The Anatomy of the Net-Zero Transition

BOSTON – Now that addressing climate change has become a top priority worldwide, economic policymakers and corporate strategists alike are embracing sustainability goals – most notably, “net-zero” greenhouse-gas (GHG) emissions. But what will it take to get there? In a new McKinsey Global Institute report, my co-authors and I aim to answer this question.

Using the Network for Greening the Financial System’s Net-Zero 2050 scenario, we simulated a relatively orderly transition that would limit the rise in global temperatures to 1.5° Celsius, relative to pre-industrial levels. While this is not a prediction or a projection, our scenario-based analysis provides an understanding of the nature and the magnitude of the changes the net-zero transition would entail, and the scale of the response needed to manage it. We find that achieving this target would involve profound economic and societal shifts – affecting countries, companies, and communities. Ultimately, we found that a successful transition would have six key characteristics.

First, the transition would be universal. Every country and economic sector contributes to GHG emissions, directly or indirectly. Getting to net zero thus means that transformation has to happen everywhere. And, given the interdependence of energy and land-use systems, coordination will be essential. The adoption of electric vehicles (EVs), for example, will lead to significant emissions reductions only if the electricity used to power them comes from low-emissions sources.

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