A five-year delay to the energy transition could see the global average temperature rise to 3°C above pre-industrial levels, according to Wood Mackenzie’s latest analysis.
The data provider has studied the implications of a delayed energy transition, amid political uncertainties, inflation and elections across the world might have on global decarbonisation efforts.
In terms of total investment, a delayed transition could cost up to $48tn, a “significant decrease” from Wood Mackenzie’s net zero scenario, which estimates a total of $75tn.
Renewables-led electrification looks increasingly more challenging, in the company’s delayed scenario.
Solar and wind dominate power markets in the longer term, but near-term additions are slowed due to transmission bottlenecks.
Unabated thermal supply provides much of the flexible generation to balance power grids.
Higher interest rates and supply chain bottlenecks raised renewables costs by 10% to 20% in recent years, according to previous Wood Mackenzie analysis.
Expensive renewables costs will further delay low-carbon hydrogen cost declines and a slower transition would mean carbon capture and removal technologies would need to play a dominant role in restoring the carbon balance and achieving long-term climate goals.
“With half of the global population heading to polls in 2024, political realities and climate scepticism in the major emitting countries, such as the US and Europe, could reduce the support for the transition as voters seek economic security and price stability,” said vice president, scenarios and technologies at Wood Mackenzie, and author of the report, Prakash Sharma.
“The global stocktake at COP28 in December 2023 also confirmed that no major country was on track to meet the Paris aligned commitments and that strong policy action and capital investment were necessary to accelerate the transition.
“Indeed, Europe and the UK have already pushed back 2030 climate goals and other countries may follow suit,” Sharma added.