In a striking reassessment of global climate goals, Goldman Sachs Research has revealed that the world needs to invest more than $75 trillion to achieve net zero carbon emissions by 2070. This updated forecast, detailed in their report “Carbonomics: The GS net zero carbon scenarios — a reality check,” represents a significant increase from their previous projection of $62 trillion.
A shifting timeline and growing investment needs
The investment banking giant’s revised outlook acknowledges that while the 1.5-degree Celsius target set in the Paris Agreement appears increasingly unattainable, a pathway to limiting warming to 2 degrees remains possible. According to Michele Della Vigna, head of Natural Resources Research in EMEA at Goldman Sachs Research, these investments would “have the potential to not only transform the global energy ecosystem but also the economy and society’s standard of living.”
The massive investment requirement, averaging “$1.5 to $2 trillion of infrastructure spending per year through 2070,” encompasses several critical sectors. The plan calls for $7 trillion to be directed toward power networks, while energy storage systems will require $5.1 trillion in investment. The transition to electric vehicles will demand $3.7 trillion in infrastructure development. Industrial decarbonization represents one of the largest investment needs at $9.3 trillion, while green hydrogen facilities will require $1.3 trillion to establish the necessary production capacity.
Technology adoption: Mixed progress
Recent years have shown varying level of progress across different green technologies. Electric vehicle adoption has exceeded expectations, particularly in China, while solar power deployment has accelerated beyond initial forecasts. Nuclear power has also gained momentum, with Goldman Sachs Research now projecting “a doubling of global installed nuclear capacity by 2050 from 2020.” However, clean hydrogen and carbon capture technologies have seen slower-than-anticipated adoption rates.
The power generation challenge
The path to decarbonization heavily relies on transforming power generation. As Della Vigna notes, “Power generation is the most vital component for any net zero scenario.” The research anticipates a threefold increase in power generation from 2023 levels to achieve global net zero by 2070. This transformation will require approximately $30 trillion in renewable power investments, with $11.1 trillion allocated to solar photovoltaics and $9.5 trillion to onshore wind development. Offshore wind installations will need $6.6 trillion in investment, while nuclear power expansion will require $4 trillion to meet the projected capacity needs.
Industrial decarbonization: The hidden challenge
While renewable energy and transport electrification often dominate climate discussions, industrial emissions present unique challenges. The report highlights steelmaking and cement production as particularly complex cases. For cement, carbon capture technologies may offer the most promising solution, given that the production process inherently releases carbon dioxide.
A multi-dimensional approach
Goldman Sachs Research emphasizes that success will require moving beyond a single-technology solution. As Della Vigna explains, “Our path consistent with net zero by 2070 calls for an evolution of the de-carbonization process from one-dimensional (renewable power) to a multi-dimensional ecosystem.” This ecosystem will rely on four key technologies. First, renewable energy will continue to serve as the foundation for clean power generation. Second, clean hydrogen will play a crucial role in hard-to-decarbonize sectors. Third, battery energy storage will enable the integration of intermittent renewable sources. Finally, carbon capture technology will address emissions from industrial processes where alternatives are limited.
The report also acknowledges some pragmatic realities about fossil fuels, noting that “new greenfield oil and gas developments are likely to be needed beyond 2040,” with natural gas maintaining its role as a transition fuel until 2050.
This comprehensive analysis underscores the massive scale of investment required to address climate change, while highlighting both the progress made and the significant challenges that lie ahead in the global transition to net zero emissions.
The road to COP29
As world leaders prepare arrive in Azerbaijan to kick off COP29 on November 11th, Goldman Sachs Research’s $74 trillion investment roadmap provides crucial context for climate negotiations. The report’s identification of specific investment requirements – from $7 trillion for power networks to $9.3 trillion for industrial decarbonization – offers concrete financial benchmarks for policy discussions. With natural gas projected to remain a transition fuel until 2050 and new oil developments needed beyond 2040, the analysis suggests that COP29 delegates must balance long-term decarbonization goals with immediate energy security concerns. As Della Vigna emphasizes, success requires evolving from “one-dimensional” solutions to a “multi-dimensional ecosystem” – a framework that could directly inform the technical and financial deliberations in Azerbaijan.
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