Mission Net-zero: Opportunities and Challenges

“What humans do over the next 50 years will determine the fate of all life on the planet.”

– David Attenborough

We have reached a point in time where we can no longer afford to consider environmental damage as an afterthought or a side-effect of conducting business. It is imperative that economies and institutions realize that years of neglect are resulting in real costs for people as they have to bear the brunt of climate disasters resulting in an overall decreased quality of life for everyone.

To achieve the 1.5º target, we need to cut our emissions by 45% by 2030 and reach net-zero by 2050.

The net zero target is probably the biggest challenge to ever face humankind. Not least because it requires a complete shift in every core of how we function as a society, right from how we operate our businesses to our eating patterns. 

According to a report by Mckinsey, to achieve the net zero target, it would require a capital investment of about $275 trillion between 2021 and 2050 in physical assets in the energy and land- use systems. This would mean a significant step-up from what is currently being invested in infrastructure that would enable us to shift to greener modes of energy production. 

While we have seen continuous increase in expenditure in clean energy over the past years (2021 alone saw the biggest jump yet of 27% in investment in low carbon energy compared to 2020) ,the urgency to achieve the net-zero target is yet to translate into large increases in spending on clean energy projects.

Of this total investment we see China, U.S and Germany leading the pack, with China alone contributing to 35% of the total investment in renewables. 

Country2021 Energy Transition Investment (US$)% of World Total
China $266B35.20%
U.S. $114B15.10%
Germany $47B6.20%
U.K. $31B4.10%
France $27B3.60%
Japan $26B3.40%
India $14B1.90%
South Korea $13B1.70%
Brazil $12B1.60%
Spain $11B1.50%
Total$561B74.30%

Source: Visual Capitalist

 With the recent geopolitical events happening in the world, many countries are now rethinking their dependence on fossil fuels and exploring alternate sources of energy that would allow them to be self-sufficient in the future. Japan, for example, has acknowledged that they would need to accelerate the introduction of offshore wind power that would allow them to achieve their decarbonization goals as well as help ensure energy security.

While we are seeing the world slowly move towards cleaner alternatives to meet its energy requirements. Many countries in the developing world are still largely depended on fossil fuels to meet their ever-growing energy demands:

CountryCoal Production (2021)Coal Production (2024F)Share (2024F)Change (2021–2024F)
China3,925 Mt3,982 Mt50%+57 Mt
India793 Mt955 Mt12%+162 Mt
Indonesia576 Mt570 Mt7%-6 Mt
United States528 Mt484 Mt6%-44 Mt
Australia470 Mt477 Mt6%+7 Mt
Russia429 Mt445 Mt5%+16 Mt
European Union329 Mt247 Mt3%-82 Mt
Other839 Mt855 Mt11%+16 Mt

Source: https://www.iea.org/reports/coal-2021

Each country whether developed or developing has its unique set of social, economical and geographical challenges in its path towards net-zero, but there is much to be learnt from Sweden which is at the forefront of sustainability and has managed to provide a high quality of life for its citizens. It was able to achieve this feat with the right mix of policies aimed at taxations, subsidies and technology aimed towards creating a sustainable place for people to live in.

Ayesha Aggarwal
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Ayesha is an Indian Institute of Foreign Trade alumnus.

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