While I'm generally not a fan of McKinsey, an analysis entitled "Financing the net-zero transition: From planning to practice published in association with the Institute of International Finance":
...examines the cost of reaching net-zero greenhouse-gas emissions by 2050.
The report opens by stating that "...financial institutions have a key role to play in channelling financing to the right place at the right time" to ensure that the net-zero goal is reached. The cost of the transition to a green, decarbonized economy will be massive, requiring investments by several sectors of the economy. The report notes that currently $5.7 trillion is allocated annually to fund the transition of physical assets to those that are deemed "climate acceptable". While this may seem very substantial, the authors conclude that that is insufficient to meet the net-zero 2050 target and that investments will have to allocate an additional 30 percent above and beyond the $5.7 trillion figure if the world hopes to "save itself".
To get emissions to net-zero, between 2021 and 2050, $275 trillion will have to be spent on physical asset alone, averaging $9.2 trillion per year with most of this investment being front-loaded over the next five to ten years. On an annual basis, one-third of this amount ($2.8 trillion) would be directed toward critical high-emission legacy obligations that cannot be completely phased out and two-thirds ($6.4 trillion) to new technologies including low-emission green technologies and assets that are transitioning to less carbon-intensive. Over the entire timeframe to 2050, more than 85 percent of investments ($170 trillion) would be required for low-emission assets including mobility, power and buildings with the breakdown as follows:
1.) $62 trillion to develop EVs
2.) $3 trillion for EV and hydrogen infrastructure
3.) $57 trillion for power sector generation, storage, transmission and generation.
4.) $46 trillion for the building sector including heating and cooking equipment.
The share of investments in low-emissions technologies can be broken down as follows:
1.) EV technologies - 32 percent
2.) clean power generation and transmission - 25 percent
3.) technologies to decarbonize heating - 17 percent
4.) other low-emission technologies - 26 percent
So, where is all of this projected $6.4 trillion worth of annual funding for net-zero new technologies coming from? Here is a breakdown of the annual average investment needs for low-emission assets between 2022 and 2050:
1.) private investors: 55 percent which breaks down to $950 billion to $1.5 trillion from institutional investors, private equity/venture capital funds and infrastructure funds and $2.0 trillion to $2.6 trillion from banks.
2.) households: 19 percent or $1.2 trillion
3.) state-owned enterprises: 11 percent or $700 billion
4.) development finance institutions: 7 percent or $430 billion
5.) governments: 4 percent or $300 billion
6.) state-owned finance institutions: 2 percent or $130 billion
7.) multilateral climate funds: 1 percent or $90 billion
8.) nongovernmental organizations: $4 billion
Given that households fund governments through their tax remittances, it would appear that households will ultimately be responsible for funding nearly one-quarter of the annual cost of the development and implementation of new net-zero technologies. It should surprise no one but it is important to note that the wealthy will be very significant beneficiaries of these technological advancements since they are the ones that are most able to invest in private equity and venture capital funds.
The extremely high financial cost of achieving net-zero by 2050 is rather sobering given that these costs are rarely mentioned in public by the decision makers that are driving the global climate change agenda. One way or another, society will pay dearly for the net-zero agenda which, in fact, will financially benefit the global ruling class and, of course, the global banking sector at the same time as it impoverishes the serfs.
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Manhattan Contrarian has estimated the cost of renewable electricity generation for the US alone would be something like $10 trillion, or half the GDP. This is mostly due to batteries. The generating system probably has a useful life of 10 years, although things like turbine gears last more like 5 years.
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