Digitalisation – Climate Saviour or Climate Killer?

Digitalisation is a double-edged sword when it comes to climate action.

The rising demand for tools, technologies and digital services increase the need for more data storage and energy supply, eventually leading to a rise in emissions globally. At the same time, digital technologies bring about enormous opportunities and provide the transparency needed to generate accountability and implementation of climate commitments.

Now, you probably wonder whether digitalisation is the cure or the accelerator of climate change. We will walk you through the pros and cons of digitalisation for the climate and outline effective actions you, as a company can undertake to reduce your environmental impact with the help of technology.

The Bright Side of Digitalisation for Our Climate

From corporates to small and medium-sized businesses (SMEs), the majority of companies look on the bright side when it comes to digitalisation. In a recent McKinsey Global Survey, more than eight in ten companies stated that their organisations have undertaken digital transformation efforts in the past five years and three quarters of SMEs believe digitalisation is a great opportunity for more sustainable business activities. They all see high potential in company-wide digitalisation initiatives as they can lead to more efficient use of resources, more transparent supply chains and lower energy consumption.

Digitalisation Speeds Up Information Flow and Education

Education is not always the first aspect that comes to mind when considering digitalisation but it has the potential to improve the access to knowledge and increase the speed of process and information flows.

What does that have to do with climate change? Well, education is an indispensable aspect of climate action and digital tools can help to explain and spread sustainability topics and the need to drastically reduce greenhouse gas emissions. After all, education is and remains one of the top levers to help tackle societal challenges such as poverty, hunger and climate change.

Digital Technologies Drive Energy Efficiency

Experts believe that digitalisation has the power to fundamentally contribute to climate change mitigation. According to the German Advisory Council on Global Change (WBGU), digitalisation can drive climate action and resource conservation, for example by supporting ongoing transition to a low carbon, environmentally sound, reliable and affordable energy supply.

Digital technologies can, for example, connect renewable energy facilities such as wind turbines to smart weather data. This way, energy can be generated more efficiently and just in time. Further technological progress in this area, coupled with price declines for renewables and batteries, could lead to accelerating demand for renewable energy up to 100%. New digital technologies can therefore help shifting energy sources: Currently two-thirds of electricity comes from fossil fuels, by 2050 wind and solar power must substitute this by providing two-thirds of electricity naturally. Bring it on digitalisation!

Reduction of Global Carbon Emissions

Digital solutions have the potential to significantly reduce carbon emissions – in Germany alone, digitalisation efforts could reduce emissions by 120 megatonnes in the next 10 years. Experts see the biggest potential in four areas: industrial manufacturing, mobility, buildings and businesses.

Within manufacturing, for example, digital technologies foster more efficient and climate-friendly processes that save significant amounts of resources and energy. Important drivers within mobility include intelligent traffic management and smart logistics. Building emissions can be reduced through smart home technology and businesses can reduce carbon emissions significantly by making employee commute more sustainable.

What about the carbon footprint of digitalisation? Accelerating digital technologies consumes energy and resources and creates emissions, no surprise there. However, the more digitalisation is powered by green electricity, for example, the more sustainable and environmentally friendly it becomes.

As a tech company, we are obviously very much in favour of digitalisation but there are also significant challenges to overcome in order to successfully drive decarbonisation with the help of digitalisation.

Digitalisation: Challenges for Climate Action

Evidently, the digital sector has the potential to take climate change mitigation to the next level. Experts see great opportunities from the fourth industrial revolution, in particular 5G, the Internet of Things (IoT) and artificial intelligence (AI). Yet this technological revolution and corresponding digital services and innovations have accelerated our global energy demand and consumption in the first place.

Digital Streaming Is Booming More Than Ever

Especially since the COVID-19 pandemic, demand for streaming is booming more than ever: In the first quarter of 2020, consumption of streaming services and cloud gaming rose by 30%. In March 2020, the world’s largest Internet node in Frankfurt am Main reported a peak value of 9.16 terabits of data throughput per second – a similar amount of data throughput happens when more than two million HD videos are transmitted simultaneously.

While the environmental impact of video streaming very much depends on the transmission technology – Ultra-HD resolution on a TV, for example, requires ten times more data compared to HD quality – it is definitely a watch out area for climate change mitigation.

Growing Demand for Digital Services Increases Need for Data Storage

With growing energy-guzzling data centres on the rise, the data-driven economy remains one of the biggest challenges in fighting climate change and building our modern business infrastructure.
The global energy consumption by data centres is already enormous – a whopping 205 TWh according to latest research (that’s twelve zeros behind the 5!) – and will continue to grow with demand for digital services increasing further. Data centres are expected to use between 3 and 13 % of global electricity by 2030, as illustrated in three scenarios below.

Graph showing scenarios of electricity usage of data centres

Storing digital data is actually expected to create 14 % of the world’s emissions by 2040. While these are estimates – as many companies from the digital sector refrain from publishing precise data – this still emphasises the urgency for finding effective solutions.

Effective Solutions Call for Effective Policies

Many technologies initially require policies to become cost competitive and achieve scale and uncover the full potential of digitalisation for mitigating climate change.

Regulation is also needed to prevent unintended rebound effects of digitalisation for the environment. Such rebound effects occur when savings from energy efficiency are cancelled out by behavioural changes. To give you an example: as a consequence of people switching to electric vehicles, demand for oil – and ultimately the oil price – is expected to drop which could increase demand for oil elsewhere in the world.

Strong environmental policies and regulation such as subsidies, taxes and, most of all, carbon pricing are required to eliminate such adverse effects. These have to be established on a global level to ensure fairly distributed environmental efforts – so far, this has proven to be an extreme challenge.

Besides regulatory challenges, many companies are still not sure how to use digitalisation efforts for more sustainable business operations – or don’t yet have the resources to push for digital transformation.

But we wouldn’t be Planetly, if we didn’t have some handy tips for you. Read on and start your sustainability journey.

How to Use Digitalisation to Reduce Your Impact on the Planet

Get a Grasp of Your Corporate Carbon Footprint

You can only manage what you can measure. Knowing your corporate carbon footprint is essential in order to be able to reduce your impact on the environment in the first place. This is where we very much believe in the power of technology and using tech for good.

With software solutions such as the Planetly’s Climate Impact Manager you create carbon footprint transparency: you easily identify your biggest emission drivers and important levers to take effective climate action.

Typical Emission Sources in the Software & IT Industry

If you would like to dive in and learn more, feel free to reach out to us.

Embrace Remote Work & Virtual Communication

2020 and beyond showed us that many office jobs can be successfully fulfilled from home, helping to reduce emissions from commuting, office buildings and emission-intensive air travel. So should we all just work from home all the time and do video calls instead? It’s actually not that simple.

Comparing emissions of video conferencing and commuting can sometimes feel like comparing apples with oranges, so let’s put things a bit more in perspective here:

Let’s assume your employees normally take the bike to work. In that case, having video calls all day would result in a higher carbon footprint. On the other hand, if your employees commute via car or public transport – even if the journey is only 10km one way – having video conferences all day long would still result in a lower carbon footprint.

Carbon Comparison Office vs. Remote

The bottom line: If your employees commute to work using higher emission modes of transport, embracing home office options and virtual communication could be a more sustainable option for your company. Nevertheless, switching your camera off on video calls whenever possible is highly recommended.

Improve Your Office Energy Efficiency

One important step in making your office more energy efficient – and, in fact, one of the biggest levers for emission reduction – is switching to green energy. But there is more: Have you ever considered installing smart solutions for heating and lighting that match working hours in the office? This would not only reduce your carbon footprint by up to 13% but also leads to cost savings of up to 25%.

In 5 to 10 years, our offices could be entirely transformed. IoT and other sensing technologies can control lighting and other energy systems in a way that when the last person leaves, the building is set as being empty and energy is switched off.

To take this one step further: any surplus energy from renewable energy sources could even be stored at night in the batteries of electric cars attached to the grid and called up as needed. Sounds pretty cool, right?

Make Your Cloud Green

Digital solutions can make clouds and data centres more sustainable: Already today, AI is used in some data centres to increase energy savings over time. AI can analyse data output, humidity, temperature and other important statistics in order to find a way to improve efficiency, drive down costs and reduce total power consumption.

Another option is to move your cloud to colder regions such as northern Scandinavia. Wonder why? The climate is cool, the geography is stable, the risk of earthquakes is low and renewable resources such as hydroelectric power and wind are abundant. Facebook, for example, set up the Luleå data centre in northern Sweden to reduce operating costs and eliminate the need for complex cooling systems.

While, like most companies, you probably don’t operate your own data centres, you can still reduce your environmental impact by switching to a more sustainable provider. AWS, for example, runs green data servers at some locations.

Keep an Eye on Blockchain

Blockchain is considered one of the future technologies. While far from mass-ready, blockchain is already accelerating energy transition by working with micro grids that enable the construction of autonomous energy communities.

Sounds promising but, as of today, these technologies come at a high price: For data in a blockchain to be forgery-proof, it must be verified. The algorithms behind this require intensive computing power which cause high energy consumption and, thus, high emissions.

Initiatives already explore the options of integrating more sustainability aspects into the future development of distributed ledger technologies like blockchain. While such technologies have enormous potential to solve current problems such as climate change, we need to be mindful not to create new issues elsewhere through them.

Quo Vadis, Digitalisation?

Digitalisation significantly impacts the environment, and, so far, not just in a good way. If steered in the right direction, however, it can create promising new opportunities for the global energy transition and climate action.

Thierry Breton, EU Commissioner for the Internal Market, puts it right by saying that “while digitalisation won’t save the world single-handedly, it will be part of the imagined innovative system to slow down and adapt to the effects of climate disruption.”

The bottom line: Digitalisation needs global regulation and rules to sustainably drive wealth, justice and the environment.

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