Industrials are highly exposed to rising energy costs and the recent volatility in prices caused by geopolitical instability. At the same time, many companies in the sector have set ambitious decarbonization targets for the coming decade that require them to reduce CO2 emissions by 10 gigatons. Senior partners Mauro Erriquez and Humayun Tai and coauthors find that many industrials still need to develop the energy strategy (including tools, capabilities, and governance) to meet their targets and put them on a pathway that could limit global warming to 1.5°C above preindustrial levels.
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An area graph shows the proportional reductions in carbon dioxide emissions needed by various sectors to achieve the 1.5° pathway, measured in gigatons of carbon dioxide output. Overall, sectors need to reduce by 42 gigatons by 2050. The exhibit highlights that industrials must reduce by a minimum of 10 gigatons by 2050 to achieve targets. McKinsey’s Global Energy Perspectives reference case provides the consensus view on how energy demand will evolve through 2050.
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To read the article, see “Playing offense: Industrials staying ahead in the energy transition,” April 3, 2024.