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    >> “Climate Solutions” is also available as a podcast and an e-book.

    By Andres Gavira Etzel

    Let me start with a simple example. I assume you are reading this article online on a digital device. From an environmental point of view, you believe that this is better than reading a printed copy. Your digital reading requires energy for your computer or phone and for the servers hosting the article, as well as for all the technology involved in transmitting it to your device. However, we didn’t cut down trees to print it or fuel trucks to get it into your hands. So we tend to believe that digitalisation is better for the environment. The idea is that by doing things virtually (such as buying and storing a book in the cloud), we will emit less CO2 compared to the physical world (buying a book in the bookshop).

    But is that true? The answer may be more complicated than you think.

    Do we have data on the data?

    To measure the impact of digitalisation on the climate, we have to consider two things. First, the emissions generated by the Information and Communications Technology (ICT) industry itself. Second, the effects that the application of these ICT services have on other sectors of the economy and our daily lives.

    Like any industry, ICT emits CO2 and by doing so contributes to climate change. It’s difficult to measure these emissions. While some studies state that the CO2 emitted by digital technologies has continued to increase1, other data seem to indicate that emissions have flattened out in recent years2 due to the increased energy efficiency of ICT equipment. Also, unlike other industries, the source of energy for ICT is already today electricity, not fuel. The ICT industry’s footprint therefore largely depends on the future de-carbonization of energy production.

    As for the second part, the ICT industry is a key contributor to de-carbonisation in other industries. Smart grids, smart cities, industry 4.0, earth observation satellites and so on  are all based on the availability of ever smaller and more powerful ICT devices and solutions.

    So, on the one hand, ICT does use energy. On the other hand, using energy helps many other industries save energy. Complicating things further is  the rebound effect.

    The Jevons paradox

    Continuous leaps in digital technology are reducing the amount of resources needed to produce it all. The famous Moore’s Law observes that the number of transistors that fit onto a microchip doubles every two years.

    Less famous than Moore’s Law is Jevons’s Paradox. It started with steam engines in England in the nineteenth century. James Watt came up with a new design for steam engines that immensely increased their efficiency. Therefore, people predicted a reduction in the demand for coal. However, economist William Stanley Jevons observed that, due to the increased efficiency of the engines, the use of these engines proliferated and in the end, more coal was used.

    The same rebound effect has been observed in many other industries and is clearly at work in digitalisation. While the cost of transmitting one megabyte of data has come down dramatically, both in monetary terms and in terms of the environmental impact, the resulting increase of total megabytes transmitted keeps raising the financial and environmental cost.

    Professors Christopher Magee and Tessaleno Devezas found the same effect on more than 50 other materials as well. It’s happening with hard disks and photovoltaics, but also with simple resources such as aluminium and formaldehyde. The professors found only six materials for which absolute consumption had dropped. Most of these were hazardous, such as asbestos, whose decrease was caused by government regulation. Wool was the only outlier, replaced by synthetics like polyester. Again, not great news for the climate.

    There are several examples of these rebound effects in the ICT world. Let us consider
    video-conferencing. Ignore for a moment the amount of energy required by the servers, by the data transmission devices, the displays and the computers. In theory,
    video-conferencing should reduce the need to meet up in person, saving all those miles of air travel.

    In practice, digital tools have inspired companies to create more geographically dispersed teams than before. These teams like to get together in person, every now or then, and when they finally meet, this creates a lot of emissions.

    Streaming will be another example for new demands created by ICT. Let us not look at the power consumption of the final device, but only at the infrastructure needed to deliver the signal to your home. While linear TV broadcasters would use a limited number of broadcasting stations around the country emitting the same signal to everyone, streaming suppliers today offer a personalised experience. To deliver a good service  without any latency and cuts, streaming providers are installing data centres across the world to store their content as close as possible to the final user. In addition, to distribute the signal to the end-device, each customer will use one data stream from the data centre to the final device. This individual stream will require electricity over its telecommunication infrastructure (fixed or mobile).

    However, let us look into the benefits of digitalisation.

    Saving the analogue world from CO2

    There are some reports that try to show improvements in efficiency created through digital solutions. A recent report3 by the Global e-Sustainability Initiative, an ICT industry initiative, estimates that ICT could head off 1.34 gigatonnes of CO2 in 2030 against the business-as-usual scenario. This calculation is based on  efficiency gains in sectors such as:

    • Energy. Smart grids will be better able to match the supply and demand for energy, based on collecting data from smart meters, network diagnostic tools and a more transparent marketplace. It will also make it easier to integrate renewable energy sources into the grid, as the grid will be more resilient to sudden drops and hikes in the supply. Additionally, on a micro-level, smart buildings can reduce energy costs because they know when to turn lights, heating and equipment on and off.
    • Food. Sensors, satellite data and connected machines will allow farmers to conduct precision agriculture, measuring the exact dose of water, fertilizer and nutrition needed for a specific crop on a specific parcel of land at any given time. Better tracking of stock and market demand will also decrease waste of food throughout its lifecycle.
    • Transport. Real-time information can help direct traffic in ways that will decrease the use of fuel. Smart lighting of highways (such as the European Investment Advisory Hub project  in Belgium) means that the intensity of lighting can be regulated automatically based on traffic density and weather conditions. Smart logistics can reduce inefficiencies such as half-empty trucks and containers moving around or moving to sub-optimal locations—and this doesn’t only apply to food.
    • Manufacturing. Further automation will improve production efficiency. Tailored production based on quick reaction to market demand will reduce waste. 3D printing is just one example of this manufacturing-on-demand that will enable production closer to the customer, reducing the need for environmentally costly logistics.

    The report estimates that the emissions savings delivered by the shown use cases can be estimated at  seven times the growth in the ICT sector’s own footprint between 2019 and 2030.  

    Of course, while it is difficult to quantify the direct and indirect emission of digitalisation, it is impossible to measure the CO2 emissions of a world in which these technological advances never occurred.

    The greening of ICT

    Potential improvements in the emissions of the ICT sector should come through the “greening of ICT” itself. In other words, non-digital sectors get greener by introducing smart, IT tools and solutions, while the ICT sector itself gets greener by making those tools and solutions more efficient.

    So how can the industry clean up its act?

    Typically, some of the market forces driving innovation in ICT—competition to produce smaller and cheaper products and solutions—also drive progress towards a smaller environmental footprint. The smaller processors by definition will require less material to produce. Striving to compete on price, companies are driven to look at life-cycle cost, meaning that there will be a focus on how much a certain product or solution costs to run. This will always entail energy costs. If these can be cut, there will be a market player to cut them.

    The new generations of fibre optic networks or the fifth generation of mobile technology are great examples. Improvements in performance, such as speed, latency and connection density, are also expected to come with a large improvement in energy efficiency, especially if based on the amount of energy required to transmit a bit of data. To provide enhanced services to their customers and at the same time control their operational costs linked to energy consumption, telecommunication operators will be eager to roll-out these new technologies.

    However, if advanced services are available to the users, chances are they will use them. This will almost certainly mean further growth in the number of bits transmitted, which might in the end outpace the energy efficiency improvements these new technologies provide.

    Circular circuits

    One of the areas that still must be tackled is electronic waste.

    With improved devices developed at great speed, we discard old devices just as fast. There are more and more of those devices, too, as more of our life becomes digital. Therefore, we need to make sure incentives, regulations and solutions are in place to manage this waste.

    Which brings us to the idea of the circular economy. Designing waste out of the cycle of production means looking for ways to use as little material as possible initially, and also designing the products and systems so that existing products can be used for longer, refurbished, or returned and taken apart with the material ready to be reused for future iterations. The circular economy contrasts with the traditional, linear model in which we take materials, produce something out of it, have the client use it and then discard it.

    The market forces are strong with this one. More circular business models reduce the reliance on sometimes scarce materials and their fluctuating cost. The efficiencies create value for the customer. They create a potential long-term relationship between the user and the provider of the circular solution.

    However, there are still hurdles for circular business models, especially when it comes to financing, as my European Investment Bank colleagues have summed up here.

    Inevitably, there will be some waste. We need to make sure there are systems in place to dispose of it safely, so as not to harm the environment—or us.

    Yes, we’re producing more and more digital components for everything from fridges to chairs. Those devices are pinging with more and more bits of data. However, we have reason to be hopeful for the planet. The drive towards greater energy efficiency in the ICT industry and the impact that digitalisation will have on the emissions of the analogue world mean ultimately we are likely to see a positive effect on emissions.

    Climate solutions: How to ensure our digital world is climate-friendly if you are a…

    Policymaker or ICT company: The ICT industry should come up with a Paris Alignment pathway. This pathway should set clear targets to be used for efficient monitoring. Get further involved in the definition of the EU taxonomy for sustainable activities initiatives related to the ICT industry.

    Citizen: Realise that the virtual world is not a CO2-free zone. Consider circular economy aspects when making purchasing decisions, and be aware of rebound effects. Make clever use of ICT-based solutions to reduce your personal CO2 footprint (such as a smart house).

    Financial institution: Recognize the importance of the sector in achieving the Paris targets. Build up your knowledge of the specificities of risks and rewards of investing in the sector. Provide patient capital.


    Andres Gavira Etzel is a lead engineer in the European Investment Bank’s innovation and competitiveness department.

    >> “Climate Solutions” is also available as a podcast and an e-book.

    2. Malmodin, J. and Lundén, D., 2018. The energy and carbon footprint of the global ICT and E&M sectors 2010–2015. Sustainability, 10(9), p.3027.