Investments of up to $13.5 trillion will be needed by 2050 to help hard-to-abate sectors such as production, energy and transport to transition to a sustainable and carbon-neutral future, a World Economic Forum report said.
The report, released before the Cop28 summit begins in Dubai this week, focuses on progress towards achieving net-zero emissions in eight industries – steel, cement, aluminium, ammonia (excluding other chemicals), oil and gas, aviation, shipping and trucking – which depend on fossil fuels for 90 per cent of their energy demand.
While the pathway to net zero in these sectors will differ based on “unique sectoral and regional factors”, greater investments are required in clean power, hydrogen and infrastructure for carbon capture, utilisation and storage (CCUS) to accelerate decarbonisation, it said.
A “robust enabling environment” is also essential to allow them to achieve their respective decarbonisation objectives, said the Net-Zero Industry Tracker 2023 report, published by the WEF along with Accenture.
“Decarbonising these industrial and transport sectors, which emit 40 per cent 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 at the WEF.
“Significant infrastructure investments are required, complemented by policies and stronger incentives so industries can switch to low-emission technologies, while ensuring access to affordable and reliable resources critical for economic growth.”
Over the past three years, absolute emissions have grown by an average of 8 per cent due to increased activity and demand, the report found.
Sectors including cement and steel are facing the most complex decarbonisation challenges due to their energy intensity, with their use of energy “equivalent to more than three times” that of the amount consumed in the US.
Emission-intensive sectors are not currently aligned with the trajectory to reach net zero by 2050 – as determined by the International Energy Agency and industry specific scenarios and targets, the report said.
The $13.5 trillion in investments covers the 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.
“They must be complemented by policies and incentives that can help the industries make the switch while ensuring access to affordable and reliable resources that are critical for economic growth,” the WEF said.
Global investments in energy transition technology alone must quadruple to $35 trillion, the International Renewable Energy Agency said in a June report.