Paris Agreement Goals Out of Reach, says Capgemini Report

Capgemini's latest analysis, in collaboration with Hogan Lovells, Vaasa ETT and Enerdata, scrutinises the evolution of energy sectors across global energy markets including Europe, North America, Australia, Southeast Asia, India and China.

What's the takeaway? Despite momentous progress in 2023 and looking into 2024, renewable energy's expansion isn't hitting required targets.

In its 26th iteration, the World Energy Markets Observatory covers hot topics like geopolitics' effect on energy, the pivot towards renewable sources, and innovative technological advancements.

Are Paris Agreement Goals reachable?

2023 saw greenhouse gas emissions soar to an unprecedented 37.4 billion tonnes, illustrating a lag in renewable energy's growth as per the Paris Agreement's standards.

“Despite an historical spike in renewable penetration, the pace of development isn’t fast enough,” says James Forrest, Global Energy Transition & Utilities Industry Leader at Capgemini.

“There is still much to do in the next decade to get closer to net zero by 2050 and achieve a successful energy transition: whether it be in the field of low carbon technologies, R&D efforts, nuclear or grid flexibility and storage.”

Capgemini's findings

Capgemini's report found that:

• Renewable energy deployment must be sped up – especially in developing countries – to deliver the 2030 and 2050 decarbonisation goals.
• Hydrogen is now a strategic lever in the decarbonization path, however only certain uses in ‘Hard to Abate’ industries, such as heavy industry and maritime mobility, have strong potential.
• Nuclear capacity needs to triple – as highlighted at COP28, it is a critical tool in reducing the effects of climate change. In 2023, 440 nuclear reactors (390 GW) provided 9% of the world's electricity, 25% of the world’s low-carbon electricity. The report highlights the need to focus on extending the life of existing nuclear plants.
• The power grid is key – better forecasting electricity consumption and AI-enhanced optimisation scenarios thanks to technologies such as AI will help to improve grid balancing.
• AI has potential to accelerate decarbonisation but lack of skills and focus is hindering progress.
• Geopolitical uncertainties pushing unstable legislation are decreasing the transparency and traceability of energy supplies.
• ‘Primary Energy Demand’ is an outdated concept for energy transition. To ensure accurate projections and clean energy progress we must move from primary to final energy consumption measurement (in kWh).

Capgemini's thoughts

James Forrest, Global Energy Transition & Utilities Industry Leader at Capgemini says: “Big Tech's entrance into the nuclear market is both significant and rapidly evolving. In just the past six months of 2024, we've seen five major announcements involving Big Tech and nuclear energy. 

“From AWS’ deal with Talen Energy to power its data centre with the Suquehanna Nuclear Station, to Microsoft's long-term agreement to utilise Three Mile Island 1, the momentum is tangible. Oracle and OpenAI's ambitious plans further emphasise this trend.

“We're optimistic about Big Tech's impact on the nuclear sector. Their quest for clean energy, notably through Small Modular Reactors, heralds faster adoption of nuclear solutions. However, traditional utilities, too, are on a mission to decarbonise, potentially spurring more investment in large nuclear plants or extending current ones.

“To make an impact, Big Tech must look beyond the current grid, innovating and partnering to create a dependable, clean energy infrastructure. Here, bold, funded initiatives will be key. Those ready to lead will indeed prosper.

“Ultimately, data dominates, and nuclear plays a critical, clean energy role in powering our digital world.”

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