Investments in information and communication technologies (ICT) are set to double by 2020 across the European Union, to match consumers' ever-growing hunger for online services. But this also comes at a cost for the environment in terms of electricity consumption and carbon dioxide emissions. The European Commission is now openly asking itself whether the industry should be regulated.
Information and communication technologies (ICT) are becoming a pervasive element of everyday life, with companies and consumers demanding ever-faster information and online systems.
A new problem has emerged as a result - the sustainability of ICT itself is becoming a greater concern with the sector's emissions now comparable to those of the aviation sector, which have been regulated at EU level.
If no action is taken, the ICT sector’s own carbon dioxide emissions are expected to increase, from 530 million tonnes CO2 equivalent in 2002 to 1.43 billion in 2020, according to a report by the Global e-Sustainability Initiative (GeSI), a consortium of leading global ICT companies.
At the same, the report notes that ICT companies can also enable energy savings in other sectors like transport, industry and buildings, with a potential for reducing carbon emissions by 15% by 2020. The European Commission has recognised this, with research in ICTs due to increase by 46% under the EU's seven-year research programme, Horizon 2020.
ICT companies have also taken voluntary measures to reduce their carbon footprint and cut their energy bills.
The main question policymakers are now asking themselves is whether voluntary actions are enough or whether specific legislation needs to be adopted for the industry.
Voluntary steps may not be sufficient
So far, ICT companies have been voluntarily developing initiatives to reduce their carbon footprint while boosting their image as part of corporate social responsibility programmes, notes the Organisation for Economic Co-operation and Development.
Top ICT companies have voluntarily committed to significant cuts in CO2 emissions, with reduction targets of up to 80% for BT, 50% for Vodafone and 49% for Nokia Siemens.
"But nobody knows the way they calculate their energy consumption," an industry expert told EurActiv, preferring to remain anonymous.
The European Commission first encouraged the ICT industry to commit to targets for reducing its carbon emissions. In 2009, it published a recommendation on mobilising the sector to facilitate the transition to a low-carbon economy. The document included a call on the ICT sector to set efficiency targets by 2011 with the aim of reducing its energy consumption by more than 20% by 2015. Progress was to be monitored on an annual basis.
It is now asking itself whether this is sufficient. “Do we leave it to the industry to regulate or will the Commission regulate?”, said Colette Maloney, head of the unit ICT for Sustainable Growth at the European Commission.
In 2013, the EU executive is planning to launch a working group that will analyse whether there is a need to regulate the entire ICT sector for its environmental performance.
This has sent alarm bells ringing among big players in the sector. While they generally support an EU-wide regulatory framework, as well as targets, they claim that “too prescriptive measures to reach that target” can harm Europe's competitiveness against Asia or the US.
Policymakers say they are aware of the challenges but seem to believe some sort of regulatory framework is needed. "That may mean light regulation or less light regulation and there are ongoing discussions at the moment in order to get that balance right," said Philip Lowe, director general at the Commission's energy department.
Certifications and audit schemes
The ICT sector's carbon footprint has in fact been under watch for some time.
One of the first initiatives taken by the Commission was to launch an EU certification system, the Eco-Management and Audit Scheme (EMAS), which has been in place since 2001 and has already been reviewed twice.
The scheme is voluntary, but many companies have signed up to be granted a green certification by the European Commission's auditing body.
EMAS is used as a management tool for companies and other organisations to evaluate, report and improve their environmental performance. It is also one of the 'green auditing' tools most used by the ICT sector. The number of sites taking up EMAS since 2004 has doubled, from 3,901 to 8,174 in 2012. The number of organisations using the audit scheme has also risen, albeit not as sharply, from 3,055 in 2004 to 4,581 in 2012.
If the evaluation is positive, companies can proudly flag their certification to their customers through marketing and advertising means.
A top ranking in energy-efficiency indexes also helps organisations establish themselves as leaders in the industry and thus gain the respect of clients.
“We manage our enterprise in a sustainable way. We decided not just to do another project or a programme, but instead we launched a new sustainability strategy and we fully incorporated it into our business strategy. That's the way to improve yourself and to be respected by your customer,” said Matthias Göttler, vice president of the Green IT division of global software company SAP.
In 2010, SAP was ranked first in the Dow Jones Sustainability Index for the fourth consecutive year.
“When we approach our customers they believe we can really help them. That is the first key: point if you want to help the society or the enterprises you need to set an example,” Göttler said.
Enabling emissions reductions
ICTs are also part of the solution when it comes to support the transition to a low-carbon economy.
Widespread use of intelligent devices and applications could reduce global CO2 emissions by as much as 15% by 2020, according to estimates by consulting firm McKinsey.
"ICT is the enabler for a carbon-free society," said Stephen Gomersall, director and Group Chairman for Europe at Hitachi, speaking at a conference on smart energy and sustainable ICT. "The IT component is the core of such solutions," he said.
Some of the low-carbon solutions enabled by ICTs include:
- Switch gears, sensors, heat-pumps, data servers, software and control systems, smart metering systems as well as railway management systems – the last having a double effect, as it enables, at the same time, a shift from cars to rail;
- Flexible management and control systems for smart grids, on which many of today's 'smart' technologies depend;
- Energy-saving solutions for manufacturing processes, which, as the most energy-hungry businesses, represent about 30% of Europe's primary energy consumption.
A study published by the European Commission in 2009, ICT and Energy Efficiency – The Case for Manufacturing, compiled a list of recommendations for ICT deployment activities over 2009-2015 and a summary of ICT R&D needs for manufacturing over 2015-2020. Savings of up to 65% can be reasonably expected in industrial processes, the report said.
“It is expected that the proposed measures will help manufacturing to move away from the dominating economic paradigm of 'maximum gain with minimum capital investment' towards a more sustainable paradigm of 'maximum added value from a minimum of resources',” the study reads.
ICT also plays a key role in enabling cities' move to a more intelligent use of energy. This can be done through more energy-efficient buildings, transport, street lighting and the rest of associated products. But the challenge in switching to smart cities will be integrating ICT in the electricity grid. At the moment, this integration is poor and the existing energy grid infrastructure is 50 years old.
Urban areas consume 70% of the EU’s energy, while about 1% of the entire region’s GDP goes towards congestion costs.
To encourage innovation, the Commission offers co-financing for smart cities projects. In fact, the European Commission announced a new €365 million a year innovation partnership scheme aimed at boosting the development of ‘smart’ technologies in cities on 10 July 2012. For 2013, €365 million in EU funds have been earmarked for the development of urban technology.
The European Innovation Partnership (EIP) will see private business and the EU executive pool research from energy, transport and ICT to develop a limited number of approved projects.
Examples of mooted projects included electric city buses that use digital technology, satellite technology aimed at improving traffic flow, a smartphone application for reserving alternative fuel rental vehicles, and fast charging mechanisms for electric vehicles.
Whilst ICTs can enable energy savings, the energy consumption of electric consumer products has long raised policymaker's attention.
The Ecodesign Directive, adopted in 2005, sets rules for the energy-efficient design of products such as computers, hairdryers, fridges or office equipment.
Computer servers, together with data storage equipment and four other groups of products, have made the Commission’s “priority list” for the Ecodesign Directive because of their “significant” energy savings potential. The Commission said the combined energy savings of these products would amount to 1,157 TWh per year by 2030 - twice the total annual energy consumption in Sweden.
The Ecodesign Directive is complemented by a series of other laws or agreements:
- Two voluntary agreements on imaging equipment and complex set-top boxes, which were proposed by the industry and accepted by the European Commission. Ismo Grönroos-Saikkala, team leader for eco-design at the Commission's energy directorate, said these were going to save some 14 kwh by 2020, "which, in the whole picture, is important”.
- The energy-labelling directive, which helps the industry measure its environmental footprint. This law provides an opportunity for industry to market their products and provides consumers with a tool to compare the energy efficiency of electric and electronic appliances.
- The Energy Star voluntary energy efficiency programme, which is estimated to save some 30kWh by 2020. The Energy Star programme focuses on office equipment and voluntary agreements between countries and manufacturers.
- The Eco-label, which it grants to products which are performing the best from an environmental point of view.
Up to now, EU standards have tended to focus on individual consumer products or equipment which can be regulated under the Ecodesign Directive.
But with cloud computing becoming more widespread, the energy consumption of data centres is also raising concerns.
The European Commission announced that it will launch a preparatory study around 2014 that will analyse what type of requirements would make sense to reduce energy consumption of data centres.
"We need to work together with stakeholders, because alone we cannot do much," Grönroos-Saikkala said. If the study identifies shortcomings that cannot be resolved through voluntary agreements from the industry, then the EU executive will act to set laws before 2017.
Big players in the cloud computing business - like Microsoft, Google, Facebook and Amazon - could lead the industry by opening the discussion on data centre efficiency. Microsoft pledged to go carbon neutral by July 2012 across its departments, and Google has created incentives to save as much energy as possible in the power management and cooling of data centres that store servers.
An investment of €19,000 in energy-saving design generates returns of €50,000 per year, Google said. But cooling data centres is not the top priority for these companies which see energy-efficient methods of power conversion as holding the biggest potential for energy savings.
ICT companies are also keen to demonstrate their green credentials by making their own buildings greener.
Information technologies play a pivotal role in making buildings more efficient. For example, ICT is the main component of intelligent control systems for more energy-efficient heat pumps and motors. Wireless sensors, also based on ICT parts, can significantly reduce electricity use by automatically controlling lighting systems. They can also be used to optimise electric ventilation and air conditioning.
The most modern buildings can even become net producers of energy. “We are in a situation where connectivity and transformative ICT solutions can turn buildings into net producers of renewable energy and eliminate the need for physical products and activities,” said Luís Neves, chairman of the Global e-Sustainability Initiative.
However, much remains to be done to encourage consumers to adopt the technologies. A study commissioned by the United Kingdom's Department of Energy and Climate Change recently revealed that over half the population is unaware of the existence of smart meters.
Over 51% of the 2,396 energy bill-payers interviewed by the Ipsos Mori research team in Britain said they had never heard of smart meters. Only one in four said they knew at least a fair amount about the meters, 24% had heard of them but knew nothing about them, while just 2% claimed to know "a great deal".
The study came amid plans to roll-out smart meters in all of Britain's 30 million households from 2014 to 2019.
Neelie Kroes, EU commissioner for the Digital Agenda, believes there should be more synergies between the telecommunications sector and other sectors of the economy such as energy and water infrastructure management for example.
“If we got better at allowing access, reusing and sharing assets it could cut the cost of high-speed broadband networks. And remember that without those networks, we couldn't get started on smart grids or smart cities in the first place,” Kroes said. She called these synergies “irreversible”, but said that those who will acknowledge that and think ahead will be the “winners of tomorrow”. “Stagnation is not an option and we should skip that from our vocabulary,” she added.
Philip Lowe, director general at the European Commission's energy department, underlined the potential synergies between the ICT and the energy sectors, citing demand-response systems such as smart meters as an example.
“A fundamental principle of every functioning market is information – timely information, which is relevant to decisions that are taken by producers and consumers. That is where that fundamental synergy is going to work substantially between the ICT sector and energy sector,” Lowe said. “If we want to achieve that low carbon economy goal we need to make substantially better use of our energy – 30 to 40% improvements,” he said.
"Green ICT has become more important in companies, but industry must work in a more joined up way, that is the challenge," said Colette Maloney, head of unit 'ICT for Sustainable Growth' at the European Commission. "Many companies have been pioneers in studies the industry uses, but we will still need some regulation for the whole society," she added. “We talk about smart grids and smart cities, but how do we really get sustainable smart grids and sustainable smart cities?”, Maloney said. "That's the challenge we are facing today”.
Speaking about the voluntary actions that information and telecommunication companies are already taking to reduce their carbon footprint John Higgins, of ICT industry consortium Digital Europe said: “People in our industry really do care about the impact that they have. As people are buying more and more services, not only products, the duty of the industry is to help them choose more 'efficiently'."
"'Stopping' growth needs innovative ideas from producers," said Jean-Philippe Vanot of Orange, referring to the Commission's intention to maybe regulate the ICT industry in the future, said: “To consume just the energy we need, at the level we need is still hard. We need innovation”.
Stephen Gomersall, director and group chairman for Europe at Hitachi, said Innovation in the European ICT sector was crucial if Europe is to maintain its competitiveness on the global market. "ICT is the enabler of the low-carbon revolution," he said. “It's in the interest of international companies to invest in Europe, because Europe is still a standard setter and therefore success in the European market will strengthen our global business.”
However, Gemorsall warned that excessive regulation will make Europe less competitive on the global market, with Asia and the US becoming more and more innovative. “It's better not to impose EU legislation, but encourage natural competitiveness,” Gomersall said. “But Europe must not look at itself as an island," he added. "Very large experiments and investments are going on in Asia and competitiveness for European companies in those markets is also essential."
Mickael Bäck, of telecom company Ericsson, said that much of the increase in energy-efficiency solutions has been driven by competition, not by regulation. “Energy efficiency is going hand in hand with the services our customers ask us for,” Bäck said.
This view is not shared among the NGO community, however. Edouard Toulouse, of the European Environmental Citizens Organisation for Standardisation, said only regulation will force substantial change in the industry: "If they know they will be regulated, it puts more pressure on [industry] to go green".
Kirsty Macdonald, senior energy policy manager at Intel Corporation, said tremendous efforts have already been made to improve the efficiency of data centres. “We’ve taken major strides in improving data centre energy efficiency through the EU Code of Conduct for Data Centres, the Green Grid and vigorous competition in the marketplace. This is recognised in the Commission’s working plan study.”
BEUC, the European Consumers Organisation, focused its criticisms on the delays in regulating new products under the Ecodesign Directive. “Another example of the failure of Ecodesign to tackle ICT products are computers. Although they were already in the 2005 transitional list of products, industry has successfully prevented the adoption of any mandatory requirements. And the Voluntary Agreements on imaging equipment and TV-decoders concluded by the ICT industry under article 8 of the Ecodesign Directive have been nothing more than a series of delays and a disappointing list of exemptions.”
A study on the evaluation of the effectiveness of the Ecodesign directive by the UK-based Centre for Strategy and Evaluation Services (CSES) says: “The inadequacy of Commission resources for participation in implementing processes is clearly a major cause of delay and a very significant constraint on the whole Ecodesign system. By way of comparison, staffing levels in the USA are in the region of 10 times the number of desk officers in the Commission. Even in China, there are about 70 staff and more than 40 product regulations. There is a similar disparity in terms of resources devoted to the necessary studies.”
- April 2006: Directive on Energy End-Use Efficiency and Energy Services adopted. Member states indicate their intention to use the energy saving potential of ICT in their National Energy Efficiency Action Plans (NEEAPs)
- March 2007: Member states committed to the objective of reducing 20% of the EU's energy consumption by 2020 compared to 2005 levels
- 13 April 2008: European Commission communication called 'Addressing the challenge of energy efficiency through Information and Communication Technologies"
- 9 Oct. 2009: European Commission recommendation on 'mobilising Information and Communications Technologies to facilitate the transition to an energy-efficient, low-carbon economy'
- 26 Aug. 2010: European Commission communication, 'A Digital Agenda for Europe'
- Feb. 2012: Computer servers, together with data storage equipment and four other groups of products are included in the second Working Plan of the Ecodesign Directive, having already been put on the European Commission’s “priority list”
- 2014: Commission expected to launch preparatory studies to regulate the environmental footprint and energy efficiency of data centres
- By 2015: ICT sector expected to reduce its energy consumption by more than 20%