UNCTAD Urges Sustainable Strategies For Digital Economy's Environmental Impact

UN Trade and Development (UNCTAD) has released The Digital Economy Report 2024, highlighting the environmental impact of the global digital sector. The report reveals that while digitalisation boosts economic growth, it also brings severe environmental repercussions. Developing countries are disproportionately affected due to existing digital and development divides but have potential opportunities for leveraging this shift.

The report stresses the urgent need to address the environmental costs associated with rapid digital transformation. Key concerns include the depletion of finite raw materials for digital technologies, escalating water and energy consumption, and increasing digital waste. As digitalisation advances rapidly, understanding its link to environmental sustainability becomes more critical.

Rebeca Grynspan, UNCTAD Secretary-General, emphasised a balanced approach: "We must harness the power of digitalisation to advance inclusive and sustainable development while mitigating its negative environmental impacts. This requires a shift towards a circular digital economy, characterised by responsible consumption and production, renewable energy use and comprehensive e-waste management. The digital economy’s growing environmental impact can be reversed".

Developing countries play a crucial role in supplying transition minerals and metals essential for low-carbon technologies. Africa's vast mineral deposits include cobalt, copper, and lithium, vital for sustainable energy futures. The continent holds significant reserves: 55% of the world's cobalt, 47.65% of manganese, 21.6% of natural graphite, 5.9% of copper, 5.6% of nickel and 1% of lithium.

The World Bank predicts that demand for minerals like graphite, lithium, and cobalt could surge by 500% by 2050 due to digitalisation needs. This increased demand presents an opportunity for resource-rich developing countries if they can add value to extracted minerals and diversify within the value chain.

ICT Sector's Environmental Footprint

The information and communications technology (ICT) sector significantly impacts the environment throughout the lifecycle of digital devices—from raw material extraction to disposal. This process consumes vast amounts of transition minerals, energy, and water, contributing substantially to greenhouse gas emissions and pollution.

In 2020, ICT sector CO2 equivalent emissions were estimated between 0.69 to 1.6 gigatons, accounting for 1.5–3.2% of global greenhouse gas emissions. This figure is expected to rise with the growth of the digital economy.

Artificial Intelligence and Cryptocurrency Mining Concerns

The development of artificial intelligence and cryptocurrency mining poses particular concerns. Bitcoin mining saw its global energy consumption increase approximately 34-fold between 2015 and 2023, reaching an estimated 121 TWh. Between 2018 and 2022, electricity consumption by major data centre operators more than doubled.

E-commerce has also surged significantly; online shoppers grew from fewer than 100 million in 2000 to 2.3 billion in 2021. This increase led to a 30% rise in digital-related waste from 2010 to 2022, reaching 10.5 million tons globally.

Recommendations for Sustainable Digital Growth

UNCTAD advocates for innovative business models and robust policies to enhance the sustainability of digital growth:

• Circular Economy Models: Prioritise recycling, re-use, and recovery of digital materials.
• Resource Optimisation: Develop strategies for efficient raw material use.
• Strengthening Regulations: Enforce stricter environmental standards.
• Investing in Renewable Energy: Promote research into energy-efficient technologies.
• Promoting International Cooperation: Foster collaboration among nations for equitable access to resources.

The report underscores integrating digital and environmental policies as crucial for an equitable digital economy that benefits current and future generations while safeguarding their well-being.

The rising global demand for clean energy commodities is already driving foreign direct investment in Latin America, accounting for nearly a quarter of the region’s greenfield project value over two years.

A coordinated effort from governments, industry leaders, and civil society is essential for sustainable development in the global economy through further digitalisation in developing countries.

The upcoming discussions on a Global Digital Compact offer an opportunity to implement comprehensive policies fostering a circular digital economy while minimising environmental impacts.

With inputs from WAM