More than 70 countries have pledged to cut their greenhouse gas emissions to net zero by mid-century. And in order to achieve the Paris Agreement’s goal of limiting global warming to 1.5 degrees Celsius above pre-industrial levels, the Intergovernmental Panel on Climate Change projects the world would need to reach net-zero emissions by 2050.

Such a transition would require colossal change throughout the global economy, according to a new report from the McKinsey Global Institute, citing an average of $9.2 trillion in annual spending on physical infrastructure through 2050— $3.5 trillion more than current yearly spending.

“Almost every aspect of our economic lives is going to change as a result of the net-zero transition,” Mekala Krishnan, the lead author of the report and a partner at the McKinsey Global Institute, told Marketplace’s David Brancaccio.

As daunting as the transition may sound, Krishnan emphasized its importance.

“For all the complexities and the challenges associated with this, ultimately, it does result in a very real benefit. Let’s remember why we’re doing this in the first place: We’re doing this because investing in the net-zero transition helps us reduce the odds of the most catastrophic impacts of climate change: loss of life, loss of property, loss of our natural environment,” said Krishnan. “We talk about these as costs but, really, I would think about these as investments.”

The following is an edited transcript of their conversation.

David Brancaccio: [There’s] a lot of work to do by mid-century if the world is going to do this. Give me a sense of the profound economic changes that would have to happen.

Mekala Krishnan: We will need to change how much we’re spending towards the net zero transition; we will need to substantially scale up investment and spending on capital. We will see a transformation of jobs across the economy that affect sectors and geographies. We will see the nature of demand shift in a whole range of different sectors. And we will see potential implications on costs of different products and services. So almost every aspect of our economic lives is going to change as a result of the net-zero transition — and managing those changes in as orderly fashion as possible is crucial to ensure we actually get to that net-zero target.

Brancaccio: The scale of this thing is breathtaking, but I’m glad that you have tried to process it. Let’s just talk about the jobs. Your analysis suggests that maybe 200 million jobs would be gained by the transition to net zero, yet 185 million jobs would be lost around the world — so more jobs created than are lost. That still produces dislocation and churning that is extremely disruptive.

Krishnan: Absolutely. Firstly, I love the way you phrased that, because you said 200 million and 185 million as two independent numbers and didn’t net them out to 15 million. I think the first really important takeaway from the research is, yes, we might see overall, on net, a slight job increase. Now, relative to the scale of the global economy, that’s small. I think the bigger point from the net zero transition, as with many other transitions we’ve seen, is, first and foremost, that it is a reallocation of jobs. We are going to see parts of the economy where jobs are lost, parts of the economy where jobs are gained, and so there is a whole-scale reallocation. When we think about how that reallocation plays out, we see these effects concentrated in a few key sectors. In the net-zero transition scenario that we looked at, sectors that have high emissions, they contribute to CO2 and methane emissions today, could see a reduction of jobs — so this is sectors like oil, gas, coal production and sectors like fossil-based power. On the other hand, there are whole opportunities for jobs to be gained in sectors like renewable power, hydrogen, biofuels. So first and foremost, there is the reallocation of jobs that is concentrated in specific sectors of the economy. There’s also a geographic dimension to this. What we find is that there are certain countries, certain communities that will be disproportionately exposed to the job transitions, and we’ll need to put in place measures to manage these job transitions. Just as one example, in the United States, what we find is that there are about 44 counties in the U.S. where 10% or more of jobs are in sectors like oil, gas, coal, fossil-based power, automotive manufacturing. And so these numbers are, I think, important not because of their scale — in fact, we find the scale of overall losses and gains less than many other transitions like automation — but rather for their localized, concentrated, reallocated nature.

Brancaccio: In other words, compared to the march of robots into the workplace and automation and artificial intelligence, this is less disruptive, but it has profound localized effects, where there’s a lot of disruption locally.

Krishnan: That’s exactly right. One of the things that we at the McKinsey Global Institute have done is to estimate the impact of job losses and gains from automation, and what we find, just as an alternate benchmark, is about 270 to 340 million jobs could be lost, and a similar number gained, by 2030 as a result of automation and the future of work. And so the scale of aggregate job change is less — as we think about the net zero transition compared to automation — on aggregate it is less disruptive, but the localized nature of the disruption could be much more substantial.

Brancaccio: Outside of the specific context of your report, here’s one way one could think about it: There are about 13,000 or 14,000 coal mining jobs in West Virginia. Across state lines, Ford Motor Company is building battery plants and EV plants in Kentucky and Tennessee that will create, they think, about 14,000 jobs. Yet if you’re a coal miner who might lose out in the energy transition, it doesn’t do much for you to know that they’re hiring in a different field across state lines.

Krishnan: Absolutely, and I think there are two aspects to what you described that are really important to think about. The first is the fact that we need to think about worker transitions and reskilling, redeployment of jobs. There’s a shift that is needed in the nature of skills that workers possess, and we need to enable workers to make these job transitions. The second is the fact that we need to create jobs in the communities where jobs could be most disrupted — and so there is also an imperative, then, to think about economic diversification and the growth of communities, the effects on specific communities. There’s both a sectoral and a skill element to it, but there’s also a geographic element to it that is important to think about as we look to embark on this transition.

Brancaccio: And help me understand the costs that will be needed, just in physical infrastructure. I saw one figure in your report — over $9 trillion globally, but annually, to do this? That’s a lot of money.

Krishnan: Yes. So first and foremost, let’s understand how much we’re spending today on these parts of the economy. If we look at a whole range of physical assets, like the power systems that we produce or the cars that we drive, today we spend, globally, about $5.7 trillion dollars on all of these parts of the economy that contribute to emissions. What our research finds is to get us to net zero, what we need to do is to raise that spending from $5.7 trillion today to about $9.2 trillion every year for the next 30 years. So there’s a substantial scale up of spending of about $3.5 trillion a year to get us to that net zero goal.

Now, in one way you look at these numbers and it really feels daunting, but I actually think the scale of spending is not the only challenge related to spending, and maybe not even the biggest challenge. There are two or three others that are really important to think about. The first is the very type of spending changes. So today we’re spending, say, on fossil-based power or on internal combustion engine-based cars. In the future, we’re going to have to completely change that to, say, renewable power or to electric vehicles. And that’s a whole-scale reallocation of spend that needs to occur. Today, about 70% of our spending is in parts of the economy that contribute to emissions in some way, what we refer to in the report is “high-emissions assets.” Going forward, that number needs to be exactly reversed: 70% on high-emissions assets today; 70% or so on low-emissions assets in the future. So almost a bigger problem is how we drive that reallocation, because it’s a whole different set of assessing risk and return trade-offs, on managing technological uncertainty — a whole set of questions of how we drive capital towards the low-emissions parts of the economy. That’s one challenge.

The second challenge is: We talked about the $9.2 trillion as an annual average number, [but] that’s not actually what the profile of spending is going to look like. We’re going to need to spend more in the early parts of the transition compared to the later parts of the transition. So just to give you a sense of that: Today, that $5.7 trillion that I described is about 6.8% of global GDP. In the next 10 years, that 6.8% would need to rise to about 9% of GDP before falling back down. So it’s not an evenly distributed spend. It is what we refer to in the report as a front-loaded spend. It’s been said many times about the net zero transition that the next decade is decisive, and our numbers really show that. We need to not just drive an increase in spend, but we need to drive an increase in spend in the next 10 years.

Brancaccio: And this is a mix of government spending and private sector spending?

Krishnan: Yes, I think there is a big question that the research has not explored, but I think one that the global community is now going to be faced with: Who pays for the net zero transition? Some of the categories of spend that we analyze in the report do come with financial returns — estimates would suggest anywhere from 40% to 50% of the spend does have a financial return — but there is a portion of the spend that does not have returns, is not “in the money” today. And so the question becomes: How do we drive capital towards the sectors and geographies where it’s most needed, particularly when it does not come with a financial return? And so immediately the consequence of that is [that] this is going to be a blend of private capital as well as public capital as well as, in some cases, philanthropic capital. And in addition to where the money comes from, I think there are also questions about how we not just create the supply of capital, but actually incentivize the demand for that capital from the sectors and geographies where it would most be needed.

Brancaccio: You spent all this time working with your team on this report. When you got to the end of this process, were you left with a sense that it is, in any way, actually doable in the real world?

Krishnan: That’s a great question. A lot of the findings of the research would suggest that this is an incredibly complex and challenging task. And we shouldn’t be surprised by that —what we’re trying to do in the next three decades is transform entire ways that we live and eat and drive and power our lives, [ways] that took one or two centuries to build. So the speed and scale of this is enormous, and so we shouldn’t be surprised at how daunting the task is. However, there are, I think, two or three reasons to be optimistic or to really believe that this is achievable. First and foremost, for all the complexities and the challenges associated with this, ultimately, it does result in a very real benefit. Let’s remember why we’re doing this in the first place. We’re doing this because investing in the net-zero transition helps us reduce the odds of the most catastrophic impacts of climate change: loss of life, loss of property, loss of our natural environment. And so there is a tangible benefit. We talk about these as costs, but really I would think about these as investments. The second is the fact that even though there are a variety of shifts that we need to make, a variety of adjustments we need to make, there are also some immediate economic opportunities that emerge as a result of the net zero transition. There are entirely new products and new markets that are opened up. So, for example, when we think about solar-based power or electric vehicles, companies can benefit, in many instances, from decarbonizing their processes — for example, investing in energy efficiency actually reduces operating costs. And then finally, there’s a broader set of support services; infrastructure inputs that are needed for the net zero transition. So in addition to the immediate types of investments, there’s an entire net zero economy that gets built around those investments, and all of that creates opportunities for companies and countries. So those two factors, the fact that this eventually comes with the benefit [and] that there are near-term opportunities, gives me hope. The third thing that gives me hope is we’ve put the numbers on the table. We understand, now, the scale of the shift and the transformation, and we can start to move towards that, collectively — towards what I would call a more orderly road to transition, versus a more disorderly road to transition.