Getting to net-zero carbon emissions by 2050 and averting runaway climate change will cost the world about $9.2 trillion annually in energy and land-use investments over the next three decades — 60% more than it spends today, McKinsey & Co. Inc. forecasted in a new report.

By midcentury, consumers would pay 20% more for power than they do now and face higher upfront costs for some consumer goods as production and shipping shifts to more expensive low-carbon fuels. At the same time, some cost increases will be gradually offset by reductions in electric vehicle prices starting this decade, said McKinsey's report released Jan. 25.

In Europe, it may become cheaper to own an EV than a conventional gasoline-fueled vehicle this year, and in the U.S. by 2027, the global consultancy predicted.

Notably, McKinsey also estimated that the cumulative investments under a net-zero scenario would not be significantly higher, relatively speaking, than under a "current policies" scenario.

With policies in place today, the world is expected to spend $250 trillion on energy and to change how land is used by 2050. That would come to 5.8% of global gross domestic product by midcentury. This spending level compares with $275 trillion and 6.1% of GDP to get to net-zero emissions by 2050.

"Amazingly, the difference between net-zero and current policies: (only!) $25 trillion through 2050," Gernot Wagner, a climate economist at Columbia University's Business School, tweeted. "It's not 'if,' it's 'when' we do this. Might as well get on with it."

The optimistic take, Wagner added in an email, is that "these numbers are low!"

The report comes as policymakers, regulators, industry and climate advocates in the U.S. and beyond battle over how to transition to cleaner energy sources and how fast. President Joe Biden's signature climate legislation, the Build Back Better package, faces an uncertain future amid opposition from Republicans and two Democratic senators.

At the same time, some communities are struggling as utilities transition away from the fossil fuels that kept Western economies going for the past 250 years.

The cost of inaction

"The economic transformation will be universal, substantial, and often front-loaded, with sectors, geographies and communities, and individuals facing uneven exposure," authors of the report from the McKinsey Global Institute wrote. "Among the challenges is the risk of short-term disorderly transitions in energy markets, and in the economy more broadly, if the ramp-down of high-emissions activities is not carefully managed in parallel with the ramp-up of low-emissions ones."

However, by not making the necessary investments and adjustments to society, the longer-term risks and costs will be even greater, the authors cautioned — echoing an often repeated point economists have made for years. Weather and climate disasters cost the U.S. an estimated $145 billion in 2021, the National Oceanic and Atmospheric Administration reported recently.

For its analysis, McKinsey used a net-zero transition scenario developed by the Network for Greening the Financial System, a network of more than 80 central banks and financial leaders seeking to scale up green finance. Under that scenario, McKinsey estimates that oil and gas production would be up to 70% lower than today and that coal production would "nearly end" by 2050.

Other organizations such as the International Energy Agency have called for a much quicker phaseout of fossil fuel investments and production. So would the goals under the Paris Agreement on climate change unless emissions from production and burning of coal and natural gas can be eliminated or captured with technology that has yet to prove financially viable on a large commercial scale.