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To get to net-zero emissions by 2050, the world is going to have to make a massive leap forward in renewable-electricity production.
The energy transition is headed for a generation gap
A recent PwC report on the state of the energy transition highlights six areas where global policies and pledges, including those agreed to under the 2015 Paris Accord, are falling far behind net-zero-emissions targets. Among the most conspicuous of these gaps: renewable-electricity generation. As the chart above shows, global capacity will have to increase eightfold from 2021 levels if the world is to achieve net zero by 2050. And that’s only if comparable leaps are made in grid development, energy storage, hydrogen production, critical-minerals extraction and, not least of all, funding, which will need to climb to nearly US$9 trillion by 2050, from the current level of around US$1 trillion.
With wind and solar power becoming more affordable and growth in renewable sources often surpassing market forecasts, we’re moving in the right direction. But it’s going to take a massive, coordinated effort to remedy the shortfalls. The PwC report offers a blueprint for progress built on five broad principles:
- Focus on concrete steps. The efforts to close these gaps will span decades, meaning it’s important to separate short-term incentives from the longer-term goal.
- Develop a global scope. Interdependence during the transition will increase, with policies and the speed of execution in one country directly affecting others through energy pricing and availability. Countries need to align national efforts with regional and global developments.
- Balance sustainability against security. Even in a net-zero scenario, the International Energy Agency projects that roughly 18% of primary energy demand will be supplied by oil and gas in 2050. Underinvestment in hydrocarbons may lead to supply-and-demand mismatches, price swings and instability. It will be critical to balance decarbonisation with affordability and security of supply.
- Take supply chains into account. As they decide on energy-transition investments, leaders must consider the broader supply chain dynamics: the long lead time to construct new critical-minerals mines, for example, or the need to focus on regional suppliers to lower the emissions associated with transport.
- Understand the trade-offs between climate impact and costs. Nuclear fission, to take just one example of a zero-emissions energy source, can provide baseload power but requires an enormous amount of capital, time and policy support. Since not all solutions can be implemented simultaneously, leaders will need to prioritise based on immediate impact and costs—even as they maintain investments in solutions with long lead times, such as grid infrastructure.
For C-suite leaders, these principles can serve as guiding lights on their organisation’s journey to net zero.
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