- More emissions than meet the eye: Even without taking into account the cryptocurrency boom, the global ICT sector emits as much greenhouse gases as the aviation sector. The information and communications technologies (ICT) sector drives economic growth, enables digital transformation, fosters innovation and promotes global collaboration and connectivity. But these benefits come at a cost: ICT’s share of global greenhouse-gas emissions ranged between 1.8 to 2.8% in 2020. In a business-as-usual scenario, assuming the emission-intensity of electricity used remains unchanged, the ICT sector would be responsible for 830 MT of CO2 emissions by 2030. And this is before taking into account the boom in cryptocurrencies, such as Bitcoin and Ethereum, which consume up to 240 terawatt-hours of electricity annually, more than the yearly electricity consumption of Australia.
- The good news is that decarbonization prospects are better in the ICT sector. Its carbon footprint heavily depends on the electricity mix, so emissions are likely to decline steadily with the increasing share of renewable electricity and the improving energy-efficiency of appliances. Many mobile operators and other ICT industries have also set carbon-neutrality and net-zero targets that are aligned with the 1.5°C decarbonisation pathway, which will also contribute to keep electricity consumption and carbon emissions in check.[1] The remaining emissions could be brought down by optimizing the product life cycle, i.e. assessing material selection, design choices, manufacturing and transportation.
- Decarbonizing cryptocurrency should be top of the agenda, but blockchain can also play a key role in climate action. Bitcoin mining is diverting electricity from other priorities such as the electrification of buildings, transportation and manufacturing. Moreover, even though switching to renewables has the potential to slash GHG emissions, this cannot be done quickly enough if energy demand keeps rising, which could slow the phase-out of fossil-fuel power plants. Some countries, such as China, have taken drastic measures and banned Bitcoin but this seems to have only driven miners underground: China is still the world’s second-largest Bitcoin miner after the US. [2],[3] Less drastic measures could also foster emission reductions through technological advancements. At the same time, blockchain can be used to help to build trust and ambition in climate negotiations by providing an interoperable and open-source digital infrastructure that could enable transparent measurement, reporting and tracking of Nationally Determined Contributions (NDCs[4]). Moreover, given its transparency and accessibility, blockchain can also help build a framework for a trustworthy and scalable Voluntary Carbon Market (VCM) to trade carbon credits.
- Policymakers will have to spur changes in consumer behaviour to decarbonize the ICT sector further. The majority of emissions come from user devices and it is unlikely that consumer behaviour will change drastically towards using fewer devices in the future. In fact, quite the opposite is likely. This means these changes would have to be mandated top-down through regulations or incentives.
Authors
Markus Zimmer
Allianz SE
Allianz SE
Arne Holzhausen
Allianz SE
Allianz SE