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Any recovery from COVID-19 — which in idling the economy, has exposed oil-industry inefficiencies and made a dent in pollution — can and should include a mandate for the transition to a lower-carbon future, a report Thursday from consultants McKinsey & Co. says.
That future requires aggressive approaches, not without tradeoffs, that call on all sectors of the economy to change to some degree, in many cases creating jobs and advancing technology to usher in such change, the report shows. Sharing the burden of reducing emissions, which in the report targets livestock practices, reforestation, switching to renewable electric power, promoting hydrogen use and more, eases the pressure on the fossil-fuel industry CL00, +17.33% to evolve alone, or even most quickly.
The McKinsey researchers carve up their approach in a couple of ways, laying out three scenarios, shown in the graphic below. Within that bigger picture, they detail five shifts in production and consumption, all with the intention of setting the globe on the path toward a 1.5° Celsius warming target, the more aggressive end of what’s been deemed a manageable level of average warming in coming decades by the Paris Climate accord and other initiatives. The Paris pact, for instance, has called for slowing to at least 2°C by 2050.
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“The 1.5 degree pathway is hard, put possible,” said Kimberly Henderson, a partner in the firm’s Washington office and one of the report’s authors. “The math is daunting, as is the timeline. Ten years is significant to really bend the curve on greenhouse gas emissions. Most targets talk about 2050, but when staying within 1.5, 2030 is the timeline that really matters.”
While achieving a 1.5°C pathway is technically achievable, it would require all sectors to decarbonize. Should one sector lag behind, others would need to move faster, the authors said.
McKinsey Global Energy Perspective 2019: Reference Case; McKinsey 1.5°C scenario analysis
The scenarios in the report focus on CO2 emissions (the most prevalent anthropogenic greenhouse gas and key to any GHG-abatement scenario), but the authors said that methane emissions and other types should be addressed as well on the 1.5°C pathway.
While the call is for all sectors to participate with the best intentions, the report recognizes that compliance may be spotty. The research shows a possible outcome if a car-loving American society is slow to cut its fossil-fuel obsession. In one set of circumstances, for instance, oil and gasoline continue to be the major fuel for transport, and that sector decarbonizes more slowly. To compensate, reforestation would need to speed up, and 90% of CO2 emissions from deforestation would have to be abated by 2030. In this scenario, all sectors/sources except transport would manage to abate by at least one-third of their 2016 emissions by 2030.
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Across the scenarios, reforestation can often pick up the slack for the hardest-to-abate sectors, particularly for pre-2030 emissions.
“For too long the mindset was if we all do one thing, it will solve the global warming problem, or address past wrongs. No one solution comes close,” said Matt Rogers, a McKinsey senior partner in its San Francisco office, and a report co-author. “We have to have significant change across many sectors. We believe we can open the aperture to highlight for each sector how to get there.”
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Rogers and colleagues, in another recent report, emphasized that the pandemic should increase pressure on the public and private sectors to act on climate change sooner than later.
“Not only does climate action remain critical over the next decade, but investments in climate-resilient infrastructure and the transition to a lower-carbon future can drive significant near-term job creation while increasing economic and environmental resiliency,” they wrote. “And with near-zero interest rates for the foreseeable future, there is no better time than the present for such investments.”
Some of the behavioral “shifts” toward the 1.5°C pathway in the report include:
1. Reforming food and forestry. Animal protein from beef and lamb is the most GHG-intensive food, with production-related emissions more than ten times those of poultry or fish and 30 times those of legumes. The culprit? Enteric fermentation inherent in the digestion of animals such as cows and sheep. In fact, if the world’s cows were classified as a country in the emissions data, the impact of their GHG emissions (in the form of methane) would put cows ahead of every country except China.
Delivering the emissions reduction needed to reach a 1.5-degree pathway would imply a large dietary shift: reducing the share of ruminant animal protein in the global protein consumption mix by half, from about 9% in current projections for 2050 to about 4% by 2050. The approach also includes new methods of cultivation. For instance, eliminating the weed-fighting process of flooding rice paddies, which results in outsize methane emissions as organic matter rots.
Deforestation today claims an area close to the size of Greece every year. Deforestation — often linked to agricultural practices, but not exclusively so — is one of the largest carbon-dioxide emitters, accounting for nearly 15% of global CO2 emissions. Removing a tree both adds emissions to the atmosphere (most deforestation today involves clearing and burning) and removes that tree’s potential as a carbon sink, so mitigating this action will require a combination of regulation and incentives to stop.
By 2030, if all fossil-fuel emissions were rapidly reduced (as in our first scenario), and all sectors of the economy pursued rapid decarbonization, deforestation would still need to fall about 75 percent. In the other two scenarios, where reduced deforestation serves to help counteract slower decarbonization elsewhere, deforestation would need to be nearly halted as early as 2030.
2. Electrifying our lives. Nearly all of the fuels used in the sector today are oil based. To decarbonize, this sector would need to shift rapidly to a cleaner source of energy, which in the scenarios McKinsey modeled was predominantly electricity, meaning electric vehicles, and leverage either batteries with sustainably produced electricity or fuel cells with sustainably produced hydrogen to power an electric engine. Biofuels would also contribute to road transportation.
Sales of internal combustion vehicles would account for less than half of global sales by 2030 and be fully phased out by 2050. One lever for smoothing the transition would be reducing overall mileage driven by personal vehicles through policies that discouraged private-vehicle usage, such as banning cars in city centers, taxing vehicles on a per-mile-traveled basis, and encouraging the use of public transport, all efforts that have found proven traction though mostly outside the U.S. By 2030, such measures could reduce by about 10% the number of miles traveled by passenger cars. To be sure, the rate of change implied in this scenario is dramatic (sales of EV passenger vehicles TSLA, +4.21% , GM, -3.70% TM, -2.40% for example, would need to grow nearly 25% a year between 2016 and 2030.
Buildings would require an overhaul as well. By expanding the use of district heating and blending hydrogen or biogas into gas grids for cooking and heating, the buildings sector could potentially reduce nearly an additional 40% of emissions. Across all three scenarios, the share of households with electric space heating would have to increase from less than 10% today to 26% by 2050. To make the most of electric heating, buildings would need to replace traditional heating equipment with newer, more efficient technologies. The good news is that electric technologies are already available at scale, and their economics are often positive. However, the combination of higher up-front costs, long payback times, and market inefficiencies often prevents consumers and companies from acting.
3. Electrification in industrial operations, too. Industries would need to electrify at more than twice their current level by 2050 (from 28% in 2016 to 76% in 2050) to achieve a 1.5-degree pathway. But adoption isn’t the same for all. Electrification would prove more difficult for process industries with high-temperature requirements, such as iron and steel, or cement (among the biggest CO2 emitters). These subsectors, along with others such as chemicals, mining, and oil and gas that are also challenging and expensive to decarbonize, would put a premium on efficiency efforts (including recycling and the use of alternative materials) and would depend heavily on innovation in hydrogen and clean fuels.
4. Decarbonizing power and fuel. McKinsey estimates that electrification would at least triple demand for power by 2050. The power system would have to decarbonize in order for the downstream users of that electricity — everything from factories to fleets of electric vehicles — to live up to their own decarbonization potential.
Renewable electricity generation is therefore a pivotal piece of the 1.5-degree puzzle. But it’s not the only piece: expanding the hydrogen market would be vital, given the molecule’s versatility as an energy source. Expanding the use of bioenergy would be important, too, but carries its own tradeoffs: it takes up land used to feed people. And by 2030, yearly build-outs of solar and wind capacity would need to be eight and five times larger, respectively, than today’s levels.
5. Ramping up carbon-capture and carbon-sequestration activity. Deep decarbonization would also require major initiatives to either capture carbon from the point at which it is generated (such as ammonia-production facilities or thermalpower plants) or remove carbon dioxide from the atmosphere itself.
“Currently, it is impossible to chart a 1.5-degree pathway that does not remove CO2 to offset ongoing emissions. The math simply does not work,” said Rogers.
Carbon-dioxide removal includes either nature-based solutions, rebuilding the world’s forests at scale, or approaches that rely on technology, which are promising but nascent; one example here includes direct air capture underway at a pilot plant in Iceland.
All the scenarios modeled would require rapid reforestation between now and 2030. At the height of the effort in that year, an area the size of Iceland would need to be reforested annually. By 2050, on top of nearly avoiding deforestation and replacing any forested areas lost to fire, the world would need to have reforested more than 300 million hectares (741 million acres) — an area nearly one-third the size of the contiguous U.S.
