The IT sector currently represents 1,900TWh, or 8% of global electricity consumption, and energy demand of this industry is forecast to grow by 50% by 2030, according to Schneider Electric estimates. This increase in energy demand is primarily due to the growth rate of device manufacturing, IoT devices, data storage, mobile networks, and computing. Expanding electricity use, of course, brings into question the carbon impact of digital technologies and the IT industry at large.
The environmental impact of the IT sector, however, is likely to be much lower in the future. Digitization offers many opportunities to increase the rate of decarbonization, and digital leaders in the economy have been some of the most ambitious actors in the corporate climate action space.
Why the impact of the digital economy on carbon emissions is likely substantially less than feared
IT energy demand is essentially electricity-based. This means that any impact of its growth on carbon emissions is primarily related to the carbon intensity of electricity generation. As the electricity system decarbonizes overall, moving from fossil-fueled generation to clean energy, the concern of the increase in energy demand from digital technologies is at least partially mitigated by the anticipated pace of grid transition. BloombergNEF’s 2019 New Energy Outlook research estimated that the overall carbon intensity of the global power generation system will decrease by around 25% by 2030 at its current trajectory. Furthermore, BNEF reports that more than 90% of new power capacity is expected to be zero-carbon by 2030.
Rapid adoption of clean power by the IT industry will also play a big part in helping digital technologies to grow sustainably. Despite a significant increase in global IT-related electricity demand, the associated environmental impact is likely to be substantially less than many parties recommending so-called ‘digital sobriety’ may fear.
While the IT industry represents the bulk of the expected increase in electricity demand, companies in the ICT sector are among the largest investors to date in additional green energy. The ‘Big 4’ in the technology space – Google, Apple, Facebook, and Amazon – have led the corporate renewable energy procurement boom. All four of these technology leaders either already use or have 100% renewable energy goals and have been investing in various forms of clean power for years. In addition, Apple has even extended its renewable energy goals to its supply chain partners, engaging exponentially more companies in the technology sector on decarbonization.
A critical point seldom considered in many projections of the industry’s climate impact is that major IT players are making bold public commitments to rapidly decarbonize their operations in the coming decade. Some even plan to reach carbon neutrality or, like Microsoft, have committed to go beyond neutrality with ‘carbon negative’ commitments.
In 2020, Amazon, AT&T, Google, Microsoft, Orange, and Verizon, were just a few of making such pledges. Based on these commitments, achieving a conservative 50% decarbonization rate for data center and network operations by 2030 globally is within reach. This accomplishment would lead to stabilized carbon emissions at a level below 3% of total energy-related emissions.
To learn more about the methodology and findings of Schneider Electric’s research on digital technology, download our recent paper, Digital Economy and Climate Impact.
The virtuous cycle: digital technology enables efficiency and accelerates decarbonization
The potential for increased IT and energy efficiencies counteracts the growth in power demand from digital technologies. Companies across all sectors and geographies are increasingly implementing digital technologies to improve their processes and find opportunities to decarbonize by reducing their energy use. International Energy Agency Digitalization and Energy research shows that digitization could lead, on average, to a minimum of 10% savings by 2040 in buildings, thanks to the use of smart controls for heating and cooling. Similarly, the integration of digital controls in industry could yield between 6% and 12% savings across sectors.
Consider the cumulative impact of the following examples:
- Innovation in digital connectivity and AI deliver increased efficiency for manufacturing and other industrial processes, reducing energy demand
- Data sharing across devices and equipment via the Internet of Things (IoT) increases industrial productivity and reduces inputs
- Digital and smart tools used in energy management help companies identify opportunities to optimize and reduce resource use
- The rise of data use and services across all sectors helps companies set a baseline for energy and emissions usage and find opportunities for renewable energy procurement
- Software and digital devices enable innovative microgrid systems, which allow for more efficient, resilient, and reliable integration of clean energy technologies, accelerating decarbonization of the grid and giving companies greater control over their energy use
These Machine-to-Machine (M2M) connectivity applications of digital technologies, which drive so much decarbonization potential, account for less than 5% of total internet traffic in 2021. Overall efficiencies created by digitization could result in energy demand savings – and reduced carbon emissions – which far outweigh the additional demand created by the increase in production and use of digital technologies. Increasing access to digital technology around the world is not only the key to economic advancement and social mobility but is also a critical combatant in the fight against climate change.
Where do we want to focus our efforts… Reducing or greening technology?
Proponents of digital sobriety suggest that the only way to avoid tech-fueled global warming is to do everything possible to limit consumption on digital devices and use less energy-intensive approaches. For example, artificial intelligence technologies have been criticized for being a key culprit of the growth in digital energy use. However, this type of innovation and automation paired with human expertise can help organizations of all kinds make their operations more efficient and accelerate decision-making on their sustainability journey.
And let’s face it: life today is online. In the past year, we saw students and employees alike find refuge in online tools and technology to continue learning and working during the global pandemic. When the world locked down—it also logged on. The proliferation of digital technologies in our lives makes it nearly impossible to reverse the trend. However, one trend that is already sliding in our favor is the rise in renewable energy and clean technologies.
When the energy used by IT and data center companies is green, combined with the decarbonization potential of the application of digital technologies in industry, the emission-reducing ability of digital technologies outweighs the digital transition energy demand. Rather than focus on reversing the digital trend, let’s instead focus on accelerating the clean energy trend.
Mitigating the rise of carbon emissions in the IT sector will indeed require continued efforts in achieving efficiencies and increasing clean energy use. When done right, and with a consistently cleaner grid, the digital transition can advance climate action efforts. Businesses need to consider how they can leverage the decarbonizing power of digitization at component and system levels, both for operations as well as for manufacturing.
To learn more about how to implement digital technology to make your business more sustainable, we invite you to get in touch with our experts at Schneider Electric today.