Quick Bites | The Cost of the Global Energy Transition

In prior quick bites, we have discussed the importance of the world’s energy transition. We note that this will not come at a small cost.

In fact, the Energy Transitions Commission estimates that to achieve the world’s net zero ambitions by 2050 it will cost a staggering $110 trillion, averaging $3.5 trillion per annum. This is equivalent to 1.3% of estimated global GDP over the next 3 decades.

Source: Visual Capitalist, 2023

The Visual Capitalist and the National Public Utilities Council have provided a great breakdown utilising data from the Energy Transitions Commission to show where significant amounts of capital should be invested.

Based on the analysis, the Energy Transitions Commission forecasts that 70% of annual investment will be towards the ‘electrification of everything’. In turn, countries such as Australia which are crucial in the discovery and production of critical minerals (think copper, lithium etc.) should be well placed to benefit.

While 2022 was a record year of investment in clean energy solutions at $1.1 trillion, the world is still a long way from achieving its net-zero goals, thus requiring significantly more investment across all sectors, especially in the power market.

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