Where: EU Greens/EFA Roundtable, 6th of September
Below the speaking notes/outline of my presentation.
3 things I am going to leave you with
- A mental model for the digital economy
- What sustainability really means in the digital economy and its infrastructure
- The role of government is to create transparency & set boundary conditions
A mental model to understand and explain the digital economy
Understanding the digital economy, its products and services, and the infrastructure that powers it is vital to understand the challenges it faces to become sustainable. Our simplified model has the goal of creating a common language for talking about the digital economy.
Digital products & services are the interaction points of human society and the digital economy.
The main interaction between society and the digital economy is through digital products & services that the digital economy provides. These can be social networking products such as Facebook and Instagram, as well as service-based offerings such as Uber or Delivery Hero. The same is true for business-to-business products & services, where we can find many CRMs-as-a-Service or Automation services that are used by the employees of companies.
Misleadingly, the companies that make these digital products & services are referred to as technology companies, even though most of them do not create technology but apply it. To create digital products, they assemble technology components — mainly free open-source software technology. They combine them with an interface that people can interact with, a business model, and provide fuel.
This also explains the breathtaking pace of new products appearing in the market. Each new product is merely an iteration, a tweaked or slightly altered assembly of the same technological components. There are more than 100 messaging applications — few of them actually invented messaging technology — most of them are using the same technologies but have slightly changed the business model or the user interface to differentiate. These are the digital products & services companies.
They depend on a few ingredients:
- Open-source and free technology to build products & services from
- Business models to generate shareholder returns
- Fuel to power their digital products & services
- Networks to provide connect digital products with customers & fuel
The fuel is what we call ‘digital power’. It’s not data — data is the input of digital technology and also its output. This is often misunderstood.
Digital infrastructure is a combination of facilities that generate digital power and networks that transport data of digital products between processing & storage facilities and customers.
This is very similar to electricity, where power grids (networks) bring electricity from power plants to customers. The power plants of the digital infrastructure are data centers that house the equipment that generates digital power. A fiber network delivers the inputs of a human, which is then processed using digital power and the results are sent back. All of this can happen within the same device, take a smartphone as an example, which possesses its own storage and processing capacity while being connected via a network to larger digital power facilities. Most digital products & services rely on the large network of digital power generators to perform the complex functions required for digital products & services today.
So, a few things I want you to keep in your mind:
- Digital products & services assemble technology, business models and require fuel
- Digital infrastructure provides both the fuel (‘digital power’) and the transport mechanism for data (‘fiber networks’)
- Data centers are the large-scale power plants of the digital economy, fiber networks are the power grids
What sustainability means for digital infrastructure
Sustainability means meeting our own needs without compromising the ability of future generations to meet their own needs. In addition to natural resources, we also need social and economic resources.
The digital infrastructure consists of a few parts: Digital power generators and data storage devices (servers), to which the primary components are silicon chips. Buildings and infrastructure to house those generators (electrical conversion, cooling, concrete structures) - data centers. And finally, fiber networks to transport & connect the generators and customers. Finally, all of this is running on electricity.
Of these parts, networks are the most sustainable today. Shooting photons — light — through fiberglass doesn’t cost much energy. Once installed, fiberglass cables can last centuries, they don’t have to be replaced or upgraded. The culprit lies within the generation of digital power and storage.
Defining sustainable digital infrastructure for Europe, therefore, should focus on three key aspects:
- It should have no negative impact on the environment. Green electricity is the starting point, but also green buildings, energy re-use, cooling, recycling of all electronic waste, removing diesel generators, minimizing waste and unused capacity.
- It should enable the competitiveness of digital businesses which decide to use European digital infrastructure. Competitiveness enables Europe to attract foreign digital products & service companies.
- It should enable inclusive prosperity. The operating model of global, large-scale digital infrastructure actors today is not creating prosperity for the regions where the infrastructure is built. Infrastructure should empower local businesses, creating sustainable digital ecosystems. The internet enables one global, market in which everyone can participate, it embodies decentralization. We must avoid building another layer on top that benefits only a handful of companies.
The role of the EU to demand transparency & set boundary conditions
Europe is already pioneering some very deep technical regulations — such as the Ecodesign guidelines for servers. But what is missing is effective system-wide action to kickstart the creation of sustainable digital infrastructure in Europe.
The digital economy is a system, in which digital infrastructure is the foundation. Today, we have no reliable information on how many resources this system consumes. Nor do we know how many emissions it creates. Without this information, it is difficult for innovators and researchers to invent new sustainable solutions, and it’s even more difficult for governments to act.
It also hinders collaboration across industry boundaries, more than 30 various industries with thousands of companies each make up the digital economy.
Creating transparency can happen on two levels:
- on the level of digital products & services — creating transparency on energy- & resource consumption, enabling customer choice
- on the level of digital infrastructure, creating national and regional transparency registers for digital infrastructure operators to report to
A combination of these two — focusing first on infrastructure and then products, will accelerate change and drive innovation to create a sustainable digital economy.
The second step is to set boundary conditions on the most important sustainability metrics for digital infrastructure. And a timeline for when they need to be reaching zero.
The technologies to get to zero on all these metrics exists already. And with our roadmap, we show all the activities that will be needed to get to zero. However, the EU has to set clear targets — zero on all environmental impact, resource consumption metrics, and a target for socio-economic benefits.
The digital economy benefits massively from not accounting for the environmental and social costs of digital products. It’s the reason cloud providers like AWS record 42% profit margins. They are not accounting for the true costs. And this can only happen if the EU sets the proper boundary conditions.
It will lead to more competitive, and more environmentally sustainable infrastructure.