The hidden environmental cost of digital: Insights from UNCTAD’s 2024 Report

The digital revolution has transformed the way we live, work, and connect. Smartphones, data centres, and smart devices have become essential parts of daily life. But comes with a serious environmental price tag that most people don’t see.

The United Nations Conference on Trade and Development (UNCTAD) released its Digital Economy Report 2024, showing the environmental impact of the digital economy.

The scale of digital growth and environmental footprint

This rapid expansion demands massive amounts of natural resources.

Smartphone shipments have more than doubled since 2010, reaching 1.2 billion units in 2023.

Internet of Things (IoT) devices are set to grow 2.5 times from 2023 to 39 billion by 2029.

Business e-commerce sales jumped nearly 60% from 2016 to 2022, reaching $27 trillion across 43 countries.

Digital waste is accumulating at a rate faster than our ability to collect it. Waste from screens and small IT equipment rose 30% between 2010 and 2022, reaching 10.5 million tons. Poor disposal practices create pollution and health hazards for communities worldwide.

Energy consumption

The ICT sector’s energy consumption tells another concerning story. Digital devices, data centres, and networks account for an estimated 6% to 12% of global electricity use. In 2020, the ICT sector emitted between 0.69 and 1.6 gigatons of CO2 equivalents, representing 1.5% to 3.2% of global greenhouse gas emissions.

Critical minerals

Modern digital devices depend on an increasing variety of critical minerals, driving enormous demand.

These materials are essential for both digital devices and clean energy technologies, creating intense global competition.

The supply chain also has geographic concentration, in 2023:

• The Democratic Republic of the Congo produced 74% of the world’s cobalt.
• Australia and Chile accounted for 72% of lithium production.
• Gabon and South Africa produced 59% of manganese.
• China dominates processing and handling, accounting for over half of the global processing of aluminium, cobalt, and lithium, and nearly 100% of the processing for natural graphite.

This concentration creates geopolitical risks and economic vulnerabilities. Resource-rich developing countries often remain stuck in low-value raw material exports while missing opportunities to move up the value chain. Mining these critical minerals also raises serious environmental and social concerns for local communities.

Energy consumption

Data centres are very energy-intensive. From 2018 to 2022, electricity consumption by the 13 largest data centre operators more than doubled.

The International Energy Agency expects this to double to 1,000 TWh in 2026.

These facilities can strain local power grids.

• In Singapore, data centres accounted for around 7% of the country’s electricity demand in 2020.
• In Ireland, the electricity demand reached 18% in 2022.

Cryptocurrency mining adds another demand for energy consumption.

• The global energy consumption for Bitcoin mining increased 34 times between 2015 and 2023, reaching an estimated 121 terawatt-hours (TWh).

Water consumption

Water consumption is often overlooked:

Newer technologies, such as generative AI, require even more potable water for cooling servers. In the United States, one-fifth of the direct water footprint of data centre servers comes from watersheds that face moderate to high water stress.

Digital inequality

The environmental costs of digitalisation fall disproportionately on developing countries, while they receive fewer benefits. Developed countries generate 3.25 kilograms of digitalisation-related waste per person, compared to less than 1 kilogram in developing countries and just 0.21 kilograms in least developed countries.

Much of the digital waste created in wealthy nations gets shipped to developing countries, where formal collection and recycling systems are often inadequate.

The value chain reveals another disparity. Higher-value parts of digital waste, such as printed circuit boards, are exported from developing to developed countries for processing. This keeps developing countries locked in the low-value segment of the waste value chain.

Developing countries also face environmental costs from mineral extraction and processing. These activities often lead to environmental degradation, pollution, and competition for local resources, such as water, between mining operations, agriculture, and households.

Building a circular digital economy

The current “extract-make-use-waste” model needs to change. The global economy is only 7.2% circular, and this share is declining due to increased material extraction and use. Only 24% of digital waste was formally collected globally in 2022, with much lower rates in developing countries.

A circular approach focuses on designing durable products, promoting responsible consumption, encouraging reuse and recycling, and supporting sustainable business models. This shift addresses environmental concerns while creating economic opportunities and jobs.

By optimising resource use and reducing waste, businesses can lower costs and create new market opportunities.

Recommendations for Action

The UNCTAD report outlines specific steps for different stakeholders:

For Governments and Companies:

• Link environmental and digital policies more closely
• Harmonise reporting standards and improve transparency about environmental and social impacts
• Balance the strategic importance of critical minerals with sustainable practices
• Implement stricter regulations on energy and water consumption for data centres
• Design policies to address planned obsolescence

For the International Community:

• Help mineral-rich developing countries build capacity to add value to raw materials
• Support developing countries with financial and technical assistance
• Foster cooperation to standardise regulations for sustainability
• Work together to reduce illegal digital waste exports
• Strengthen infrastructure for proper digital waste disposal

For Companies:

• Design products that last longer and are easily repairable
• Reduce waste through better design and offer sharing services like leasing
• Focus on improving data centres’ energy and water efficiency
• Power operations with low-carbon electricity
• Support sustainable business models

For All Stakeholders:

• Undertake comprehensive assessments of digitalisation’s environmental effects
• Educate consumers about the environmental impacts of their devices
• Promote the use of refurbished and second-hand products
• Assess water usage and its impact on local resources
• Collaborate to develop inclusive solutions

A sustainable future

The digital economy offers tremendous opportunities for human development and economic growth. But making these benefits sustainable requires immediate action from all stakeholders to build systems that work for both people and the planet.

The choices we make today about digital technology will shape our environmental future. By embracing circular principles, supporting sustainable practices, and ensuring equitable access to digital technology, we can create a digital economy that serves everyone while protecting our planet for future generations.

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