McKinsey: How to Scale Critical Climate Technologies

Climate tech is essential in reaching the goals set out in the Paris Agreement, something 196 nations committed to to limit global warming to well under two degrees.

McKinsey says that 12 categories of climate technologies could potentially reduce as much as 90% of man-made GHG emissions if deployed at scale.

It says these technologies are interdependent so they must scale together and must become commercially viable.

Anna Kortis, Partner at McKinsey, says: “Climate technologies could reduce GHG emissions by 90%. 

“Most have been proven at scale — but only 10% are commercially viable today. And despite remarkable progress over the last decade, many won’t be competitive by 2030.”

The climate technologies needed for net zero

McKinsey says a network of 12 climate technologies hold the promise of large-scale emissions reductions:

• Batteries
• Carbon capture, utilisation and storage (CCUS)
• Circular technologies
• Energy storage
• Engineered carbon removals
• Heat pumps
• Hydrogen
• Nuclear
• Renewables
• Sustainable fuels
• Technologies supporting natural climate solutions
• Technologies to produce alternative proteins

The challenges in scaling up climate tech

Nine of McKinsey’s 12 categories rely on renewables and six will need new infrastructure like grids, pipes and storage facilities. 

It says that investment in these areas will be crucial to create an environment that enables new climate technologies. 

Permitting and regulations for new projects also pose a challenge, but the Norwegian Ministry of Energy’s approach through pre-allocating land for CO₂ storage is a good example of addressing these issues. 

Renewable energy sources generally require from 10 to 30 times more land than fossil fuel alternatives, which McKinsey says can be addressed through acknowledging trade-offs, fostering innovation, bolstering underlying systems and exploring alternatives.

Cost reductions for climate technologies

Despite climate tech advancing rapidly, McKinsey says that only 10% of abatement potential comes from technologies that are already commercially mature.

These include aluminium recycling, geothermal and nuclear technologies.

An additional 45% of abatement potential could come from technologies currently in early adoption and commercialisation including solar and wind generation, electric vehicles and biofuels. 

McKinsey says these technologies have proven their ability to scale but require additional support to be competitive. 

Mark Patel, Senior Partner at McKinsey, explains: “Climate technologies are maturing rapidly – but they still need to become commercially viable to generate large-scale emissions reductions that overcome bottlenecks and reach the goals aligned with the Paris Agreement.”

To reach climate targets, batteries and renewables would need to continue historic growth rates and other technologies would need to replicate these trajectories. 

This would mean increasing by as little as 3% from current trajectories, like nuclear power generation, or as much as 105% for carbon removals. 

How climate technologies can develop

McKinsey says that, based on historic scaling, a twofold to eightfold reduction in carbon abatement costs is achieved for every 100-fold increase in deployment. 

It says that two essential drivers of this pattern are spending on innovation and achieving economies of scale through industrialisation. 

In the early innovation stage where first projects are going live in the field, McKinsey says R&D is essential to increase efficiency.

When a project becomes technologically mature it enters the accelerated commercialisation stage where McKinsey says it is vital to focus on scaling up supply chains.

In the global deployment stage, McKinsey says the focus should be on ongoing cost reductions and acceleration of scale-up. 

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