By Frédérique Carrier, Head of Investment Strategy, RBC Wealth Management
The way people live in 2050 will be quite a departure from today, with many dramatic changes brought on by the net-zero world. We examine what net zero really means, what this world could look like, challenges to getting there, and investment implications.
Much in the way that today’s hyperconnected society is worlds apart from the pre-internet days of 30 years ago, life in 2050 will probably be very different from what we know today. On one important front—the fight against global warming—most countries will have tried to reach “net zero,” a state where the amount of greenhouse gas emissions (GHG) added to the atmosphere is balanced out by that removed.
We explore some of the most eye-catching changes our children and grandchildren are likely to experience in key areas of their lives. After assessing the difficulties in achieving net zero, we review some investment implications.
What does net zero really mean?
The term “net zero” carries within it the message that even if all efforts are made to reduce human-produced carbon dioxide and other planet-warming gases, if renewables replace coal and other fossil fuels, and even if green hydrogen is scaled up massively, certain sectors for which these solutions are somewhat impractical, such as aviation or farming, will still produce carbon emissions. Emissions that can’t otherwise be avoided will need to be removed from the atmosphere via solutions such as direct air capture of CO2, or by nature-based solutions, for example, tree planting.
The extent of global warming is proportional to the amount of carbon dioxide that is added to the atmosphere. Thus, to stabilize climate change, net GHG emissions need to fall to zero, i.e., net zero.
The expression comes from an Intergovernmental Panel on Climate Change (IPCC) report in 2018 that called for capping the warming of the planet to below 1.5 degrees Celsius above the pre-industrial average temperature in an attempt to avoid the worst impacts of climate change, such as (even more) extreme weather and potentially disastrous increases in sea levels.
Achieving this will be no small feat as temperatures today are already one degree Celsius above the pre-industrial level and continue to climb, driven by 51 billion metric tons of GHGs emitted worldwide each year. To achieve the temperature goal, the IPCC estimated that global carbon dioxide emissions must fall by about 45 percent by 2030 and to net zero by 2050.
Many countries and regional blocs, including the U.S., UK, and the European Union (EU), have committed to reach net zero by 2050; China targets 2060. Some nations have made the commitment legally binding. Meanwhile, many businesses have declared their intentions to meet this goal by mid-century.
A net-zero world by mid-century
Our descendants will live in a world that will be a very different place to how it is today, with wholesale changes in their homes, modes of transport, and the landscape that surrounds them.
Homes will likely receive 95 percent of their electricity from wind and solar versus some 40 percent in 2020. Most fossil fuel-powered furnaces and boilers will very likely be replaced by heat pumps.