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The Straits Times: South-east Asia’s Digital Growth Doesn’t Have to Compromise on Climate Goals

09 Jun The Straits Times: South-east Asia’s Digital Growth Doesn’t Have to Compromise on Climate Goals


Our post-pandemic world faces many challenges in the search for economic recovery.

As countries see the digital economy as a golden opportunity to boost growth, the urgency for climate action is also growing as they cope with record temperatures, droughts, fires and floods.

It may seem like the twin goals of growing the digital economy and addressing climate concerns are at odds.

The digital world isn’t all about electrons that deliver mobility and ease of access to a world of products and services to consumers.

It has a carbon footprint.

Perhaps, the most controversial of the infrastructure required to run the digital services is data centres – powering everything from cloud services and online working habits to watching an Instagram reel of a cat doing a trick on your phone.

Data centres have a high carbon footprint and consume a significant amount of energy. Collectively, data centres consume as much as 1 per cent of all global electricity, according to the International Energy Agency. As the digital economy grows, that number will – unless addressed – rise exponentially.

This is especially challenging for our region, where consumer spending and the demand and use of digital platforms and services are growing rapidly.

The e-Conomy SEA 2022 report by Google, Temasek and Bain estimates the digital economies of the top six countries in Asean to be worth some US$1 trillion (S$1.35 trillion) by 2030.

South-east Asia is targeted to be the fastest-growing region for data centre facilities, with data centres expected to grow by 16.5 per cent, according to global consulting firm Kearney.

All this is good for the economy, but steps must be taken to reconcile digital growth with protecting our planet.

This is where governments in the region can do more in allowing efficiency and scale across borders while addressing energy needs and climate concerns.

Even as governments consider the necessary changes to policies and regulations, some leading digital players are already taking steps to address the climate concerns.

Steps to green the digital industry

One area of improvement is in the design of data centres in order to cut their energy needs and carbon footprint.

Technologies like artificial intelligence (AI) and machine learning are incorporated into this process to optimise resource management and operational efficiencies.

Current best practices aim for a 30 to 40 per cent reduction in energy use.

Technology giant Google and its subsidiary Google DeepMind have developed an AI-powered data centre management software to optimise cooling, reducing electricity consumption in data centres by 40 per cent.

While energy reduction is the first priority, data centre providers are also embarking on initiatives to reduce their carbon footprint. This includes the purchasing of carbon credits to offset emissions, as well as incorporating renewable energy to power data centres.

Equinix, one of the world’s largest data centre operators, plans to use a mix of new renewable energy sources like biodiesel and hydrogen, as well as carbon offsets to help meet their internal commitments towards climate neutrality.

As these examples multiply, standards should be set and best practices identified.

However, there is more that the industry needs to do. Beyond data centres, effort is needed for software and applications.

“Green coding” is required to ensure that software by design consumes a minimal amount of energy when processing lines of code, therefore reducing the overall energy demand and carbon footprint – while still delivering on performance.

Digital players must also give attention to what are called “Scope 3” emissions under the Paris Agreement on climate change.

These are emissions that are not produced from a company’s own activities, but from its suppliers located within its value chain.

For example, when a digital platform links customers to sellers, the platform operators need to help ensure that the fulfilment of those orders is also efficient and less carbon-intensive.

Otherwise, while consumers order products electronically and efficiently, the delivery of those items comes by diesel trucks or pollutive scooters – further contributing to carbon emissions.

Several digital platforms are already making this effort to help their suppliers move forward on climate action and nudging consumers towards greener practices.

For example, Lazada’s RedMart utilises a routing algorithm to ensure last-mile delivery services are the most efficient. GoTo in Indonesia has offered consumers the opportunity to mitigate their own carbon footprint with its #GoGreen carbon offset initiative.

Digitalisation can and should go deeper to decarbonise supply chains which are well-equipped to do so. This is especially so with cross-border shipment – by air and by sea – of products.

At present, these usually require extensive documentation that takes time and much laborious attention.

Digitalisation of trade documentation can lead to less paperwork, faster delivery as well as less carbon emissions.

Asean leaders agreed to establish and implement the Asean Single Window (ASW) in 2005, to digitalise and provide a single platform for the exchange of trade documentation. Efforts are under way to expand this to include other key trading partners.

Leveraging Asean mechanisms

Governments can also leverage existing regional mechanisms to move ahead.

One opportunity lies in the Asean Digital Economy Framework Agreement (DEFA), one of Indonesia’s key priorities as Asean chair. The DEFA aims to create a digital trade ecosystem through the harmonisation of digital rules and standards across Asean.

All members can see that growth prospects are increased by acting together as a region, rather than independently. Yet key issues within the digital domain still remain to be resolved, including the cross-border transfer of data and the protection of privacy and cyber security.

The agreement, as a framework, cannot resolve all the issues.

But it would do well to recognise the importance of the issues raised and identify principles and even priority areas to guide further action.

In this way, the agreement can build momentum for cooperation and pilot schemes, with Singapore assuming the chair for the Asean Digital Ministers Meeting in 2024.

Another opportunity involves the Asean Economic Community (AEC) which was inaugurated in 2015.

The community did not explicitly incorporate the digital economy when it was formed eight years ago. Its next phase of development should do so and ally that growth to sustainability and climate concerns.

The AEC has already taken steps towards various digital and sustainability initiatives. These include implementing the Framework on Circular Economy for the AEC, formulating an Asean Strategy on Carbon Neutrality and the Asean Taxonomy for Sustainable Finance. However, the integration of digital and green initiatives is currently not on the agenda.

Beyond Asean there are also other regional mechanisms that can be leveraged to address the climate concerns, such as bilateral and mini-lateral digital economy agreements – like the Digital Economic Partnership Agreement (DEPA) that includes Chile, New Zealand and Singapore.

Developing a regional, renewable power grid

At present, for most countries, the source of such energy needs is largely fossil fuel-based, and indeed many still rely on coal. To meet their climate obligations, all Asean countries must increase their renewable energy capacity.

Perhaps, the most critical of the synergies within Asean is in developing green energy grids. While still at its nascent stages, an interconnected grid across the region would help accelerate regional decarbonisation, with the renewable-rich Asean member states able to export energy to the rest of the region.

Steps towards green energy can be made more resilient, efficient and sustainable if those sources of renewable energy could be linked across borders.

This also has the added benefit of economic returns.

With increased access to a larger consumer base, the market pricing for renewable power would tend to be higher, ensuring a good payback for investors in renewables.

This also offers an opportunity for digitalisation. The interoperability and optimisation of an energy grid across borders and with different types and sources of power generation is best served by digitalised grids that incorporate AI systems.

The growth of a regional green power grid would ensure that the digital sector – and indeed many others – can access energy to grow, without adding to the carbon footprint.

Two major events took place this week: Temasek’s annual sustainability event Ecosperity and the Infocomm Media Development Authority’s flagship technology event Asia Tech x Singapore.

The timing of these events might appear coincidental, but the intersections between digitalisation and decarbonisation are growing.

It is increasingly impossible to talk about one without considering the other.

Simon Tay is chairman of the Singapore Institute of International Affairs (SIIA). Janessa Kong is senior policy analyst and Rohini Nambiar is assistant director at the same institute.

The SIIA’s report, Building A Digital-Green Asean, was launched at the ATxSummit and the SIIA hosted the Sustainable World Resources Dialogue on 9 June 2023.

This article was first published on 9 June 2023.

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.