The world faces an $18 trillion investment gap to finance the green energy transition through to 2030 if it is to stand a chance of limiting global warming to 1.5 degrees Celsius, according to a new report from Boston Consulting Group (BCG).
The U.S consulting giant estimated a total of $37 trillion is needed over the rest of the decade to finance the transition away from fossil fuels, of which $19 trillion "at most" has already been committed, leaving an $18 trillion investment gap that urgently needs filling if global climate goals are to be met.
The report also stressed that similar levels of investment were required to bolster electricity grids to prepare for the rapid roll out new solar and wind capacity and manage the influx of intermittent renewable power sources.
At the same time, BCG emphasised that society "must massively accelerate substitution and abatement of fossil fuel use" by electrifying economies and switching to renewable energy sources wherever possible, although it added that selected investment in oil and gas projects would still be needed even as the global economy decarbonizes.
The estimates are featured in a new report, "Blueprint for the Energy Transition," which predicts that total world consumption of electricity is projected to roughly double by 2050 as developing economies industrialize and the global economy as a whole embraces the electrification of heating, transport and some industrial processes.
In 2021, renewables and other low carbon energy sources accounted for 12 percent of global supply, but BCG said most industry standard models suggested renewables' share of the power mix needed to reach 50 to 70 percent by 2050 in order to limit average global temperature increases to 1.5C by the end of the century.
As such, it said the green energy transition would need to take place around three times faster than previous transitions, such as the coal-powered Industrial Revolution and the oil and gas booms that helped drive economic growth over the past century.
The report points to five key technology levers to drive the transition: increased energy efficiency; the electrification of economies and processes, primarily through electric vehicles and heat pumps; the decarbonizing of power supplies; the use of lower carbon fuels in hard to abate industries; and the deployment of carbon capture and storage (CCS) technologies.
However, a huge investment gap needs to be bridged to fund these decarbonisation "levers" through to 2030.
"Most of the tools we need to bring our energy system to net zero are already available," said Maurice Berns, report co-author and a BCG managing director and senior partner who chairs the firm's Centre for Energy Impact. "What we need, urgently, are the policies, proven business cases and capabilities to effect the biggest and most critical peacetime transformation in our economic history."
The report notes that most net-zero scenarios require global oil and gas
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