BAKU, Azerbaijan, February 24. Around $4.7 trillion is needed to achieve a net zero target in Europe and Central Asia by 2060, Trend reports.
According to the World Bank's estimations, this is equivalent to about 3.9 percent of the GDP. This amount is also $872 billion, or 0.7 percent of GDP, higher, compared to the reference scenario.
Comprehensive investments span across all technologies within the energy system value chain, encompassing fossil fuels, power, hydrogen, and end-use sectors such as buildings, industry, and transport, the WB noted. These investments extend to machinery, appliances, commercial vehicles, public transport vehicles (both conventional and electric), boilers, heat pumps, and energy efficiency upgrades in buildings, including new windows, doors, and insulation.
In particular, the bulk of the extra investments for decarbonization are needed in the power sector, with Net Zero 2060 requiring $934 billion, which is $535 billion more than the reference scenario. These additional funds are essential to meet the rising demand for power, driven by economic growth and the electrification of heating, transportation, and industry.
Considerable investments are also necessary to expand and modernize electricity transmission and distribution networks. Historically, these investments in the region have been consistently low due to financial challenges and the utilities' struggle with low-cost recovery levels. According to the International Energy Agency, there's a need to nearly double grid investment by 2030 to over $600 billion per year to achieve national climate targets.
In both the reference and Net Zero 2060 scenarios, we're looking at a hefty $1.2 trillion investment for renovating residential buildings and appliances. These investments lead to a reduction in energy demand compared to the reference scenario, resulting in more affordable energy and decreased household bills due to enhanced energy efficiency.
When it comes to the transport sector, it takes the lion's share of investment, surpassing $1.4 trillion in the ECA region under both scenarios. This encompasses infrastructure updates and the costs associated with commercial and public transport vehicles like buses and heavy trucks. The broader transport system costs also factor in consumer spending of over $4 trillion for light-duty vehicles over the 2060 timeframe.
On the path to Net Zero 2060, additional investments of over $180 billion are needed for cross-border gas and electricity trade and the decarbonization of industry. The Net Zero scenario sees a flourishing cross-border trade, with an extra $83 billion in investments, reaching a total of $148 billion. Furthermore, investments in a net-zero energy industry spike nearly 30 percent higher, totaling $347 billion.