Exhibit 2 Incumbent companies can, on average, abate 20 to 40 percent of carbon
emissions by 2030 while also reducing costs. Cost-effective emission abatement by 2030, by sector, 1 %
Advanced industries
Average 20–40
OEMs, aerospace, industrial machinery
50–60
Batteries, semiconductors
20–30
Global energy and materials
40–50
Mining, oil, and gas
Chemicals and agriculture
45
15
Metals and materials
Travel and logistics
Logistics
30–40 60–80
Travel
Other industries
Consumer
30–40
Life sciences and healthcare
15–25
100%
1 Includes Scope 1, 2, and 3 emissions. Based on net present value. Source: McKinsey Catalyst Zero
McKinsey & Company
public and private sectors increasingly set demands on sustainability, organizations that are ahead on decarbonization could be positioned to earn early contracts in growing markets and generate revenue faster than competitors. This advantage for early movers will likely fade as competitors catch up. However, as more market players decarbonize, global emissions should go down—a societal benefit—and end customers should experience more competitive pricing. The dual task of cutting costs and carbon emissions is not easy. Decarbonizing operations often requires a transformation of processes and capabilities. There needs to be clear buy-in and
in production costs could be driven by energy efficiency, sourcing green energy, and variable cost reduction (yield and throughput increase, for example) of the manufacturing footprint. The potential for dual cost and carbon savings varies by industry. However, in some sectors, we see the potential to reduce emissions by as much as 60 to 80 percent while still having a favorable business case based on net present value. Reducing costs and carbon simultaneously can also free up cash to invest in new business opportunities that emerge from the ongoing net-zero transition.
Integrating cost and carbon reductions can also help companies gain market share. As both the
Accelerating the journey to net zero
70
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