Digital boom could well be a bust for the environment, warns UN trade agency

These are just a few of the concerning findings of a new report into the digital economy by UN trade agency UNCTAD, which insists that the thriving sector’s negative environmental impact must be taken more seriously – and slowed by investment in renewables.

“The rise of technologies such as artificial intelligence and cryptocurrency, cryptocurrency mining, has significantly increased energy consumption,” said UNCTAD chief Rebeca Grynspan.

Power binge

“For example, Bitcoin mining’s energy consumption rose 34-fold between 2015 and 2020, reaching around 121 terawatt hours…The energy consumption of Bitcoin mining is more than what Belgium or Finland consume per year,” the UNCTAD Secretary-General told journalists in Geneva.

Today, some 5.4 billion people use the internet and the global digital economy is booming, with obvious upsides for many. In value terms alone, business e-commerce sales surged from $17 trillion in 2016 to $27 trillion in 2022 across 43 countries, Ms. Grynspan noted.

“We talk a lot about how digital technologies can reduce paper use and improve energy efficiency and they can help cut greenhouse gas emissions in transport and construction, agriculture and energy sectors.

“But the downside is not talked about as much,” she said, insisting that digitalization is “highly materialistic” in addition to requiring masses of carbon-rich electricity to boot.

To counter this threat to the environment and in support of an equitable and environmentally responsible digital economy, UNCTAD’s Digital Economy Report 2024 offers policy suggestions covering precious minerals used to make electronic devices including mobile phones and other vital natural resources, such as water.

Data centres’ thirst for energy

According to UNCTAD, in 2022, global data centres consumed 460 terawatts hours, an equivalent of power used by 42 million homes in the United States in a year. This figure is expected to double by 2026.

The UN agency also cites estimates that the digital sector is accountable for 1.5 to 3.2 per cent of global greenhouse emissions, similar to that of air transportation and shipping.

Between 2018 and 2022, the electricity consumption of 13 major data centre operators more than doubled, highlighting the urgent need to address the energy and water footprints of these technologies.

“Google disclosed that in 2022, total water consumption at its data centres and offices amounted to 5.6 billion gallons (about 21.2 million cubic metres). For the same year, Microsoft reported that its water consumption was 6.4 million cubic metres,” Ms. Grynspan said, adding that water consumption by such facilities had recently stoked tensions within local communities in several countries.

Training for ChatGPT-3 alone, according to Microsoft, required an estimate of 700,000 litres of clean, fresh water, the UNCTAD chief also noted.

Surge in e-commerce and e-waste

E-commerce has surged, with online shoppers growing from fewer than 100 million in 2000 to 2.3 billion in 2021, the report says. This increase has led to a 30 per cent rise in digital-related waste from 2010 to 2022, reaching 10.5 million tonnes globally.

“Digital waste management remains inadequate. This is a huge concern given the pollution this generates and its impact on the environment,” the UNCTAD Secretary-General said.

The report notes that developed countries generate 3.25 kg of digital waste per person, compared to less than 1 kg in developing countries and just 0.21 kg in least developed countries, which serves as yet another indicator of the unequal distribution of benefits that digitalization brings about.

Critical minerals

The World Bank, the report authors say, estimates that the demand for minerals required for digitalization like graphite, lithium, and cobalt could surge by 500 per cent to 2050.

Developing countries are pivotal in the global supply chain for transition minerals and metals, which are highly concentrated in a few regions.

For example, Africa’s vast mineral deposits, essential for the global shift to low-carbon and digital technologies, include cobalt, copper, and lithium, crucial for a sustainable energy future.

The continent holds significant reserves 55 per cent of the world’s cobalt, 47.65 per cent of manganese, 21.6 per cent of natural graphite, 5.9 per cent of copper, 5.6 per cent of nickel and 1 pe cent of lithium.

Development opportunities

“The increased demand for critical minerals presents an opportunity for resource-rich developing countries to add more value to extracted minerals, diversify their economy and enhance their development. But technology has to be transferred and has to be more efficient to be compatible with the environment and climate change objectives,” Secretary-General Grynspan shared.

Amid current global crises, limited fiscal space, slow growth and high debt, developing countries should maximize this opportunity by domestic processing and manufacturing, the report authors suggest. This would help them to secure a larger share of the global digital economy, generate governments revenues, finance development, overcome commodity dependence, create jobs and raise living standards.

Rising global demand for clean energy commodities is already driving foreign direct investment in Latin America, accounting for 23 per cent of the region’s greenfield project value over the past two years, the report finds.

Factors of success

UNCTAD suggests new business models and strong policies to make digital growth more sustainable. The UN trade and development experts’ straightforward recommendations to the world are:

– use circular economy models, focusing on recycling, reusing, and recovering digital materials to cut down on waste and environmental damage;

– optimize resources by create plans to use raw materials more efficiently and reduce overall use;

– strengthen regulations, enforce tougher environmental standards and rules to lessen the ecological impact of digital technologies;

– invest in renewable energy, support research and development of energy-efficient technologies and sustainable digital practices;

– promote international cooperation, encourage countries to work together to ensure fair access to digital technologies and resources, and to tackle global digital waste and resource extraction issues.

“The digital economy is central to global growth and development opportunities, so we need to implement the practices that will take us to a win-win space and not against our also important objectives of environmental sustainability and our commitments to climate change,” Rebeca Grynspan concluded.