Cloud Tech Key to Achieving 2050 Climate Goal, Says McKinsey

In pioneering research by McKinsey, the spotlight is on cloud technology as a pivotal force in meeting the 1.5°C climate goal by 2050.

The study identifies three groundbreaking technologies, deeply intertwined with cloud capabilities — Artificial Intelligence (AI), Machine Learning (ML) and Internet of Things (IoT).

These technologies are instrumental in advancing decarbonisation efforts by offering unparalleled insights into areas such as climate-conscious agriculture, climate finance and the expansion of essential climate tech, paving the way for reducing, and ultimately ceasing, carbon emissions to achieve climate neutrality.

Speaking to the urgency of adapting to comprehensive sustainability regulations, McKinsey experts including Cindy Levy, Fan Gao and Eric Hannon highlight the strategic advantage cloud-powered technologies offer businesses on this journey.

“As companies gear up to comply with increasingly complex sustainability regulations, strategic use of cloud-powered technologies can be a crucial differentiator,” the co-authors report.

Tech's vital role in green strategies

Underpinning McKinsey's analysis are 217 identified initiatives that significantly contribute to decarbonisation across various sectors. These strategies collectively forge a viable route to limit global warming to 1.5°C.

The integration of AI, ML and IoT not only catalyses the decarbonisation effort but also significantly streamlines processes ranging from reporting and assessments to transformative operational shifts, reinforcing the role of such technologies as indispensable for swift and effective decarbonisation achievements.

Remarkable decarbonisation pace

Despite a gradual adoption over the past decade and a half, the true potential of cloud technologies in decarbonisation projects is just reaching fruition. McKinsey's review of 217 initiatives suggests almost half, 47%, can significantly hasten decarbonisation with cloud technology's intervention.

Initially projected at an annual cost of US$9.2tn, cloud technology's contribution is seen as potentially slicing billions of dollars off this expense each year.

Moreover, the deployment of cloud-powered solutions could curtail up to 32 metric gigatons of CO₂ equivalent emissions, nearly halving the 65 GtCO₂e required for net-zero emissions by 2050.

Significant improvements in managing and reducing Scope 3 emissions are also attainable, potentially lowering decarbonisation costs by 5-15%.

Strategising tech for decarbonisation

Positioning technology at the forefront of change necessitates a structured approach. McKinsey advises entities to pinpoint critical decarbonisation projects before advancing through crucial phases:

• Developing a tech-driven decarbonisation framework: This forms the cornerstone for adaptable and evolving strategies as companies progress in their decarbonisation trajectory
• Grasping cloud technology's potential in each initiative: Determine where these technologies can have the most substantial impact
• Formulating a focused investment and execution plan: Optimise decarbonisation impact through strategic investments in crucial technologies, as demonstrated by industry leaders.

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