Net zero target needs $3.5 trillion in annual green energy investment, Wood Mackenzie says

Wood Mackenzie's report on Tuesday said that the investment in green energy must double every year to $3.5 trillion if we are to reach the Paris Agreement goal of net zero emissions by the year 2050.

The consultancy's report said that, in addition to the investment gap, global efforts to switch to cleaner energy are under pressure due to concerns about energy security and tariffs and barriers to trade, which are stunting the electrification of growth globally.

According to the report, no major countries and only a handful of companies are on track to achieve the 2030 climate goals set forth in the Paris Agreement.

Why it's important

Climate experts believe that strong national determined contributions (NDCs), as well as global cooperation, will be critical to mobilizing the $3.5 trillion investment. Climate experts say that if these challenges are not overcome then much more money may be required to fund adaptation and mitigation.

By the Numbers

The analysis found that solar and wind power's share in global power production is expected to increase to between 25% and 36% by 2030. In 2024, it grew from 4.5% to 17%.

The report stated that the gas demand will have different outcomes. In the scenario where the warming is limited to 2.5 degrees Celsius, it would increase by 11% by 2050, while in the net zero scenario, the demand would decrease by 47% during the same time period.

KEY QUOTE

Prakash Sharma is vice president and head of scenario and technologies at Wood Mackenzie. He said, "A series of shocks on global markets threatens to derail progress in the decade pivotal to energy transition."

He said that if decisive actions are taken, it is possible to achieve net zero emissions in 2050.

CONTEXT

The energy transition aims to achieve the Paris Agreement goal of limiting global temperature increases to 1.5 C (2,7 F) by replacing fossil fuels in electricity production with renewable sources.

In recent years, the renewable energy supply has increased dramatically to reduce emissions. However, it has not grown fast enough to eliminate fossil fuels from the energy mix. Reporting by Forrest Crellin, Paris; Editing and proofreading by Helen Popper

(source: Reuters)