Digitalisation: a risk and an opportunity for climate action

• Growing use of digital technologies is contributing to rising energy and resource consumption but offers opportunities for action on climate change
• Greenhouse gas emissions from digitalisation in Germany currently estimated to be at least 34 million t CO2e per year
• Working from home delivers limited climate benefits
• Sustainable configuration of information and communication technology is crucial to achieving climate neutrality

Digitalisation is both a risk and an opportunity for climate action. Digital technologies play a key role in the energy, transport and heating transition. At the same time, information and communication technology (ICT) itself is increasingly contributing to the rising global energy and resource consumption and to the emission of greenhouse gases that harm the climate. This is the key finding of a study conducted by the Oeko-Institut (Institute for Applied Ecology) and the Institute for Futures Studies and Technology Assessment (IZT) on behalf of KfW Research. It examined the reciprocal effects between the two megatrends of digitalisation and climate neutrality.

The study found that digital technologies are considered to be of great importance in the climate-friendly conversion of energy supply, industry, transport and housing, for example in the integration of renewables into the electricity supply system, in the use of smart measuring and control technology for harnessing energy efficiency potentials in buildings and production, and in the reduction of greenhouse gas emissions from transport through the increased use of videoconferencing. But the growing use of digital devices in businesses and households and the use of computer centres and data transmission networks are themselves leading to an increase in energy consumption. In Germany, for example, the use of digital technologies currently consumes approx. 45 to 50 TWh of electricity annually, a share of 8% to 9% of total electricity consumed in the year 2019. Greenhouse gas emissions from digitalisation in Germany are currently estimated to be at least 34 million t CO2e per year, roughly as much as the total GHG emissions of the federal state of Rhineland Palatinate. This footprint is caused not just by the use of digital devices and infrastructure but also by their production.

Working from home also generates a mixed carbon footprint. The study revealed that mobile working is not per se more climate friendly than working on-site but depends on the ICT devices being used at home, the room where the work is done, and the mode of commute being substituted. The lower the energy consumption of the devices used, the lower the number of rooms needing additional heating and the lower the frequency of private commutes to the office, the greater the potential greenhouse gas reductions. An individual working from home thus generates a carbon footprint of 95 kg to 443 kg per year, depending on the devices and home working arrangements in place. Even with a high share of teleworking, significant long-term GHG reductions on the employer’s side are not to be expected unless it scales down existing workplace infrastructures.

Dr Fritzi Köhler-Geib, Chief Economist of KfW, commented: “Successful digital transformation in the business community is of enormous importance for Germany’s future competitiveness. Germany aims to become climate-neutral by 2045, so the drive to digitalisation must take climate change concerns into consideration from the start. This requires policy guidelines for harnessing the opportunities of digitalisation – for example, incentives for the automated flexibilisation of electricity demand in line with supply fluctuations of wind and solar power. In addition, market incentives for reducing greenhouse gas emissions driven by digital technologies are also still too weak.”

Important approaches to lowering digital greenhouse gas emissions include making ICT devices and computer centres more energy-efficient, extending the useful life of ICT devices, pushing ahead with the circular economy in ICT, developing efficient software and using electricity from renewables to power ICT infrastructure.

The full study and an analysis by KfW Research on the main findings are available for download at:
www.kfw.de/focus