Digitalisation and decarbonisation: a 2-D approach to building back greener

Across the world, two disruptive and powerful trends are taking hold: digitalisation and decarbonisation. At times, it seems as if these two forces are acting against each other, with digital technologies accelerating economic growth, but also consuming huge quantities of energy and emitting high amounts of CO2.

But it’s becoming clear that rather than competing, digitalisation and decarbonisation can work together in ways that achieve sustainable economic growth without destroying our home planet.

The net zero imperative

We’re now familiar with the evidence that global warming will do irreparable damage to the world unless we can reduce the greenhouse gases that cause it. Getting to net zero means achieving the right balance between the amount of greenhouse gas produced and the amount removed from the atmosphere.

The challenge is one not just for national governments. Businesses are facing growing regulatory, reputational and market-driven pressures to transform their business models and embrace the shift to a low-carbon, sustainable future. It’s here that digitalisation can support us on the path to net zero.

The digital possibilities

In 2020, a Green Alliance study reported that  digital technologies could have significant positive environmental impacts, including: accelerating the deployment of clean technologies and helping businesses to stop wasting energy and resources.

But the report also found that many UK businesses are still not making use of digital solutions: only 42% of UK businesses have purchased cloud computing services, compared to 65% in Finland and 56% in Denmark. The authors highlighted a number of factors explaining slower digital adoption, including lack of digital skills, concerns about cybersecurity and privacy, and underinvestment in infrastructure.

AI as an ally in the battle against climate change

Another report, published last year by PwC and Microsoft explored the potential of artificial intelligence (AI) in tackling the climate crisis. Focusing on agriculture, water, energy and transport, the report revealed numerous ways in which AI can have positive environmental and economic impacts.

  • In agriculture, AI can better monitor environmental conditions and crop yields;
  • AI-driven monitoring tools can track domestic and industrial water use, and enable suppliers to pre-empt water demand, reducing both wastage and shortages;
  • AI’s deep learning, predictive capabilities can help manage the supply and demand of renewable energy.

The report stressed that AI cannot act on its own, but will rely on multiple complementary technologies working together, including robotics, the internet of things, electric vehicles and more.

While the challenges of putting AI to work in tackling the climate crisis are great, the prizes of doing so are equally significant. The PwC/Microsoft report estimated that across the four sectors studied AI could:

  • contribute up to $5.2 trillion to the global economy in 2030;
  • reduce worldwide greenhouse gas emissions by up to 4.0% in 2030, (an amount equivalent to the 2030 annual emissions of Australia, Canada and Japan combined);
  • create up to 38.2 million net new jobs across the global economy.

Put simply, AI can enable our future systems to be more productive for the economy and for nature.

The downsides of digitalisation

As we’ve previously reported, the infrastructure that supports the digital world comes with significant energy costs and environmental impacts. From internet browsing, video and audio streaming, as well as manufacturing, shipping, and powering digital devices, digital has its own substantial carbon footprint.

The PwC/Microsoft report acknowledges that there will be trade-offs and challenges:

“For example, AI with its focus on efficiency through automation might potentially lead to ‘over exploitation’ of natural resources if not carefully guided and managed. AI, especially deep learning and quantum deep learning, could also lead to increased demand for energy, which could be counter-productive for sustainability goals, unless that energy is renewable and that electricity generation is developed hand-in-hand with application deployment.”

In addition, there is a need to ensure that all parts of the world are able to capture the benefits of digital technologies – not just the more advanced economies.

Final thoughts

Decoupling economic growth from greenhouse gas emissions is one of the biggest challenges of our lifetime. Digital technologies have enormous potential not only to achieve decarbonisation, but to improve economic performance.

As both the Green Alliance and PwC/Microsoft reports have underlined, this can be achieved by taking a joined-up approach to digitalisation and green growth. This means thinking beyond the technology to consider issues such as investing in education and training to develop the skills needed to support the growth of clean industries and digitalisation, addressing privacy concerns and supporting businesses in their drive to shrink their carbon footprints.

As we emerge from a pandemic which has inflicted great damage to economies, but which has also demonstrated the possibilities of changing longstanding habits, digitalisation is presenting us with opportunities to ensure that building back greener is more than just a slogan.


Further reading: more on climate change and technology from The Knowledge Exchange blog:

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After Glasgow: the legacies of COP26 and the continuing challenge of climate change

It’s almost four months since the UN’s climate change conference took place in Glasgow. COP26 was headlined as a pivotal moment in the fight against global warming. But how much was achieved in Glasgow, and how much more action is needed if we’re to limit destructive levels of global temperature rises?

The legacies of COP26 were the focal point of a webinar last month, hosted by Strathclyde University’s Fraser of Allander Institute (FAI).  Mairi Spowage, the recently appointed Director of the FAI, welcomed Chris Stark, CEO of the Climate Change Committee and Steve Williams, senior partner at Deloitte Scotland, to consider how the outcomes from COP26 might influence government policy and business practice.

COP26 report card: a mixed picture

Chris Stark began with an upbeat assessment of COP26, noting that while it didn’t deliver everything hoped for, the inclusion of voices from civil society, business and finance added weight to the urgency of tackling climate change. Chris expects those voices to be influential in pushing governments to keep their promises on tackling climate change. He also welcomed the sectoral agreements announced in Glasgow on reducing the use of coal, cutting methane emissions and protecting forests.

That said, Chris warned that the agreements in Glasgow will not be enough to prevent the Earth’s average temperature exceeding a rise of 1.5 degrees C – the tipping point where many climate impacts go from destructive to catastrophic:

“The overall outcomes are still heading in the wrong direction. We went into the Paris COP in 2015 facing 3.6 degrees of warming. If we add up all the current policies that we see globally, we will leave Glasgow facing something like 2.7 degrees of warming.”

All of which heightens the importance of delivering every one of the emissions reduction targets which governments and businesses have set for 2030. Chris also stressed that some countries need to raise their levels of ambition, notably Australia, Brazil, Mexico, Indonesia, China and Russia.

Business: the journey to tackling climate change

Business has a vital role to play in tackling global warming, and Steve Williams outlined where the corporate sector currently finds itself. Most of Deloitte’s clients have targets and governance in place to reduce their carbon footprints, although not all have a credible road map to achieving decarbonisation.

Steve went on to highlight four areas that are being worked on.

Many companies are trying to understand the scope 1, 2 and 3 carbon emissions targets, as well as setting science-based emissions targets, and investing in systems to obtain the right data to make sure they can stand behind the numbers that they publicise.

With regard to business operations, companies are attempting to truly understand their reliance on fossil fuels, switching to renewables, and exploring what other clean technologies are available. In addition, business is trying to have a clearer view of the vulnerabilities around supply chains that could result from climate change.

A third focal point for business is understanding investors’ expectations. Lenders are demanding more of companies in terms of decarbonisation, and they want to know about their roadmaps to sustainability.

The fourth area is one which Steve saw for himself during COP26. Businesses are starting to talk more about biodiversity and the health of our oceans. As a result, companies are moving towards ‘nature-friendly’ targets beyond existing decarbonisation goals.

Delivering on the promises: UK and Scottish Governments

As Chris Stark explained, the Climate Change Committee  (CCC) advises the UK and devolved governments on emissions targets and reports to Parliament on progress made in reducing greenhouse gas emissions. In line with CCC advice, last year the UK Government set in law the world’s most ambitious climate change target, aiming to cut emissions by 78% by 2035 compared to 1990 levels.

Meanwhile, the Scottish Government’s net zero emissions target date of 2045 is ahead of many other countries, and it has also set a very ambitious target of a 75% reduction in emissions by 2030, relative to 1990 levels.

Chris Stark stressed that both the UK and Scotland are presenting good examples to the rest of the world in addressing climate change. But he also highlighted the need to move even faster in the next decade. Having closed its major coal fired power stations, the major challenge for the UK is decarbonising buildings. Chris noted that energy efficiency strategies, covering measures like insulation and double glazing of buildings, are important, but…

“…the big gains in terms of emissions come from decarbonising heat supply to those buildings. This is a big cost, but in the long run it is worth it. My message here is we’ve got to get real about this. We have lots of ways in which we could do it, but until you start to knuckle down, particularly in making plans for the cities, where the big win is, it’s not going to happen.”

Business: decarbonising in a post-Covid world

Steve Williams suggested that the restrictions imposed to prevent the spread of COVID-19 have made it easier for some businesses to meet their decarbonisation targets. With commuting and business travel at significantly lower levels during the height of the pandemic, many companies’ emissions fell dramatically. As Steve acknowledged, the question now is how to make sure that these gains are not lost in the longer term. Examples of good practice include committing to less business travel in future, electrifying car fleets and appointing corporate climate champions.

Chris added that the CCC, having longstanding experience of advising government on policy,  is now increasingly providing advice to businesses on tackling climate change. Chris highlighted some of the issues business should be considering:

“Our primary advice to the business community is just start measuring. Think properly about the way in which you impact through emissions , and how exposed you are to the climate risks. And then think about the strategies you can use to push the national mission to net zero. As businesses do this, the policy environment should respond and go more quickly”

Final thoughts

Just four months on from COP26, the world looks very different today.  There are now concerns that economic pressures could cause governments to backslide on their climate change commitments, especially with a looming energy crisis threatening the cost of living.  However, there have also been more positive developments.

Earlier this month, leaders from nearly 200 countries agreed to draw up a legally binding treaty on reducing plastic waste. This will not only have positive impacts on ocean and marine life; it will also make a difference on climate change. A 2019 study reported that the production and incineration of plastic produced more than 850 million tons of greenhouse gases – equivalent to 189 five-hundred-megawatt coal power plants.

The latest report from the International Panel on Climate Change has reiterated that global warming remains a threat to human wellbeing and the health of the planet. The report couldn’t be clearer about what’s at stake:

“Any further delay in concerted global action will miss a brief and rapidly closing window to secure a liveable future.”

You can watch a recording of the FAI webinar here

Photo by William Gibson on Unsplash

Further reading: more on tackling climate change from The Knowledge Exchange blog

Close to home: getting to net zero means decarbonising the UK’s housing stock

Photo by Erik Mclean on Unsplash

Two years ago, the UK became the first major economy in the world to pass a law pledging to bring all greenhouse gas emissions to net zero by 2050. Achieving net zero means balancing the amount of greenhouse gases we emit with the amount we remove, and it’s a critical factor in tackling climate change by reducing global warming.

But, according to the government’s independent adviser on tackling climate change, the UK will be unable to meet the net zero target without the near-complete elimination of greenhouse gas emissions from 29 million homes. 

The necessity: why buildings need to be decarbonised

In 2014, emissions from domestic properties accounted for 34% of total UK greenhouse gas emissions. A combination of high energy prices and improvements in energy efficiency brought that figure closer to 19%. But those reductions have stalled, and because the UK’s building stock is one of the oldest and most energy-inefficient in Europe, the need to decarbonise is even more urgent.

The benefits: environmental, health, economic

While achieving net zero is one good reason for making our buildings more energy efficient, decarbonisation offers further dividends.

Energy efficient homes are cheaper to run, reducing the levels of fuel poverty that affect millions of households. They can also bring health benefits in the form of healthy air temperatures, lower humidity, better noise levels, and improved air quality.

In addition, a nationwide programme of decarbonising buildings could make a vital contribution to the recovery of the economy from the coronavirus pandemic. A recent inquiry by the House of Commons Environmental Audit Committee  (EAC) found that investing in energy efficiency alone could create 34,000 full-time jobs within the next two years. In the longer term, energy efficiency investment could support an estimated 150,000 skilled and semi-skilled jobs to 2030.

The problems: high costs, skills uncertainty and a “disastrous” insulation scheme

The UK government says the cost of decarbonising homes is between £35 billion and £65 billion. But the EAC believes that this seriously underestimates the cost of upgrading the energy efficiency of homes. With 19 million homes in England requiring energy efficiency installations, this could cost £18,000 per home, even before the installation of a heat pump.

Another area of concern is skills. Brian Berry from the Federation of Master Builders told the committee that every tradesperson in the country needs to be upskilled in retrofit techniques in order to secure overall competency in the supply chain:

“We need to upskill people in the building industry because there is a need to understand how their skills interrelate to one another. You cannot just pick out one bit of this. It has to be seen holistically, which is why I think there needs to be a national retrofit strategy, a clear political direction and a commitment to reducing carbon emissions in our homes.”

The EAC was also outspoken in its criticism of the government’s flagship home insulation scheme. The Green Homes Grant was launched in 2020 to offer £1.5bn in subsidies for insulation and low-CO2 heating. However, only 6.3% of the money has been spent, despite exceptionally high demand.

The committee said the scheme was rushed and poorly implemented, and described its administration as “nothing short of disastrous.” Just six months after its launch, the scheme has now been scrapped. Instead, energy saving upgrades and low carbon heating will be delivered to homes through local authorities in England.

The recommendations: strategies, incentives and insights from overseas

There’s no shortage of suggestions for driving decarbonisation forward. The EAC has called for a government strategy for the next decade to give industry and tradespeople time to upskill and to give households the right signals to invest in energy efficiency. The committee also recommends that VAT on the labour element of refurbishment and renovations is reduced to 5%, a measure also supported by the Royal Institute of Chartered Surveyors.

It’s also worth looking at ideas from overseas. In February, research by the University of Edinburgh reviewed the heat decarbonisations policies in nine European countries. The report highlights particular progress made by the Nordic countries in decarbonising buildings’ heat supply and in making greater use of electricity as a potential future source of low-carbon heating.

The solutions: putting promises into practice

While the challenge of decarbonising homes may be daunting, a growing number of housing providers are taking steps to cut emissions from domestic properties.

The Welsh Government has provided £20m in funding for Optimised Retrofit. Through this scheme, 28 social landlords can retrofit homes and test the ways heat and energy are produced, stored and supplied. If it’s successful, the scheme could be the model for decarbonising all of Wales’ 1.4 million homes by 2050.

Last month, Sutton Council launched an energy-efficiency programme to transform draughty properties with high energy bills into net zero carbon houses which are warmer and cheaper for residents. The programme is based on a successful Dutch initiative known as Energiesprong (energy leap). In the Netherlands, 1300 net zero energy refurbishments have been completed, and a further 500 are being built. The initiative involves insulating the external walls and roof areas, replacing windows and doors and installing new solar panels to power a new central heating and ventilation system. Sutton is the first London borough and the latest UK housing provider to adopt the programme, which has already been taken up in Nottingham and Maldon.

Many housing associations are at the start of their journey to net zero, but a National Housing Federation survey has shown that two thirds of social housing landlords have started planning to make their homes greener and warmer. Three quarters (74%) of survey respondents expect to retrofit homes in 2020-21. A similar proportion (73%) expect to retrofit homes in 2021-22. However, the survey also reported that lack of finance and continuing policy uncertainty remain major obstacles to decarbonising homes. That’s important, particularly given the cost of decarbonisation of social housing – £104bn by 2050.

The future: decarbonisation begins at home

Local authorities, housing associations, and the construction industry are all keen to transform existing homes into greener, warmer places to live in. At the same time, residents – especially those having to make the choice between heating or eating – need to be taken out of fuel poverty. And, as we’ve seen, achieving net zero will only be possible by making the nation’s housing stock more energy efficient.

With so much riding on decarbonisation of domestic properties, the need for more funding as part of an ambitious policy approach is clear. As the UK prepares to host the critical climate change talks in Glasgow this year, there has to be a better understanding that tackling the climate emergency starts on our own doorstep.


Further reading from The Knowledge Exchange blog on housing and energy efficiency