The world requires $13.5 trillion investment to fast-track decarbonisation of hard-to-abate key industries and achieve the net-zero target, World Economic Forum said on Tuesday — two days ahead of the opening of the UN Climate Change Conference (COP28) in Dubai.
This investment is required by 2050, particularly in the production, energy, and transport sectors, WEF said in its report, ‘The Net-Zero Industry Tracker 2023’, in collaboration with Accenture.
The report took stock of the progress of net-zero emissions for eight industries, including steel, cement, aluminium, ammonia, excluding other chemicals, oil and gas, aviation, shipping, and trucking – which depend on fossil fuels for 90 per cent of the energy demand.
WEF’s call comes close on the heels of an urgent call by the United Nations for “dramatic climate action” by COP28 to close an “emissions canyon.” While the pathway to net zero in these sectors will differ based on unique sectoral and regional factors, investments in clean power, clean hydrogen and infrastructure for carbon capture, utilisation, and storage (CCUS) will be needed to accelerate industrial decarbonisation across most sectors, the WEF report said.
“Decarbonising these industrial and transport sectors, which emit 40% of global greenhouse gas emissions today, is essential to achieving net zero, especially as demand for industrial products and transport services will continue to be strong,” said Roberto Bocca, head of Centre for Energy and Materials, World Economic Forum. “Significant infrastructure investments are required, complemented by policies and stronger incentives so that industries can switch to low-emission technologies while ensuring access to affordable and reliable resources critical for economic growth.”
According to the report, the $13.5 trillion in investments is derived from average clean power generation costs of solar, off-shore and on-shore wind, nuclear and geothermal, electrolyser costs for clean hydrogen and carbon transport, as well as storage costs.
Last week, the Paris-based International Energy Agency said that a “reasonable ambition” for oil and gas producers looking to align with the 1.5C temperature goal of the Paris Agreement would be to earmark 50 per cent of their capital expenditures on clean energy projects by 2030. In 2022, the global oil and gas industry’s total capital investment amounted to around $800 billion —largely for supporting fossil fuel operations — which the IEA said is around double what would be needed each year by 2030 to decarbonise production in line with a 1.5C scenario.
The Net-Zero Industry Tracker proposes a comprehensive framework of emissions drivers and enablers to measure progress and identify gaps, scorecards for each industry and opportunities for cross-sector collaboration. Building on the 2022 edition, the updated report includes transportation sectors and applies the framework to identify strategies for net-zero industrial transformation.
The majority of the technologies needed to deliver net-zero emissions are expected to reach commercial maturity after 2030, highlighting the need for collaborative approaches to research, develop, and scale them. This includes substituting legacy technologies with low-emission alternatives, increasing the efficiency of processes and machinery, electrification, and driving circularity.
“It is imperative that action is taken soon to both decarbonise and improve energy efficiency; otherwise, unabated fossil-fuel demand in the key industry sectors, which have grown 8% on average the past three years, will increase very significantly by 2050,” said Bocca.
WEF report’s findings underscore the urgency for creating a robust enabling environment, including low-emissions technologies, infrastructure, demand for green products, policies, and investments. In addition to increasing capital expenditures to decarbonise existing industrial and transport asset bases, further investment is needed to build a clean-energy infrastructure.