Capgemini: Why We Won’t Achieve The Paris Agreement Goals

Capgemini’s annual research report created in partnership with Hogan Lovells, Vaasa ETT and Enerdata tracks the transformation of global energy markets including Europe, North America, Australia, Southeast Asia, India, and China.

The headline? Despite impressive strides in 2023 and positive projections for 2024, the pace of renewable development just isn’t fast enough.

The 26th edition of the World Energy Markets Observatory (WEMO) has been prepared by a global team of over 100 experts and includes 15 articles on topics including geopolitical impacts, demand side energy transition, batteries, renewables, SMRs, Hydrogen, Industrial Heat, GenAI and the Inflation Reduction Act (IRA).

Will we achieve the goals set out in The Paris Agreement?

In 2023 greenhouse gas (GHG) emissions reached a new record high of 37.4 billion tonnes (Gt) the report says, highlighting that the pace of renewable development isn't in line with The Paris Agreement. 

“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.”

What does the report say?

Highlights from the report include:

• 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).

What does Capgemini say?

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’s deal with Talen Energy to power its 960MW data center with the Suquehanna Nuclear Station, to Microsoft's 20-year agreement with Constellation to reopen Three Mile Island 1, the momentum is undeniable. Oracle’s plans for a 1GW data center powered by three SMRs and OpenAI’s ambition to build multiple 5GW data centers further underscore this shift.

“We are bullish on Big Tech’s influence in the nuclear market. Their demand for clean energy, particularly Small Modular Reactors (SMRs), will accelerate the adoption of nuclear technology. SMRs offer flexibility, faster development timelines, and independence from the traditional grid, making them an attractive solution for tech giants. However, traditional utilities are also striving to decarbonize, which could drive increased investment in large-scale nuclear plants or the continued extension of life for existing plants.

“To succeed, Big Tech must acknowledge that their energy needs won’t be met solely through the existing grid. Instead, they need to innovate and collaborate with both traditional and non-traditional partners to develop a robust SMR-based clean energy solution. This is where bold, well-funded action is required. Fortune will favor those willing to step up and lead.

“The bottom line is simple: data is king, and nuclear is the queen – literally the power behind the throne. As Big Tech's demand for energy grows, nuclear power, with its unmatched reliability and clean energy potential, will play a pivotal role in sustaining this data-driven empire.”

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