Clean Energy
Transition: ICT
Is the ICT industry adding to,or reducing global warming?
There’s no escaping from the fact that the Information andCommunications Technology (ICT) industry can be found at theheart of almost every conversation and every initiative linked to theclean energy transition. ICT software and hardware are key driversof many of the solutions designed to address global warming.

Using ICT to improve
efficiency in ICT
Beamforming
Beamforming improves theprecision and efficiency of Wifiand 5G networks, enabling

From the onboard computers in electric vehicles, to the tech used on wind farms
and solar arrays and even the ICT needed for managing electricity grids andimproving efficiency across all industries. Our underwriting teams in the US
and Germany point out that technology such as IoT, Edge Computing andMachine Learning are very likely to help drive energy efficiency in coming years.

them to consume less power.

IoTInternet of Things (IoT)
enabled devices can be usedin smart networks to reduce

But the other side of this same ICT story reveals an industry that consumes
energy. A lot of energy. According to the IEA data centres and data transmission
networks each account for 1-1.5% of global electricity use. Digital technologies
are directly responsible for 2% of energy-related greenhouse gas emissions
today. To achieve Net Zero by 2050, the IEA notes the industry needs to reduce
its emissions by 50% by 2030.

energy consumption throughapplications such as logistics
efficiency and building
thermostat controls.

Edge Computing
Edge Computing stores andThat said, the industry is a heavy investor in renewable energy, often seeking
to create its own power sources to protect itself from power price volatility,
reduce its environmental impact and improve brand reputations. For example,
the Citadel Campus located in Nevada, USA, is one of the world’s biggest data
centres and operates with 100% green power. It’s not an anomaly, but part ofa trend within the industry that favours sustainable renewable energy solutions.
Whether this is enough to meet Net Zero targets is still uncertain.

uses data on or near thedevice on which it was created,
reducing the need for data
centres, and lowering energy
consumption and carbonemissions.

What do Atradius underwriters see as the primary issues
in the sector?
Atradius underwriters throughout the world note thecomplexity of the industry’s relationship with clean energy
transition, often pointing to the same issues for both
opportunities and challenges. By its very nature, the ICT
industry works at the cutting edge of technology, leveraging
science and innovation to create solutions. Althoughgovernment policies will inevitably have an impact, clean
energy solutions are most likely to come from within theindustry itself.

Opportunities: What are greatest opportunities for the sector
in the next three years?
1. Data centres
Our underwriters were almost unanimous in theirconclusions that building a sustainable ICT infrastructure
presents many opportunities for the industry. This ranges
from improving energy efficiency and building renewableenergy sources for data centres to exploring newopportunities for innovation.
2. Increased demand for green ICT solutions
The underwriting teams in Italy and the UK noted there
is increased demand across sectors and consumers
for smart solutions to assist in the reduction of energy
consumption. This includes the growing trend of Green
offices and buildings, which involves the use of IoT, data
platforms and advanced analytics to reduce electricity
consumption, maximise renewable electricity consumption
by weather forecasting and improving the utilisation ofdevices and servers across their life cycles.
3. Clean energy transition
As global momentum grows within the clean energy
transition, so will opportunities for the ICT sector.
From smart solar to smart grids, predictive analytics andthe need for digital technology to help store and transfer
energy efficiently, the ICT industry will play a central role
and will enjoy access to multiple and growing opportunities.

Challenges: What are the most urgent challenges
for the sector in the next three years?
1. Data centres
Our underwriters in India, the Netherlands, and China
noted digital transformation is resulting in growing
demand for data storage and processing. Data centres
consume significant amounts of energy for operationand cooling, which as our team in the UK explained isfacing greater challenges amid more extreme weather
patterns. A major challenge facing the industry concerns
the production of renewable energy for data centres
and improving their efficiency.
2. Government policies
Businesses that don’t transition to clean energy models
will increasingly find themselves paying out for climaterelated levies and taxes. However, this is not the only policy
challenge facing businesses. Our underwriters in the USA
and China noted that inconsistencies, changing energy
policies and regulations that are uncertain or inappropriate
for individual industries can be a challenge.
3. Circular economy
Our underwriters in the Czech Republic explained
minimising e-waste is a major sustainability challenge
for the ICT industry, with the disposal of ICT devices
contributing to environmental impacts. Improved andenhanced recycling could also ease pressures on sourcing
materials from geopolitically unstable locations.

Where next?
Although digital technologies currently account for 2% of global
greenhouse gas emissions, these have grown fairly modestly
since 2010, despite rapidly growing demand for digitalservices. This is due to improvements in energy efficiency
for businesses and devices across the industry, as well as theincreasing use of renewable energy by ICT companies and thebroader decarbonisation of electricity grids in many regions,such as Tasmania in Australia. Furthermore, initiatives likethe Second Horizon Europe Strategic Plan 2025-2027, wherea Key Strategic Orientation of the Strategic Plan is: “Making
Europe the first digitally enabled circular, climate-neutral andsustainable economy through the transformation of its mobility,
energy, construction and production systems” will help tofurther optimise the efficiency of the sector. What’s more,as noted by our underwriters in Sweden and China renewableenergy solutions could benefit the ICT sector in terms ofraising incomes, growing customer demand and creating jobs.

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