G20 economies would need to invest about an estimated $35 trillion this decade, over and above the current spending, to be on track to reach net zero greenhouse gas emissions by 2050, a study by McKinsey said.
“While G20 economies have made tangible progress in reducing emissions in recent years, CO2 emissions still need to further decrease almost 50% by 2030 versus 2020 levels to reach net zero goal on time.
To achieve that goal, much of the investment needed for the transition to a low-emissions economy would need to be made upfront to successfully transform the world’s energy and land use-systems,” analysts at the management consulting firm said.
The report was released on the sidelines of the B20 summit.
To put it in perspective, G20 economies at present emit about 31 gigatons CO2 per annum and would need to reduce that by about half by the end of this decade. While China and some Latin American countries have the highest emissions reduction requirements among the upper middle income countries, Germany has the highest reduction needs among high income countries.
Business-led innovations can account for a considerable proportion of financing required to meet the sustainability goals, helping close some amount of the net zero gaps, suggest experts.
Societies would need to consider greater public-private commitment and collaboration, new incentives, and even bolder innovation possibilities, analysts said.
“Market responses to new incentives for net zero occur when subsidies or other forms of public support crowd in more private spending, as could regulatory and policy changes. For example, government grants and concessions, or funding from state-owned enterprises and development finance institutions could help improve the risk and return profiles of investments. Greater public support could also further accelerate technology learning, resulting in avoided spending towards the net zero investment gap,” they said.
Besides, new high growth opportunities across sectors from healthcare to renewables can fuel long-term economic growth that drives progress towards sustainability and inclusion goals.
