McKinsey’s Scary Climate Math

In 2018, the Intergovernmental Panel on Climate Change (IPCC) released a special report on the climatic impacts of meeting and exceeding an increase of 1.5 degrees Celsius from pre-industrial levels. The findings of what we could face by 2040 were dire. Agricultural collapse. Destruction of all coral reefs. Inundated coastlines. Millions of climate refugees. That’s at 1.5 degrees of warming. With the policies currently in place, the world is expected to warm by at least 2.8 degrees Celsius by 2050.

McKinsey and Company, the global management consulting firm, has a new report out on what it will take to limit warming to 1.5 degrees Celsius through 2050. In short: massive, unprecedented reductions in emissions across all economic sectors, starting now, with a rapid ramp up over the next ten years.

To undershoot 1.5 degrees warming, we only have 570 gigatons of carbon dioxide left to burn, worldwide, until 2050. A gigaton is one thousand megatons. For reference, Canada emits around 870 megatons of CO2-equivalents per year. Sounds like we have a good amount of headroom, right? Unfortunately, no. According to McKinsey’s analysis, if the world continues on its current emissions trajectory we’ll have already driven our heads through the carbon ceiling by 2031.

If the COVID-19 pandemic has taught us anything, it is how ultimately fragile our existence is. The difference is that COVID-19 is at its core a simple problem: a single vector wreaking havoc on the human body. Neutralize the vector (through physical distancing, testing and tracing, therapeutics, and, eventually, a vaccine), and eliminate (or significantly reduce) the problem. Climate change is a problem of complex adaptive systems. It touches everything in the biosphere, and those things in turn react with each other in unpredictable, ever escalating ways.

As detailed in David Wallace-Wells’ The Uninhabitable Earth, climate change will disrupt all aspects of life, and cascade devastation across land, water, and air. Carbon absorbed by our oceans will reduce their oxygen content, suffocating fish and destroying marine ecosystems, starving the upwards of a billion people who subsist on locally caught fish, leading to mass migration, conflict, a fight for resources, more people packed into a dwindling number of habitable countries where they can be bludgeoned by ever more frequent and violent natural disasters, wrecking the economy and plunging people into poverty, people who can’t afford food made more expensive by declining agricultural yields… you get the picture. That’s just an appetizer of what can, and likely will, happen if we don’t act swiftly, broadly, and with unprecedented scale.

McKinsey’s research envisions three scenarios to keep us within the 570 gigaton carbon budget. One where deep decarbonization proceeds in every sector; one in which power is slower to decarbonize; and one in which oil is slower to decarbonize. You can read the full report to see how each scenario affects the cuts required — in this piece I’ll focus on the first scenario. The defining feature of each is the requirement of instantaneous and deep cuts to emissions, with billions of dollars invested into clean energy and decarbonization from today onwards. For all of the great work already underway worldwide, we are not anywhere close to the scale required to stay under the 1.5 degree target by 2050.

McKinsey’s analysis relies on five key factors: 1) changing what we eat, how it’s grown, and the land it’s grown on; 2) electrifying transport and buildings; 3) making industries more sustainable; 4) decarbonizing the energy supply; and 5) increasing the use of carbon capture and sequestration.

Below, I’ve summarized the key findings from the report and added additional commentary and examples of promising work underway.

1. Food and land use

The challenge: Agriculture contributes 20% of global carbon emissions, and is likely to increase by about 15–20% by 2050 if current trends continue. To meet the 1.5 degree target, from 2016 levels:

• Consumption of grazing animals like cows and lambs (70% of agricultural emissions) will have to drop by 50%;
• Methane emissions from rice cultivation (14% of agricultural emissions) will have to be reduced by 50% by 2050, among other innovations required in cultivation;
• Food waste will have to decline by 40%;
• Deforestation (15% of overall emissions), indirectly linked to agriculture (forests are often cleared for grazing or to grow cash crops), will have to fall by 75% by 2030.

Current agricultural practices will need to change both to mitigate and to adapt to climate change. A shift away from the monocultures and heavy fertilizers of industrial agriculture can make farms more resilient to an increasingly temperamental climate, while also improving their effectiveness as carbon sinks.

Bright spots: Plant-based meat companies like Beyond Meat and Impossible Foods have grown rapidly over the past few years. According to a study commissioned by the company, Beyond Meat’s burgers generate 90% less greenhouse gas emissions than the beef they substitute for. With meat production, and its side by side, gruelling working conditions, driving a number of coronavirus outbreaks in the United States, grocery stores and restaurants are facing supply shortages, driving renewed attention to plant-based alternatives and their reduced impacts on workers, animals, and the planet.

2. Transport and buildings

The challenge: Vehicles currently account for 15% of global emissions. To meet the 1.5 degree target, internal combustion vehicles will need to account for less than half of global sales by 2030 and be eliminated by 2050, implying a 25% annual growth rate in EV sales from 2016 to 2030. For reference, while the global EV sales compound annual growth rate (CAGR) from 2016–2019 was 29%, sales only grew 9% from 2018 to 2019.

Buildings currently account for 7% of global emissions. Electrifying space and water heating where possible would abate those emissions by 20%, while expanding the use of district heating and using hydrogen or biogas for cooking and heating would reduce an additional 40% of those emissions.

Bright spots: While modernizing the physical infrastructure through electrification and renewable fuels is most critical, a number of startups (like Canada’s PeakPower and Parity) are busy implementing building intelligence systems that help to optimize energy consumption and cut emissions.

3. Industry

The challenge: For sectors with low and medium heat temperature requirements such as construction, food, and textiles, electrification will have to increase from 28% in 2016 to 76% in 2050 — within the realm of possibility, and already a point of marketing differentiation for companies like Amazon, which proudly claim an ambition to power their operations using 100% renewable energy by 2030. Electrification is more difficult for industries with high temperature requirements, like steel-making or cement production.

Additionally, industries will have to embrace the circular economy on a grand scale. McKinsey estimates that 60% of plastic needs could be met through recycled materials. While companies like Apple have made strides towards reusing the mined materials in their products, there are larger philosophical questions that will likely have to be addressed (like designing products that are more upgradeable and reusable) before they can hit their target of building products using recycled materials only.

Bright spots: Though not covered in the report, there have been exciting advancements in solar technology by companies like Heliogen that use AI to focus huge farms of mirrors at a single capture point to generate the high heat required for steel, glass, and cement production.

Canadian firm CarbonCure is greening the high emissions world of concrete (cement, the primary input, is responsible for 7% of global emissions) by recycling CO2 into the concrete they produce, in the process strengthening the material while also permanently sequestering the emissions.

4. Decarbonizing the energy supply

The challenge: Electrification will increase the demand for power worldwide, with McKinsey estimating a tripling of demand from now to 2050. Meeting this demand safely will require a rapid shift away from coal and gas-fired power — an 80% decline in coal (40% of power generation today) and a 20–35% decline in natural gas (25% of power generation) by 2030.

Much of this will have to be replaced by renewables like solar and wind. As solar and wind take greater precedence in the energy mix, the need for scalable storage increases substantially. While lithium-ion batteries work great for home storage and electric vehicles, grid-scale energy backup requires cheaper and more easily scalable solutions, with low energy capacity costs.

Bright spots: Luckily, examples of grid-scale backup are abundant, including pumped hydro (by far the most used energy storage technology today), storing energy as heat in molten salt (really!), and compressed-air storage (see Canadian startup Hydrostor).

There are industries where renewables don’t present a realistic alternative, such as aviation, marine transport, and, barring technologies like Heliogen’s, those with high heat requirements like steel and iron production. For these industries, bioenergy and hydrogen are clean (although limited) alternatives to natural gas.

5. Carbon capture and sequestration

The challenge: McKinsey estimates that carbon capture, use, and sequestration (CCUS), in which CO2 is collected at the source, as in “clean coal”, would need to increase by more than 125 times from 2016 to 2050 — a significant increase, one even their already optimistic forecast suggests is near impossible with current plans and policies.

There also needs to be a massive expansion in natural carbon sequestration by both preventing deforestation and reforesting more than 300 million hectares worldwide, with some estimates indicating a need for 1 trillion new trees to be planted. No easy task, given we currently destroy around 10 billion trees per year. Additionally, critics of tree-planting efforts argue it could actually disrupt ecosystems, create harmful monocultures, and distract from the more critical work of stopping deforestation and protecting indigenous communities.

Bright spots: Direct air capture, where CO2 is pulled out of the air and sequestered, used to create low carbon fuels, or even pumped into greenhouses, will play a key role. Unfortunately, contrary to many’s hopes, it is not a miracle cure absolving the need for aggressive decarbonization. The Canadian startup Carbon Engineering has a pilot facility in operation which has successfully demonstrated the technology, though questions remain about both the amount of energy required as well as the scalability of these solutions.

The title for McKinsey’s piece is “How global business could mitigate climate change”, but the report is mostly silent about the elephant in the room: while global business will play a key role in delivering innovations to the market at scale, nothing will happen without strong governmental action; without taxes and incentives to change our fuel sources; without regulatory pressure on companies to act; without green funding schemes; or without serious and binding international accords. It is asking a lot of business to take a leap when it is not clear that it is not an act of self-immolation; when they aren’t guaranteed their more cynical competitors, more certain of climate action inertia, won’t swoop in and undercut them using more polluting technologies or delivery mechanisms or supply chains. While the oft-assailed Paris agreement is a start, McKinsey’s report lays bare the drastic action required today by world governments to give us a chance to come in under the 1.5 degree limit. The majority of the solutions we need for decarbonization already exist, but we don’t have time to wait for the market to respond to cleverly designed price signals. Climate change is a global problem that will require global cooperation, and Canada can lead by example by building on its carbon tax with innovative green financing, by reallocating subsidies from the oil patch towards clean technologies, and by developing policies targeting carbon emissions at the source such as greener building codes, for example.

As COVID-19 has tragically demonstrated, waiting until the crisis hits to act is a recipe for preventable disaster. Only by rapidly mobilizing decarbonization across all sectors of the global economy will we stand a chance of averting irreversible changes to the habitability of our planet.

You can read McKinsey’s full report here.