$18 trillion investment gap looms as world races towards 1.5°C climate target

A rapid transition to renewable energy is essential to combat climate change, but will require unprecedented levels of investment, warns a new report from Boston Consulting Group (BCG) Center for Energy Impact, titled The Energy Transition Blueprint.

Global investments of $37 trillion are required by 2030, but only $19 trillion is currently committed, leaving an $18 trillion shortfall.

The report says renewables must expand from 12 per cent to 50-70 per cent of global energy supply by 2050 to limit warming to 1.5C, but this transition must happen three times faster than previous shifts to new energy sources. The authors highlight five technology levers can help achieve targets in the transition: increasing energy efficiency; electrifying end uses, via, for example, electric vehicles or heat pumps; decarbonising the power supply; using lower carbon fuels in hard-to-abate use cases; and deploying carbon capture.. 

The report highlights major economic shifts on the horizon, noting that the cost structure of energy will fundamentally change, requiring more upfront but lower operating costs. Transport and storage of renewable energy will be far more complex.

“Most of the tools we need to bring our energy system to net zero are already available,” said Maurice Berns, a BCG managing director and senior partner who chairs the Center for Energy Impact and coauthored the report. “What we need, urgently, are the policies, proven business cases, and capabilities to effect the biggest and most critical peacetime transformation in our economic history.”

Read the report here: https://www.bcg.com/industries/energy/energy-transition/blueprint