An Energy Transition Reality Check with McKinsey’s Mekala Krishnan

A Watchwords entry for the "energy transition"

There’s so much chatter and buzz around the phrase “energy transition” - only blunted slightly by the newer phrase “net zero” - that I thought it well worth doing a live Sustain What “Watchwords” conversation with a top expert about the energy transition concept and realities. I use the term watchwords to highlight terms or phrases that too often confuse more than clarify.

🗓️ 🖥️ UPDATED post broadcast: Here’s my bracing conversation with Mekala Krishnan, the lead author of a recent McKinsey Global Institute report “The hard stuff: Navigating the physical realities of the energy transition.” Here’s the YouTube stream:

You can watch and share this Sustain What chat on my LinkedIn and Facebook accounts or at my X/Twitter @revkin account.

As I’ve long said, at the global level there’s only been energy addition so far, as folks like Resources for the Future and Our World in Data have shown. Post-carbon energy sources like nuclear and renewables are simply adding onto the total human energy menu still dominated by fossil fuels. I described this once in a conversation with Elise Gout as adding wind and solar frosting to a rising fossil cake.

The situation is rapidly changing thanks to decades of research, innovation, investments and policies. But it’s good to start, before considering next steps for policy, by setting a baseline for the physical hurdles in shifting away from conventional burning of fossil fuels. That’s what the report by Krishnan and her colleagues does.

A slide from one of Krishnan’s McKinsey report presentations

Here are the key points from the report summary:

The energy transition is in its early stages, with about 10 percent of required deployment of low-emissions technologies by 2050 achieved in most areas. Optimized over centuries, today’s energy system has many advantages, but the production and consumption of energy accounts for more than 85 percent of global carbon dioxide (CO₂) emissions. Creating a low-emissions system, even while expanding energy access globally, would require deploying millions of new assets. Progress has occurred in some areas, but thus far has largely been in less difficult use cases.

Twenty-five interlinked physical challenges would need to be tackled to advance the transition. They involve developing and deploying new low-emissions technologies and entirely new supply chains and infrastructure to support them.

About half of energy-related CO₂ emissions reduction depends on addressing the most demanding physical challenges. Examples are managing power systems with a large share of variable renewables, addressing range and payload challenges in electric trucks, finding alternative heat sources and feedstocks for producing industrial materials, and deploying hydrogen and carbon capture in these and other use cases.

The most demanding challenges share three features. First, some use cases lack established low-emissions technologies that can deliver the same performance as high-emissions ones. Second, the most demanding challenges depend on addressing other difficult ones, calling for a systemic approach. Finally, the sheer scale of the deployment required is tough, given constraints and the lack of a track record.

Understanding these physical challenges can enable CEOs and policy makers to navigate a successful transition. They can determine where to play offense to capture viable opportunities today, where to anticipate and address bottlenecks, and how best to tackle the most demanding challenges through a blend of innovation and system reconfiguration.

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