As the reality of climate change becomes increasingly stark, global initiatives aim to limit temperature increases to within 2 degrees Celsius of pre-industrial levels. Achieving this ambitious goal by 2070 requires significant financial and infrastructural investment, projected at over $74 trillion according to Goldman Sachs Research. This comprehensive analysis explores the scale of investment, technological advancements, and strategic considerations necessary for a realistic pathway to net zero emissions by 2070.
Projected Investments and Financial Outlay
Goldman Sachs Research emphasizes that meeting net zero emissions by 2070 will demand infrastructure spending of $1.5 to $2 trillion annually, accumulating to a total of approximately $75 trillion over the coming decades. This updated projection surpasses their earlier estimate of $62 trillion by 2060, underscoring the rising costs as emissions continue to outpace prior expectations.
Key sectors driving this financial requirement include power networks ($7 trillion), energy storage solutions ($5.1 trillion), and infrastructure for electric vehicles (EVs) at $3.7 trillion. A significant $9.3 trillion is projected for making industrial processes carbon neutral, while investments in green hydrogen plants amount to $1.3 trillion. “These investments have the potential to transform not only the global energy ecosystem but also the economy and society’s standard of living,” writes Michele Della Vigna, head of Natural Resources Research in EMEA at Goldman Sachs.
Technological Advancements and Shifts in Outlook
Significant technological shifts have marked the period since the first net-zero modeling by Goldman Sachs in 2021. The report notes an accelerated adoption of electric vehicles, driven by rapid uptake in China, and a robust expansion in solar power capabilities, thanks to scaling manufacturing. Additionally, nuclear energy forecasts have been revised to predict a doubling of installed global capacity by 2050, highlighting its evolving role in the net zero landscape.
Conversely, progress in clean hydrogen and carbon capture has been slower than anticipated. This has implications for industries heavily dependent on these technologies, as achieving decarbonization will require bolstered support and innovation to meet the new projections.
Carbon Emissions and Sectoral Challenges
Global carbon emissions from 2021 to 2023 surpassed previous projections by 6%, driven predominantly by the power generation, agriculture, and transport sectors. While building emissions declined due to advances in low-carbon technologies like heat pumps and favorable temperature conditions, other sectors have struggled to keep pace. To bridge the gap, the report suggests that substantial policy shifts and investments are necessary to accelerate decarbonization.
Achieving net zero by 2050 and keeping warming within 1.5 degrees would require early retirement of coal plants by the 2030s, resulting in $1.7 trillion of stranded assets. Full electrification of auto sales by 2035 is also a cornerstone of this scenario. However, the 2070 target with a 2-degree warming cap presents lower stranded costs and manageable adaptation expenses but necessitates substantial ongoing investments of 1% to 1.5% of global GDP each year.
Electrification as a Central Pillar
Electrification stands as a critical pillar in reducing carbon emissions, with power generation projected to increase threefold from 2023 levels. The estimated investment for renewable power alone reaches nearly $30 trillion, comprising $11.1 trillion for solar photovoltaics, $9.5 trillion for onshore wind, and $6.6 trillion for offshore wind. Additionally, nuclear power requires $4 trillion in investment.
“Power generation is the most vital component for any net zero scenario,” Della Vigna states. This highlights the interconnected nature of sectors such as road transport, heating, and industrial manufacturing, which will increasingly rely on electrified solutions to curtail their carbon footprints.
Addressing Industrial Emissions
Industrial emissions, the second-largest source of global carbon output, present a formidable challenge. The report highlights the steel industry’s dependence on coal-fired blast furnaces, suggesting that innovation in electricity and clean hydrogen use will be crucial. “Over the past few years, we have seen a number of innovative alternative clean steel production processes being developed,” notes Della Vigna, reflecting an essential shift in process methodologies.
Cement production similarly faces obstacles due to its inherent carbon-intensive chemical process. Here, carbon capture technologies emerge as the most promising solution, potentially allowing for significant emissions reduction in a sector critical to global infrastructure.
Four Pillars of the Net Zero Strategy
Goldman Sachs Research identifies four pivotal technologies for achieving net zero: renewable energy, clean hydrogen, battery energy storage, and carbon capture. The evolution from a renewable-centric approach to a more integrated, multi-dimensional strategy incorporating these elements is deemed essential for success. “Our path consistent with net zero by 2070 calls for an evolution of the de-carbonization process from one-dimensional (renewable power) to a multi-dimensional ecosystem,” Della Vigna emphasizes.
The Role of Hydrocarbons and Natural Gas
While the report indicates that hydrocarbons will remain part of the global energy mix, the use of natural gas as a transitional fuel is particularly notable. Demand for natural gas is expected to grow until 2050, signaling that new oil and gas developments may be required beyond 2040. This trend reflects a shift in perspective regarding the future of peak oil demand, now expected to occur post-2030.
Climate Insider Analysis
Goldman Sachs Research’s updated projections outline an ambitious yet nuanced roadmap to achieving net zero emissions by 2070. The financial scale, estimated at over $74 trillion, represents an unparalleled investment opportunity but also highlights the challenges in aligning policy, innovation, and infrastructure at a global scale. The revised expectations underscore the importance of a diversified approach involving renewables, clean hydrogen, nuclear power, and carbon capture.
The report’s findings convey both progress and areas of lag, particularly in the adoption of clean hydrogen and carbon capture. For policymakers and investors, the message is clear: advancing towards net zero will require coordinated action, significant investment, and a shift towards a more integrated ecosystem of solutions. As the climate crisis unfolds, the pathway to 2070 will likely redefine global economic and energy paradigms, demanding steadfast commitment to innovation and adaptation.
Source: Goldman Sachs
