Does Digitalisation Really Contribute to Climate Protection?

Digitalisation in its current form contributes little to climate protection, as the Borderstep Institute's CliDiTrans project clearly shows. But there is still room for fine tuning.

Author Sarah-Indra Jungblut:

Translation Mark Newton, 02.28.22

In the “Climate Protection Potentials of Digital Transformation (CliDiTrans)” project, researchers set out to explore the actual climate impacts of digitalisation. The Borderstep Institute, the Leibniz Center for European Economic Research (ZEW) and the Zweckverband Kommunale Datenverarbeitung Oldenburg (KDO) were all on board. The results of the project, which were published in a final report at the end of January, are clear: digitalisation in its current form has hardly any positive effects on the climate. For that to change, it must be actively shaped socially and politically.

Let’s take a closer look.

Previous Studies Fall Short

Many studies published in recent years attest to the potential of digital transformation to both reduce CO2 emissions from the economy and society and support economic growth and prosperity. However, according to the authors of the CliDiTrans report, many of the analyses fall short, as they are mostly limited to supply-side analysis and only theoretically derived forecasts. Both the behavioural changes and rebound effects triggered by digitalisation and national and international shifts in production are neglected. Behavioural changes include, for example, the fact that demand for many products and services is increasing because they are simultaneously becoming better in quality and cheaper. Another is that digital tools and services are shifting national and international production processes because they are less location-bound.

In the CliDiTrans project, the researchers have therefore chosen a different approach: With the help of macroeconomic analyses, the relationships between increasing digitalisation and the energy demand of the economy were investigated and tested by means of microeconomic evidence at the national level. In addition, national and international shifts in production and changes in demand were examined in more detail. The focus was on the areas of virtualisation, cloud computing, video conferencing and online collaboration in companies, as well as Internet and media use in private households.

Little Reason for Optimism

The project provides a number of findings that are not very optimistic. For example, the researchers were able to prove that the energy demand of information and communications technologies (ICT) in Germany has not declined over the past decade, but on the contrary was around 1 billion kWh higher in 2020 than in 2010. Even if there are slight energy savings in end devices – these have been eroded by the higher energy demand of digital infrastructures overall.

It is clear that power consumption is shifting from end devices to networks and data centres, i.e., end devices are becoming increasingly efficient, but their intensive use is leading to growing consumption in the network and cloud. What is particularly worrying about this is that it can be assumed that the global CO2 footprint of digitalisation will continue to rise massively in the coming years.

On the question of the extent to which digital technologies could decouple economic growth and energy consumption from one another, the team of authors notes that this connection has not yet been scientifically proven either. It has been shown, for example, that increasing digitalisation reduces the economy’s energy requirements – but only slightly. And this positive effect can be attributed primarily to the relocation of energy-intensive production processes to countries with lower energy costs and not to efficiency gains through ICT. However, results that include the energy requirements of the entire value chain should be treated with caution, as these data are difficult to collect.

At the level of individual companies, the researchers were certainly able to identify climate protection potential through digitised production processes. However, the correlations were much weaker than previously assumed in estimates. This means that digital technologies in the manufacturing sector in Germany can indeed lead to greater energy efficiency. However, this effect is so small “that it cannot be assumed that the climate protection potential of digital technologies, if any, was exploited in the period under consideration.”

The balance is similarly mixed for cloud computing and virtualisation in companies. On the one hand, these applications significantly increase energy and resource efficiency. On the other hand, the researchers prove with the case studies studied that the solutions are also increasingly used. “Digital innovations thus clearly increase efficiency here, but the energy and resource savings are partially offset again at the level of an individual user by more intensive use.” Nevertheless, at the level of individual companies, increased use of virtualisation and cloud computing can certainly be recommended, as energy and CO2 are saved.

The question of private Internet and media use remains unanswered. The bad news is that here too, the CliDiTrans project was unable to identify any positive effects of digitalisation on climate protection. Even if more energy-efficient devices do reduce CO2 emissions during use, the savings are offset by the demand for new devices. This shifts the savings from the use of the equipment to the manufacturing phase.

In addition, the fact that more and more people are spending more and more time with digital media means that the volume of data that has to be sent through our digital networks is constantly growing. And that, in turn, leads to rising energy requirements and increasing CO2 emissions, especially in data centres.

No Momentum in Climate Protection

From their findings, the authors conclude that the climate protection potential of digitalisation can only be unleashed with a determined policy. The surprising breakthrough of video conferencing is a good illustration of this:

Even as telephone and video conferencing technology became better and more readily available between 2000 and 2019, the number of people travelling across the world on business by car or plane increased at the same time. It wasn’t until the harsh lockdown at the start of the corona pandemic that the tide turned. Many companies inevitably switched to online conferences and meetings – and experienced the benefits immediately. Just eight months later (and 16 months later, still), a representative group of business travellers is convinced that about one in three business trips is avoidable. In this case, therefore, clear regulations have made the win-win situations visible and helped to ensure that the ecological and economic potential of digital solutions is also used in a meaningful way.

The CliDiTrans project also took a closer look at climate protection effects in Industry 4.0, specifically the production of electric cars and serial refurbishment. Here, too, it was shown that new technical possibilities alone do not ensure more efficient production. For example, the researchers found that it is primarily strong regulatory provisions of the EU as well as the numerous announcements of governments to ban combustion vehicles from the roads that are responsible for the fact that since 2015, more and more low-emission and energy-efficient vehicles are being produced.

The analysis thus clearly shows that digitalisation has hardly any positive effects on climate protection if it is left to its own momentum. Therefore, the authors clearly call for “a more active political and social shaping of the digitalisation process to make ICT effective for global environmental sustainability.”

A 3 Pillar Policy of Climate-Friendly Digitalisation

Wie abBut how can digitalisation be steered towards climate protection and sustainability? The researchers of the CliDiTrans project have developed the concept of the “3-pillar policy of climate-friendly digitialisation” for this purpose. The three pillars are: “Making climate protection effects transparent,” “Synchronisation of diffusion and exnovation,” and “Basic rules of the game.”

• Making climate protection effects transparent

As the researchers were able to prove, the potential of digitization for climate protection is regularly massively overestimated because complex system changes due to digitalisation have not been considered at all or only inadequately. The examples of flat sharing or station-independent car sharing clearly show that unexpected changes in behaviour (travel increases and short trips are made with car sharing instead of public transport) do not lead to the desired or expected sustainability effects.

The authors therefore call for systematic scientific studies with high standards to make the actual effects of digitalisation transparent. This includes scientifically investigating the developments and diffusion of new, digital products and behaviours, accompanied by effective communication of the research results in politics, business and the public.

• Promoting diffusion by synchronising diffusion and exnovation

Digital solutions can certainly improve energy and resource efficiency in many places. But these potentials remain largely untapped because sustainable digital solutions are slow to spread. The corona-induced switch to videoconferencing, whose electricity consumption is low compared to the CO2 emissions of business travel, is the best example of this. Similar examples include the slow uptake of climate-friendly digital solutions in building technology, which have been shown to increase the energy efficiency of buildings. However, without supportive regulations, a rapid widespread adoption of the technology is unlikely.

The authors therefore call for the dissemination of digital technologies that actually have high climate protection potential to be driven forward in a targeted manner. This can best be achieved through a policy that pushes back old, non-sustainable products and behaviours, thereby making room for the promotion of the new, for example through clear price signals such as the CO2 tax, a congestion charge or particularly high taxes on fuel.

• Basic rules of the game

Another major challenge is the high innovation dynamics of digitalisation and the global market. For example, after China banned crypto mining in its own country in 2021, mining capacities shifted very quickly to other countries. Rules of the game should therefore ideally be set at the European or international level. The report recommends international standardisation as a useful tool.

In principle, the researchers appeal to policymakers not to shy away from effectively intervening in climate-damaging developments in the digital economy – on the basis of sound findings: “Sustainability and climate protection must become the mainstream of digitalisation. They must become part of the DNA of the digital industry and also of digital policy. By now, our society should be out of the phase where it can carelessly allow large industries and climate-damaging mass phenomena to emerge without paying attention to their contribution to welfare and their climate policy responsibility.”

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