McKinsey – Path to Net Zero, 2023

The world is currently not on track to achieve the goals set out in the Paris Agreement of limiting global warming to below 2°C or ideally 1.5°C. Although there has been some progress, it has not been enough. The share of renewable energy has only increased from 8% in 2010 to 12% in 2021. If emissions continue on their current trajectory, achieving net-zero emissions will not happen by the end of the century. A successful transition to net-zero emissions requires achieving four interdependent objectives: emissions reduction, affordability, reliability, and industrial competitiveness. If these objectives are not met, it could compromise economic empowerment, energy and materials supply security, and competitiveness. The research conducted outlines seven principles to navigate the transition successfully. These principles include deploying lower-cost solutions, driving down the cost of more expensive ones, managing existing and emerging energy systems simultaneously, and using comparative advantage to seek opportunities for countries to enhance their competitiveness. Applying these principles could significantly improve the current trajectory of emissions and help limit global warming according to the Paris Agreement. Illustrative analyses show that capital spending on low-emissions technologies would be 1.5 to 2 times larger than it is now, as opposed to potentially three times larger if the principles were applied less extensively. To move closer to achieving net zero, stakeholders should not only commit to global action in the future but also take action today. The report highlights the need for more capital investment and expanded deployment of necessary technologies to support the transition. By addressing all four objectives simultaneously and embracing a change of mindset, progress towards net zero can be accelerated.