The Economics of Net Zero
As a cornerstone of their Carbonomics analysis, our Goldman Sachs Research analysts have updated their de-carbonization cost curve for 2022.
It shows the increasing cost to remove carbon emissions from the global economy, from the most cost-effective technology (recycling plastic and renewable power) all the way through to the most expensive (converting diesel vehicles in rural parts of the EU to electric and the carbon that cannot be abated at any cost).
Innovation and higher fossil fuel costs tend to push the cost curve down, which means reaching Net Zero has become gradually more affordable in the four years that Goldman Sachs Research has plotted the cost curve. Still the difficulties of limiting global warming are large and looming, and the cost is high: by our analysts’ reckoning the cost of de-carbonizing 75% of the global economy is $3.1 trillion per year. Their Carbonomics cost curve synthesizes and condenses hundreds of hours of research and in one visual sweep it shows the scale of the challenge, and the progress made and opportunities ahead.