- $3.5 trillion increase to achieve net-zero emission by 2050.
- McKinsey estimates the increase to be equal to half of global corporate profits and one-quarter of total tax revenue in 2020.
According to a new McKinsey and Company report, it would take at least $9.2 trillion in annual investment to meet the world’s nations’ 2050 net-zero commitment. In addition, the company noted the transition required for the world to reach net-zero emissions by 2050 would necessitate a $275 trillion investment in physical assets within the proposed time frame.
This annual average included investment in energy, mobility, industry, buildings, agriculture, forestry, and other land-use sectors. According to the firm, the estimated spending on all of these would need to be $3.5 trillion per year higher than it is now if the world achieves net-zero emissions by 2050.
To put the global funding requirement into perspective, McKinsey estimated that the increase would be equal to half of global corporate profits and one-quarter of total tax revenue in 2020. “Many of these industries will face cost increases as they decarbonize. In the scenario we examine, steel and cement production costs, for example, would rise by about 30 per cent and 45 per cent, respectively, by 2050, compared to today, ” McKinsey said.