SMART 2020: Enabling the low carbon economy in the information age - BNRG
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A report by The Climate Group on behalf of the Global eSustainability Initiative (GeSI) ©Creative Commons 2008 Attribution Noncommercial-No Derivative Works Prior to distributing, copying or reporting this work contact The Climate Group (info@theclimategroup.org) or GeSI (info@gesi.org). Supporting Organisations GeSI and member companies: Bell Canada, British Telecommunications Plc, Cisco Systems, Deutsche Telekom AG, Ericsson, France Telecom, Hewlett-Packard, Intel, Microsoft, Nokia, Nokia Siemens Networks, Sun Microsystems, T-Mobile, Telefónica S.A., Telenor, Verizon, Vodafone Plc. Additional support: Dell, LG. Steering Committee Deutsche Telekom AG Luis Neves, Chair of GeSI The Climate Group Emily Farnworth Chair of Steering Committee British Telecommunications Plc Chris Tuppen Cisco Systems Juan Carlos Castilla-Rubio Intel Robert Wright LG Alexander Grossmann Nokia Siemens Networks Juha-Erkki Mantyniemi T-Mobile Allison Murray Vodafone Plc Joaquim Croca Project Director Molly Webb, The Climate Group Independent Analysis McKinsey & Company Acknowledgements The report was developed independently on behalf of GeSI. Particular thanks to the members of the Steering Commitee and the editorial team, who helped develop and sustain the project. The analysis contained in this report would not have been possible without contributions from McKinsey, Jason Adcock and Anna da Costa, co-editing by Chris Tuppen and Juan Carlos Castilla- Rubio and editorial support from Flemmich Webb and Karen Anderton. Special thanks for the participation of individuals in the sponsoring companies (listed above) who were involved throughout the analysis. We are grateful to the experts we consulted for general guidance and to develop our regional case studies (Appendix 5) and also to the many others not listed who have supported along the way.
SMART 2020: Enabling the low carbon Support for the report economy in the information age 3 Support for the report This rigorous assessment underlines that the This report gives a clear picture of the key role world can realise a green economy and make that the ICT industry plays in addressing climate the transition to a low carbon economy. It also change globally and facilitating efficient and low underlines the crucial importance of the carbon development. The role of ICT not only international community reaching a deal on a includes emission reduction and energy savings new climate agreement at the climate convention in the ICT sector itself, but also benefits from the meeting in Copenhagen in 2009. This partnership adoption of ICT technologies to influence and between GeSI (convened under UNEP) and The transform the way our society works and the way Climate Group, with analytical support from people behave. By using our huge network and McKinsey, gives us yet another platform for over 400 million customers, China Mobile is doing action and yet another compelling reason for its best to promote this transformation and to reasoned optimism. Achim Steiner, UN Under- realise real sustainable development for human Secretary General and Executive Director, UN beings and the environment. Wang Jianzhou, Environment Programme (UNEP) Chief Executive, China Mobile Communications Corporation Nowhere is ICT’s vast potential more apparent than India where it is driving opportunity and Unlocking the universal potential of clean development and transforming our economy technology in the information systems sector is a and society. This important report makes clear critical step toward a low carbon future. Silicon the exciting opportunity that exists for industry Valley innovators and the growing support of to significantly contribute to climate change clean tech investors in California place the state in abatement, as well as expand into new markets. a unique position to lead the effort to combat Nandan Nilekani, Co-Chairman, Infosys global warming. Linda Adams, Secretary, Technologies Limited California Environmental Protection Agency The ICT industry has a very significant role to play in reducing greenhouse gas emissions, especially in a rapidly developing country such as China. Future development in China should not follow the wrong path taken by developed countries. Many industries can make use of modern ICT technology to move into higher efficiency low carbon markets. If we are to better use ICT technology to move away from existing energy- intensive work habits and lifestyles, we need government policy innovations, incentives for companies and the active participation of consumers. Tang Min, Deputy Secretary-General, China Development Research Foundation
SMART 2020: Enabling the low carbon Contents economy in the information age 5 Contents 06 Forewords 09 Report summary Chapter 1: 12 The time for change Chapter 2: 17 Taking direct action Chapter 3: 29 The enabling effect 29 Dematerialisation 32 SMART motor systems 36 SMART logistics 40 SMART buildings 45 SMART grids Chapter 4: 53 The SMART 2020 transformation Appendices 63 1: Scope, process and methodology 65 2: The direct impact assumptions 66 3: The enabling effect assumptions 75 4: Company commitments 79 5: Experts consulted and/or interviewed 83 6: Glossary
SMART 2020: Enabling the low carbon GeSI Foreword economy in the information age 6 Forewords A force for change 2. Put more emphasis on climate change issues The most recent results presented by climate in our supply chain work so we influence the scientists are alarming. The accumulation of end-to-end manufacturing process for greenhouse gases (GHG) in the atmosphere electronic equipment is growing faster than originally predicted. Scientists, economists and policy makers are 3. Ensure that energy and climate change matters calling for emissions targets of at least 20% are fully considered by the organisations that below 1990 levels in 2020. set the technical standards for our industry It is our responsibility to estimate the GHG emissions from the information and 4. Work with organisations in the key opportunity communications technology (ICT) industries areas – travel/transport, buildings, grids and and to develop opportunities for ICT to contribute industry systems – to help turn potential CO2 About GeSI to a more efficient economy. reductions into reality. This will include a strong GeSI (www.gesi.org) is an international “SMART 2020 – Enabling the low emphasis on the significant opportunities strategic partnership of ICT companies and industry associations committed to creating carbon economy in the information age” offered by dematerialisation and promoting technologies and practices presents the case for a future-oriented ICT that foster economic, environmental and social sustainability and drive economic industry to respond quickly to the challenge of 5. Work with public policy makers to ensure that growth and productivity. Formed in 2001, global warming. the right regulatory and fiscal frameworks are GeSI fosters global and open cooperation, informs the public of its members’ We now have evidence demonstrating in place to move us all in the right direction. voluntary actions to improve their that the ICT industry is a key player in creating a sustainability performance and promotes technologies that foster sustainable low carbon society and could do a lot more to help We will do this by involving appropriate partners development. It partners with the UNEP push the world in this direction by 2020. drawn from the business and NGO worlds. and the ITU. These partners help shape our global vision regarding the evolution The ICT sector’s own emissions are In particular we aim to continue our successful of the telecommunications sector and how expected to increase, in a business as usual (BAU) partnership with The Climate Group. We will we can best meet the challenges of sustainable development. scenario, from 0.53 billion tonnes (Gt) carbon also continue to work collaboratively with the dioxide equivalent (CO2e) in 2002 to 1.43 GtCO2e International Telecommunication Union (ITU) in 2020. But specific ICT opportunities identified and the World Business Council for Sustainable in this report can lead to emission reductions five Development (WBCSD). times the size of the sector’s own footprint, up to 7.8 GtCO2e, or 15% of total BAU emissions In conclusion by 2020. The ICT sector has both a profitable opportunity This report has identified many and a critical role to play with other sectors to opportunities for the ICT industry, to replace design and deploy solutions needed to create goods and services with virtual equivalents and a low carbon society. I urge you to review this to provide technology to enable energy efficiency. report and focus your efforts on improving The ICT sector must act quickly to demonstrate energy efficiencies wherever possible, to what is possible, get clear messages from policy collaborate with us in steering regulations to makers about targets and continue to innovate be more productive and to move boldly forward radically to reduce emissions. The publication with technologies to improve our global climate. of this report is not an end but a beginning and Acting now will be good for business, good for GeSI is committed to continue to work across the economy and good for the world. the industry as a force for change. In particular GeSI will: 1. Develop an agreed ICT industry-wide methodology for the carbon footprinting Luis Neves of ICT products and services Chair, GeSI
SMART 2020: Enabling the low carbon The Climate Group Foreword economy in the information age 7 The SMART solution Companies that implement the solutions will Putting a man on the moon was one of the capture part of the potential global savings of greatest technological challenges of the 20th ¤600 billion ($946.5 billion), once again showing century. In the 21st century we face an even that tackling climate change is not only good for greater test – tackling climate change. In contrast the climate but good for the economy. to the space race, the solutions required today Given the unpredictable nature must encompass us all. This is not just about one of technological innovation, there is always man walking on the moon, but about 7 or 8 billion uncertainty in estimating future impacts and this people, the population of 2020, living low carbon report has identified a number of hurdles that lifestyles in harmony with our climate. must be overcome if the large savings highlighted How can a mission of this size be are to be realised. Furthermore, the ICT sector will achieved? This report illustrates for the first have to focus on reducing its direct footprint as time the scale of the opportunity for ICT to drive the demand for its products and services grows. efficiency across the economy and deliver But this is the first time that the potential of ICT emission savings of 15% – 7.8 GtCO2e – of global to reduce emissions has been put on the same BAU emissions in 2020. plane as other climate change solutions, such as Recently, Lord Stern revised his targets carbon capture and storage (CCS). for safe levels of GHG emissions reductions to This sends a clear message to industry 2 tonnes per capita by 2050 (20 GtCO2e). The leaders and policy makers around the world that, ICT-enabled solutions in this report would make through collaboration, ICT solutions can unlock possible savings of 1 tonne per capita in 2020, emissions reductions on a dramatic scale. a significant step in the right direction. To get things moving forward, this When we started the analysis, we report launches our new SMART framework, expected to find that ICT could make our lives a guide for developing ICT solutions. Through ‘greener’ by making them more virtual – online standards, monitoring and accounting (SMA) shopping, teleworking and remote communication tools and rethinking (R) and optimising how all altering our behaviour. Although this is one we live and work, ICT could be one crucial piece important aspect of the ICT solution, the first and of the overall transformation (T) to a low most significant role for ICT is enabling efficiency. carbon economy. Consumers and businesses can’t The Climate Group, along with GeSI, About The Climate Group The Climate Group is an independent, manage what they can’t measure. ICT provides will be taking the report’s findings to the USA, not-for-profit organisation that works the solutions that enable us to ‘see’ our energy China, India and Europe to work with decision internationally with government and business leaders to advance climate change and emissions in real time and could provide the makers and leading companies to develop a set solutions and accelerate a low carbon means for optimising systems and processes to of scenarios – the vision – focused on how to turn economy. Its coalition of proactive leaders – from government, business and civil make them more efficient. Efficiency may not the ideas presented here into a global reality. society – has demonstrated that emissions sound as inspirational as a space race but, in the Putting a man on the moon was reductions, essential to stop climate change, can be achieved while boosting profitability short term, achieving efficiency savings equal to once thought impossible. The next “giant leap and competitiveness. More companies, 15% of global emissions is a radical proposition. for mankind” is within our reach, but only if states, regions and cities around the world are realising there are significant economic The breadth of solutions will span motor systems, we act now. as well as environmental advantages from logistics and transport, buildings and electricity taking decisive action now. The Climate Group was founded in 2004 and has offices grids – across all key economies in the world. in the UK, USA, China, India and Australia. Mature economies will be able to A European office is planned for 2008. upgrade and optimise entrenched systems and infrastructures. Developing countries could ‘leapfrog’ inefficient mechanisms and integrate state-of-the-art solutions into their Steve Howard evolving societies. CEO, The Climate Group
SMART 2020: Enabling the low carbon Report summary economy in the information age 9 Report summary 1 The Stern Review suggested that The ICT sector has transformed the way we live, Our analysis identifies some of the biggest and developed countries reduce emissions 20-40% below the 1990 levels would be work, learn and play. From mobile phones and most accessible opportunities for ICT to achieve a necessary interim target based on IPCC micro-computer chips to the internet, ICT has these savings. and Hadley Centre analysis. Source: Stern, N (2008), Key Elements of a Global Deal consistently delivered innovative products and on Climate Change, London School of services that are now an integral part of everyday •Smart motor systems: A review of Economics and Political Science, http:// www.lse.ac.uk/collections/climateNetwork/ life. ICT has systematically increased productivity manufacturing in China has identified that publications/KeyElementsOfAGlobalDeal_ and supported economic growth across both without optimisation, 10% of China’s emissions 30Apr08.pdf 2 developed and developing countries. But what (2% of global emissions) in 2020 will come from All currency conversions to US$ based on exchange rate ¤1=$ 1.57757, obtained impact do pervasive information and China’s motor systems alone and to improve at http://xe.com on 9th June 2008. communication technologies have on global industrial efficiency even by 10% would deliver 3 Exact figures: ¤553 billion ($872.3 billion) warming? Is it a sector that will hinder or help up to 200 million tonnes (Mt) CO2e savings. in energy and fuel saved and an additional ¤91 billion ($143.5 billion) in carbon saved, our fight against dangerous climate change? Applied globally, optimised motors and assuming a cost of carbon of ¤20/tonne, To answer these questions, this report industrial automation would reduce 0.97 GtCO2e for a total of ¤644 billion ($1,015 billion) savings. has quantified the direct emissions from ICT in 2020, worth ¤68 billion ($107.2 billion).4 4 All value figures here include a cost for products and services based on expected carbon of ¤20/tonne. See Appendix 3 for growth in the sector. It also looked at where ICT • Smart logistics: Through a host of efficiencies detailed assumptions. could enable significant reductions of emissions in transport and storage, smart logistics in in other sectors of the economy and has quantified Europe could deliver fuel, electricity and heating these in terms of CO2e emission savings and savings of 225 MtCO2e. The global emissions cost savings. savings from smart logistics in 2020 would reach Aside from emissions associated with 1.52 GtCO2e, with energy savings worth deforestation, the largest contribution to ¤280 billion ($441.7 billion). man-made GHG emissions comes from power generation and fuel used for transportation. • Smart buildings: A closer look at buildings in It is therefore not surprising that the biggest role North America indicates that better building ICTs could play is in helping to improve energy design, management and automation could save efficiency in power transmission and distribution 15% of North America’s buildings emissions. (T&D), in buildings and factories that demand Globally, smart buildings technologies would power and in the use of transportation to enable 1.68 GtCO2e of emissions savings, worth deliver goods. ¤216 billion ($340.8 billion). In total, ICTs could deliver approximately 7.8 GtCO2e of emissions savings • Smart grids: Reducing T&D losses in India’s in 2020. This represents 15% of emissions in 2020 power sector by 30% is possible through better based on a BAU estimation. It represents a monitoring and management of electricity significant proportion of the reductions below grids, first with smart meters and then by 1990 levels that scientists and economists integrating more advanced ICTs into the recommend by 2020 to avoid dangerous climate so-called energy internet. Smart grid change1 In economic terms, the ICT-enabled technologies were the largest opportunity energy efficiency translates into approximately found in the study and could globally reduce ¤600 billion ($946.5 billion2) of cost savings.3 2.03 GtCO2e , worth ¤79 billion ($124.6 billion). It is an opportunity that cannot be overlooked.
SMART 2020: Enabling the low carbon Report summary economy in the information age 10 While the sector plans to significantly step up the energy efficiency of its products and services, ICT’s largest influence will be by enabling energy efficiencies in other sectors, an opportunity that could deliver carbon savings five times larger than the total emissions from the entire ICT sector in 2020. These are not easy wins. There are policy, market This is the opportunity the ICT sector has in the 5 The scope of this analysis includes whole life emissions from PCs and peripherals, and behavioural hurdles that need to be overcome fight against climate change. But it does come at data centres, telecoms networks and to deliver the savings possible. For example, a cost. Emissions from the sector are estimated devices. Chinese factory managers find it difficult to stop to rise significantly over the coming years – from producing long enough to implement more 0.5 GtCO2e today to 1.4 GtCO2e in 2020 under efficient industrial processes because they risk BAU growth.5 This growth assumes that the sector losing revenue and competitiveness. will continue to make the impressive advances Logistics efficiency is hampered by in energy efficiency that it has done previously. fragmentation in the market, which makes it However, meeting the sheer scale of demand for difficult to coordinate across the sector to achieve products and necessary supporting services in economies of scale. Even with the latest emerging markets such as China and India and technologies implemented, buildings are only continuing to deliver the services to increase efficient if managed properly. In India, there is no productivity growth in the developed world will coordinated national roadmap for smart grid effectively outweigh the adoption of the current implementation and more needs to be done to wave of efficiency benefits per product or service. build the cross-functional and cross-sectoral There is also the possibility that the speed of capabilities needed to design and implement introduction and the impact of new ICT innovative business and operating models and technology or the mass adoption of social deliver new technology solutions. networking could cut carbon emissions in ways In addition to the savings possible by currently impossible to predict. supporting other sectors to become more energy While the sector plans to significantly efficient, there are also potential energy savings step up the energy efficiency of its products and from dematerialisation or substitution – replacing services , ICT’s largest influence will be by high carbon physical products and activities (such enabling energy efficiencies in other sectors, as books and meetings) with virtual low carbon an opportunity that could deliver carbon savings equivalents (e-commerce/e-government and five times larger than the total emissions from the advanced videoconferencing). Our study indicates entire ICT sector in 2020. that using technology to dematerialise the way we work and operate across public and private sectors Getting SMART could deliver a reduction of 500 MtCO2e in 2020 The scale of emissions reductions that could be – the equivalent of the total ICT footprint in 2002, enabled by the smart integration of ICT into new or just under the emissions of the UK in 2007. ways of operating, living, working, learning and However, these solutions would need to be more travelling makes the sector a key player in the widely implemented than they are today to realise fight against climate change, despite its own their full abatement potential. growing carbon footprint. No other sector can
SMART 2020: Enabling the low carbon Report summary economy in the information age 11 supply technology capabilities so integral to that drive low carbon alternatives can be energy efficiency across such a range of other developed and diffused at scale across all sectors sectors or industries. of the economy. But with this potential comes The ICT sector can’t act in isolation if it responsibility. Emissions reductions in other is to seize its opportunity to tackle climate change. sectors will not simply present themselves; the It will need the help of governments and other ICT sector must demonstrate leadership on climate industries. Smart implementation of ICTs will change and governments must provide the require policy support including standards optimum regulatory context. This report outlines implementation, secure communication of the key actions needed. information within and between sectors and These actions can be summarised as the financing for research and pilot projects. SMART transformation. The challenge of climate This report demonstrates the potential change presents an opportunity for ICT to first role the ICT sector could play in mitigating standardise (S) how energy consumption and climate change. It is now up to policy makers, emissions information can be traced across industry leaders and the sector itself to make different processes beyond the ICT sector’s own sure this potential is realised. The stakes couldn’t products and services. It can monitor (M) energy be higher. consumption and emissions across the economy in real time, providing the data needed to optimise for energy efficiency. Network tools can be developed that allow accountability (A) for energy consumption and emissions alongside other key business priorities. This information can be used to rethink (R) how we should live, learn, play and work in a low carbon economy, initially by optimising efficiency, but also by providing viable low cost alternatives to high carbon activities. Although isolated efficiency gains do have an impact, ultimately it will be a platform – or a set of technologies and architectures – working coherently together, that will have the greatest impact. It is through this enabling platform that transformation (T) of the economy will occur, when standardisation, monitoring, accounting, optimisation and the business models
SMART 2020: Enabling the low carbon The time for change economy in the information age. 01/12 01: The time for change The science would incur a wider range of risks and impacts 6 Pachauri, R.K. and A. Reisinger (eds.) (2007) Climate Change 2007: Synthesis As stated in the Intergovernmental Panel on and the estimates of damage could rise to 20% Report. Contribution of Working Groups I, Climate Change’s (IPCC) 2007 Synthesis Report: of global GDP or more. In contrast, the costs II and III to the Fourth Assessment Report of the Intergovernmental Panel on Climate “Warming of the climate system is unequivocal, of action – reducing GHG emissions to avoid Change, IPCC, Geneva, Switzerland. as is now evident from observations of increases the worst impacts of climate change – 7 McKinsey analysis for this report, based in global average air and ocean temperatures, can be limited to around 1% of global GDP on IPCC (2007), Fourth Assessment Report and International Energy Agency (IEA) widespread melting of snow and ice and rising each year. (2007), World Energy Outlook. global average sea level.”6 The review predicts that failure to act 8 Recent analysis suggests that 450ppm may The global warming debate has now today and in the future could cause possibly be too high and that we should be aiming to reduce emissions more quickly: King D. and shifted from whether or not man-made climate irreversible economic and social disruption G. Walker (2008), The Hot Topic: How to change is occurring to what atmospheric levels “on a scale similar to those associated with the Tackle Global Warming and Still Keep the Lights On; Hansen J., M. Sato, P. Kharecha, of GHG are “safe” and what can be done to great wars and the economic depression of the D. Beerling., V. Masson-Delmotte, prevent them from exceeding this threshold. first half of the 20th century”. M. Pagani, M. Raymo, D. Royer and J. Zachos (2008); Target Atmospheric CO2: Current BAU scenarios predict that Lord Stern has recently joined Where Should Humanity Aim?, http://www. global emissions will rise from 40 GtCO2e scientists in outlining the worsening nature columbia.edu/~jeh1/2008/ TargetCO2_20080331.pdf (referred to as both “carbon” and “GHG” of the problem. His report on the economics 9 Stern, N (2006), Executive Summary, emissions in this report) emitted each year in of climate change should have issued a bleaker Stern Review on the Economics of Climate 2002 to nearly 53 GtCO2e annually by 2020.7 warning when it was published 18 months Change, HM Treasury. Current atmospheric GHG levels stand at 430 ago, he said recently, “We underestimated the 10 Harvey, F and J. Pickard, “Stern takes bleaker view on warming”, Financial parts per million (ppm) and are rising at risks... we underestimated the damage Times, 17 April 2008, http://www.ft.com/ approximately 2.5ppm every year, leading us associated with the temperature increases... cms/s/0/d3e78456-0bde-11dd-9840- 0000779fd2ac.html?nclick_check=1 beyond levels of 450-500 ppm (roughly twice and we underestimated the probabilities of 11 Stern, N. (2008), Key Elements of a Global pre-industrial levels). temperature increases.”10 Deal on Climate Change, London School of The specific figures for what can be Society currently needs to reduce Economics and Political Science, http:// www.lse.ac.uk/collections/climateNetwork/ considered “safe” are not universally accepted8 emissions to about 20 GtCO2e per year by publications/KeyElementsOfAGlobalDeal_ and will continue to be debated as new 2050, according to Stern, about two tonnes per 30Apr08.pdf information becomes available. Whichever person in 2050. Given that the current underlying benchmark is used, the magnitude of cuts rate of decrease in carbon intensity, defined as required will be challenging. tonnes of carbon dioxide equivalent (tCO2e)/ GDP, is 1% per year and that the world The economics economy continues to grow by 3-4% per year, Former UK Government and World Bank carbon emissions will continue to grow at Chief Economist Lord Stern, author of the 2-3% per year under a BAU scenario. So to Stern Review,9 makes it clear that to ignore reduce emissions by 20 GtCO2e per year, as rising carbon emissions that will result in recommended by Stern, implies that a dramatic dangerous climate change now will damage change is needed in production and economic growth in the future. According to consumption profile.11 the report, if no action is taken, the overall costs Both policy makers and industry must and risks of climate change will be equivalent to initiate the rapid implementation of climate losing at least 5% of global gross domestic product solutions before average global temperatures (GDP) each year. Not acting now move beyond a “tipping point” of no return.
SMART 2020: Enabling the low carbon The time for change economy in the information age 01/13 12 EU Spring Summit, Brussels The political response wealth. A number of studies have linked the (March 2007). 13 Thirty-four countries have signed up to the growth of ICT to global GDP growth and UK Climate Change Bill (April 2008). 14 legally binding Kyoto Protocol, the agreement globalisation. One analysis16 suggests that a third Germany’s Integrated Energy and Climate Programme (December 2007). negotiated via the United Nations Framework of the economic growth in the Organisation for 15 China’s 11th Five -Year Economic Plan, Convention on Climate Change (UNFCCC), which Economic Cooperation and Development (OECD) www.gov.cn/english/special/115y_index. sets a target for average global carbon emissions countries between 1970 and 1990 was due to htm 16 reductions of 5.4% relative to 1990 levels by access to fixed-line telecoms networks alone, Roeller, Lars H. and L. Waverman (2001), ‘Telecommunications Infrastructure 2012. Discussions for a post-2012 agreement which lowered transaction costs and helped firms and Economic Growth: A Simultaneous are currently underway. to access new markets. Approach’, American Economic Review, Volume 91, Number 4, pp. 909-23. Individual regions and countries have Globally, the ICT sector contributed 17 Analysis includes data from Global Insight also developed their own targets. In 2007, the 16% of GDP growth from 2002 to 2007 and (www.globalinsight.com). European Union (EU) announced a 20% emissions the sector itself has increased its share of GDP 18 Waverman, L., M. Meschi and M. Fuss reduction target compared to 1990 levels by 2020 worldwide from 5.8 to 7.3%. The ICT sector’s (2005) The Impact of Telecoms on Economic Growth in Developing Countries, Africa: The and will increase this to 30% if there is an share of the economy is predicted to jump Impact of Mobile Phones, Vodafone Policy international agreement post-2012.12 The UK is further to 8.7% of GDP growth worldwide from Paper Series 2. 19 aiming for a reduction of 60% below 1990 levels 2007 to 2020.17 Eggleston K., R. Jensen and R. Zeckhauser (2002) ,‘Information and by 2050, with an interim target of about half In low income countries, an average Communication Technologies, Markets and that.13 Germany is aiming for a 40% cut below of 10 more mobile phone users per 100 people Economic Development’, Discussion Papers Series, 0203, Department of Economics, 1990 levels by 2020,14 while Norway will become was found to stimulate a per capita GDP growth Tufts University. carbon neutral by 2050. California’s climate of 0.59%.18 In China, improved communication 20 Jensen R. (2007), ‘The Digital Provide: change legislation, known as AB 32, commits the has helped increase wealth by driving down Information (Technology), Market Performance and Welfare in the South state to 80% reductions below 1990 levels by commodity prices, coordinating markets and Indian Fisheries sector’, Quarterly Journal 2050. China’s latest five-year plan (2006-2010) improving business efficiency.19 In Kerala, India, of Economics, cited in: Economist, To do with the Price of Fish, 10 May 2007, http:// contains 20% energy efficiency improvement the introduction of mobile phones contributed www.economist.com/finance/displaystory. targets15 to try to reduce the impact of recent fuel on average to an 8% rise in fishermen’s profits cfm?story_id=9149142. 21 shortages on its economic growth. and a 4% fall in consumer prices.20 Member companies of GeSI: Alcatel-Lucent, Bell Canada, British As governments across the world wake Telecommunications Plc, Cisco Systems, up to the urgency of rising temperatures, they Deutsche Telekom AG, Ericsson, European Telecommunication Network Operators are increasingly focusing on how business is Scope, process and methodology Association (ETNO), France Telecom, Fujitsu responding to both reduce their carbon footprints The study was undertaken by a unique Siemens Computers, Hewlett-Packard, Intel, KPN, Motorola, Microsoft, Nokia, and to develop and supply the required partnership between not-for-profit Nokia Siemens Networks, Nortel, Sun innovations for a low carbon world. organisation The Climate Group and ICT sector Microsystems, Telecom Italia, Telefónica SA, US Telecom Association, Verizon, Vodafone group GeSI.21 The supporting analysis was Plc. What does this mean for business? conducted independently by international Associate members: Carbon Disclosure Companies must adapt quickly to the political, management consultants McKinsey & Project (CDP), WWF. social, economic and fiscal drive towards a global Company. Input was provided by GeSI member Supporting organisations: ITU, Telecommunication Development Bureau, low carbon economy. Businesses that can turn this companies and the global experts consulted for UNEP Division of Technology, Industry and challenge into an opportunity, by developing each of the case studies. Economics. business models to enable adoption of low carbon The combined knowledge and solutions, will be in a stronger position to mitigate experience of this group has enabled us to rising carbon emissions and adapt to a world identify and quantify specific ICT impacts dealing with the impacts of climate change. and opportunities, in the context of carbon A radical approach is required that incorporates emission savings and potential economic different ways of thinking, living, working, value. In addition, the analysis drew on playing, doing business and developing solutions. additional data from the ICT companies Action is no longer an option; it has become an involved in the study. It estimated the likely urgent necessity. growth of the ICT sector’s carbon footprint and, more importantly, the carbon emissions What does this mean for the ICT sector? savings and business opportunities that are The terms “the new economy”, “the knowledge possible when ICT is deployed across the economy” and “the information society” all refer economy. A detailed methodology can be to the world’s increasing reliance on ICT to provide found in Appendix 1. services and solutions that ultimately generate
SMART 2020: Enabling the low carbon The time for change economy in the information age 01/14 This demonstrates that the ICT sector continues In order to approach the second and third 22 IEA (2008), Worldwide Trends in Energy Use and Efficiency: Key Insights from IEA to play a vital role in the growth of the global questions, it was important to know which sectors Indicator Analysis, IEA/OECD, Paris. economy and international development. are responsible for producing the highest levels of As the imperative to develop zero carbon growth carbon emissions and therefore where ICT might solutions becomes stronger, society needs to enable reductions. Of the total emissions from lower emissions while continuing to serve the human activity in 2002, 24% was from the power needs of people in emerging economies, to sector, 23% from industry, 17% from agriculture develop poverty reduction schemes and enable and waste management, 14% from land use, multiple sectors across the world. What, 14% from transport and 8% from buildings. therefore, are the next steps for ICT? Could Taking another view of the same data – at the it apply its creativity and skills to help reduce point where electricity is consumed and fuel is carbon emissions by massively enabling used – sharpens the focus further. In 2005, efficiency or behaviour change? How big an manufacturing was 33% of end-use energy impact could it have? And how will that affect consumption, transport was 26% and households its carbon footprint? 29% (other services and construction made up the final 12%).22 The SMART way The findings of the analysis are highly In order to understand and compare the direct illuminating. Because of its pervasiveness, ICT impact of ICT products and services and its is a key, though often unrecognised enabling enabling role in climate change solutions, the infrastructure in the global economy. The sector analysis set out to answer three main questions: can enable smart development opportunities for CO2e reductions and participate in the new 1. What is the direct carbon footprint of the sources of value of low or zero carbon solutions ICT sector? markets at the same time as restricting the growth 2. What are the quantifiable emissions reductions of its own carbon footprint. that can be enabled through ICT applications in Even as the sector tackles its own other sectors of the economy? carbon footprint, the need to mitigate climate 3. What are the new market opportunities for ICT change presents opportunities for ICT to deliver and other sectors associated with realising these low carbon energy efficiency solutions. The sector reductions? has a unique ability to make energy consumption and GHG emissions visible through its products Because of growth in demand for its products and and services. Radical transformation of services, mainly from emerging economies and infrastructure is possible only if it is known where the rapid adoption in the developed world, the inefficiency occurs throughout the processes and ICT sector’s own carbon footprint is likely to grow workflows of various sectors in the economy. under BAU conditions to 1.4 GtCO2e by 2020, ICT can provide the data, which can be used to three times what it was in 2002. Chapter 2 looks change behaviours, processes, capabilities and at the reasons for this growth and assesses what systems. Although isolated efficiency gains do can be done to reduce it and the hurdles that have an impact, ultimately it will be a platform – need to be overcome for the sector to attain or a set of technologies – working coherently maximum efficiency. together that will have the greatest impact.
SMART 2020: Enabling the low carbon The time for change economy in the information age 01/15 Fig. 1 ICT impact: The global footprint and the enabling effect GtCO2e Emissions ICT footprint Selected ICT-enabled abatements ther abatements† O 2002 40.0 ICT 0.5 2020 51.9 ICT 1.4 BAU -14.1* - 7.8 Five times Abatements ICT’s direct footprint 2020 with 30† abatements * For example, avoided deforestation, wind power or biofuels. † 21.9 GtCO2e abatements were identified in the McKinsey abatement cost curve and from estimates in this study. Source: Enkvist P., T. Naucler and J. Rosander (2007), ‘A Cost Curve for Greenhouse Gas Reduction’, The McKinsey Quarterly, Number 1. This report has identified global emissions In Chapter 3, the report looks at five of the most reductions of 7.8 GtCO2e in 2020, five times its important “levers” or mitigation opportunities: own footprint (Fig.1). dematerialisation; smart motor systems in China; smart logistics in Europe; smart buildings in North The ICT sector can enable emission reductions America; and smart grids in India. It considers the in a number of ways: impact of ICT on local and global emissions, where ICT could have the most influence on emissions • Standardise: ICT can provide information in reductions, current markets, regulatory context standard forms on energy consumption and and hurdles that need to be overcome if its emissions, across sectors potential to reduce emissions is to be realised. • Monitor: ICT can incorporate monitoring In parallel with the ICT reducing its information into the design and control for own carbon footprint, governments need to do energy use more to create a fiscal and regulatory • Account: ICT can provide the capabilities and environment that will encourage faster and more platforms to improve accountability of energy widespread adoption of ICT. Crucially, new and carbon partnerships between governments and the • Rethink: ICT can offer innovations that private sector are required. Chapter 4 develops capture energy efficiency opportunities a framework for understanding the enabling across buildings/homes, transport, power, opportunity of ICT solutions. manufacturing and other infrastructure and provide alternatives to current ways of operating, learning, living, working and travelling • Transform: ICT can apply smart and integrated approaches to energy management of systems and processes, including benefits from both automation and behaviour change and develop alternatives to high carbon activities, across all sectors of the economy.
SMART 2020: Enabling the low carbon Taking direct action economy in the information age 02/17 02: Taking direct action 23 Gartner, Green IT: The New Industry In 2007, analyst Gartner released the statistic that developments outlined in the rest of the chapter Shockwave, presentation at Symposium/ ITXPO conference, April 2007. the ICT sector was responsible for 2% of global are implemented, this figure looks set to grow at 24 Of course a range of figures are possible, carbon emissions23 and this figure has since been 6% each year until 2020. The carbon generated but the report took a BAU scenario with the widely cited. The analysis conducted for this from materials and manufacture is about one best information available from companies and public sources. See Appendix 1 for report came to similar conclusions. This chapter quarter of the overall ICT footprint, the rest detailed methodology and Appendix 2 for sets out in some detail how today’s 2% figure was coming from its use (Fig. 2.1). the direct footprint assumptions. calculated and the assumptions behind the Although there is expected growth in 25 CIA (2007): World Factbook website, https://www.cia.gov/library/publications/ growth in emissions expected in 2020, taking into mature developed markets, the most significant the-world-factbook/print/ch.html account likely efficient technology developments growth is attributable to increasing demand for that affect the power consumption of products ICT in developing countries (Fig. 2.2). Just one and services, or their expected penetration in the in 10 people owns a PC in China today; by 2020, market in 2020. Not all technology developments that will rise to seven in 10, comparable to current can be predicted and therefore further possible ownership rates in the US. In just 12 years’ time, abatements are discussed, but not calculated. The one in two Chinese people will own a mobile chapter concludes with a brief section on what phone and half of all households will be more could be done. connected by broadband. It will be a similar In 2007, the total footprint of the ICT story in India. By 2020, almost a third of the sector – including personal computers (PCs) and global population will own a PC (currently one peripherals, telecoms networks and devices and in 50), 50% will own a mobile phone and one in data centres – was 830 MtCO2e, about 2% of the 20 households will have a broadband estimated total emissions from human activity connection.24 Considering that the populations released that year. Even if the efficient technology of China and India are currently 1.3 billion25 and Fig. 2.1 The global ICT footprint* GtCO2e Embodied carbon Footprint from use 2002 0.11 0.41 0.43 0.53 2% of total footprint 2007 0.18 0.64 0.83 2020 0.35 1.08 1.43 CAGR† +6% *ICT includes PCs, telecoms networks and devices, printers and data centres. † Compounded annual growth rate.
SMART 2020: Enabling the low carbon Taking direct action economy in the information age 02/18 1.1 billion respectively,26 that consumption measures, data centres will grow faster than any 26 Ibid. in the Indian economy is expected to quadruple other ICT technology, driven by the need for 27 McKinsey Global Institute in the next four years and that the middle class storage, computing and other information China Consumer Demand Model, V2.0. in China is expected to grow to over 80% of the technology (IT) services. Though the telecoms population by 2020,27 these are potentially footprint continues to grow, it represents a smaller huge growth areas. share of the total ICT carbon footprint in 2020 as By 2020, when a large fraction of efficiency measures balance growth and as data developing countries’ populations (up to 70% centres rise to take a larger share of the total in China) will be able to afford ICT devices and (Fig. 2.3). will have caught up with developed countries’ The analysis below took a deeper look ownership levels, they will account for more than at three main areas of the direct footprint: PCs 60% of ICT’s carbon emissions (compared to less and peripherals, data centres, telecoms networks than half today), driven largely by growth in and devices, outlined below. Appendix 1 provides mobile networks and PCs. But these are not the more information about what was included in the fastest-growing elements of the footprint. Despite scope of the analysis and Appendix 2 outlines the first-generation virtualisation and other efficiency assumptions behind each in more detail. Fig. 2.2 The global ICT footprint by geography % of GtCO2e RoW* ther O China industrialised EiT† countries OECD Europe 2002 17 18 11 13 16 25 % of 0.53 US and Canada 2007 23 23 12 10 14 20 % of 0.83 2020 27 29 10 7 12 14 % of 1.43 CAGR 9 9 6 3 4 3 % *RoW = Rest of the world. (includes India, Brazil, South Africa, Indonesia and Egypt) †EiT = Economies in transition. (includes Russia and non-OECD Eastern European countries) Fig. 2.3 The global footprint by subsector Emissions by geography % of GtCO2e T elecoms infrastructure and devices Data centres PCs, peripherals and printers* 2002 28 14 57 % of 0.53 2007 37 14 49 % of 0.83 2020 25 18 57 % of 1.43 CAGR 5 7 5 % *Printers were 11% of the total ICT footprint in 2002, 8% in 2007 and will be 12% in 2020.
SMART 2020: Enabling the low carbon Taking direct action economy in the information age 02/19 Fig. 3.1 The global footprint of PCs – desktops and laptops GtCO2e 2002 0.2 0.2 Embodied U se Growth along 0.3 1.2 1.5 A Increased number of PCs from current trends 592 million to 4067 million* B 0.23% pa increase in power consumed† and Change in power 0 decrease from 15W standby consumption C S witch in form factor from 84% desktops to 74% laptops and desktop monitors from 90% CRT to 100% LCD Impacts of expected 0.1 1.0 1.1 technology developments 0.2 0.5 0.6 2020 BAU * Based on Gartner estimates until 2011 and trend extrapolation to 2020. †Based on McManus, T. (2002), Moore’s Law and PC Power, presentation to Tulane Engineering Forum. 28 Printers were included in the overall PCs and peripherals are expected to compensate for the increase in analysis of the ICT footprint, but are not broken down further in this section. In the developed world today, PCs (workstations, PC computing demand, represented by Row B, 29 Analysis includes data from Shiffler, desktops and laptops) are almost as ubiquitous so that overall power consumption is not expected G III. (2007), Forecast: PC Installed Base in people’s homes as televisions (TVs). This is not to grow. Worldwide, 2003-2011, Gartner. yet the case in the developing world, but the However, two major technology explosion in the number of internet cafés developments are expected by 2020. First, the demonstrates that the demand is there. desktop PCs that dominate today’s market (84%) Growing middle classes in emerging economies, will be largely replaced by laptops if adoption whose newfound wealth will allow them to start materialises as forecasted – by 2020, 74% of all buying PCs at developed country rates, will PCs in use will be laptops. Second, all cathode ray substantially increase the global carbon footprint tube (CRT) screens will be replaced by low energy of these technologies. alternatives, such as liquid crystal display (LCD) In 2002, the PC and monitors’ screens, by 2020. These two factors explain the combined carbon footprint28 was 200 MtCO2e reduction in carbon footprint in Row C. and this is expected to triple by 2020 to Taking Rows A, B and C together shows 600 MtCO2e – a growth rate of 5% per annum that the 2020 footprint will rise to three times the (pa) (Fig. 3.1). emissions in 2002.29 By 2020, laptops will have overtaken Calculating the PC footprint in 2020 desktops as the main source of emissions The number of PCs globally is expected to (Fig. 3.2) and will make up the largest portion increase from 592 million in 2002 to more than (22%) of the global ICT carbon footprint. four billion in 2020. Row A of Fig. 3.1. shows the Desktops with LCD monitors will represent 20% expected footprint if this growth used today’s of the total ICT footprint in 2020, an increase of PC technology. Since 1986, the power demand 16% since 2002. for PCs has only increased at 0.23% pa, a low rate considering there has been a 45% pa improvement Reducing PC emissions further in computational power. This success has been To reduce the total carbon emissions of PCs achieved by the exploitation of multi-core predicted for 2020 to below 2002 levels would processors and more efficient power supply units. require a 95% efficiency improvement in the By 2020, further advances in power management overall impact from PCs. This cannot only be
SMART 2020: Enabling the low carbon Taking direct action economy in the information age 02/20 Fig. 3.2 Composition of the PC footprint MtCO2e 2% 2002 6% 2020 100% = 247 100% = 643 MtCO2e MtCO2e L aptops D esktops with (6 MtCO2e) CRT monitors D esktops with 91% (0 MtCO2e) 52% 48% LCD monitors L aptops (16 MtCO2e) (333 MtCO2e) D esktops with D esktops with CRT monitors LCD monitors (226 MtCO2e) (309 MtCO2e) Desktops with CRT monitors represented Laptops will represent 22% of the total ICT 44% of the total ICT footprint (91% of 49%). footprint (52% of 42%). Desktops with LCD monitors and laptops Desktops with LCD monitors will represent represented 4% of the total ICT footprint 20% of the total ICT footprint (48% of 42%). (8% of 49%). Fig. 4.1 The global data centre footprint MtCO2e Embodied 2002 76 U se A Increased number of servers and Growth along 349 their necessary power and cooling current trends from 18 million to 122 million* B No increase in power consumption Power 0 due to new generation technologies consumption across server classes† C S avings from expected adoption Impacts of expected of measures (27% efficiency due technology 166 to virtualisation and 18% due to developments smart cooling and broad operating temperature envelope) 2020 259 BAU *Based on IDC estimates until 2011 and trend extrapolation to 2020, excluding virtualisation. †Power consumption per server kept constant over time.
SMART 2020: Enabling the low carbon Taking direct action economy in the information age 02/21 30 This category includes blade servers. achieved by a combination of increased energy collection of servers, storage devices, network 31 Assessments based on data made efficiency and longer product life alone, but will equipment, power supplies, fans and other available by GeSI companies for the purposes of this report. necessitate changes comparable in scale to that cooling equipment – which provide information 32 The net zero increase shown in Row B enabled by the shift from desktops to laptops. at our fingertips, supplying business, government, is due to the adoption of volume servers There could also be breakthrough academia and consumers around the world. that incorporate technologies such as multi-core/multi-threading microprocessors technologies around the corner that would In 2002, the global data centre with more sophisticated power-state transform how PCs use energy. Examples include footprint, including equipment use and embodied sensing and management. Additionally, the rapid adoption of newer processor micro- solid state hard drives, which could reduce energy carbon, was 76 MtCO2e and this is expected to architectures has refreshed the installed consumption by up to 50%, choleristic LCD more than triple by 2020 to 259 MtCO2e – making base of servers with a more power-efficient silicon transistor technology. screens that reduce monitor energy consumption it the fastest-growing contributor to the ICT 33 IDC analysis predicts 83 million servers by up to 80% and direct methanol fuel cells that sector’s carbon footprint, at 7% pa in relative will be needed in 2020 if virtualisation can deliver 20% savings for power supplies. terms (Fig. 4.1). effects are included. Other areas of research such as quantum and optical computing could also have a Calculating the data centre footprint in 2020 substantial impact. These have not been factored If growth continues in line with demand, the into the carbon emission calculations because world will be using 122 million servers in 2020, their impact within the timeframe is uncertain. up from 18 million today. In addition to this 9% pa increase in server numbers, there will be a shift Data centres from high-end servers (mainframes) to volume In the “information age” there is a vast amount servers,30 the least expensive kind of server that of data that is stored and instantly made available can handle much of the computational needs of upon request. Users of these data range from businesses. Row A of Fig. 4.1 shows the increase companies complying with the recent Sarbanes– in footprint that would be expected by simply Oxley accounting data legislation to consumers scaling up today’s data centre technology without watching YouTube videos, to the processing and the application of virtualisation technologies in storage capabilities required for climate change data centres. modelling. This has led to a vast increase in the Power consumption differs by server number of data centres – buildings that house a type but, like PCs, no increase in overall Fig. 4.2 Composition of data centre footprint Global data centre emissions % 2002 2020 100% = 76 17% 100% = 259 18% MtCO2e MtCO2e 36% olume servers V olume servers V (27 MtCO2e) (136 MtCO2e) 52% Cooling systems Cooling systems (24 MtCO2e) (70 MtCO2e) 21% Power systems 32% Power systems (13 MtCO2e) (62 MtCO2e) Mid-range servers Storage systems (5 MtCO2e) (18 MtCO2e) 7% 6% Storage systems 5% 3% High-end servers (4 MtCO2e) (5 MtCO2e) High-end servers Mid-range servers 1% 1% (2 MtCO2e) (2 MtCO2e) Volume servers represented 5% of the total Volume servers will represent 9% of the ICT footprint (36% of 14%). total ICT footprint (52% of 18%). Data centre cooling systems represented 4% Data centre cooling systems will represent of the total ICT footprint (32% of 14%). 4% of the total ICT footprint (21% of 18%).
SMART 2020: Enabling the low carbon Taking direct action economy in the information age 02/22 consumption is expected in the coming years, down the air conditioning. Similarly, in climates 34 Estimates based on Koomey, J.G. (2007), Estimated Total Power Consumption in spite of increased processing demand.31 where the outside temperature allows, simply by Servers in the U.S. and the World, This is due mainly to new technologies in all directing external air into the data centre can save http://enterprise.amd.com/Downloads/ svrpwrusecompletefinal.pdf. types of servers32 and explains the net zero cooling costs for much of the year. By allowing the 35 Uptime Institute and McKinsey & change in Row B. temperature of the data centre to fluctuate along Company (2008), Revolutionizing Data A major trend driving down the overall a broader operating temperature range, a 24% Center Efficiency—Key Analyses, http:// uptimeinstitute.org/content/view/168/57 growth in the footprint of data centres (Row C) is reduction in energy consumption from cooling is virtualisation – pooling assets such as computing possible. Distributing low voltage direct current and storage where utilisation is low, so they can (DC) into the data centre would eliminate the be used across the enterprise and beyond. need for mechanical back-up, uninterruptible Virtualisation represents a radical rethinking power supply units. of how to deliver the services of data centres, By 2020, the net footprint for data pooling resources that are underutilised and centres is predicted to be 259 MtCO2e. At this could reduce emissions by 27% – equivalent to point, volume servers will represent more than 111 MtCO2e.33 Technologies are also available to 50% of the data centre footprint (174 MtCO2e) detect where within the data centre temperatures and cooling systems for data centres alone will are running high and to direct cooling to those amount to 4% of the total ICT footprint (Fig. 4.2). areas thus delivering a 12% reduction in cooling costs. By 2020, the analysis predicted that these Reducing data centre emissions further measures could achieve an approximate 18% Additional emission reductions not included in reduction (55 MtCO2e) in consumption. the current 2020 BAU scenario are possible. Only about half of the energy used by Complete adoption of the cooling technologies data centres powers the servers and storage; the noted above would result in additional savings rest is needed to run back-up, uninterruptible of 65 MtCO2e in 2020. power supplies (5%) and cooling systems (45%).34 Higher adoption rates of virtualisation There are a number of ways to reduce this energy architectures and low energy cooling would help overhead, some of which are expected to be achieve step changes in efficiency. Current adopted by 2020. The simplest way is to turn utilisation rates of servers, storage and other Fig. 5 Global telecoms footprint (devices and infrastructure) Global telecoms emissions % 2002 2020 100% = 151 12% 100% = 349 15% 20% MtCO2e MtCO2e obile M 42% M obile (66 MtCO2e) (179 MtCO2e) Fixed narrowband 91% F ixed narrowband 14% (64 MtCO2e) (70 MtCO2e) Telecom devices 43% Telecom devices (18 MtCO2e) (51 MtCO2e) Fixed broadband F ixed broadband 51% (4 MtCO2e) (49 MtCO2e) 3% Mobile phones represented 3% of the total Mobile phones will represent 1% of the ICT footprint (11% of 30%). total ICT footprint (6% of 25%) Fixed broadband represented 1% of the Mobile networks will represent 13% of the total ICT footprint (3% of 30%). total ICT footprint (51% of 25%) Fixed broadband will represent 4% of the total ICT footprint (14% of 25%)
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