The world would have to spend over $9 trillion a year to reach net-zero targets, reveals a fresh study released today.
Total spending on weaning the global economy off carbon-intensive production processes by 2050 would reach $275 trillion, according to consultancy McKinsey and Company.
The new findings underline the scale of the cost burden the global economy would be saddled with for tackling the worst impacts of climate change.
The negative effects of the transition to net zero would be unevenly distributed across sectors, McKinsey and Company said.
Sectors that use large quantities of carbon intensive resources, such as fossil fuels, to produce goods and services would be hit hardest by the pivot toward a greener economy.
These businesses contribute around 20 per cent to global output, suggesting restricting access to dirty inputs would have a sizeable impact on the world economy.
Hamid Samandari, senior partner at McKinsey and Company, said: “The short-term risks of a poorly-thought transition cannot be ignored.”
Poorer households would shoulder the heaviest burden from the transition.
“Low-income households everywhere may be most affected, for example due to up-front capital costs they may need to incur for low-emissions products like new heaters or electric cars,” McKinsey warned.
Most of the spending on combating climate change would be front loaded, with the majority of the cost booked over the course of this decade.
Although the bill for reaching net zero would lurch into the hundreds of trillions, it would be partially offset by supporting emerging industries, creating new markets and stimulating job creation.
“While the impacts will be unevenly distributed, a well-coordinated transition would pay dividends including the potential for a long-term decline in energy costs, improved health outcomes, and natural capital conservation,” McKinsey and Company said.
“Areas for growth could be more efficient operations from decarbonization and the creation of new markets for low-emissions goods,” the consultancy added.
McKinsey estimates the journey toward net zero would generate a net 15m jobs by 2050.