Study: Achieving carbon neutrality will cost a fifth more than expected

The EU’s goal of achieving net-zero emissions, or carbon neutrality, by 2050 is still attainable. However, according to BloombergNEF, it will cost more than expected. Globally, the additional cost will run into tens of trillions of dollars. 

A new BloombergNEF report says that a further $34 trillion needs to be spent worldwide on the transition to clean energy. This is the only way to achieve the net-zero target, or net-zero emissions, as BloombergNEF’s research group summarizes in its new New Energy Outlook report.

The report highlights the need for continued government support, particularly for electric mobility, renewables and carbon capture. BNEF identifies higher interest rates and inflation as major obstacles to financing decarbonization, as they reduce the appeal of potential investment returns.

Under BNEF’s base-case scenario, which assumes that governments rely exclusively on economically competitive technologies, the planet’s temperature will rise by 2.6 °C compared with pre-industrial levels. Governments around the world are currently committed to targets that would lead to a higher temperature, but BNEF expects those targets to be raised in part.

BNEF’s second scenario, known as the net-zero scenario, assumes that governments will double down on emissions-reduction technologies in order to achieve net zero by 2050. This would then limit the rise in global temperatures to approximately 1.75 °C, in line with the higher target of the Paris Agreement (though not its more ambitious goal of keeping warming below 1.5 °C). This scenario could prevent some irreversible damage to the climate.

Only new electric cars in 10 years

The report says that among the major changes needed to achieve net zero is the requirement for every new car sold from 2034 to be electric. Carbon capture and storage (CCS) technologies will require $6.8 trillion in investment to capture emissions not only from industry but also from the energy sector. Investment in power grids is expected to peak in 2040, at approximately $1 trillion a year. BNEF says achieving net zero will cost 19% more overall than under the base-case scenario.

While BNEF reported earlier this year that global investment in the transition to a low-carbon energy system rose 17% to $1.8 trillion in 2023, a report published last week shows that spending must accelerate to achieve the net-zero target. The European Union, for example, has made this target binding for 2050.