$18 Trillion Investment Gap to Finance the Global Energy Transition by 2030

Strategic Insights -

The Boston Consulting Group (BCG) has emphasized the urgent need for a massive investment of $37 trillion by 2030 to finance the global energy transition. This investment gap is largely due to the premature retirement of fossil fuel assets, making it essential to develop new and cost-competitive low-carbon energy sources. According to BCG, renewables and other low-carbon solutions must ramp up from 12% of the energy supply in 2021 to 50%-70% by 2050 to limit global warming to 1.5°C above preindustrial levels.

Key Takeaways:

  • The global energy transition requires a massive investment of $37 trillion by 2030 to finance the replacement of fossil fuel assets with low-carbon energy sources.
  • The investment gap is largely due to the premature retirement of fossil fuel assets, making it essential to develop new and cost-competitive low-carbon energy sources.
  • Renewables and other low-carbon solutions must ramp up from 12% of the energy supply in 2021 to 50%-70% by 2050 to limit global warming to 1.5°C above preindustrial levels.
  • The global energy crisis requires an investment of $19 trillion by 2030, of which only $1 trillion has been committed, leaving an investment gap of $18 trillion.
  • The focus should be on developing the most affordable and least greenhouse-gas-intensive oil and gas production.
  • The economics of the energy system will fundamentally change, shifting from an extracted to a manufactured resource, requiring heavier upfront investment but lower operating costs.
  • Energy market design will require a significant overhaul to address cyclicality, increasing volatility, and uncertainty in energy markets.
  • Energy transport costs will also increase significantly due to the energy mix change, leading to global industry production centers re-locating to where energy is less costly.
  • The transformation will require unprecedented investment, policies, and capabilities to effect the biggest and most critical peacetime transformation in our economic history.

Statistics:

  • $37 trillion: total investment needed by 2030 to finance the global energy transition
  • $19 trillion: committed investment by 2030
  • $18 trillion: investment gap by 2030
  • 50%-70%: share of renewables and low-carbon solutions in the global energy supply by 2050
  • 12%: share of renewables and low-carbon solutions in the global energy supply in 2021
  • 775 million: number of people worldwide without access to electricity
  • 20 MWh: primary energy per capita needed to reach very high levels of prosperity

Sources:

  • Boston Consulting Group. "The Energy Transition Blueprint."
  • Boston Consulting Group. "The Center for Energy Impact."
  • Boston Consulting Group. "About Boston Consulting Group."