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Digitize to decarbonize | Business

In the current global socioeconomic context, and especially after the crisis caused by the covid pandemic, digitization and sustainability have become fundamental pieces for economic and social transformation, making it especially relevant to understand and analyze how both interact.

How does digitization affect decarbonization? In recent years, the use of technology and digitization has intensified in various sectors, which will undoubtedly contribute to economic and social progress. However, digitization also acts as a lever to decarbonize the world economy, thus facilitating compliance with the Sustainable Development Goals (SDGs) and in turn the transition to a low-emissions economy.

The transformation towards a digitized society through technological innovations has, among other advantages, the ability to increase energy efficiency and facilitate the production and storage of renewable energies, with the consequent effect on emissions. A recent study published by BBVA Research suggests that digitalization is favoring the reduction of CO₂ emissions in highly digitalized economies, such as those of the Persian Gulf, the United States and European countries. In the medium and long term, it should promote decarbonization in economies with lower levels of digitization, as is the case in Latin America or Africa.

The study points to the existence of an inverted U-shaped relationship between digitization and CO₂ emissions per capita, so that thresholds or minimum levels of digitization are identified from which the emissions generated by economic activity begin to decrease. reduce. According to this analysis, the direct marginal effect of digitization on emissions is limited compared to that of other variables, such as GDP per capita, but once the threshold is reached it can cause a reduction in emissions per capita of up to 10%. in fully digitized economies. However, the total effect is greater, with a maximum reduction in emissions per capita close to 45%, when also including the indirect impact, such as the gains derived from higher energy efficiency and greater use of renewables. The estimated digitization thresholds for the direct and indirect effect were exceeded in 2020 by 60% and 70% of the countries analyzed, respectively.

Looking to the future, and as digitization progresses and spreads globally, we should see significant additional gains in the process of decarbonizing the world economy. In short, a unique challenge that requires a paradigm shift and a profound digital transformation in which technology transfers will be key.

Joxe Mari Barrutiabengoa and Pilar Morefrom BBVA Research.

He knows in depth all the sides of the coin.

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