Managing Emissions

The rapid expansion of AI technologies is delivering a shock to the energy system and could well have transformative effects for the industry. Utilities and power companies are rushing to revise growth plans to respond to surging electricity needs from datacenters and energy transition demand. This is driving investment in renewables, advanced nuclear, and geothermal, but also pointing to a renewed role for natural gas. This new demand is forcing large tech companies into major players in the power sector. At the same time, generative AI and other digital technologies hold the potential to transform how energy is produced, managed and consumed and to help energy systems become more efficient and sustainable.Delivering emissions reductions in energy-intensive sectors such as heavy industry is one of the energy transition’s biggest challenges. Decarbonization technologies such as carbon capture and storage, direct air capture, methane reduction, materials recycling and others, as well as new industrial processes, are making progress, but the scale and speed of deployment remains modest. Early projects are starting to yield lessons that will be vital for technological advancement, reducing costs and scaling up these technologies. Strategies that align industry, policymakers and capital providers can help accelerate and expand decarbonization technologies. But there is the evident risk that some decarbonization policies can impose heavy costs that make companies uncompetitive and lead to shrinkage and deindustrialization.