Investment in the green energy transition must double to $3.5 trillion annually to meet the Paris Agreement's net zero emissions target by 2050, according to a report released by Wood Mackenzie on Tuesday. The consultancy highlighted an investment gap that poses a significant challenge, compounded by growing concerns over energy security, as well as tariffs and trade barriers that hinder the global electrification movement.
The analysis revealed that very few countries and only a handful of companies are on track to achieve the 2030 climate targets outlined in the Paris Agreement. Experts stress the importance of strong nationally determined contributions (NDCs) and enhanced global cooperation to mobilize the necessary funding. Without addressing these challenges, the financial requirements for climate mitigation and adaptation could escalate even further.
The report projects that the combined share of solar and wind energy in the global power supply could rise to between 25% and 36% by 2030, up from an estimated 17% in 2024 and just 4.5% in 2015. Meanwhile, natural gas demand is expected to fluctuate significantly, with a potential increase of 11% by 2050 under a scenario limiting warming to 2.5 degrees Celsius. In contrast, a net zero scenario could see gas demand drop by 47% over the same period.
Prakash Sharma, vice president and head of scenarios and technologies at Wood Mackenzie, remarked, “A string of shocks to global markets threaten to derail the progress in a decade pivotal to the energy transition. However, there is still time for the world to reach net zero emissions by 2050 – provided decisive action is taken now.”
Displacing fossil fuels with renewable energy in electricity generation is essential for meeting the Paris Agreement's goal of limiting global temperature rise to 1.5 degrees Celsius. While renewable energy supply has surged in recent years in response to emissions reduction goals, the current growth rate is insufficient to fully displace fossil fuels from the energy mix.
