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ICT Impact on Greenhouse Gas Emissions in Energy-Intensive Industries

Executive Summary

Download the full study report

December 2009 (PDF, 4 MB)

About this study

There is much hope that information and communications technology (ICT) has a high potential to increase energy efficiency and reduce greenhouse gas (GHG) emissions. This study provides the first comprehensive empirical analysis of the relationship between ICT on GHG emissions in European energy-intensive industries, analysing the following five sectors:

  • Basic metal and fabricated metal
  • Pulp, paper, printing and paper products
  • Chemicals, rubber, plastics and coke
  • Glass, ceramics and cement
  • Transport and storage

Structure of the analysis

In order to explore the variety of possible relationships between ICT and GHG emissions, this study employs three central investigative methods:

  • an econometric analysis,
  • case studies,
  • surveys of current industry trends and expert views.

The empirical analysis is comprised of a descriptive discussion of relevant data trends, a parametric regression analysis that estimates the form and magnitude of the impact of ICT on GHG emissions per output in each sector, and a semi-parametric analysis of the impact of ICT on industry efficiency through an input-output production framework.

Eight case studies on representative firms from European energy-intensive industries provide explicit examples of ICT use for GHG emissions reductions in industry that anchor the econometric results in the present business and market climate.

Finally, a pilot survey of the glass, cement and ceramic sector and a Delphi-style survey of industry experts track ICT adoption for sustainability purposes and report current industry opinion on the potential of ICT to counteract climate change.

Varying trends in GHG emissions and ICT capital, as well as structural differences among sectors, support a sectoral approach to analysis. We first focus our analytical methods on each sector independently, using these results to derive the most relevant cross-sector conclusions regarding the relationship between ICT and greenhouse gas emissions in European energy-intensive industries.

This report investigates the following areas:

  1. ICT impact on GHG emissions: We test for a statistically-robust impact of ICT on GHG emissions and sustainable production, quantifying this impact at the sector level and analysing the implications for the future climate impact of each sector.
  2. ICT uses and development status: We illuminate the specific means by which firms in energy-intensive industries utilise ICT to improve efficiency and sustainability, the progress made in ICT systems development, the potential for further innovation to improve the climate-change impact of ICT, and the interaction between current EU emissions policy and ICT development.
  3. ICT diffusion and adoption barriers: We report the extent to which ICT that can reduce greenhouse gas emissions has been adopted in energy-intensive Industries for emissions-reductions purposes, the incentives and barriers to ICT adoption, and the particular influence of European emissions regulation on the decision to use ICT to counteract climate impact by these industries.

Econometric results

First and foremost, we find highly significant structural differences and structural change, both among and within sectors, which limits the scope of meaningful results from available data and impedes analysis of the paper sector alltogether. We also find significant differences in the relationship between ICT and GHG emissions among the sample European countries, even within a sector, which suggests that new Eastern European member states are employing ICT with less focus on sustainability. Nevertheless, the significant conclusions derived through econometric analysis confirm a limited but acute impact of ICT on the GHG emissions and sustainability of European energy-intensive industries.

Excluding the paper sector, we find that increased ICT share in total capital significantly improves industry sustainability, so that a change in production volumes does not require a corresponding increase in GHG emissions. We also find significant evidence of a non-linear impact of ICT across all sectors. In the metal and transport sector in particular, we find that increased ICT capital relative to gross output has improved the emissions per output of the industry at a diminishing rate.

Furthermore, we find that achieving reductions in GHG emissions using ICT is expensive relative to other abatement technologies. These results suggest that future investments in ICT must be carefully vetted for cost and an ability to reduce emissions in order to efficiently improve the climate impact of energy-intensive sectors in the long run.

Contextualising empirical results: case studies and opinion surveys

We conducted eight case studies about the use of ICT for production engineering, energy use optimisation, and emissions monitoring. The results confirm, by and large, the important role for ICT in increasing sector sustainability, particularly through the use of ICT-based production optimisation, energy management, and emissions management systems.

The industry and expert surveys conducted for this study further show a recent increase in adoption of these systems (and persistently weak market incentives for adoption of emissions-management systems, in particular). This provides an optimistic context for the econometric results.

While historical impact of ICT on industry emissions is distinct but limited, increased adoption and awareness sector-wide suggest that empirical evidence for the role of ICT in sector sustainability will improve in the future.

Policy recommendations

Above all else, we advise that the best way to reduce GHG emissions in energy-intensive industries is to allow the market to determine the most efficient technology - whether it is ICT-based or not - through a sufficiently high price for carbon (sufficiently low carbon caps) in the framework of the European Union Emissions Trading System (EU ETS).

However, our analysis also indicates need for indirect policy support to foster the development and wider adoption of ICT that supports energy management and emissions management systems. Documentation and publication of best practises, financing support for research and development, encouragement of cross-sector cooperation for ICT development and cultivation of a greater awareness of climate change concerns will all incentivise the needed development and adoption of these ICT-based systems.

Furthermore, we suggest a particular attention to new Eastern European member states and the transport sector, where emissions reductions are most needed but ICT has not yet been proven to be emissions-reducing.

Finally, we emphasise the need for standardised emissions accounting and reporting systems in order to increase the credibility and competitiveness of European energy-intensive firms and to facilitate further useful analysis that builds on this report's conclusions.