Few economists, scientists, or policy-makers would argue that the two most important megatrends of the next ten years will be climate change and digitalisation. While narratives around both have existed in silos to-date, links between the two are impossible to ignore.
As the path toward a sustainable, low-carbon economy becomes clearer, it is evident that climate change and digitalisation are intertwined in more ways than one. To realise the ambitions of the Paris Agreement and our own Climate Action Plan, it is important to consider how these two transformative trends interact.
Building a Climate-resilient Economy
Ireland is taking proactive steps to building an environmentally-sustainable, and climate-neutral economy by 2050. The roadmap to achieving this target is underpinned by the Climate Action Bill which commits to a 51% reduction in carbon emissions by the end of the decade. While the impact on individual sectors of the economy is still taking shape, it is inevitable that industries will invariably undergo radical structural transformation as the transition gathers pace.
What’s also clear is that new technologies will play a fundamental part in this change. Digitalisation enables new and greater forms of transparency, collaboration, and control. The ability to rapidly leverage data can not only help inform decision–making around production and consumption, but also uncover a broad range of possibilities in terms of research, innovation, and sustainable business actions.
In many ways, this will be the driving force for developing sustainable practice models across industry sectors as it is no longer enough for companies to develop a business strategy that works from a sustainability perspective – they should develop a sustainability strategy that works from a business point-of-view.
At a micro-level, the digitalisation journey of businesses locally and globally, has rapidly accelerated in the past 12 months. Many businesses – particularly SMEs – that had been slow to embrace digitalisation, have achieved more in a matter of months than they may have previously considered possible over a five-year period.
While this reprioritisation was prompted by the emergence of the pandemic and has been largely geared toward business continuity, business leaders and owner-managers are now in a position to look forward and assess the value of their investments with renewed confidence in their digital capacity and ability to respond to future challenges.
Reaching Climate Goals – Doing More With Less
No future challenge looms quite as large as climate. Digital technologies are already influencing how, where, and when energy is generated, distributed, and consumed. However, we have not yet experienced the full potential of digitalisation as a factor in reaching net zero.
By 2030, it is estimated that digital technologies have the potential to save almost 10 times more emissions than they produce. This will be partly driven by greater adoption of smart technologies in manufacturing and infrastructure where intelligent building management systems and energy efficiency technologies will generate energy and emissions savings.
On a deeper level, further digitalisation of electricity networks is expected to contribute to the development of a more efficient and resilient grid, with increased integration of renewable energy generation. In Ireland, this will be pivotal if we are to reach our Climate Action Plan target of 70% renewable electricity by 2030. Digitalisation in logistics and transport will also significantly reduce CO2 emissions with greater optimisation through automation and connectivity on our roads and at our ports.
Climate Finance and Investment in Technology
The potential impact of digitalisation as a driver of climate adaptation is significant. Challenges exist around infrastructure and financing, however in advance of COP26, renewed emphasis on the need to mobilise sustainable finance has placed the climate challenge high on the agenda of investors and asset managers.
There is a major commercial opportunity for private investors when it comes to lower-carbon technology and digital innovation. Almost half a billion homes are expected to be built globally in the next ten years, requiring green technology and infrastructure to align with a net zero target. The continuing momentum behind retrofit and the need to upgrade the existing housing stock will only augment the dependency on frontier technologies.
Developing Digital Talent for a Sustainable Economy
Not only is the green transition presenting opportunities for investors, it is also creating opportunities for the workforce. To achieve the targets set out for 2030 and beyond, entire sectors will be reworked resulting in new types of jobs and adapted jobs for the green economy.
Skillnet Ireland, through our Skillnet Business Networks, work with Irish businesses to understand and meet their specific talent needs and ultimately develop the workforce. Digital skills are consistently in demand across all sectors, but with the continued development of digital infrastructure along with the emergence of frontier technologies on foot of climate adaptation, this demand is expected to grow exponentially.
Discussing the change, Mark Jordan, Chief Technologist at Skillnet Ireland says:
“Digital transformation is colliding with global megatrends like climate change. However, as we’ve witnessed over the course of the past year, if digitalisation and emerging technologies like AI, blockchain, IoT for example, are harnessed correctly, digital change can have a positive and lasting impact across industry sectors, ultimately boosting the efficiency and competitiveness of businesses.”
“To capitalise on the opportunities presented by digitalisation and climate adaptation, it is important to recognise where both forces intersect. Through Climate Ready, Skillnet Ireland will continue to work with industry to enhance the delivery of leading-edge workforce development programmes that are agile and reflective of the transition to a circular economy.”
A Potent Pairing
For businesses big and small, the juggernauts of climate and digitalisation can feel insurmountable. However, the fusion of the two makes for a powerful alchemy.
Assessing the impact of both factors on industry sectors – as well as the interplay between these factors – is increasingly important. Digital solutions make it possible for businesses to understand their climate impact, take practical and buildable steps to improve this, and identify and seize new opportunities and investments – yielding substantial returns for our economy and climate.