The world needs to invest 50 trillion dollars (45 trillion euros) in five technology areas by 2050 to reduce emissions and meet the Paris Accord goal of halting global warming, Morgan Stanley analysts say in a report.
To reduce net carbon emissions to zero, the world would have to eradicate the equivalent of 53.5 billion metric tons of carbon dioxide a year, according to the report, which identified renewable energy, electric vehicles, hydrogen, carbon capture and storage, and biofuels as key technologies that could help achieve the goal.
Carbon emissions from fossil fuels reached a record last year, but estimates vary on how much it would cost to reach the Paris goal of keeping global temperature rise within 2 degrees. The International Renewable Energy Agency (IRENA) says 750 billion a year is needed in renewable energy for a decade. United Nations scientists say 300 billion spent on reclaiming degraded land could offset emissions to buy time to implement carbon-free technologies.
These are Morgan Stanley’s estimates for the five key technology areas and some of the companies leading the way.
Renewable energy generation will require $14 billion by 2050, including investments in energy storage.
By then, renewables would have to supply about 80% of the world’s energy, compared to 37% today, which means an additional capacity of 11,000 gigawatts, excluding hydropower.
The rapid decline in solar energy costs will make it the fastest growing renewable technology in the next decade with an annual growth rate (AAGR) of 13%.
Shares that could benefit include CGN New Energy Holdings Co., China Resources Power Holdings Co. and China Suntien Green Energy Co.
With passenger cars emitting about 7 per cent of greenhouse gases, some $11 trillion will be needed to build factories, expand energy capacity and develop the batteries and infrastructure needed to switch to electric vehicles.
With increased investment, annual electric vehicle sales could grow from 1.3 million units in 2018 to 23.2 million in 2030, bringing the total number of electric vehicles to 113 million in 2030 and 924 million in 2050.
Some of the companies to follow: Beijing Easpring Material Technology Co., Rohm Co. and Panasonic Corp.
Carbon capture and storage
Nearly $2.5 trillion would be needed for technologies that capture and store carbon.
While it currently costs about $700 million to capture one million tons of carbon per year, the cost of building CCS plants is expected to drop 30% by 2050.
With more than 200,000 megawatts of new coal-fired generation capacity under construction, CCS is the only option for offsetting emissions from these plants, says Morgan Stanley.
The bank’s main options include Air Liquide SA and Bloom Energy Corp.
It takes about $5.4 billion for electrolysers to produce the gas, which can help provide clean fuel for power generation, industrial processes, vehicles and heating.
In addition, $13 trillion would be required to increase renewable energy capacity to power plants.
Another trillion dollars would be needed for storage, with additional investment for transportation and distribution.
Key players include: Johnson Matthey PLC and Air Liquide SA.
Nearly $2.7 trillion should go to biofuels such as ethanol, which are currently blended with petroleum products but will eventually spread to areas such as aviation.
About 4% of the world’s transport fuel will be biofuel by 2030.
Ethanol, the most widely used biofuel at the moment, will grow at about 3% per year, while a type of biodiesel called hydrotreated vegetable oil will achieve faster growth, quadrupling production by 2030.