Digitalization: No Automatic Solution for Climate Protection

New studies have raised doubts about the potential of digitization with regard to reducing CO2 emissions. Especially in the field of mobility, the connection is extremely complex, warned researchers from the Leibniz Center for European Economic Research (ZEW) in Mannheim in a very comprehensive study in cooperation with the Borderstep Institute, which also examined specific areas in detail, such as the digitalized production of e-cars at eGO, Tesla, or VW's MEB. Many studies on the climate effects of digitization are produced with relatively little effort and based on weak assumptions, "without considering the complex system connections," criticize the ZEW scientists. Politics must devise fundamental rules here, sustainability and climate protection must become the "mainstream of digitization."

"Our society should by now be past the phase where it allows large industries and climate-damaging mass phenomena to emerge thoughtlessly," warn the researchers.

Business trips: Routine only broke with Corona

A much-discussed topic during the Corona crisis was the factor of business trips. Although the technology has been around for many years, the number of trips increased by 30 percent between 2004 and 2019, according to the ZEW study. The physical impossibility due to the pandemic only broke this trend and helped the theoretically existing technical possibilities to break through or break with old routines. Currently, even frequent business travelers consider every third business trip unnecessary.

"It can hardly be clearer that only a clear impetus through regulations makes win-win situations recognizable and unlocks their ecological and economic potential," state the ZEW scientists.

Their demand: decisive politics are needed to tap the potentials of digitization for climate protection. As an example, the researchers cited the tax benefits for company cars, which have been debated for years and are questionable.

Home office is environmentally friendly? Yes, but!

The increased reliance on home office during the pandemic only leads to positive climate effects at first glance. While commuting is eliminated, the issue is more complex, according to the ZEW, because business trips often serve other purposes, such as school runs or caring for relatives. An accompanying survey also showed that only a quarter of respondents expect to have to drive less in the future. For half, it remains the same, and one-fifth even predict they will have to be on the move more.

"The home office is a new technical-social possibility, and its increased use deeply affects daily routines," the researchers state.

In November 2020, only about 23 percent of employees were satisfied with working from home, while this figure rose to about 43 percent in June 2021, the researchers continue.

"Regular work from home changes mobility behavior in everyday life, affects housing demands, and creates the possibility that even more people than ever might choose to live far from their workplace. A flood of rebound effects could follow increased work from home," warn the researchers.

As desirable as more home office might be for a good work-life balance, the overall impact of these diverse changes on climate protection is difficult to quantify, according to the conclusion. Since nearly 70 percent of employees want to work from home two to five days a week, it is "of great importance to realistically assess the effects on climate protection," the researchers believe.

Rebound effects: Instead of analogically on the virtual space

Another factor of the greatly increased use of digital devices and data connections (information and communication technologies, ICT) was that the devices were replaced faster and more frequently, absolutely more in use, and the data volume steadily increased. This, in turn, requires an elaborate infrastructure, and networks as well as server centers drive emissions. For example, a tablet needs ten times more energy in the data center than at the end user. The end-user often calls for high resolutions, although these are hardly effective on small devices. And the biggest factor is also the manufacture of the devices, with 80 to 90 percent not taking place in Germany. Overall, the CO2 balance is therefore not good. 

"ICT products often exhibit so-called rebound effects. This means that although the products are becoming increasingly efficient, the improvement in efficiency leads to increased use of the products. When used correctly, digitization can help significantly reduce the consumption of energy and natural resources," states the Borderstep Institute. 

Digitization in production: The more software, the better?

The authors around ZEW scientists Janna Axenbeck and Thomas Niebel empirically analyzed the climate protection potentials of a digitized production for the first time, i.e., the connection between the use of digital technologies and the improvement of energy intensity in companies. The necessity for sustainable business practices and the use of digital technologies have increased significantly in recent years. Furthermore, there is a general assumption that digital technologies lead to energy efficiency improvements and thus could significantly reduce CO2 emissions, especially in energy-intensive manufacturing, the authors introduce. And come to the following conclusion:

"In reality, digital technologies reduce energy intensity in production, but to a much lesser extent than previously expected. Therefore, increased use of digital technologies in companies does not necessarily lead to a significant improvement in their energy intensity."

To arrive at this statement, they evaluated administrative panel data from the statistical offices of the federal and state governments for 28,600 companies in the manufacturing sector between 2009 and 2017. The ratio of software use to output served as an indicator of a company's degree of digitization. An indicator of energy efficiency is energy intensity, i.e., the actual amount of energy used to produce one unit of output.

"The study's results are particularly relevant in the context of increasing digitization and urgent climate policy measures. Our findings are important for policymakers, consultants, and companies who overestimate the possible synergies between digital technologies and energy savings in production. Only with the targeted use of digital technologies and a sensible legal framework that, for example, mitigates potential rebound effects, can the climate protection potentials of digital technologies actually be realized and CO₂ emissions reduced," explains study author Janna Axenbeck.

Moving to the cloud? Virtualization does not necessarily serve the climate

The analysis of case studies on Cloud Computing and Virtualization in companies showed that these solutions can significantly increase energy and resource efficiency. However, the intensity of use of these solutions also increased in the case studies examined. Thus, digital innovations significantly increased efficiency, but the energy and resource savings at the level of an individual user were partially offset by increased usage. Nevertheless, due to the possible energy and greenhouse gas (GHG) savings, an increased use of virtualization and cloud computing is recommended economically. However, the new services and usage possibilities that cloud computing offers lead to a general increase in the use of ICT.

"For Germany, therefore, no reductions in energy requirements and GHG emissions through cloud computing can be detected," the sobering conclusion for this area.

Digitalized manufacturing of e-cars and houses: Not necessarily climate-friendly

The juxtaposition of both case studies on climate protection effects through Industry 4.0, here for the production of electric cars and serial renovation, shows that the innovative forces of the economy are not released solely through technical possibilities, but that a clear regulatory incentive is needed for this.

"The increasingly clear impact of policies since 2015 on the development of low-emission and energy-efficient vehicles is based on strong regulatory provisions of the European Union as well as recent numerous announcements by nation states, mostly concerning a ban on the sale of combustion engine vehicles in 2030. The case studies do not show that the possibilities of digitization inherently lead to more climate protection," warn the scientists.