Digitalization drives global economic growth and offers unique opportunities for developing countries. However, its environmental repercussions are becoming increasingly severe. Developing countries remain unevenly affected both economically and ecologically due to existing digital and development divides. Nonetheless, they have the potential to leverage this digital shift to foster development.
These findings are highlighted in a new report The Digital Economy Report 2024, by the UN trade agency UNCTAD, which emphasizes the need to take the digital sector’s negative environmental impact more seriously. The report calls for investments in renewables to slow these impacts.
ENVIRONMENTAL IMPACT OF DIGITALIZATION
UNCTAD chief Rebeca Grynspan stated, “The rise of technologies such as artificial intelligence and cryptocurrency mining has significantly increased energy consumption. We must harness the power of digitalization to advance inclusive and sustainable development while mitigating its negative environmental impacts. This requires a shift towards a circular digital economy, characterized by responsible consumption and production, renewable energy use, and comprehensive e-waste management.”
The report stresses the need to address the environmental costs of rapid digital transformation. Key concerns include the depletion of finite raw materials for digital and low-carbon technologies, escalating water and energy consumption, and the growing issue of digitalization-related waste. As digitalization progresses at an unprecedented rate, understanding its link to environmental sustainability becomes increasingly critical.
DEVELOPING COUNTRIES: BURDEN AND OPPORTUNITY
Developing nations bear the brunt of these environmental impacts but do not always reap the benefits. However, this scenario can change. Developing countries are pivotal in the global supply chain for transition minerals and metals, which are highly concentrated in a few regions. 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 of these minerals, presenting a development opportunity.
Minerals and Economic Opportunity
According to the World Bank, demand for minerals required for digitalization like graphite, lithium, and cobalt could surge by 500% by 2050. This increased demand presents a development opportunity for resource-rich developing countries. These nations can add value to extracted minerals, utilize proceeds effectively, and diversify within the value chain and other sectors.
Fiscal Strategies Amid Global Crises
Amid current global crises, limited fiscal space, slow growth, and high debt, developing countries should maximize this opportunity by domestic processing and manufacturing. This would help them secure a larger share of the global digital economy, generate government revenues, finance development, overcome commodity dependence, create jobs, and raise living standards.
ENVIRONMENTAL FOOTPRINT OF THE ICT SECTOR
The environmental footprint of the information and communications technology (ICT) sector is significant. It encompasses the entire lifecycle of digital devices and infrastructure—from raw material extraction and processing to manufacturing, distribution, usage, and disposal. This process consumes vast amounts of transition minerals, energy, and water, significantly contributing to greenhouse gas emissions and pollution.
In 2020, the ICT sector’s 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.
ENERGY CONSUMPTION AND E-WASTE
Artificial Intelligence and Cryptocurrency Mining
The development of artificial intelligence and cryptocurrency mining are of particular concern. Bitcoin mining, for example, saw its global energy consumption increase approximately 34-fold between 2015 and 2023, reaching an estimated 121 TWh. Between 2018 and 2022, the electricity consumption of 13 major data center operators more than doubled, highlighting the urgent need to address the energy and water footprints of these technologies.
E-commerce and Digital Waste
E-commerce has surged, with online shoppers growing from fewer than 100 million in 2000 to 2.3 billion in 2021. This increase has led to a 30% rise in digital-related waste from 2010 to 2022, reaching 10.5 million tons globally. Inadequate handling and disposal of digital waste exacerbates environmental inequalities, disproportionately impacting developing countries.
UNCTAD’S CALL FOR SUSTAINABLE DIGITALIZATION
UNCTAD advocates for innovative business models and robust policies to enhance the sustainability of digital growth.
Key recommendations include:
Adopting Circular Economy Models; Prioritize recycling, re-use, and recovery of digital materials to reduce waste and environmental impacts.
Implementing Resource Optimization; Develop strategies to use raw materials more efficiently and reduce overall consumption.
Strengthening Regulations; Enforce stricter environmental standards and regulations to mitigate the ecological footprint of digital technologies.
Investing in Renewable Energy : Promote research and development of energy-efficient technologies and sustainable digital practices.
Promoting International Cooperation; Foster collaboration among nations to ensure equitable access to digital technologies and resources, and to address the global nature of digital waste and resource extraction.
A CALL FOR GLOBAL COLLABORATION
UNCTAD urgently calls on the international community to implement comprehensive policies fostering a circular digital economy, minimizing environmental impacts, and bridging the digital divide. Most developing countries need further digitalization to participate effectively in the global economy. Immediate and coordinated efforts from governments, industry leaders, and civil society are essential for sustainable and inclusive digital development.
Current discussions on a Global Digital Compact and the upcoming 20-years review of the World Summit on the Information Society can be leveraged to this end.
KEY FIGURES
The ICT sector is estimated to have emitted between 69 to 1.6 gigatons of CO2 in 2020, representing 1.5-3.2% of global greenhouse gas emissions.
- Producing a 2 kg computer requires approximately 800 kg of raw materials.
- Demand for critical minerals like graphite, lithium, and cobalt could surge by 500% by 2050.
- Data centers consumed 460 TWh of electricity in 2022, with consumption expected to double by 2026.
- Digital-related waste increased by 30% between 2010 and 2022, reaching 10.5 million tons globally.
- Developed countries generate 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 (LDCs).
- Only 24% of digital waste was formally collected globally in 2022, with a mere 7.5% collection rate in developing countries.
- The number of semiconductor units quadrupled from 2001 to 2022, with 5G coverage expected to rise from 25% in 2021 to 85% by 2028.
- Internet of Things (IoT) devices are projected to grow from 16 billion in 2023 to 39 billion by 2029.
- Business e-commerce sales surged from $17 trillion in 2016 to $27 trillion in 2022 across 43 countries.
