ton of CO2e abatedcould potentially be abating as much as 19 metric gigatons per year(Exhibit6).40Investment in some of those solutions has begun to flow in recent years.One example is solar and wind power,whose initial deployment can oft
126、en be carried out without further spending on 39 See Emissions gap report 2023:Broken record,United Nations Environment Programme,November 2023,and Emissions gap report 2022:The closing windowClimate crisis calls for rapid transformation of societies,United Nations Environment Programme,October 2022
127、.CO2e,or carbon dioxide equivalent,includes not only carbon dioxide but also other GHGs.CO2e is calculated with a measure called global warming potential,which indicates how much energy the emissions of one ton of a GHG will absorb in relation to the emissions of one ton of CO2 over a given periodin
128、 this case,100 years.40 The 19-metric-gigaton calculation is based on estimates from the IPCC.Cost is defined as the net lifetime discounted monetary cost of the solution(including both capital and operating costs)relative to the cost of the technology that is the traditional alternative to the solu
129、tion.The IPCC acknowledges uncertainty associated with the magnitude of abatement potential;it also notes that abatement potentials are assessed independently for each solution,so they are not necessarily additive.15An affordable,reliable,competitive path to net zeroExhibit 6By 2030,solutions that a
130、re relatively low-cost have the potential to abate 19 gigatons of COe per year.Potential contribution to net COe reduction in 2030,by solution,metric gigatonsCapitalspendingon physicalassets,2020,$billionMcKinsey&CompanyNote:The solutions are ordered from the highest to lowest magnitude of low-cost
131、abatement.Capital spending on physical assets in 2020 is rounded to the nearest$5 billion.Some solutions with little or no abatement potential have been excluded.In some instances,2020 spending values may be estimates and not actuals.The IPCC acknowledges uncertainty associated with the magnitude of
132、 abatement potential;it also notes that abatement potentials are assessed independently for each solution,so they are not necessarily additive.COe,or carbon dioxide equivalent,includes not only carbon dioxide but also other greenhouse gases.COe is calculated with a measure called global warming pote
133、ntial,which indicates how much energy the emissions of one ton of a greenhouse gas will absorb in relation to the emissions of one ton of CO over a given periodin this case,100 years.For full details about the listed solutions,see Climate change 2022:Mitigation of climate change.Contribution of Work
134、ing Group III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change,Intergovernmental Panel on Climate Change,fgure SPM.7,2022.Abatement costs shown are net lifetime costs,including capital and operating costs,of avoided greenhouse gas emissions.Costs are calculated in rela
135、tion to a reference technology.The 202130 spending required is based on various 1.5C scenarios.It includes spending on physical assets,not operating spending.Capital spending includes both what are considered investments in national accounts and some spending on consumer durables.Abatement costs for
136、 power are based on the levelized cost of electricity and do not include the cost of system integration(such as transmission and distribution capacity),so they may understate total costs.Capital spending for solar and wind power includes spending for batteries and excludes spending for transmission
137、and distribution.Abatement potential includes behavioral changes,such as lower thermostat settings in winter and higher occupancy in vehicles.Abatement potential includes fuorinated gases,methane,and nitrogenated gases.This spending is not shown for biofuels because sources assign it a wide range of
138、 values;it is not shown for non-CO emissions from waste and industry because of a lack of robust data.Abatement potential includes feedstock decarbonization and process change.The Intergovernmental Panel on Climate Change does not provide cost data for demand shifts in agriculture and land use,some
139、categories of decarbonizing buildings,or the use of electric vehicles.Abatement potential includes diet shift and reduced food waste.Capital spending on electric vehicles also includes spending on infrastructure;capital spending on building electrifcation includes spending on residential and commerc
140、ial heat pumps and district heating.Solutions include efcient heating,ventilation,and air conditioning,which could lead to additional efciency improvements.Source:Climate Policy Initiative;Intergovernmental Panel on Climate Change;International Energy Agency;Network for Greening the Financial System
141、;McKinsey analysisSolar power,Total:5.011.73.92.32.31.71.33.22.82.80.71.82.11.00.8n/an/an/a55n/aCO abatement in agriculture and land useWind power,Transportation efciency and modal shiftNon-CO abatement in waste and industryMethane abatement in coal,oil,and gas operationsEnergy efciency in buildings
142、Energy efciency,materials efciency,enhanced recycling in industryNitrous oxide and methane abatement in agriculture and land use,BiofuelsBuilding electrifcation and other decarbonization measures,Electric vehicles,Industrial electrifcationLess expensive to reduceabatement cost($20)Abatement costdata
143、 unavailableCurrent capitalspending as a shareof annual 202130spending inillustrative net-zeroscenarios,%Other low-emissions power capacity(such as nuclear and geothermal)Carbon capture in power and industry3.43.33.12.31.61.41.31.10.70.40.20.20.00.00.040603525254060406040604060
144、2020202020202040406016An affordable,reliable,competitive path to net zeroexpanding grids or building storage capacity.41 But investment in lower-cost solutions remains lower than what is needed over the next decade to be consistent with a 1.5C trajectory.Stakeholders have a wide range of such soluti
145、ons to consider.For example,implementing energy-efficiency measures and shifting behavior to reduce rates of energy consumptionby using energy-efficient appliances,making changes to industrial processes to minimize the use of energy and materials,improving efficiency in transportation,increasing the
146、 occupancy of passenger vehicles,and taking other measurescollectively have the potential to abate 4.8metric gigatons of CO2e.42 Reducing GHGs other than CO2,particularly methane,in such activities as coal mining,oil and natural gas operations,and solid waste operations could abate about 3.0 metric
147、gigatons.Addressing emissions of CO2,nitrous oxide,and methane from agriculture and land usefor example,by halting deforestation and improving forest managementcould abate 3.7 metric gigatons.43Some lower-cost solutions are“transition”solutionsthat is,temporary ones that do not completely eliminate
148、emissions but help reduce them at relatively low cost until alternatives become viable over time.Transition solutions being discussed by decision-makers include shifting from coal to gas to generate electricity,increasing the share of scrap steel used in existing steelmaking processes,and using hybr
149、id heating systems that have both an electric heat pump and a gas furnace to heat homes.44 Such solutions could offer a pragmatic way forward.They nonetheless will need to be carefully implemented:stakeholders have to make lifetime assessments of their emissions and costs(including the risk of stran
150、ded assets)and of the emissions and costs of low-emissions alternatives,to make sure that the transition solutions would truly help reduce emissions,maintain affordability,and not increase long-term costs.45 Deploying lower-cost solutions would have four key benefits.First,it would allow any given a
151、mount of capital spent on low-emissions technologies to have a large impact on abatement.Second,it would make progress in reducing emissions while other solutions were scaled up and came down 41 The marginal abatement costs shown in Exhibit 6 for wind and solar power are based on levelized costs onl
152、y and do not include system integration costs,such as battery costs and costs associated with transmission and distribution.42 These assessments of abatement potential may not consider the“rebound effect”of energy efficiency,in which consumers use more energy,not less,as technology becomes more effi
153、cient.Estimates of rebound effects vary significantly,but the literature agrees that they are probably well below 100 percent,so that improving energy efficiency still leads to overall savings in energy.See Kenneth Gillingham,David Rapson,and Gernot Wagner,“The rebound effect and energy efficiency p
154、olicy,”Review of Environmental Economics and Policy,volume 10,number 1,winter 2016;and Paul E.Brockway et al.,“Energy efficiency and economy-wide rebound effects:A review of the evidence and its implications,”Renewable and Sustainable Energy Reviews,volume 141,May 2021.Also,empirical evidence sugges
155、ts that realized cost savings may be substantially lower than modeled ones for specific energy-efficiency programs,particularly those related to retrofitting homes.So stakeholders seeking to improve energy efficiency should carefully assess which measures will actually result in savings.See Meredith
156、 Fowlie,Michael Greenstone,and Catherine D.Wolfram,“Do energy efficiency investments deliver?Evidence from the Weatherization Assistance Program,”Becker Friedman Institute for Economics,working paper number 2621817,January 2018.43 A partial list of more detailed lower-cost solutions includes replaci
157、ng low-efficiency lighting with high-efficiency lighting,improving the efficiency of kilns in cement production,installing smart energy and gas monitoring systems,flooding abandoned mines to trap methane,capturing landfill gas to use for power,optimizing fertilizer application,and improving rice cul
158、tivation practices.44 See Deborah Gordon et al.,“Evaluating net life-cycle greenhouse gas emissions intensities from gas and coal at varying methane leakage rates,”Environmental Research Letters,volume 18,number 8,July 2023;Jamie Brick,Dumitru Dediu,and Jesse Noffsinger,“The role of natural gas in t
159、he move to cleaner,more reliable power,”McKinsey&Company,September 2023;Ajitesh Anand,Toralf Hagenbruch,Anoop Muppalla,and Benedikt Zeumer,“Tackling the challenge of decarbonizing steelmaking,”McKinsey&Company,May 2021;and Gustav Bolin,Ann Hewitt,Blake Houghton,Charlie Jersey,and Evan Polymeneas,“Bu
160、ilding decarbonization:How electric heat pumps could help reduce emissions today and going forward,”McKinsey&Company,July 2022.A“coal-to-gas”shift for generating electricity could involve either replacing existing coal-fired plants with gas-fired ones or prioritizing gas when building new fossil fue
161、lpowered plants.Most transition scenarios anticipate a larger role for gas power in the future because it could provide future firming capacity;it has the potential to cut CO2 emissions in half(provided that emissions associated with the production of gas are also reduced);and it could eventually be
162、 retrofitted with carbon capture and storage or hydrogen to further reduce emissions(provided that innovation brings those technologies to maturity).45 For example,some researchers suggest that the benefits of a coal-to-gas shift may be overstated because methane emissions from gas operations may be
163、 understated.Others suggest that a shift would lock large shares of fossil fuel capacity into the future energy grid.See Stefan Schwietzke et al.,“Upward revision of global fossil fuel methane emissions based on isotope database,”Nature,volume 538,October 2016;and Robert W.Howarth,“A bridge to nowhe
164、re:Methane emissions and the greenhouse gas footprint of natural gas,”Energy Science and Engineering,volume 2,number 2,June 2014.17An affordable,reliable,competitive path to net zeroin cost.46 Third,many of these measures,such as those improving energy efficiency,are cheaper than traditional alterna
165、tives over their lifetimes;implementing them could thus improve overall affordability.Fourth,some of the solutions would reduce methane emissionswhich are highly potent in the near termand could make a major contribution to reducing warming over the next ten to 20 years.47Therefore,as stakeholders c
166、onsider scaling up future spending for the next phase of the transition,they should ask themselves what opportunities exist to accelerate the deployment of lower-cost solutions.Various obstacles stand in the way,however.Some of the solutions would need to be executed at an enormous scale to have a m
167、eaningful impact on emissions;improving energy efficiency in millions of homes is a good example.Others call for changes to daily routines or lifestyles,such as altering modes of travel.Still others,particularly the transition solutions,may be perceived as temporary fixes and therefore ineffective.B
168、ut providing incentives can help.Changing building standards for new construction can lead to gains in energy efficiency,as can setting fuel-efficiency standards for vehicles.48 Offering rebates or tax incentives to people or sectors can reduce the amount of energy they use.Preserving forests by pro
169、viding financial incentives to protect them or by designating and enforcing protected areas can help prevent deforestation.And in addition to incentives,many solutions would need financing,as we discuss in principle 3.Principle 2:Drive down costs of expensive solutions.At the same time,many of the t
170、echnologies that the world needs to reach net zero are not yet cost competitive.The IPCC estimates that by 2030,more than 20 metric gigatons of GHGs could cost more than$20 per metric ton to abate,and 14 metric gigatons could cost more than$50 per metric ton.49Another way to think about the cost of
171、technologies is to consider their maturity,because immature technologies are by definition not yet fully viable and therefore not cost competitive.Various analyses suggest that 10 to 20 percent of the emissions reductions needed by 2050 could come from technologies that are already commercially matu
172、re(Exhibit 7).50 But at the other end of the 46 For example,it will take time to fully scale up low-emissions sources of electricity.In the meantime,lower-cost solutions like improving energy efficiency can reduce demand for energy and therefore reduce emissions.47 In some instances,however,it may b
173、e appropriate to also focus on higher-cost solutions in the near term.One example,as we discuss in principle 2,is when deploying them would reduce costs via the learning that happens as companies start to build and deploy a product or via economies of scale.A second example is when they have particu
174、larly large adjustment costs,including costs and time associated with developing supply chains or building the necessary skills in the workforce;in those cases,deploying the solutions early and incrementally over time can help minimize the adjustment costs and remove bottlenecks.These ideas are simi
175、lar to those we describe in principle 4.See Adrien Vogt-Schilb,Guy Meunier,and Stphane Hallegatte,“When starting with the most expensive option makes sense:Optimal timing,cost and sectoral allocation of abatement investment,”Journal of Environmental Economics and Management,volume 88,March 2018.As w
176、e stated above,deploying lower-cost solutions can in fact go hand in hand with these other measures and allow for simultaneous,targeted efforts to drive down costs of expensive solutions and remove bottlenecks.48 M.Tyler et al.,Impacts of model building energy codesInterim update,Pacific Northwest N
177、ational Laboratory,July 2021;and Antonio M.Bento et al.,“Estimating the costs and benefits of fuel-economy standards,”Environmental and Energy Policy and the Economy,volume 1,2020.49 Climate change 2023 synthesis report,IPCC,2023.50 The stages mentioned in this discussion(the concept,prototype,and d
178、emonstration stages,the early market stage,and commercial maturity)are groupings based on technology readiness levels(TRLs)from the International Energy Agency.The ranges mentioned(for example,the 10 to 20 percent of emissions reductions that could come from commercially mature technologies)are base
179、d on several analyses,including the International Energy Agencys Net Zero Emissions by 2050 Scenario and forthcoming McKinsey research.See Net zero roadmap:A global pathway to keep the 1.5C goal in reach,International Energy Agency,September 2023.The shares of technologies at various stages of matur
180、ity could differ in different parts of the world because of technologies different cost profiles,local adoption rates,and other factors.We excluded behavioral change(which has a small contribution to emissions reduction)from the IEAs analysis and rounded the resulting shares to the nearest 5 percent
181、.Though TRLs can be an effective framework for understanding the maturity of individual technologies,they do not consider other factors relevant to commercialization.Such factors include,for example,the technologys potential to perform as well as traditional alternatives in a range of uses,the matur
182、ity of the supply chain and other inputs needed for the technology,and the maturity of supporting systems that the technology would depend on(such as batteries for full-scale intermittent renewable energy generation).Most of the lower-cost solutions described in principle 1 are either in the commerc
183、ially mature category or are not technological(for example,altering modes of travel).A few exceptions are in the early market stage but close to commercial maturity.18An affordable,reliable,competitive path to net zeroExhibit 7Many technologies needed to reduce emissions to net zero are not yet comm
184、ercially mature.Share of CO emissions reductions from technologies needed to reach net zero by 2050,%McKinsey&CompanyReductions relative to 2022 emissions;technology readiness levels(TRLs)as of 2022.These categories are based on TRLs from the International Energy Agency.What we call the concept,prot
185、otype,and demonstration stages correspond to TRLs 1 through 8;the early market stage corresponds to TRLs 9 and 10;and commercial maturity corresponds to TRL 11.We excluded behavioral change(which has a small contribution to emissions reduction)from the IEAs analysis and rounded the resulting shares
186、to the nearest 5%.Although TRLs can be an efective framework,they do not consider every factor that is relevant to commercialization.Prices and maturity refer to those of the solar photovoltaic modules and do not include system costs.Source:International Energy Agency;ETP Clean Energy Technology Gui
187、de,“Evolution of solar PV module cost by data source,19702020,”and World energy outlook 2023;US Department of Energy;McKinsey Platform for Climate Technologies;McKinsey analysisOne representative technologys evolution through each stage:solar photovoltaic modules,price per watt,$519801990
188、2000200520970First residence running only on solar power builtFirst power station with over 1 megawatt of capacityFirst distributed gridGlobal capacity exceeds 1 gigawattGlobal investmentexceeds$100BDemonstrationstageEarly marketstageCommercialmaturity(in some markets)20.800.20
189、Concept,prototype,or demonstration stage,3545Early market stage,45Commercially mature,1020Representative technologies:Geothermal powerHydropowerConventional LED lightingInduction cookingLarge nuclear plantsRepresentative technologies:Air-source heat pumpsOnshore wind powerPassenger battery-electric
190、vehiclesLithium-ion battery storageHydrogen fuel cell electric vehiclesAlkaline water electrolyzersRepresentative technologies:Concept(05%):Nuclear fusion;lithium-air batteriesPrototype(1520%):Hydrogen aviation;concrete recyclingDemonstration(20%):Small modular nuclear reactors(SMRs);natural gas pow
191、er with carbon capture,utilization,and storage0203009010019An affordable,reliable,competitive path to net zeromaturity spectrum,35 to 45 percent could come from technologies that are still in the concept,prototype,or demonstration stage.Examples of technologies in those stages include lit
192、hium-air batteries,hydrogen aviation,and small modular nuclear reactors,respectively.In some cases,technologies need to overcome fundamental scientific or engineering challenges.In others,they would need to grow much cheaper to become cost competitive with traditional technologies.The remaining 40 t
193、o 50 percent of the emissions reductions needed by 2050 are expected to come from technologies that are currently in the early market stage(for example,lithium-ion energy storage,onshore wind power,and passenger battery EVs).51 These technologies have been proven to work and are commercially availab
194、le,but they may not yet be fully scaled up or cost competitive with traditional technologies.They may also face integration challenges or unresolved technological difficulties in specific uses.Improving the maturity of technologies and bringing their costs down will need three mutually reinforcing m
195、echanisms:first,R&D;second,“learning-by-doing”(the learning that happens as companies that are starting to build and deploy a product enhance its technological performance,improve manufacturing processes,build supply chains,and develop appropriate business models);and third,the economies of scale th
196、at emerge when deployment becomes widespread.52Those three mechanisms often work together to drive down costs.In the early stages,R&D is a major factor.As technologies start to grow,learning-by-doing can play a larger role and also provide real-world feedback to guide additional R&D efforts.In later
197、 stages,economies of scale begin playing a greater role as increasing the size of production plants spreads fixed costs over more produced units(though in later stages,too,R&D and learning-by-doing can still improve technologies and drive down costs).From 1980 to 2001,R&D and learning-by-doing accou
198、nted for as much as 65 percent of the cost decline of solar panels,economies of scale for 20 percent,and other factors for the remainder.From 2001 to 2012,R&D and learning-by-doing represented 50percent of the cost decline,and economies of scale accounted for about 45 percent.53Various measures can
199、help improve the viability of technologies and reduce their cost.The public sector can play a key role by convening stakeholders in various sectors,collaborating with them to establish cross-sector decarbonization road maps,directly funding R&D,or providing incentives or subsidies for companies to e
200、ngage in it.In the energy sector,investing more in R&D is surely warranted;as a share of GDP,it has remained flat since the early 1990s and is 60 percent lower than it was at its historical peak.5451 What we call the early market stage corresponds to the IEAs TRLs 9 and 10.TRL 9,“commercial operatio
201、n in relevant environment,”refers to technologies that are commercially available but need improvement to stay competitive,such as hydrogen fuel cell electric vehicles and alkaline water electrolyzers.TRL 10,“integration needed at scale,”refers to technologies that are commercial and competitive but
202、 need further integration efforts,such as air-source heat pumps and lithium-ion batteries for energy storage.Some technologies that have reached commercial maturity in some locations are still in the early market stage in others.See ETP clean energy technology guide,International Energy Agency,Septe
203、mber 2023.52 Other factors can also drive changes in technology costs over time.For example,the cost of silicon,an important driver of the cost of solar photovoltaic modules,declined between 1980 and 2001 because of developments in the semiconductor industry.See Goksin Kavlak et al.,“Evaluating the
204、causes of cost reduction in photovoltaic modules,”Energy Policy,volume 123,December 2018.53 Between 1980 and 2001,economies of scale accounted for 20 percent of cost declines for solar photovoltaic modules,while other factors accounted for 15 percent.Between 2001 and 2012,R&D,learning-by-doing,and o
205、ther factors represented 43,7,and 5percent of cost declines for solar photovoltaic modules,respectively.The impact of learning-by-doing on its own was relatively small.Market-stimulating policies played a significant role in driving costs down by unlocking private R&D,economies of scale,and learning
206、-by-doing;these together contributed an estimated 60 percent of the cost decline for solar photovoltaic modules between 1980 and 2012.See Goksin Kavlak et al.,“Evaluating the causes of cost reduction in photovoltaic modules,”Energy Policy,volume 123,December 2018.54 World energy investment 2022,Inte
207、rnational Energy Agency,2022.That calculation is of investment in 31 IEA member countries,and it includes R&D in energy efficiency,fossil fuels,CCUS,renewable energy,nuclear fission and fusion,hydrogen and fuel cells,other power and storage technologies,and other technologies.20An affordable,reliabl
208、e,competitive path to net zeroFor technologies that show promise,a broader approach may be called for,one in which market-stimulating mechanisms,as well as actions by venture capital firms and other organizations,provide incentives for private R&D and for early deployment.Those measures can push the
209、 private sector to build new businesses and scale up technologies.55 One way to do so is to guarantee future demand in order to encourage companies to develop and scale up new technologies.Another approach would establish innovation clusters or hubs where academic researchers,venture capital firms,a
210、nd companies could work together to develop and scale up technologies.Even commercially mature technologies may need help if they are still seen as risky or if moving to them from older technologies causes consumers to incur switching costs.One way to accelerate their deployment is to drive financia
211、l flows to them;see our next principle for more.In implementing all these measures,it will be important to encourage collaboration among sectors in different countries.Such collaboration brings a broader pool of talent and ideas to bear on problems and promotes the wide applicability of technologies
212、.One example is the Renewable Energy Technology Action Platform,a collaboration between India and the United States that aims to enable knowledge sharing about green hydrogen,wind energy,long-duration energy storage,and other emerging technologies.56For companies looking to systematically drive down
213、 costs,a crucial step is setting ambitious goals that can help focus their attention and efforts.Consider Teslas master plan,which has set an ambitious agenda to reduce battery costs by 56 percent between 2020 and 2025.57 And society and industry need to be focused on reducing the cost not just of i
214、ndividual technologies but of entire systems.Principle 3:Build effective financial mechanisms to drive capital where it is needed.Financial markets and institutions are key actors in effectively allocating capital.They do so by channeling money efficiently from providers of capital to investments.Bu
215、t those markets and institutions face two challenges in facilitating a capital reallocation as large and complex as the net-zero transition.First,low-emissions technologies are still nascent in some sectors and not yet cost competitive in others,and their risk-return profiles differ from those of tr
216、aditional alternatives.Providers of capital may therefore have a hard time evaluating their viability and risk and may be hesitant to lend to them or invest in them.Second,consumers and companies may have a limited appetite to move to these new technologies,which can affect demand for climate financ
217、e.Innovation,as we noted earlier,can play an important role by ensuring that low-emissions alternatives continue to become cost competitive.But a number of additional solutions could help accelerate the necessary reallocation of capital.Those solutions would reduce the risk of 55 There is some debat
218、e about whether governments,in trying to lower the cost of low-emissions technologies,should focus on R&D or on driving deployment.As we discussed above,the importance of the two in lowering costs varies depending on the stage of the technology.For technologies in earlier stages,direct incentives fo
219、r R&D may matter more;for those in later stages,R&D,learning-by-doing,and economies of scale can all play a role and reinforce one another.There is a related debate about how much to focus on improving technologies and how much to focus on deploying existing technologies(for example,through adoption
220、 subsidies or through enacting a carbon tax on high-emitting assets).Research suggests that the two agendas need to work in parallel.For example,adoption subsidies can help increase the use of low-emissions technologies,but over time they will be expensive unless the cost and performance of those te
221、chnologies improve.And carbon taxes tend to be most effective when viable and cost-competitive low-emissions technologies already exist;in such cases,the taxes discourage the use of high-emissions technologies and encourage a switch to the low-emissions ones.See Daron Acemoglu et al.,“The environmen
222、t and directed technical change,”American Economic Review,volume 102,number 1,February 2012.56“Renewable energy technology action platform under USIndia strategic clean energy partnership,”Ministry of New and Renewable Energy,Government of India,August 2023.57“Battery day presentation,”Tesla,Septemb
223、er 2020.21An affordable,reliable,competitive path to net zeroinvestments,better match capital providers with the investment needs that are most suitable for them,or unlock demand for climate finance.One of the solutions is developing and scaling up voluntary carbon markets in the near term.They woul
224、d need to be large,transparent,verifiable,and environmentally robust.58 If designed well,they could particularly encourage the flow of capital to developing countries and to measures that could otherwise be hard to finance,such as avoiding deforestation.Another possible solution is mandatory markets
225、 and carbon prices.This approach would require companies to pay for their emissions and give them an incentive to invest in projects that reduce emissions.59Another opportunity is expanding and revamping existing sources of capital,such as project finance.In developed markets,environmental,social,an
226、d governance indexes,climate indexes,green bonds,and sustainability-linked loans have also gained popularity.However,concerns are growing that these instruments are not working well.Improving the functioning of such instrumentsfor example,by crafting better standards or formulating better ways of ve
227、rifying that the standards are actually metcan help increase their effectiveness.Entirely new asset classes and funds could be built as well.Industrial venture capital funds,which tend to play an active role in a technologys early stages,and growth infrastructure funds,which can be instrumental in b
228、ringing a mature technology to scale,could be developed to drive capital to climate solutions.Special-purpose vehicles,which manage financial resources for a clearly defined purpose and period,could help companies continue funding high-emitting assets that remain necessary in the near termbut for a
229、specified period and with a clear plan for winding them down.Sustainable land and forestry funds could help preserve forests,and“brown-to-green”funds could help carbon-intensive companies decarbonize.Scaling up blended finance could also help increase capital flows.Blended finance combines public an
230、d private capital,reducing the risk faced by private capital providers.Philanthropic capital can play a part as well.Because public capital is often limited,it is important that it be carefully channeled into areas where the need is most acute,such as supporting the transition in lower-income or low
231、er-middle-income countries.For example,those countries may be investing in raising energy access,but doing so with low-emissions technologies could incur high capital costs.Various reforms are also being considered to ensure that blended finance,grant funding,and loans on concessional terms are used
232、 to their full potential,such as increasing the funding available via multilateral institutions and adjusting the terms on which it can be provided.60 Also,implementing blended-finance projects can be slow;to address that problem,financial institutions and multilateral institutions could develop“off
233、-the-shelf”guidance on general financing structures and frameworks that could then be tailored to different needs.Companies can use the various sources of capital discussed above,such as project finance or brown-to-green funds.But they could also reallocate their own capital resources from high-to 5
234、8 Voluntary carbon markets would include markets for avoidance credits(for example,to prevent forests from being cut down)and for removal credits(for example,for planting forests or direct air capture).For further details,see Final report,Taskforce on Scaling Voluntary Carbon Markets,January 2021.59
235、 One way carbon prices can be implemented is in the form of a carbon tax on emitting parts of the economy.Estimates suggest that the application of such a tax could result in increased prices of energy and other products for end consumers,creating affordability concerns.However,the extent of the aff
236、ordability impact for consumers depends on the magnitude of the carbon tax applied and on how the revenue generated from the tax,if any,is recycled back into the economy.See Fiscal monitor:How to mitigate climate change,International Monetary Fund,October 2019.Moreover,as we discussed earlier,using
237、R&D and other measures to develop and drive down the costs of low-emissions technologies can work hand in hand with carbon taxes and reduce challenges to affordability.60 By multilateral institutions,we mean those that are funded by the governments of more than one country.See Scaling up blended fin
238、ance in developing countries,OECD,2022;and Strengthening multilateral development banks:The triple agenda,Independent Expert Group commissioned by Indian G-20 Presidency,2023.22An affordable,reliable,competitive path to net zerolow-emissions businesses.That often involves making large capital invest
239、ments or transforming large physical assets.The step is not a straightforward one,and it will require creating incentives for companies to make the investments.Long-term purchase agreements,for example,provide companies with a guaranteed source of revenue over an extended period,giving them an incen
240、tive to invest in new technologies.All these solutions would need to be supported by more transparency and a better understanding of the potential demand,costs,and risks of specific new technologies and projects.Climate-related disclosures could help,and so could efforts by companies and financial i
241、nstitutions to build capabilities to better assess new risk-return profiles and identify new opportunities.Redesigning physical and energy systemsThe net-zero transition calls for far-ranging changes to many existing systems.Some of those systems provide the physical inputs necessary to build low-em
242、issions assets;others provide energy.If not performed well,the changes could compromise affordability,reliability,and the pace of emissions reduction.The next three principles show how to make the changes effectively.Principle 4:Anticipate and remove bottlenecks for materials,land,infrastructure,and
243、 labor.The transition will call for increases in the supply of certain minerals,such as lithium and nickel,and of manufactured goods,such as wind turbines and electrolyzers.It will require substantial amounts of water for mining,hydrogen production,and other uses.It will also require a great deal of
244、 land for solar panels,wind farms,transmission infrastructure,forests,and crops that could be turned into biofuels.Infrastructure,such as EV charging networks,electrical grids,and hydrogen pipelines,will need to be scaled up.And a great deal of labor will be needed to build and operate new physical
245、assets.The potential supply of those inputs will generally not be a limitation.For example,enough mineral reserves exist to meet the demand expected under the net-zero transition.But various bottlenecks could limit access,especially in the near term.This is not an unprecedented problem;bottlenecks h
246、ave threatened high-emissions supply chains in the past,and they have been managed effectively.But if the bottlenecks threatening the transition are not also managed effectively,material shortages and price spikes could result,impairing affordability,reliability,and the pace of the transition.Long l
247、ead times are often a problem.For example,the time that elapses between initial exploration and starting to operate a new mine is typically five to 15 years.61 Partly for that reason,shortages of copper,lithium,nickel,rare earth metals,and cobaltmaterials used heavily in EV batteries,wind turbines,a
248、nd other low-emissions technologiescould begin before 2030.62 Similarly,it can take three to 12 years for a new electricity transmission or distribution project to be planned,receive the necessary permits,be built,and become active.63 In the United States,getting a new nuclear reactor approved can t
249、ake up to five years of complex safety reviews,environmental assessments,and public hearings,and building it can take five years or more.64Another potential bottleneck is concentration.For example,China produces more than 70 percent of the worlds silica-based solar photovoltaic modules and two-third
250、s of battery cells.65 While 61 The net-zero materials transition:Implications for global supply chains,McKinsey&Company,July 2023;and Material and resource requirements for the energy transition,Energy Transitions Commission,July 2023.62 Patricia Bingoto,Michel Foucart,Maria Gusakova,Thomas Hundertm
251、ark,and Michel Van Hoey,“The net-zero materials transition:Implications for global supply chains,”McKinsey&Company,July 2023.63 Average lead times to build new electricity grid assets in Europe and the United States,20102021,International Energy Agency,January 2023.64“Nuclear explained:US nuclear in
252、dustry,”US Energy Information Administration,August 24,2023.65 Energy technology perspectives,International Energy Agency,March 2023.23An affordable,reliable,competitive path to net zeroconcentration can bring efficiency gains,it can create supply-chain bottlenecks if supply from the few sources is
253、affectedsay,by natural disasters or trade restrictions.A multitude of constraints can affect the supply of land.Those constraints do not include the amount of land available in the world,but they do include the natural endowments of a given region(such as sunniness,windiness,and forests),competing p
254、riorities for land(for example,agriculture),local regulations,and public sentiment.As for labor,the availability of necessary skills is a potential challenge.Nuclear power could face shortages of workers with the required expertise because many are now reaching retirement age.66 Similar challenges c
255、ould exist for other jobs related to the manufacture and installation of low-emissions technologies.67Stakeholders should therefore conduct analyses of where bottlenecks could emerge and take measures to remove them.Some ways of doing so would increase the supply of inputs.Long-term supply contracts
256、,such as those that are forming between auto manufacturers and minerals producers to provide lithium used for battery technologies,help individual manufacturers secure supply of key inputs over long periods while supporting the scale-up of capacity for new materials.68 And workforce retraining progr
257、ams could increase the supply of workers with the necessary skills quickly.For example,teaching technicians who already install heating,ventilation,and air-conditioning systems how to install heat pumps could be a fast way of building a capable workforce.Other measures would reduce the demand for in
258、puts.Examples include recycling materials,developing new battery chemistries that rely less on raw materials that are in short supply,and replacing dated wind turbines in existing windmills with newer,more efficient ones,thus reducing the amount of land needed for a given supply of electricity.Princ
259、iple 5:Revamp energy markets and planning approaches for an electrified world.Electricity will play a larger and larger role as the transition takes hold.In a net-zero world,electricity systems could provide about three times as much energy as they do today,and the share of all electricity that was
260、generated by wind and solar power could grow.69 Almost twice as many transmission and distribution lines would need to be constructed as exist today.70In a number of ways,current markets and planning approaches for the generation of electricity may no longer be suited for that expansion and may no l
261、onger function well once it happens.71 Four challenges stand out.The first is that companies may not have incentives to build and operate all the necessary generation capacity.Many markets currently use marginal costs(which are typically driven by the cost of using a fuel,such as gas or coal)to set
262、electricity prices,and those prices serve as incentives to build capacity.But that arrangement will not work in a system in which generation assets have no marginal costs or low onesexamples are wind and solar powerbecause the resulting electricity prices would be very low and volatile,and generator
263、s would receive almost no payments for the power they supplied,on average(Exhibit 8).66“Nuclear industry census reveals positive signs of growth alongside workforce challenges,”Nuclear Industry Association,January 25,2022.67 World energy employment 2023,International Energy Agency,November 2023.68“L
264、G Energy Solution and Toyota sign long-term battery supply agreement to power electric vehicles in the U.S.,”Toyota,October 4,2023.69 World energy transitions outlook 2023:1.5C pathway,International Renewable Energy Agency,June 2023.70 Energy technology perspectives,International Energy Agency,March
265、 2023.71 Though this discussion focuses on electricity,other energy markets will also need to shift or develop,including those for natural gas and hydrogen.We focus on electricity because it will undergo an especially dramatic transformation and will require especially innovative solutions.24An affo
266、rdable,reliable,competitive path to net zeroExhibit 8Wind and solar power generation,which have very low marginal costs to operate,could become major parts of the energy mix in the future.Projected change in distribution and cost of US energy sourcesMcKinsey&CompanyGas peaking refers to gas-fred pla
267、nts that run only when demand is high.The range shows clearing prices during most hours.Storage includes pumped-hydro and lithium-ion long-duration energy storage.Storage could increase the utilization potential of wind and solar power and displace some fossil fuel production.Based on the US Achieve
268、d Commitments scenario published in Global energy perspective 2023,McKinsey&Company,October 2023.This chart excludes hydrogens short-run marginal cost of$150$200 per megawatt-hour in 2050.Source:Publicly available data from US Energy Information Administration and US National Renewable Energy Labora
269、tory;McKinsey analysisShort-run marginal cost per megawatt-hour,$Onshore windOfshore windSolarHydropowerNuclearCoalGasGas peakingOnshore windOfshore wind:3HydrogenSolarHydropower:2Nuclear:4Gas:3Gas peaking919113218$100)energywill be required when the system is in full use.280gigawattsof additional c
270、apacity with very low marginal costs could come from storage.30gigawattsof additional capacity at an average marginal cost of$0.50 permegawatt-hour could come from energy storage.25An affordable,reliable,competitive path to net zeroThe second challenge is that wind and solar power are intermittent.T
271、hat is,they provide electricity only when the wind is blowing or the sun is shining.Therefore,planners and market designers need to ensure that the right plans and market signals exist to drive investment in assets,such as energy storage and gas plants,that can support wind and solar power.Third,in
272、an electrified world,it may be harder to time supply to match demand.72 Demand for electricity may be especially high in the winter in places where people replace fossil fuelbased heating systems with electric ones.It may also be especially high at night if people continue to adopt EVs and to charge
273、 them overnight.So systems will need to be designed to manage different demand at different times of the year and different times of day.Moreover,solar panels generate less power in the winter and none at night,complicating the problem if they become a larger part of the energy mix.Fourth,because of
274、 the increase in wind and solar generation and the changing climate,planners and market designers must now accommodate weather volatility.For example,as Texas discovered during a severe freeze in 2021,some power plants and natural gas facilities are not winterized;that is,they stop working or suffer
275、 diminishing performance in extreme cold.73A number of steps could start addressing these challenges in both regulated and deregulated markets for electricity.To build low-emissions assets affordably,power companies in regulated markets could either take on the job themselves,reducing costs through
276、internal efficiency improvements,or issue competitive bids for other companies to do it.In deregulated markets,auctions for supply agreements will probably still be critical.In both kinds of markets,solar and wind power(or other forms of capital-intensive power)need to be able to compete on a level
277、playing field with generation technologies that have relatively low capital costs but high fuel costs.To help keep supply aligned with demand,a system depending on solar and wind power will also need to build a great deal of flexible capacitythat is,capacity that can provide electricity when wind an
278、d solar cannot.74(Flexible capacity is sometimes called resource adequacy,depending on the location and the length of time that the capacity covers.)Some of that flexible capacity would support wind and solar over the course of a day;for example,batteries could store solar power during the day and r
279、elease it in the evening.In regulated markets,a procurement authority could require generators to make available a certain amount of such capacity.In deregulated markets,it could be attained by requiring assets to compete against each other to provide it.Other kinds of flexible capacity would suppor
280、t electricity markets for more than a day in order to counteract seasonal and extreme events.For example,it may be necessary to maintain generation plants,which could run on fossil fuels today but eventually be retrofitted with carbon capture or shift to using low-emissions fuels.They would be used
281、much less than they are today,so incentives would be needed for companies to maintain and run them,as well as the necessary support infrastructure,such as gas pipelines.7572 Conversely,lower dependence on fuel inputs will reduce the risk of“commodity shocks,”in which a fuel commodity suddenly become
282、s scarce.Such shocks can significantly increase the price of electricity generation,and they can also eliminate access to the commodity entirely,jeopardizing the reliability of electricity.For example,in 2002,Bangladesh could not obtain supplies of natural gas that had been rerouted to Europe as a r
283、esult of the shortage of gas there,and widespread outages resulted.73 Garrett Golding,“Texas electrical grid remains vulnerable to extreme weather events,”Federal Reserve Bank of Dallas,January 24,2023.74 Note that flexible capacity does not necessarily call for fossil fuels;renewable resources ofte
284、n provide some capacity during critical times.Similarly,fossil fuels are not a sure bet at such times,as Texass experience in 2021 demonstrates.75 Running gas power plants to provide only backup capacity will entail numerous shifts.For example,gas pipelines,even if they carry less,may need even more
285、 investment,including investment in expanding the size of pipes so that they can provide adequate supply to generators at critical moments.Gas generators that will eventually shift to CCUS or hydrogen will also need investment.26An affordable,reliable,competitive path to net zeroCompensation mechani
286、sms would have to change to give companies incentives to provide this kind of capacity.In regulated markets,planners could determine the amount of capacity needed and allow companies to build or maintain more assets to cover the need,compensating them with a regulated return on those assets.In dereg
287、ulated markets,other compensation mechanisms,such as a price paid per gigawatt of flexible capacity,would provide incentives for companies to build or maintain assets well in advance of the need,because power capacity cannot be built overnight.Acceptable system risks would also need to be defined.Fl
288、exibility will be critical regardless of the generation mix as more and more parts of the economy become electrified.Planning mechanisms will be necessary to determine the needfor example,which seasons and types of events present the greatest challenges and how much electricity will be needed to mai
289、ntain reliability.A particularly important planning tool in determining how much capacity a resource can provide during critical times is probabilistic modeling,which can account for variations in demand for electricity and for intermittent supply.Another way to reconcile the timing of supply and de
290、mand is to offer consumers and businesses incentives to shift their demand for electricity to times when there is more available supply.For example,EV charging does not have to happen in the evening.And data centers can align their demand to times and locations at which renewable sources of electric
291、ity are operating.76Not only the generation of electricity but also its transmission faces a challenge:the transmission capacity necessary for the transition needs to be built.The challenge exists both for large-scale,high-capacity lines that would cover long distances and for smaller lines that wou
292、ld connect them to generators.There is no shortage of capital seeking to build large-scale transmission in many developed countries.The problem,rather,is planning procedures that assess only the reliability value of a single line.More modern planning procedureswhich evaluate a portfolio of transmiss
293、ion lines and value several benefits,such as resiliency,access to clean energy,and economic developmentare increasingly being adopted.Such procedures should balance costs and benefits among jurisdictions to account for their different approaches.Another reason for not building transmission capacity
294、is permitting,as this report discussed earlier.The distribution of electricity likewise faces a challenge in the transition.In many places,regulations provide utilities with most of their returns on the basis of their nondepreciated capital assets.That system gives the utilities an incentive to depl
295、oy more capital than they otherwise might.Several countries,such as Italy,are therefore planning to shift to models that reward total spending,not just capital spending.Such models could give utilities an incentive to be more capital efficient,which could lead to shifts in behavior,such as repairing
296、 assets(which does not always count as capital spending)rather than replacing them(which does).Another area that could require market changes and planning focus is distributed energy resources,such as rooftop solar panels.Such resources could potentially reduce spending on transmission and distribut
297、ion,and they could also provide small-scale flexible capacity.However,as use of distributed energy grows,its users will naturally depend less on utilities,requiring the utilities to plan carefully.Establishing clearer standards for compensating consumers for these resources will be vital.Navigating
298、risks and opportunitiesIf the world is to protect affordability and reliability during the net-zero transition,it will also have to navigate risks while moving from an old energy system to a new one.And to become more 76 Rasoul Rahmani,Irene Moser,and Antonio L.Cricenti,“Inter-continental data centr
299、e power load balancing for renewable energy maximisation,”Electronics,volume 11,number 10,2022.27An affordable,reliable,competitive path to net zerocompetitive,countries and companies will have to prepare for the many opportunities offered by the transition.Principle 6:Manage existing and emerging e
300、nergy systems in parallel.The net-zero transition will entail revamping how the world produces and uses energy.As that happens,the world will need to run two energy systems in parallel,smoothly ramping down the old,fossil fuelsbased one while scaling up the new.Doing so well can help reduce emission
301、s to net zero while ensuring reliable and affordable access to energy.To help decision-makers better understand how to enable a smooth transition,we started by examining scenarios of demand for oil,gas,and coal from a range of sources,including the IEA,the IPCC,and McKinseys Global energy perspectiv
302、e 2023(Exhibit 9).77 Those scenarios have different warming outcomes by 2100,ranging from 1.5C above preindustrial levels to about 3.0C.For oil demand,some of the scenarios show growth during the next few years,but then the picture changes.In all of the scenarios examined here,demand eventually star
303、ts to fall,and in most,it is lower by 2050 than it is today,though to varying extents.A key driver of the variation in projected demand for oil is the transportation sectorspecifically,the use of EVs and the efficiency of transportation.Gas demand is also expected to grow in the near term in some of
304、 the scenarios we examined.Over time,though,some scenarios show increases in demand between now and 2050,while others show declines.The overall impact on demand would depend on how various factors pushed it up or down.Faster declines could be caused by a more rapid increase in the use of renewable e
305、nergy for power generation,growing electrification to replace the use of gas(particularly in heating systems in buildings),and a shift away from natural gas in industrial processes.But some transition-related solutions could push gas demand up:using gas to produce hydrogen,switching from coal to gas
306、 to generate electricity,and using gas power to provide firming capacity for renewable power generation.Using gas as a feedstock for chemicals could also increase demand.And for coal demand,all scenarios show declines.The steepness of the declines depends in particular on how demand in India and Chi
307、na,the worlds biggest consumers of coal,evolves.Stakeholders approaching the management of two energy systems in parallel should therefore consider two implications.First,in scenarios in which warming is kept to the levels envisioned by the Paris Agreement,the process of shifting from the old energy
308、 system to the new means that oil,gas,and coal will play at least some part in the energy mix in the next few years.So it is vital that direct emissions from their operations be as small as possible.Second,these numerous scenarios show that although demand for oil and gas will be lower in 2050 than
309、it is todaysubstantially lower,on a 1.5C trajectorythe decline will not be immediate.In the interim,it will be important for demand to be met with enough supply so that access to energy is reliable and affordable.At the same time,however,it will be absolutely critical to ensure that reliance on the
310、old system,to the extent needed,does not slow momentum toward the new.77 See World energy outlook 2023,International Energy Agency,October 2023;“World energy balances,”International Energy Agency,August 2023;“AR6 Scenario Explorer and Database hosted by IIASA,”International Institute for Applied Sys
311、tems Analysis,2022;and Global energy perspective 2023,McKinsey&Company,October 2023.The scenarios are for fossil fuels used for energy production but also for other uses.By oil demand here,we mean demand for a range of liquids,including crude oil,natural gas liquids,biofuels,coal-to-liquids,gas-to-l
312、iquids,methyl tert-butyl ether,refinery gains,and low-emissions fuels.28An affordable,reliable,competitive path to net zeroExhibit 9Demand for oil,gas,and coal declines by 2050 in many scenarios,but the outlook varies widely.Oil and other liquid fossil fuels,daily average,barrels,millionMcKinsey&Com
313、panyNatural gas,annual,cubic meters,trillionCoal,annual,metric tons of coal equivalent,billionNote:All non-McKinsey data come directly from public sources.For some scenarios,data for 2020 may vary from actual data because they may come from models,including models built some years ago.Data may also
314、vary among scenarios because of different assumptions about the energy content of fuels,the specific mix of fuel types within each category,and other factors.We have used linear interpolation between the published data points,which are indicated by dots.Values from the Intergovernmental Panel on Cli
315、mate Change(IPCC)were provided in exajoules(EJ),which we converted by using the following conversion factors:1 EJ per year=0.517 million barrels of oil per day,28.9 billion cubic meters of gas per year,and 34.12 metric megatons of coal equivalent per year.We derived those conversion factors by using
316、 the reported 2022 demand in exajoules and the reported volume measures in World energy outlook 2023,International Energy Agency,October 2023.Includes the following:for McKinsey GEP scenarios,crude oil,natural gas liquids(NGLs),coal-to-liquids(CTLs),gas-to-liquids(GTLs),methyl tert-butyl ether(MTBE)
317、,refinery gains,and low-emissions fuels;for IEA scenarios,crude oil,NGLs,CTLs,GTLs and additives,refinery gains,and low-emissions fuels.For IPCC scenarios,we used the conversion factor described above.Each of the four IPCC lines shows the median value of a range of scenarios.In the C1 and C2 scenari
318、os,warming by 2100 is limited to 1.5C above preindustrial levels,but in the C2 scenario,it first overshoots that limit,whereas in the C1 scenario,it does not.In the C3 and C4 scenarios,there are a 67%and a 50%likelihood,respectively,of limiting warming by 2100 to 2.0C above preindustrial levels.Sour
319、ce:International Energy Agency(IEA),World Energy Balances;publicly available data from IEA,World energy outlook 2023;“AR6 Scenario Explorer and Database hosted by IIASA,”International Institute for Applied Systems Analysis,2022;McKinseys Global energy perspective 2023(GEP);McKinsey analysisDemand sc
320、enariosProjected warming abovepreindustrial levels,C1.51.51.52.03.02.03.02.03.02.03.02.03.01.5 to 1.5 to 1.5 to 1.5 to 1.5 to 1.5 to 2.0Further AccelerationAchieved CommitmentsCurrent TrajectoryFading MomentumNet-Zero Emissions by 2050Announced PledgesStated PoliciesC1 MedianC2 MedianC3 MedianC4 Med
321、ianMcKinsey GEP:IEA:IPCC:30An affordable,reliable,competitive path to net zeroleast through 2040,some shortfall could exist between that production and potential demand for oil,even with the substantial decline in demand for oil expected on a 1.5C trajectory.80And depending on how demand for gas evo
322、lves,new infrastructure may be needed,in particular for pipelines and for facilities that transform gas into liquefied natural gas(LNG)and then back.In the United States,for example,new pipeline infrastructure may be needed in parts of the country to supply gas to support renewable power systems.Lik
323、ewise,Asia has only modest gas reserves of its own,so it may need new facilities to service LNG imported from abroad.These analyses point to a number of solutions that could help manage two energy systems effectively in parallel.First and foremost,it will be critical to scale up the new energy syste
324、m as quickly as possible.This could be done by expanding alternative energy sources,changing end-use sectors,and improving energy efficiency,as we have described in depth elsewhere in this report.But more is needed.One important step is to reduce Scope 1 and 2 emissions from fossil fuel operations t
325、o the extent possible.81 Estimates suggest that such emissions of methane from oil and gas operations could be reduced by 35 percent at nearly no net cost.82 Methane emissions could be reduced by fixing leaky connections and updating operating procedures to reduce venting at wells,pipes,and tanks.83
326、 Other measures could include reduced flaring,electrification of equipment,and use of carbon capture.Another step is for decision-makers to undertake fossil fuelrelated investments in ways that provide as much energy as necessary and prevent price volatility but also maintain momentum toward net zer
327、o and do not risk locking in the use of fossil fuels.Increasing the efficiency and effectiveness of existing operations to maximize productionfor instance,through improved management of reservoirsis one opportunity.Another,to the extent new projects are needed,is deploying capital in a modular fashi
328、on.That is,rather than investing in projects that require large,up-front capital outlays in return for long useful lifetimes,companies could identify opportunities for which capital can be deployed in segments.Also,projects with low emissions intensity could be prioritized.Principle 7:Compete for op
329、portunities created by the transition,using comparative advantage as a guide.As the transition unfolds,and as demand for high-emissions products and their components falls,jobs and output in some parts of the economy may be harmed.84 Other parts of the economy could gain.By 2050,the transition could
330、 result in a gain of about 200 million jobs and a loss of about 185 million jobs globally.85 Countries will need to consider how to support vulnerable workers and industries.But even as the transition reduces demand and affects some parts of the economy,it will also create new opportunities for coun
331、tries and companies to participate in a net-zero economy.Some 80 The 1.5C scenarios that we examined are from the IEA and the IPCC.81 Scope 1 emissions come from sources that are controlled or owned by an organization;Scope 2 emissions are those“associated with the purchase of electricity,steam,heat
332、,or cooling.”See US Environmental Protection Agency,Center for Corporate Climate Leadership,“Scope 1 and Scope 2 inventory guidance,”August 21,2023.82 Emissions from oil and gas operations in net zero transitions,International Energy Agency,June 2023.See also Curbing methane emissions:How five indus
333、tries can counter a major climate threat,McKinsey&Company,September 2021.83 Methane emissions from the energy sector are highly concentrated in a few countries,which could create barriers to emissions reduction if those countries do not actively pursue it.According to the International Energy Agency,the five biggest methane emitters for energy-related uses are China,Russia,the United States,Iran,a