SERIES – The Net-Zero Transition in the Wake of the War in Ukraine: A Detour, a Derailment, or a Different Path? PART 2

In this series, we attempt to offer a more granular view of what might be in store. We examine the possible effects of the war and its ramifications on the key requirements for a more orderly net-zero transition. We explore the war’s potential effect on key sectors and how shifts in energy and finance markets could play out in the aggregate, both globally and within major regional blocs. Finally, we suggest steps that stakeholders could take as they navigate this turbulent period while continuing to drive toward as orderly a transition as possible. 

To get a clearer idea visit PART 1 of the series, visit SERIES – The Net-Zero Transition in the Wake of the War in Ukraine: A Detour, a Derailment, or a Different Path? PART 1 – Earth5R.

A Precarious Moment

The invasion of Ukraine came at a time already marked by insufficient progress toward the net-zero transition. Challenging economic conditions threatened its acceleration and accumulating physical risks made its necessity even more evident.

Even before the invasion, despite the rising tide of public- and private-sector commitments made in 2021, the world was not on a path to achieving net-zero greenhouse-gas emissions by 2050. Indeed, if all existing commitments were achieved, the world would still fail to stabilize global warming temperatures at 1.5˚C. Moreover, most of these commitments were not yet backed by the required financial resources and execution plans.

As for the world economy, it was already suffering from several preexisting conditions. A once-in-a-century, the multistage global pandemic has caused an estimated 25 million deaths, increased global public debt by 28 percent to 256 percent of GDP, shrunk global GDP by 3.3 percent, and given rise to rapidly increasing inflation across the globe. Supply chains were under significant strain, energy markets were already tight, and global commodity prices had risen to ten-year highs. The war in Ukraine has exacerbated all these trends, affecting lives and livelihoods both locally and globally and threatening the most vulnerable with the potential for a marked decline in energy and food security and affordability.

At the same time, the manifestations of climate change—among them unprecedented heat waves in India and worsening drought in the American West—continued to multiply. In that context, the Sixth assessment report, published by the United Nation’s Intergovernmental Panel on Climate Change, issued a few days after the invasion provided a stark warning that climate change was already exerting substantial effects on human and natural systems, that these effects would scale in nonlinear fashion in the face of continued warming, and that the window for avoiding the most catastrophic effects of climate change was fast closing. As we examine the potential impact of the current conflict on climate action, it may also be worth noting that the absence of climate action could well increase by itself the risks of future conflicts, within and across nations, as a result of contention over scarcer resources such as food and water.

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Source: McKinsey

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