Tuesday, July 26, 2011

Building a 21st century communications economy - New Paper highlights that economic value will increasingly reside in bits and bytes, rather than molecules and atoms

The Carbon Disclosure Project (CDP) outlines an opportunity to forge sustainable economic growth in a new paper, Building a 21st century communications economy. While global oil demand is projected to grow by a fifth by 2030 1 (equivalent to using the entire U.S. strategic oil reserves in a month 2), this new paper presents an alternative; creating a low carbon, low-environmental impact economy through greater investment in advanced communication networks.

Paul Dickinson, executive chairman of CDP, explains, “We are at a historic moment where nations will either enter into a contest for finite resources, where everyone is guaranteed to lose, or we can enter into a golden age of economic growth, without the serious threat of climate change, built on the enormous potential of communications. The 19th century saw massive advances in agriculture and the 20th century was defined by manufacturing. We have the opportunity to define economic growth in the 21st century by advanced communication networks where economic opportunity is not limited by time, distance, or geography.

“Economic value will increasingly reside in bits and bytes3, rather than molecules and atoms of products and commodities, in effect, decoupling greenhouse gas emissions from growth.”

With increased competition for natural resources, the most competitive economies of tomorrow will be those that revolutionize the way we live and work, generating increased value using fewer resources. Investment in broadband – expanding access to next generation technology to communities across the U.S. and across the globe – has the potential to stimulate job creation and increase access to goods and services including healthcare and education whilst reducing greenhouse gas emissions. This is particularly true for rural communities and areas that are currently not served or underserved by broadband access.

CDP analysis shows that the average Information Communications Technology (ICT) company generates over $4,000 of net income per company for every metric ton of CO2 equivalent emitted. This is double that of the Consumer Staples 4 sector and seven times that of the Materials sector 5, showing it’s a sector that is well positioned to continue to grow in a low carbon, resource efficient economy. 6

However, the ICT sector’s greatest impact is likely to be through enabling companies across sectors to drive energy efficiencies and transform working practices, thereby increasing their net income per metric ton of carbon ratio. The Smart 2020 report 7 showed that ICT could help reduce emissions by an estimated 13 to 22 percent from U.S. business and see gross energy and fuel savings of $140 billion to $240 billion 8. Employment in this area is predicted to increase by 450,000 jobs between 2004 and 2014 9.

Dan Esty, Commissioner of the Connecticut Department of Environmental Protection (DEP) affirms, "ICT can help customers and business to become more sustainable. By acting as the platform, ICT can be used to drive emissions reductions...instead of having people fly for a 2 or 3 hour meeting, it is much more cost effective and sustainable to have the meeting via telepresence. Telecommuting enables employees to work from home and reduces the carbon footprint."

To realize the potential greenhouse gas savings, access to broadband is critical – if devices are not reliably connected to the network they will not be adopted. Currently, 14 million people in the U.S. lack access to high speed internet. As U.S. President Barack Obama said in 2010, “This new era in global technology leadership will only happen if there is adequate spectrum available to support the forthcoming myriad of wireless devices, networks, and applications that can drive the new economy.”10

Robust global accounting of emissions is integral to achieving a successful 21st century communications economy. Danny Quah, from the London School of Economics says, “ICT and broadband can play an important role in helping advanced economies decrease their carbon emissions. But advanced economies also outsource to the emerging economies the production and carbon emission of what they consume. A truly dematerialized economy is not limited by geography and physical boundaries, and therefore neither should the accounting for the associated carbon emissions.”

Dickinson concludes, “The world as we know it is changing, to a world that is cleaner, more inclusive and unconstrained by where you live. The key to unlocking the potential of all these technologies is an efficient and reliable communications network. We have an opportunity to grow our economy with less environmental impact, and fundamentally transform the way we live, work and play.”

1 On average more than 20 million barrels a day by 2030, reaching a level which is more than twice Saudi Arabia’s production
2 International Energy Agency, 2009. World Energy Outlook. Available from http://www.iea.org/textbase/nppdf/free/2009/weo2009.pdf  Last accessed June 16th, 2011.
3 Bank of England Quarterly Bulletin, February 1997, vol. 37 no. 1, pp. 49-56.
4 GICS category - includes manufacturers and distributors of food, beverages and tobacco and producers of non-durable household goods and personal products.
5 GICS category - includes chemicals, construction materials, glass, paper, forest products and related packaging products, and metals, minerals and mining companies, including producers of steel.
6 CDP analysis
7 U.S. addendum to the seminal Smart 2020 report by the Climate Group.
8 The Climate Group, 2008. Smart 2020: Enabling the low carbon economy in the information age. United States Report Addendum. Available from http://www.smart2020.org/_assets/files/Smart2020UnitedStatesReportAddendum.pdf Last accessed June 16th, 2011.
9 Berman, J. 2005. Industry Output and employment projections to 2014. Bureau of Labor Statistics Monthly Labor Review. Available from http://www.bls.gov/opub/mlr/2005/11/art4full.pdf  Last accessed June 16th, 2011.
10 Cited in Middleton, J. 2010. Obama plans to free up 500MHz of spectrum. Available from http://www.telecoms.com/21309/obama-plans-to-free-up-500mhz-of-spectrum/ Last accessed June 16th, 2011.

The Carbon Disclosure Project (CDP) www.cdproject.net is an independent not-for-profit organization holding the largest database of primary corporate climate change information in the world. Some 3,000 organizations and cities across the world’s largest economies now measure and disclose their greenhouse gas emissions and climate change strategies through CDP, so that they can set reduction targets and make performance improvements. 

Press Release dated June 28, 2011

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