689. The scale of decarbonisation. Digital solutions can help to reduce emissions and energy consumption, improve environmental monitoring, and facilitate better policy design.
690. However, there is a large and growing carbon footprint from digital solutions. The energy needed for computation and cooling of data centres is also increasing at an alarming rate as our economies become more digitised.500 Furthermore, there are risks from the rapid rise in digital technology on the climate, due to its 'rebound effects', where there can be increased consumption of energy due to the efficiencies the technology offers. There is currently a large amount of uncertainty on the scale of these effects, however policy should consider any potential unintended consequences of interventions in this regard.
691. The economic opportunity. The adoption of digital technologies can drive resource efficiency, reduce energy demand, and raise aggregate productivity.501 The TechUK Digital Economy Monitor shows that between 2010 and 2019 the sector's contribution to the UK economy has grown by 26.5%, with the latest DCMS figures showing the digital sector added £150.6 billion to the UK economy, 7.6% of total gross value added (GVA).502
692. Beyond the measured GVA impact, it is estimated that adoption of smart grid and smart meters could reduce total consumer energy bills by £354 million in 2030; and a smart, flexible energy system built on clean-digital tech could reduce total costs by up to £50 billion a year by 2050.503
693. New innovations in digital and investment to scale emerging tech will be key to delivering the level of decarbonisation required to meet the UK's net zero commitments. Up to 15 per cent of the forecast reduction in the UK's total GHG emission between 2019-govertn2030 is attributed to the expected impact of digital technologies, reducing UK 2030 emissions by 7.2 MtCO2e.504
694. The UK has existing comparative strengths in clean and clean-digital technologies and products, but the scale of the economic opportunity needs unlocking by Government. Digital technology adoption and innovation can drive both productivity growth and decarbonisation and will be key to delivering a smart energy system.
695. The Review has heard that Government has a role to play in crowding-in private investment and scaling up emerging sectors and technologies.
696. Digital technologies are not being harnessed at scale. However, investment in green (and digital) innovations is slowing down. Only around 20% of patents protecting climate change mitigation technologies have a digital component.505
"There is hesitancy to embrace digital skills, or digital tech, despite understanding the rationale that such adoption brings greater efficiencies, optimisation, and lower energy consumption." - TechUK506
697. There needs to be a standardised approach to emissions counting and frameworks to properly evaluate business action.
"Firms and government need robust data to measure progress. However, firms, particularly SMEs, are new to carbon accounting, and therefore require support to adopt standardised approaches to collect and collate data, as well as turning information into intelligence." - TechUK507
698. We need better integration between digital and green innovations. This could be achieved via increased support for demonstration projects.
699. Support to R&D undertaken by business should primarily be direct and technology neutral. Innovation in breakthrough technologies cannot be incentivised through horizontal support or deployment subsidies.
"The opportunities are primarily around long term, stable frameworks that markets can support. The climate-tech/clean-tech community is well funded and growing at a much faster rate than the rest of the sector, however, sectors that need to decarbonise are still not incentivised, or do not have the confidence in long term policy. Measures addressing this include: long term tax reliefs to offset capex needed for adopting digital technologies; 'Green vouchers' for SMEs to help adopt decarbonising technologies; moving away from specific products/machines and towards systems that are eligible for grant reliefs and standardisation of emission data capture and reporting, and ensuring standards are internally aligned." - TechUK508