The world is not moving fast enough to meet net-zero emissions goals by 2050, global consulting firm McKinsey & Company says in a recent article on the energy transition. Despite some progress in renewable energy like solar and wind, there remains a significant gap in deploying newer, crucial technologies such as carbon capture, clean hydrogen, and sustainable fuels, it adds.
Only 10 per cent of the required low-emission technologies are currently deployed, McKinsey says in the article titled “The energy transition: Where are we, really?” It adds that the pace of deployment is lagging, especially for technologies that face more significant barriers like raw material shortages, labor deficits, and lengthy permit procedures. These hurdles are further compounded by a lack of clear economic incentives, firm project commitments, and investor confidence, particularly in the European Union and United States, the article says, adding that many projects remain stalled, failing to reach the final investment decision stage.
The gap between what is needed and what has been achieved in the deployment of low-emissions technology is large — to date, only about 10 per cent of the deployment of low-emissions technologies globally by 2050 required for net zero has been achieved, mostly in less challenging use cases.
“The energy transition: Where are we, really?” McKinsey & Company. Aug. 27, 2024
McKinsey highlights some specific challenges: solar and wind energy, while growing, are not expanding quickly enough to meet 2030 targets. Solar photovoltaic (PV) installations in Europe and the U.S. face a shortfall, with much of the planned capacity still awaiting final ivestment decisions. Similarly, both regions are falling behind in wind power development, particularly offshore projects. Despite announced pipelines, many projects lack the firm backing needed to ensure they come to fruition.
Electrification technologies like electric vehicles and heat pumps, vital for reducing fossil fuel dependence, are also losing momentum, the article says. Growth in EVs, once rapid, has slowed, jeopardizing targets, and heat pump adoption, essential for decarbonizing heating, shows mixed results. McKinsey says while the European market shows continued but uncertain growth due to high costs, in the U.S., declining EV sales indicate potential future setbacks.
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The article also underscores the interdependent nature of clean technologies, emphasizing that slow progress in one area can delay advancements in others. For example, insufficient development of hydrogen production could hinder sectors relying on it for decarbonization. McKinsey warns that many clean hydrogen and carbon capture projects are not advancing past early stages, which threatens the broader energy transition.
To address these gaps, McKinsey recommends comprehensive policy measures and more effective public-private collaboration. Governments need to provide clear, long-term frameworks, including financial support mechanisms, carbon pricing strategies, and infrastructure investments. Private sector stakeholders should focus on prioritizing technologies with the highest impact potential, forming strategic alliances, and building robust supply chains to mitigate risks.
The article stresses the urgency of the next decade as critical to closing the gap between climate commitments and actual progress. A more proactive and coordinated approach is required to ensure that climate goals remain achievable. Without substantial and immediate changes in strategy, the world risks falling short of its net-zero objectives. McKinsey’s analysis calls for stakeholders to reassess and adapt their plans to better align with the complex realities of the energy transition landscape.
Read the article originally published by McKinsey & Company on Aug. 27, 2024.
