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Tackling Climate Change

At present the ICT sector contributes two per cent of global greenhouse gas emissions. The figure seems low but the sector’s will grow over the next ten years. Molly Webb, ICT project director for The Climate Group, argues it would be better to put measures for reducing emissions in place now while the problem is manageable.

The global discussion on green IT gathered momentum in 2007 when ICT analyst Gartner announced that the information and communications technologies (ICT) sector contributes two per cent of global greenhouse gas emissions. The recent study SMART 2020: Enabling the low carbon economy in the information age came to the same conclusion about today’s figures, and looking out to 2020, saw that the global market penetration of PCs, data centres, telecoms networks and devices would cause the emissions to double in real terms under business as usual assumptions.

But the discussion doesn’t stop at the two per cent. The tantalising side of the story is ‘the other 98 per cent’, a landscape of greenhouse gases emitted from industry, transport, buildings, agriculture and so on. To some companies in the ICT sector, this landscape is a vista of opportunity, where an emissions “reducer” would also be an economic winner.

There would be even more at stake if global governments adopt a price for carbon as is widely expected. What is the nature of the link between ICT and climate change solutions? How can ICT apply itself to reducing not only its own growing emissions, but to the emissions of other sectors? What would be the value at stake for companies that took on this opportunity?

These are the questions at the heart of the SMART 2020 project, and though a complete answer will only become clear over time, ways in which ICT could play a role in the transformation to a low or zero carbon society are beginning to be charted.  We stand at a point approximately 300 years into a riveting story that links humans to their environment, and as Dickens might remind us, it is both the best and the worst of times. While economic growth has brought prosperity and improvement in the standard of living of many, scientists point to a problem on a massive scale – the warming of the planet due to the presence of increasing amounts of greenhouse gases in the atmosphere – which now threatens economic growth.  Consensus is growing globally that something must be done to break human societies’ dependence on fossil fuel, but it will not be an easy habit to break.

Since 1712, when the first steam engine began to burn coal, the industrial revolution has progressed rapidly, based on the combustion of fossil fuels in ever-increasing amounts. In fact, all the efficiency and productivity gained through advances in technology continues to drive the use of more and more energy. It is a cycle that modern societies have not succeeded in breaking.

But this story is not only about dependence on fuel. It is also about how we communicate.  One hundred and fifty years into our story, in 1876, Alexander Graham Bell succeeded in transmitting voice over wires, inventing the telephone. Since then, telecommunications and collaborative technologies can’t seem to grow fast enough. In the 1970s, the microprocessor allowed personal computing to become cheap and therefore mainstream, starting the trend that by 2020 will most likely see seven out of ten people in China owning a PC.

In 1990, Tim Berners-Lee successfully linked two machines using http, now the main way we connect to and browse the internet. The 1990s also brought the second generation of mobile phone standards, with Nokia launching its first digital handheld GSM phone in 1992. By 2020, some seven billion accounts (mobile and fixed line) will be supported by the global telecommunications industry.

As the ripples of the industrial and communications revolutions widen, more people are brought into both contributing to the problem of climate change and (potentially) to being part of the solutions. ICT is now such an integral part of everyday life that, in developed countries at least, it tends to be taken for granted. Whether it is providing the technology that underpins stock markets, the design of buildings and cities or the optimisation of logistics networks, ICT is a critical component of any economy and its adoption has been shown to contribute to growth in GDP.

It is clear that a shift in how we deliver growth and development needs to come quickly because climate change will be too costly to ignore. The Stern Review states that if no action is taken “the overall costs and risks of climate change will be equivalent to losing at least five per cent of global GDP each year, now and forever,” compared to one per cent if action is taken now. ICT is implicated in the growth of economies but the report found it can also help reduce emissions.  In the last three years of our 300 year story, climate change has become a household phrase, billions of dollars, euro, yen and yuan have been invested in ‘clean tech’, and nongovernmental organisations have set out to demonstrate that what’s good for business is also good for the environment.

While some companies still treat this as a communications or reputational issue, it is becoming more common – especially as energy costs soar – for companies to look hard at their own products and operations. The ICT sector is no exception. Reducing energy and waste in their operations can also reduce costs. Better data centre design, innovations in storage and cooling or smart chargers for devices are already within reach. A number of companies are joining initiatives such as the Green Grid, which focuses on data centre best practice, or the Climate Savers Computing initiative, which more than 20 companies have joined in an effort to reduce computer power consumption by 50 per cent in 2010. In the USA, Environmental Protection Agency’s Climate Leaders government-industry partnership helps companies develop comprehensive climate change strategies, and its ‘Energy Star Program’ recently turned its attention to set-top boxes.

A glance at the climate change commitments from companies shows just how much activity is beginning in this space. The first step is always to understand where emissions are occurring in operations and products, and to disclose that publicly. Companies who aren’t already reporting, like Alcatel Lucent, are beginning to commit to doing so. Dell even expects its primary suppliers should report on their GHG emissions.

The next step is to set targets. In spite of the growth of the sector, which will be providing billions of people with connectivity in the years to come, expectations are high that the sector can ‘decouple’ its growth in products and services from growth in energy consumption. Already we know that even as computing power doubles every 18 months, the energy consumption does not increase at the same rate. But overall, the industry is growing so fast that a doubling of the sector’s emissions (0.83 Gt CO2 today to 1.4 Gt in 2020) is expected under business as usual.  Keeping those emissions down will involve going beyond the predicted efficiencies in the industry. Company commitments in this space will be interesting to watch. Motorola will reduce the average no-load power consumption of its mobile phones by another 50 per cent by the end of 2010. Ericsson aims to improve the energy efficiency of WCDMA RBS by 20 per cent from 2006 to the end of 2008, and Nokia Siemens Networks will reduce the energy consumption of typical WCDMA RBS by 40 per cent by 2010 from end-2007 level of 500W.

Companies looking at both products and operations are able to make comprehensive targets. Hewlett-Packard is aiming to reduce the combined energy consumption and associated GHG emissions of its operations and products to 25 per cent below 2005 levels, by 2010. Vodafone will reduce absolute CO2 emissions by 50 per cent against the 2006/07 footprint baseline, by 2020. BT’s target to reduce UK CO2 emissions in absolute terms by 80 per cent below 1996 levels by December 2016 is ambitious enough, but it has gone further. Its Climate Stabilisation Index (CSI) proposes a new way to measure the company’s impact that ties it to company growth; BT will reduce the worldwide CO2 emissions per unit of BT’s contribution to GDP by 80 per cent from 1996 levels, by 2020.

How are these targets met? Efficiency is one obvious area of focus, but companies really serious about reducing their footprint are going two steps further. First, they are using their own collaborative technologies to reduce the emissions from transport and buildings, as Sun Microsoft does by committing to maintain over 50 per cent of employees in a flexible work programme, which includes partial and full time work from home. In 2006, Sun’s ‘Open Work’ programme included 17,000 employees and saved the company $64m in real estate, $24m in IT infrastructure (through the use of Sun Ray thin clients) and 30,000 tonnes in carbon from reduced commuting and reduced building energy use.

Second, most of the emissions from ICT company operations, products and services come from electricity, either to power the manufacturing process or to power the networks and devices in use. If telecommunications companies in particular can reduce their own consumption of dirty sources of power, this leads to cost and emissions savings.  British Telecom, which consumes 0.7 per cent of the UK’s electricity, is investing in 250 MW of wind power with the aim of providing 25 per cent of their own consumption from wind by 2016. Deutsche Telekom will source 100 per cent of German electricity demand from renewable sources (water/wind/biomass) from 2008. Dell is striving for 100 per cent renewable in their operations as well.  Targeting their emerging market operations, FT Group are looking for ways to source 25 per cent of electricity consumption in Africa (EMEA) from solar by 2015.

All this helps reduce the company’s footprint in the short term, but also contributes to the viability of a shift from fossil fuel based energy production. Google’s ambitious pledge to make renewable cheaper than coal in the near term (RESMART 2020 found that 15 per cent of global emissions under business as usual assumptions could be saved in 2020, if a number of technology sets are scaled up. These include efficiency in logistics, buildings, power and industry. How much they can be scaled was based on discussions with experts and examination of historic trends. Fifteen per cent of global emissions in 2020 is estimated to be 7.8 billion tonnes CO2e – about one tonne per person in 2020, and five times the ICT sector’s own footprint in 2020.Dematerialisation – or replacing goods and services with digital equivalents – is the focus of most studies by the industry. Video conferencing, telecommuting, e-billing, replacing DVDs or CDs with online media were all examined. Together, the analysis showed that these improvements made up six per cent of the total global opportunity for ICT companies.  This is not an insignificant number, as it amounts to about 500 million tonnes of CO2 reductions, the size of the emissions from a country like the UK. However, scaling up these solutions remains a challenge.Telecommuting may be possible across a certain percentage of Europe’s workforce, for example, but not across China’s manufacturing sector. The more efficient an economy already is, such as Japan’s, the smaller the impact of teleworking. These and other constraints mean that dematerialization solutions that exist today and are likely to be rolled out at scale in the next 12 years will not have as big an impact on emissions as efficiency measures in the short term. However, dematerialization remains an area of interest for many companies who see the opportunity to apply their technologies creatively in ways that may continue to surprise us.The transformation that the industry could drive using their skills to lead the way in enabling low-carbon solutions across the economy is a huge economic opportunity as well. The value at stake from the four opportunities looked at in depth was close to Eur600bn at December 2007 fuel prices, so this figure would likely be much larger if electricity and fuel costs continue to rise. A price for carbon, likely to be implemented in the coming years, would make this figure even higher.  The report looked in depth at four opportunities for ICT-driven efficiency.Smart motors: A review of manufacturing in China has identified that without optimisation, ten per cent of China’s emissions (two per cent of global emissions) in 2020 will come from China’s motor systems alone and to improve industrial efficiency even by ten per cent would deliver up to 200 million tonnes (Mt) CO2 savings.  Applied globally, optimised motors and industrial automation would reduce .97 GtCO2 in 2020, worth Eur68bn ($107.2bn).Smart logistics: Through a host of efficiencies in transport and storage, smart logistics in Europe could deliver fuel, electricity and heating savings of 225 MtCO2. The global emissions savings from smart logistics in 2020 would reach 1.52 GtCO2, with energy savings worth Eur280bn ($441.7bn).Smart buildings: A closer look at buildings in North America indicates that through better building design, management and automation 15 per cent of North America’s buildings emissions could be saved. Globally, smart buildings technologies would enable 1.68 GtCO2 of emissions savings, worth Eur216bn ($340.8bn).Smart grid: Reducing T&D losses in India’s power sector by 30 per cent is possible through better monitoring and management of electricity grids, first with smart meters and then through integrating more advanced ICTs into the so-called energy internet. Smart grid technologies were the largest opportunity found in the study, and could globally reduce 2.03 GtCO2, worth Eur79bn ($124.6bn).In all cases above, ICT first makes energy consumption visible. No other sector has the opportunity to provide the much needed standard and repeatable tools and methods to measure and monitor energy consumption in real time. Companies in all sectors need ways to be accountable for their emissions. IBM recently launched a supply chain focused product that allows customers to optimise their supply chains based on carbon or other business priorities, just one announcement from their Big Green Innovations programme that develops products for a low carbon society.  Beyond monitoring and feedback devices that automate efficiency or allow people to change their behaviour, the sector can develop ways to optimise for efficiency. Freight exchange platforms in logistics, energy modelling in building design or automated meter reading to reduce power consumption are all examples of how energy efficiency can be achieved.Where abatement opportunities exist in transport, supply chain, industrial processes or smart buildings, market opportunities for ICT products and services are wide open.  Some of these opportunities are already the focus for software and IT applications, but not to the extent that they are needed. The report identified a number of informational, policy, market and technology barriers to each of the four solutions above. Not surprisingly, though some technologies do exist – such as smart meters – but linking them together to deliver large scale reductions is still a challenge.  SMART stands for standards, monitoring, accountability, rethink and transform. It is an approach for reducing emissions across the economy that can be taken by telecoms and IT companies, and a guide for government support of those activities.As human to human communication increases, the lessons learned from the standards and protocols that make that communication possible are being applied to machines. There are five machines for every person on the planet, and ‘The internet of things’ will connect them.  Which of the overwhelming number of applications we can imagine arising from this level of connectivity will actually be developed is an open question. What governments and companies alike need to consider is how to develop this connectivity into a smart infrastructure that allows energy to be reduced systematically.  There is no one standard in the machine to machine space, but some initiatives are underway, such as M2MXML.The real opportunities lie in rethinking the way we currently live and work and scaling those up to transform our current infrastructure.  This will of course require technological expertise, but also individual and institutional behaviour change, open innovation models, and new partnerships between sectors. There will likely be disruptions along the way, but this is nothing new for the ICT sector.  Some ICT companies are beginning to step out of what is currently their core business and look into these new areas. Commitments in the enabling space are tougher to find, probably because companies are still holding the business development ideas close to their chests. But they are looking for are the standards & protocols that would allow them to develop new business models for the home, office, factory or vehicle fleet.R&D investments also point to where companies see opportunities. As part of Clinton Global Initiative (CGI) commitment, Cisco will invest at least $20m in remote collaboration technology to reduce carbon emissions from air travel by ten per cent (against a 2006 baseline) as well as $15m in the Connected Urban Development initiative, to create replicable templates for sustainable urban infrastructure development considering urban planning, built environment, transport and energy solutions to reduce carbon emissions from cities.Three hundred years brought us to everincreasing emissions, and we only have about another ten years to reverse that trend. A SMART transformation can start with companies that take the work they are doing on their own products and apply them elsewhere. Or it can come from a longer-term strategic exercise to identify the demands of the low-carbon economy, and tailor products and services to that. All approaches and experiments will be welcome.