ict lowcarbon growth china
TRANSCRIPT
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January 2011
ICT and Low Carbon Growth
in China
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ICT and Low carbon growth in China Page 1
This paper has been prepared by Dr Simon Zadek ([email protected]), Maya Forstater, Kelly Yu and Jon
Kornik for Digital Energy Solutions Campaign (DESC) . The paper was produced with the support and
inputs of DESC’
s members including Intel, HP, Lenovo and Nokia.
The paper is intended both for policy makers and business leaders in China, to help to spark thinking
and discussion on the potential role that the ICT sector can play in China’s transition to low carbon
development and the steps that can be taken to accelerate that transition. The audience for this paper
is not limited to those already concerned with ICTs, but also for those concerned with the industries
that could benefit through greater use of these technologies, including in buildings, transportation,
agriculture, logistics, manufacturing and services, as well as in public institutions that are also energy
users.
The paper draws on the insights of policy makers, business leaders, and low carbon growth experts
who took part in the China International ICT and Low Carbon Economy Development Forum, hosted
by the Ministry of Industry and Information, the Ministry of Science and Technology, and the Ministry
of Environmental Protection in Beijing on Dec 17th 2010. Those who provided inputs and comments
to the paper and the Forum included Feng Fei of Industrial Economics Research Department, DRC , Li
Junfeng of Energy Research Institute, NDRC, Zong Fang of Energy Saving Promotion Committee, Steve
Harper, CY Yeung, Terry Zhang, Ding Wei, and David Xu of Intel, Hongjun Zhang of Holland & Knight,
Professor Wang of xxxxx, Zhao Jun of HP, Dr Tao Hongzhi, Xudong Chen, Gong Xun, and Paul Huang of
Lenovo, Fu Lei, Salla Ahonen and Chen Min of Nokia, Professor Qi Ye of Tshinghua University and the
Climate Policy Institute, Dr Zou Ji of Renmin University and WRI, Professor Jin Min of Renmin
University, Director Huang Dao of the China Iron and Steel Association, Peter Johnstone and Robert
Madelin of the European Commission, Dennis Pamlin, who has been a leader on WWF’s area in this
work, Chris Tuppen who has been active in this area through BT, Smart 2020 and GeSi, Molly Webb,
and Wu Changhua of Climate Group, Mark Levine, Jonathon Toomey, Dale Sartor, and Bo Shen of
Lawrence Berkeley Labs, Jiang Jiaqi of US Information Technology Office , Wu Jichuan of Chinese
Institute of Electronics, Zhou Zixue of MIIT, Bie Tao of Department of Policies, Laws and Regulations,
Ministry of Environmental Protection, Helen Chui of HP, Cuizhong, of China Institute of Strategy and
Management, Wen Zongguo of China Circular Economy Industry Research Center, Tsinghua University,
Zhang Junhua of Zhejiang University, Peng Jun of China Mobile, Chen Qingquan of Chinese Academy of
Engineering, Fang Qing of China Energy Conservation Association, Wang Yi of China Academy of
Sciences, Shi Jianwei of Beijing Municipal Institute of City Planning and Design, Zhou Fuqui of Energy
Research Institute, National Development and Reform Commission, Li Pengcheng of China National
Institute of Standardization, Zhang Jian of ASAT Technology Corp, Wang Hongtao of Sichuan University,
Allen Yen of SIA China, and Yu Yuqing of Climate Policy Center, Tsinghua University. . Antonio Álvarez
García-Mon provided key support to the quantitative modeling.
The paper also draws on the valuable work of key institutions including the Development Research
Center of the State Council, Energy Research Institute of the National Development and ReformCommittee, the Program of Energy and Climate Economics at Renmin University, the UN Development
Program, The Climate Group, the Global e-Sustainability Initiative, WWF and McKinsey & Company.
The reports content, including and errors and omissions, remain the responsibility of the authors.
Cover photo by Huangjiahu
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Contents
Summary .................................................................................................................. 4
1 ICT and China’s low carbon growth goals........................................................ 11 1.1.1 The opportunity for green transformation ........................................... 11 1.1.2 The ICT sector contribution .................................................................. 14
2 The relationship between ICT, growth & emissions ........................................ 18 2.1.1 The ICT industry drives productivity and competitiveness .................... 18 2.1.2 The ICT contributes directly to economic growth ................................. 22 2.1.3 The ICT sector’s own footprint ............................................................. 24 2.1.4 ICT enabled carbon savings in other parts of the economy ................... 28
3 Realizing the potential for ICT enabled low carbon growth in China .............. 36 3.1.1 What are the barriers to technology adoption? .................................... 37 3.1.2 What should technology users do? ...................................................... 40 3.1.3 What tools and measures of support are already available? ................ 41 3.1.4 The need for collaboration ................................................................... 43
Annex...................................................................................................................... 49
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Exhibits
Exhibit A: Relationship between ICTs and intensity goals ....................................... 5 Exhibit B: Summary of estimated impacts .............................................................. 5 Exhibit C: ICT sector emissions intensity fall faster than general economy ............. 6 Exhibit D: ICT enabled contribution to national carbon intensity targets ............ 7 Exhibit E: Key technology opportunities ................................................................ 8 Exhibit F: Key Questions and answers .................................................................... 8
Exhibit 1: ICTs and energy and carbon intensity impacts ...................................... 14 Exhibit 2: Investment in ICT asset base drives growth .......................................... 18 Exhibit 3: ICT contribution to economic growth, by % by region .......................... 19 Exhibit 4: Growth impacts of ICT .......................................................................... 20 Exhibit 5: China network readiness ...................................................................... 21 Exhibit 6: Supporting environment key to network readiness .............................. 22 Exhibit 7: IT Industry has grown faster than the rest of the economy .................. 23 Exhibit 8: ICT Exports are growing faster than general exports ............................ 23 Exhibit 9: The ICT value chain .............................................................................. 24 Exhibit 10: ICT brand’s own life cycle assessments of their product’s footprints 25 Exhibit 11: Carbon footprint of ICT in China ....................................................... 26 Exhibit 12: Opportunities for reducing the ICT carbon footprint ........................ 27 Exhibit 13: ICT sector emissions intensity could fall by 63% ............................... 28 Exhibit 14: ICT enabled emission reduction opportunities ................................. 29 Exhibit 15: International studies on ICT enabled emission reductions ................ 30 Exhibit 16:
ICT enabled emissions reduction potential ....................................... 31
Exhibit 17: ICT enabled contribution to national carbon intensity targets .......... 32 Exhibit 18: China ICT enabled emission reductions compared to other countries
32 Exhibit 19: China’s ICT enabled emission reduction potential compared to India33 Exhibit 20: China technology opportunities compared to other countries .......... 34 Exhibit 21: Stages in technological diffusion ...................................................... 37 Exhibit 22: Key steps for technology users ......................................................... 40 Exhibit 23: Life cycle assessment approach for ICT ............................................. 42
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Summary
China is committed to a pathway of green growth based on scientific and
technological progress and innovation. As Wu Jichuan, Director-General of Chinese
Institute of Electronics and Former Minister of Ministry of Information Industry told
assembled business, policy and ICT experts at the China International ICT and Low Carbon Economy Development Forum, hosted by the Ministry of Industry and
Information, the Ministry of Science and Technology, and the Ministry of
Environmental Protection “ In the post financial crisis era, China has begun to adopt
practical measures to promote low carbon development. The Chinese government
has declared that carbon intensity will be reduced by 40-45% between 2005 and
2020, and the 12th 5 year plan aims to speed up energy efficiency and low carbon
development models. Within in this the ICT industry is the pioneer of energy
efficiency .”
Chinese policy makers and leading ICT businesses are beginning to recognize theimportant role that ICTs can play in driving low carbon growth. ICT is an amplifier of
industrial development and contributor to industrial upgrading while being much
less emissions intensive than other industries. Zhou Zixue Chief Economist of MIIT
told the forum “ ICT very important to promote the transformation of high carbon
industries into low carbon industries, which is a means towards sustainable
development.” This potential has been confirmed internationally through numerous
studies such as those by European Commission, The Climate Group, the Digital
Energy Solutions Campaign, the Global e-Sustainability Initiative and WWF.
MIIT is actively encouraging research and development into energy efficienttechnologies and the ICT industry, and is calling on industry to take leadership. The
aim is to increase the share of ICT in the overall economy and to encourage ICT to
contribute to energy conservation in energy intensive industries , “ We warmly
welcome both domestic and international companies to promote ICT for low-carbon
development in China” said Zhou. Bie Tao from the Department of Policies, Laws
and Regulations in the Ministry of Environmental Protection called on all of society,
but especially the ICT industry to hold the flag of low carbon development,
“ Companies can play a leading role here” he said, “ there is pressure but also a great
opportunity in the transition of the Chinese economy.”
Companies represented at the Forum, including Intel, Lenovo, HP and Nokia
indicated that they accepted this call to action. They highlighted the work that they
were doing to reduce their own green house gas emissions, as well as those of their
suppliers and customers, over the full life-cycle of ICT product use.
ICT can help to decouple economic growth from energy consumption and
emissions both by contributing to economic productivity, and by reducing
emissions.
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Exhibit A: Relationship between ICTs and intensity goals
High level estimates indicate the significant contribution that ICT could make to
China’s low carbon development through each of these dimensions. These
estimates are tentative and provisional, due to many uncertainties, but nevertheless
show that there are large opportunities to drive productivity across the economy
through ICT adoption.
Exhibit B: Summary of estimated impacts
190Mt CO2 in 2007,
falling 64% in
intensity by 2020
2007年二氧化碳排
放量为1.9亿吨,2020年将下降64%
13-18% of 2020
emissions intensity
target
2020年实现13-18%
的减排目标
Each RMB of ICT
investment drives
RMB1.6 of GDP per
year
ICT产业每投资1元
人民币每年可创造
1.6元GDP
7.2% of GDP by 2020
2020年创造7.2%GDP
ICT enabled emission
reductions
利用ICT技术实现二氧化碳减排
ICT sector
value added
ICTY部门经济产值增长
ICT enabled
competitiveness
利用ICT技术提高竞争力
ICT sector
carbon footprint
ICT部门碳排放足迹
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ICT use improves competitiveness and productivity. Breakthroughs in information
technology provide the basis for leaps in labor, capital, and firm productivity. In
developed countries it has been found that each US$ invested in the ICT asset base
results in the annual creating of around US$1.4 of added value from the productivityuplift of ICT on other sectors. In China, one estimate suggests that from 1995 to
2003, ICT was responsible for 8% of economic productivity growth.1
We estimate
that by 2020 China’s ICT sector will contribute 5.9 trillion RMB of added growth to
the economy, accounting for 7.2 % of the economy, and contributing 8.6% of overall
economic growth over the decade. This is crucial to achieving the shift from a heavy
industry to a knowledge and service sector oriented economy, which is core to
China’s low carbon, and overall economic development strategy.
The ICT sector can reduce its own carbon intensity. The ICT sector itself, has
relatively low energy and carbon intensity, although its absolute emissions are
growing. In 2007 the ICT industry contributed 2.4% of total China emissions and
about 1 trillion RMB of added value, giving an emission intensity of around 190 MT
CO2/M RMB. By 2020 it is projected that the ICT industry will produce 415 MT of
emissions, or 3.0-3.3 % of the country’s total emissions at the same time the sector
will provide 7% of economic output, giving an emissions intensity of 70 MT/M RMB.
This means the carbon intensity associated with the ICT sector could reduce by over
60%.
Exhibit C: ICT sector emissions intensity fall faster than general economy
11Note: Exchange rate of 6.831 USD/RMBSource: CEIC Database; “China’s Low Carbon Development Pathways by 2050 – Scenario Analysis of Energy Demand and Carbon Emissions” – by Energy
Research Institute of NDRC; Smart2020, NBS & MIIT from CCID Consulting, Jan 2009; team analysis
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
20202005
40-45%
Overall China emissions intensity
tCO2e/RMBm GDP
China ICT sector emissions intensity
tCO2e/RMBm value add
Overall China economy
China ICT sector
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
20202007
-64%
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The largest potential is for ICT enabled emission reductions is in other industries,
where ‘smart’ technologies could abate 1.4 -.1.8 GT CO2e by 2020. This would
amount to between 13% and 18 % of the national GHG intensity reduction target for
2020. ICTs enable energy and emission savings through monitoring and optimizingenergy use (such as in heating, lighting and industrial processes), optimizing product
and service provision (such as through smart logistics and transport and traffic
controls), and by enabling substitution of virtual services such as virtual meetings,
and music downloads for real world office space, travel, products and shipping. The
emissions savings enabled by ICT use could be up to 4 times greater than the direct
emissions related to ICT over that period.2
Exhibit D: ICT enabled contribution to national carbon intensity targets
This estimate is based on cautious assumptions and technologies already on the
market internationally, in many cases being trialed and developed in China. Key
areas of opportunity are through ICT applications in electricity generation anddistribution (smart grids), energy efficient buildings and industrial processes,
optimization of logistics and dematerialization.
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
20202005
-40%
33
40% emissions intensity reduction,
tCO2e/RMBm GDP
Assumes constant exchange rate over time of RMB6.83/USDSource: CEIC Database; “China’s Low Carbon Development Pathways by 2050 – Scenario Analysis of Energy Demand and Carbon Emissions” – by Energy
Research Institute of NDRC; Smart2020, team analysis
45% emissions intensity reduction,
tCO2e/RMBm GDP
15.2 –
18.5%
ICT contribution to intensity reduction
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
20202005
-45%
13.5 –
16.5%
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Exhibit E: Key technology opportunities
[Source: Smart 2020, team analysis]
Exhibit F: Key Questions and answers
Total
Dematerializa on 167
Smart Logis cs 274
Smart Motors 286
Smart Buildings 328
Smart Grids 481
1,536
Emission reductions from ICT enablement in China in 2020, MtCO2e
1,382 1,689
A
B
C
D
E
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Achieving these opportunities for low carbon growth requires action by technology
providers and users, as well as enabling frameworks provided by public policy and
procurement. As Zhang Jiutian, Director, Ministry of Science and Technology told
the Forum, “calculation of emission reduction maybe not the most difficult task, but how feasible or realistic is if for the potential to be realized, and how to make it
known and accepted, are the key. “
Demonstrating and enabling ICT use in practice is as important as development of
technologies. Often when new technologies are developed they cannot be
immediately introduced within existing business models. Peng Jun, Director of China
Mobile’s Green Action Program highlighted this dilemma, “f or many energy
efficiency technologies, a large upfront investment is required with long payback
times. While China Mobile has implemented technologies with a 10 year payback for
energy savings many other companies will not be able to afford such an
investment.” He called for stronger measurement tools and third party verificationof savings opportunities, to help companies make the case for investment in these
measures.
Many participants highlighted the need for more in depth case study research to
demonstrate the benefits of ICT enabled emission reductions. Professor Cuizhong,
from the China Institute of Strategy and Management said “IICT is widely connected
with all industries and energy sectors, for each industry we need to find good
examples and then promote these. There must be standards to specify how energy-
efficiency can be achieved through ICT applications.” He called on companies to
show leadership in developing pilot projects, while initiatives such as DESC could
draw together and disseminate evidence, and best practice.
There is a need for more detailed policy analysis, alongside the technical and
commercial case studies Participants agreed that enabling national policy
frameworks are crucial. While China has a set of ambitious strategies both for energy
efficiency and for ICT, they are not strongly joined up, and as the World Economic
Forum’s ‘Network Readiness’ analysis highlights there is much still to be achieved.
Continuing to develop a stronger ICT infrastructure, and expanding broadband
access is crucial but further areas that should be explored include:
The role of public procurement in demonstrating the benefits of smart grid,
smart transportation, travel substitution, smart buildings and other smart
technologies.
The potential for adopting or creating protocols for measuring the energy-
efficiency and climate impacts of ICT in other economic sectors, and for the
interoperability of devices.
The potential for integrating ICT tools and approaches into training, tools
and incentives as part of the overall strategy for industrial energy efficiency.
Collaborative action by ICT industry players, MIIT and other relevant ministries,
and international collaborators in both developed and emerging economies could
help develop the tools and capacities needed for ICT to make a full contribution to
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China’s low carbon growth. As Professor Zhang Junhua, Professor from the School
of Management at Zhejiang University noted “Information exchange and learning is
critical between ICT companies, suppliers, users and government. We need to
enhance capacity building amongst all stakeholders”
Key areas for immediate productive collaboration would include:
Development and sharing of detailed case studies covering technical,
commercial and policy aspects of technology adoption, to advance the level
of awareness and understanding in China, and provide a platform for mutual
learning.
Detailed investigation of ICT industry supply chain carbon footprint and
opportunities for carbon emission reduction.
Development of a policy roadmap through detailed policy analysis of the
critical gaps and opportunities for advancing low carbon ICT opportunities inChina.
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1 ICT and China’s low carbon growth goals
1.1.1 The opportunity for green transformation
China is committed to proactively combating global climate change, as well as
improving the local environment, conserving resources and ensuring resilience in theface of environmental stress. The pathway envisaged is one of low-carbon, high
technology development. While water use, biodiversity and air quality are key issues
for green growth, the carbon and energy challenges remain core targets for policy
intervention.
The relationship between carbon emission and economic growth exemplifies the
complex relationship between economic development and environmental impacts.
China’s economy has achieved remarkable economic growth in recent decades, with
this comes increasing consumption of goods and services, and development of
resource intensive infrastructure such as roads and buildings. As the economy has
expanded, so too has the demand for energy, and with it emissions of carbondioxide, sulphur dioxide and other pollutants. The growth in energy demand creates
several risks for China’s continued economic and social development. Energy supply
constraints and the local impacts of environmental pollution are the most immediate
concerns, while the economic impacts of climate change are already significant.
China is one of the countries most susceptible to the adverse effects of climate
change, in the form of desertification, water scarcity and flooding. This impacts on
economic sectors including agriculture, forestry, transport and tourism, as well as
the infrastructure of coastal zones.3
One way to control carbon emissions is to slow the pace of economic growth. This
was seen in the aftermath of the global economic crisis, where emissions decreasedaround the world (Project Catalyst, 2010). It was also seen in China in the last
quarter of 2010, when in the closures and power blackouts were put in place in
order to meet energy intensity.4 As Premier Wen Jiabao said in September 2010,
while attending the “Summer Davos” meeting in Tianjin.
Slower growth is, however, not a realistic or desirable option. Not only would such a
policy imperil employment creation, but it would also constrain the transition from
heavy industry towards services and enforce a longer reliance on outdated and
inefficient equipment. China is therefore committed to a transition to a low carbon
development pathway that allows for sustained and rapid growth that does not
come at the expense of social or economic wellbeing.
Low carbon growth has therefore to be part of an overall economic development
strategy, consistent with goals to improve energy security, phase out inefficient
“ we are working to reduce high energy-consumption enterprises including
the elimination of small thermal power plants, small iron and steel plants,
cement plants and other high energy-consuming enterprises. We are willing
to achieve this goal at the cost of reducing GDP growth rate. "
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of small and inefficient factories and power plants have enabled the country to reach
its 2010 energy intensity target. However, there has been less progress on industrial
restructuring, with the overall proportion of heavy industry continuing to rise.
Box 1: China’s targets for low carbon growth Economic growth. One of the most important objectives of economic policy is to
continue to enable economic growth to create jobs and enable China’s 1.3 billion
citizens to live well. China’s target is to maintain stable and relatively fast
economic growth, at least quadrupling per capital GDP between 2000 -2020.
Current growth targets are for 7.5% per year.
Reduction in energy intensity. The Government has recognised the economic
imperative to reduce the energy intensity of the economy and redirect
investment from power supply and energy intensive industries towards a more
balanced, environmentally favorable, and sustainable economic growth. It hastherefore set an ambitious, target to decouple economic growth from energy
consumption – with a medium term goal to quadruple per capita GDP between
2000 and 2020, while only doubling energy use. This was supported by a shorter-
term goal of achieving a 20% energy intensity reduction between 2006 and 2011.
Reduction in carbon intensity. Because most carbon dioxide emissions in China
are generated by fossil fuels, carbon intensity is very closely related to energy
intensity. Reflecting its energy intensity targets, in 2009 the State Council set a
target to reduce carbon intensity (the amount of carbon dioxide emitted for
every RMB of economic output) by 40-45% by 2020, as compared with a 2005
baseline.
Informatization. China has been pursuing a growth strategy based on
informatization since 1993. This seeks to accelerate transformation of the
economy towards higher value added, higher economic efficiency and resource
and energy efficiency by accelerating the development of ICT infrastructure and
utilization, capability of independent innovation of information technology and
the development of e-enabled public services.
High tech, green innovation driven growth – More recently seven key strategic
new industries have been identified for development these are include new-
generation information technology, energy-saving and environmental protection,new energy, biotechnology, high-end equipment manufacturing, new materials
and new-energy cars. The State Council has set a target that over the next five
years the added value contributed by these sectors should top 8 percent of GDP
by 2015 and 15 percent by 2020.7
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1.1.2 The ICT sector contribution
Information and Communication Technologies (ICTs) refer to electronic computer
equipment and related software to convert, store, and process, communicate and
retrieve digitized information. This includes technology, equipment, software and
service elements and both ICT infrastructure and end-user devices. 8
In the national statistics of China, ICT comes under manufacture of Communication
Equipment, Computer and Other Electronic Equipment, as well as within the
statistics of Transport, Post and Telecommunication services. However, ICT devices
(chips, sensors and communicators) are increasingly pervasive and embedded into
infrastructure and other equipment – such as transport and energy systems, vehicles
and household appliances. Convergence between ICTs and consumer electronics
(such as TVs and games consoles) also means that in practice the boundary between
these two categories is increasingly difficult to set, as many of these devices arebeing used for two-way communication in a similar way to PCs and smart phones.
The ICT sector itself has a comparatively low carbon intensity compared to others
such as steel, power, cement and airlines. Therefore it has often been ignored in
traditional analysis of the low carbon growth opportunity and challenge, which has
focused on energy intensive, high emissions industries. However, it is increasingly
recognized that ICTs can play an important role in driving low carbon growth.
Underlying the many of the economic and technological opportunities for green
transformation are ICTs that contribute both to economic growth, to carbon
emissions and to the potential for carbon emission reductions. The ICT industry
impacts on the carbon intensity of an economy in several ways:
Exhibit 1: ICTs and energy and carbon intensity impacts
The promotion of scientific and technological progress and innovation is core toreconciling China’s economic growth ambitions with those of resource-saving and
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environment-friendly development. ICT I turn is core to this strategy, as has been
seen in the long-standing priority for ‘informatization’. However the potential for ICT
to contribute to China’s low carbon goals is now starting to receive particular
attention, as it offers opportunities for low carbon –high growth outcomes. This
emerging view of the importance of ICT to low carbon development is supported by
international studies, such as those by European Commission, the Climate Group,
the Digital Energy Solutions Campaign, the Global e-Sustainability Initiative, and the
WWF. These and others have helped to assess and articulate this potential at a
global level.
Other countries are already grasping the potential for ICT to play a key role in
meeting economic and social goals sustainably.
For example, the European Union’s 2020 strategy to get Europe back on track
following the global financial crisis is made up of seven pillars, of which one is
‘Europe’s Digital Agenda’. Faced with the demographic challenge of an ageing
population in the context of intensifying global competition, there is a recognition of the need to ‘work smarter’ and transform economies for sustainable and inclusive
growth. The Digital Agenda for Europe sets out to define the key enabling roles that
the use of ICT will have to play if Europe wants to succeed in its ambitions for 2020.9
This agenda is also being supported by industry, for example in agreement with the
European Commission and following a Commission communication in March 2009,
DIGITALEUROPE, GeSI, JBCE and TechAmerica Europe have launched an initiative
called ICT for Energy Efficiency (ICT4EE) Forum. The Forum focuses on driving
common methodologies for measuring and improving the energy and environmental
performance of ICT processes and developing partnerships and sharing best
practices to demonstrate how ICT can contribute to the more intelligent andefficient use of energy also in other sectors.
10
In India, the Confederation of Indian Industries has been working with DESC to study
the potential for ICTs to contribute to the national Action Plan on Climate Change.
Their research identified GHG emission savings of up to 450 million tonnes CO2 per
annum from ICT solutions in 2030, which is approximately 10% of estimated GHG
emissions in 2030 for the sectors covered in the study, and energy cost savings
equivalent to 2.5% of India’s current GDP.11
In China, there is strong government recognition of the role that ICT can play in the
economy, and the need for low carbon growth. China is working to address barriers
to ICT enabled growth through its policies for ‘informatization’ which has been a key
strategy since the 10th
five year plan. This is being supported by sustained
investment in the ICT infrastructure, R&D, skills and an enabling environment for
innovation. For example significant resources have been committed to spur
innovation in key strategic industries including next generation ICT, renewables and
energy efficiency. There is a plan for national R&D expenditures to reach 2.5 percent
of GDP 2020. A much higher proportion of people in China use ICTs than in any other
developing country with a similar per capita income, and the government is
continuing to expand access to telecommunications and broadband. Measures such
as tax incentives and public procurement priorities seek to promote indigenous
innovation. At the same China is pursuing plans to reduce the energy intensity of the
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economy, through industrial energy efficiency, development of low carbon cities and
development of renewable energy and the associated smart grid.
But these two agendas are only just beginning to be brought together at the highest
level and in technical and industry research and collaborative endeavor.
“ICT is an amplifier of industrial development and contributor to
industrial upgrading, at the same time it is much less intensive than
other industries , and it improves the quality of people’s lives. ICT very
important to promote the transformation of high carbon industries into
low carbon industries, which is a means towards sustainable
development. MIIT is actively encouraging the R&D of energy efficient
and ICT industries, and the proliferation of the research results. We aim
to increase the share of ICT in the overall economy and also to
encourage ICT to lead energy protection and saving across all
industries, especially high energy consuming industries. We warmly
welcome both domestic and international companies to promote ICT
for low-carbon development in China.”
Zhou Zixue, Chief Economist, MIIT
“ We need to call for the whole society and especially the ICT industry to
hold the flag of low carbon development. Companies can play a leading
role here: there is pressure but also a great opportunity for China. This
is a very big opportunity to push the transition of the Chinese economy.
It is crucial to explore opportunities for low carbon development, to
gather information, attract researchers and media and raise more
attention from the governmental authorities to the potential for low
carbon development through ICT.”
Bie Tao, Department of Policies, Laws and Regulations, Ministry of
Environmental Protection
“There is tremendous potential and opportunities for furthering energy
efficiency and emission reductions. China’s 12th Five Year PLan focuses
on adjustment of economic and industrial structure, while the 7 key
emerging strategic sectors (including new generation information
technology) will contribute the added value between 8 to 15% in GDP by
2020 – this demonstrates an improvement of awareness about the role
that ICT can play in transforming the economy.”
Wu Changhua, China Director, The Climate Group
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There is an emerging groundswell of businesses and cities pursuing ICT enabled low
carbon opportunities. There has also there has recently been research by WWF and
China Mobile, looking in particular at the potential for solutions such as e-books,
teleworking, smart transport solutions, smart city lights, smart appliances and smart
houses to contribute to carbon emission reduction in China.12
This paper builds on these foundations and aims to highlight, and to quantify, the
opportunities for ICT to contribute to China’s low carbon growth goals. It then draws
on the discussion by industry and policy experts at the ICT and Low Carbon Economy
Development Forum to highlight the barriers to to achieving this potential and the
opportunities for action by business, and public sector actors to overcome them.
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2 The relationship between ICT, growth &
emissions
2.1.1 The ICT industry drives productivity and competitiveness
Leading academics, global organizations and industry analysts agree that there is adirect correlation between the use of ICT and positive macroeconomic growth. In the
US, ICT capital is estimated to have been responsible for 20% of productivity growth
from 1985 to 1995 and 25% from 1995 to 2003.13
Across the OECD, one estimate
indicates that on average every US$1 invested in the ICT asset base results in a
contribution by the sector to GDP of around US$1.6 per year. This multiplier has
increased over the past decade indicating that the sector’s ability to create economic
value accelerates as ICT penetration and technology advances.14
Exhibit 2:
Investment in ICT asset base drives growth
In developing countries the ICT contribution to growth has to date been lower, but is
increasing rapidly. In China, as in much of developing Asia the ICT asset base
contributed 2.5% to economic grow between 1985-1995 and 7.5% from 1995 - 2003.
1
Every dollar increase in the ICT asset base creates around $1.6 in GDP per year
$ of GDP per $ of ICT investment in OECD countries
Note: Calculated by comparing increase in ICT asset base to ICT contribution to GDP growth in each time period
Source: OECD Productivity Database, September 2005, www.oecd.org/statistics/productivity; World Bank Databank; team analysis
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Exhibit 3: ICT contribution to economic growth, by % by region
Source: Jorgenson, D., and K. Vu. Information Technology and the World Economy.Scandinavian Journal of Economics. Vol. 107, Issue 4. December 2005
While developing countries are starting from a lower base of ICT capital, It has been
estimated that in emerging markets raising broadband penetration to OECD levels
could add US$300 to US$420 billion in GDP and create 10 to 14 million new jobs.15
The key mechanisms are through rising productivity in services and integration into
the global economy. A study by the World Bank estimates that a 10 percent increase
in the uptake of basic telecommunication and ICT technologies in emerging
economies, correlates with an incremental GDP increase of between 0.7 and 1.4percent depending on technology.
16
-5
0
5
10
15
20
25
30
o r l d G 7
D e v e l o p
i ns i a
E .E u r o p e
S u b - s a h a r a n
f r i c a
o r t h
f r i c a
a n d
i d d l e
E a s t
C h i n a I n d
i a U S
1985-95
1995-2003
% contribution of ICT capital to GDP growth
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Exhibit 4: Growth impacts of ICT
Percentage-point increase in economic growth per 10-percentage-point increase intelecom penetration
[Source: Source: World Bank, “Information and Communications for Development”, 2009 from Qiang, Christine, “Telecommunications
and Economic Growth”, unpublished paper, World Bank, 2008]
ICT use has delivered productivity enhancements for many traditional and new
Chinese businesses. For example in 2005 Shenhua Coal Mine Group reported
productivity tripled in 2005, through management, automation and informatization,
by using ICT Bao Steel was able to reduce its delivery time of hot rolled plates from
50 days to 12 days, and in the petrochemical industry, E-commerce application saved
procurement costs by RMB 2.5 billion.17 New industries that rely on the internet are
emerging and creating new jobs. For example, four Chinese web-based companies,
including Baidu and Alibaba have now taken their place amongst the global top 15 of
internet companies by market value, with average revenues exceeding 2 billion RMB
each. Over ten billion e-commerce employees working for small and medium sized
enterprises are linked into the Alibaba business-to-business network.18
However, an economy wide analysis of the factors underlying ICT driven
competitiveness indicates that there are likely to be significant further opportunities
for improvement. Analysis by the World Economic Forum indicates that although
China has made significant strides through ICT driven growth, more could be
achieved if obstacles to international competitiveness on ICT were addressed. TheWorld Economic Forum’s Network Readiness Index is a tool that assesses economies’
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preparedness to leverage ICT advances for increased competitiveness and
development. The framework aims to measure the degree to which a national
environment is conducive to ICT development and diffusion, the extent which
individuals, the business sector, and the government are inclined and prepared to
use ICT in their daily activities and the actual levels of ICT use. The 2010 Index rated
China s leading amongst the lower middle countries. The country is ranked 37th out
of 133 (rising from 57 and 46 over the previous two years, and overtaking India, now
ranked at 43rd). Hong Kong is ranked separately and is number 8 in the world. The
Republic of Korea is 15th and Malaysia is in 27th position. China scores well for
individual readiness, reflecting high quality education, and in government readiness
and commitment to the sector. It also scores well in business usage, reflecting high-
tech exports and capacity for innovation. Areas where China lags are on
infrastructure and market environment, and the resulting levels of individual usage.
Exhibit 5: China network readiness
Source: Global Information Technology Report, 2009-2010, 2010 World Economic Forum; team analysis
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Exhibit 6: Supporting environment key to network readiness
Source: Global Information Technology Report, 2009-2010, 2010 World Economic Forum; team analysis
2.1.2 The ICT contributes directly to economic growth
China’s ICT sector is concentrated in manufacturing and export of electronic
equipment but has also seen recent growth in software development, ICT enabled
service outsourcing and the development of domestic ICT enabled business to
business and consumer services.
The ICT industry has grown around twice as fast as GDP over the past 10 years, with
a combined contribution (from telecommunications and IT) of 7.5% of GDP by
2007.19
Looking just at the IT industry (computer equipment and software) in 2005,
the added value of was RMB 1.1 trillion or 4.2% of GDP. In the same year, exports of
ICT and electronic products accounted for 27% of the country's exports, and 25% of
global output of global electronic products.20
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Exhibit 7:
IT Industry has grown faster than the rest of the economy
Exhibit 8: ICT Exports are growing faster than general exports
We estimate that by 2020 the IT sector will contribute 5.9 trillion RMB of added
value to the economy, accounting for 7.2 % of GDP and contributing 8.6% of overall
economic growth over the decade.
8
China ICT added value, 100M RMB
Note: 2020 figure estimated based on current % of ICT value added/GDP in USSource: NBS & MIIT from CCID Consulting, Jan 2009
11,459
9,948
8,155
6,701
5,193
3,5442,715
2,372
2007200620052004200320022001 … 2020 (E)
59,537
02008 (E)
5,000
60,000
10,000
XX % of GDP
2.22.3
2.6
3.2
3.6
3.9
4.0
4.2
7.2
8
Export revenue in China, $ billion
Source General Administration of Customs (GAC) & MIIT from CCID Consulting, Jan 2009
2001
266
65
2005
762
268
2004
593
208
2003
438
142
2002
326
92
1,218
2006
969
2008 (E)
1,452
2007
460537
364
ICT industry export revenue: Growth rate = 35% p.a.
Total export revenue: Growth rate = 27% p.a.
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2.1.3 The ICT sector’s own footprint
The carbon footprint of ICT is made up of the carbon emitted across the whole value
chain, from the extraction of raw materials, manufacturing of components and
equipment, energy demand from the use of ICTs (both by end users and in the
underlying telecommunications and data processing infrastructure) and finally
through disposal at the end of life.
Exhibit 9: The ICT value chain
Globally it has been estimated that ICT use is responsible for 2-3 % of current green
house gas emissions. This estimate includes key contributions from PCs and data
monitors (40%) data centers (23%) and fixed and mobile telecommunications
(24%).21
Energy use by data centers is the fastest growing area, driven by demand
for new Internet services. If the energy use from consumer electronics such as
televisions, set top boxes and DVD players is included in the ICT footprint, the overallemissions of the sector is likely to be significantly higher. For example, the European
Commission includes consumer electronics in their assessment and estimates that
nearly 8% of electricity use in the EU is associated with ICT use (by end users and
infrastructure).22
The well-known ‘Moore’s Law’ describes the long-term trend in the history of
computing hardware in which the number of transistors on a chip doubles every two
years. This leads to an exponential growth in the performance of computing
equipment, and in the associated performance per unit of energy used. However,
the cost of computer technology tends to fall at double exponential rates (chips are
getting both smaller and cheaper), leading to more powerful devices being used by
more people, and being embedded in more equipment. Therefore, despite the
increasing energy efficiency of ICT hardware, the growing proliferation of devices
and increase in demand for processing power and high-bandwidth communication
mean that the total energy demand of the installed hardware base is growing, and is
predicted to continue growing, to reach 6% of global energy use by 2020.23
Overall it is estimated that the carbon generated from materials and manufacture is
about one quarter of the overall ICT footprint, the rest coming largely from the use
phase. There is little greenhouse emission associated with disposal, since ICT
equipment is composed mainly of metals, plastic and glass. However recycling of e-
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waste recovers material, saving energy otherwise used for their primary
production.24
Emissions from the materials and manufacturing stage of consumer electronics and
ICT products tend make up a greater proportion of the overall footprint of these
devices, as they often replaced well before the end of their useful life. While forinfrastructure products the use phase is more dominant. For example, Apple
estimate that 43% of their product emissions are from transport and manufacture,
and Nokia estimate that 72% of product emissions are from materials,
manufacturing and transport. The assessments by different companies should not be
directly compared as the assumptions and data behind the calculations can be very
different. There are ongoing standardization initiatives for example in ITU that aim at
providing a standardized method for assessing the life cycle impacts of ICT.25
Exhibit 10: ICT brand’s own life cycle assessments of their product’s footprints
[Source: Apple (2010) Website, Nokia (2010) Sustainability Report]
Manufacturing and materials related emissions are particularly important in
considering the emissions footprint of the ICT industry in China, because of the
importance of manufacturing.
In China, as in other countries the ICT sector itself, has relatively low energy and
carbon intensity. As part of the GeSI/Climate Group ‘Smart 2020’ report the overall
ICT footprint for China (encompassing materials, production, use and disposal) was
calculated at 190 Mt CO2e, or about 2.4% of the country’s emissions. At the sametime the telecommunications, electronics and information technology industries
Apple
Nokia
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combined in China were approaching 8% percent of China’s economic output. This
means that the ICT industry creates more than three times as much wealth per unit
of emissions as the average for China.26
By 2020 China’s ICT related emissions will reach 415 Mt or 3% of the estimated
national total. This reflects a projection that by 2020 up to 70% of people in Chinawill be able to afford ICT devices, and will have caught up with developed countries’
ownership levels.
Exhibit 11: Carbon footprint of ICT in China
This estimate takes into account the significant potential to control and reduce
emission growth associated with ICT use, particularly through the development of
more efficient data centers.
4
2.4%
190
415
13,344
2020
8,060
China footprint (Mt CO2)
2007
ICT Total
3.1%
China footprint (Mt CO2)
ICT vs. Total
Note: Future ICT footprints are calculated after taking into account expected developments in improved efficiency (e.g. shift from PC ’s to laptops, replacement ofcathode ray tube screens with low energy alternatives, reduction in PC and dat a centre power consumption). However, potential breakthrough technologies which
would reduce the footprint even further have not been taken into account.
Source: GESI/Climate Group (2008) Smart2020: Enabling the low carbon economy in the information age ; Netherlands Environmental Assessment Agency
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Exhibit 12: Opportunities for reducing the ICT carbon footprint
Technology Opportunity Potential *
Personal
computers
Improvements in power management
of PCs, switch from desktop to laptop
computers and from cathode ray
screens to LCD screens
Longer product life
73%
Data centers Improved energy efficiency of servers
Optimization of cooling, including
natural ventilation and cooling
Virtualization and sharing of data
processing
48%
Telecoms
devices
Smart chargers
Low energy standby settings
Longer product life (service and
software rather than handset upgrades)
64%
Telecoms
infrastructure
Network optimization
Renewable energy powered base
stations
Energy efficiency improvements
Natural ventilation
35%
* Reduction in energy use against current trends expected through ongoing
technology adoption
[Source: adapted from GESi/Climate Group (2009) Smart 2020]
These are technologies and management approaches that are readily available and
ready for application. There may well be further possibilities for energy efficiency,
such as utilizing the heat generated by the data centers and servers for district
heating – this is currently being trialed in Finland.
Taking into account both growth in added value by the sector, and immediately
applicable energy efficiency improvements, this results in an emission intensityreduction of 63% for the sector from 2008 to 2020.
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Exhibit 13: ICT sector emissions intensity could fall by 63%
2.1.4 ICT enabled carbon savings in other parts of the economy
ICTs can help to green other industries – for example by using sensors and controls
on heating, air conditioning and industrial motors, through the development of
Smart Grids to optimize power distribution and through the dematerialization of
products (such as CDs and books) as well as travel and retail premises using virtual
communication. New technologies allow people to do more with less, for example
checking emails on a tiny smartphone rather than a desk top computer.
Convervegence of consumer devices may also mean that many products such as a
CD player, camera, alarm clock, navigation device and e-book reader can all be
replace by a single smart phone.
The Smart 2020 report outlines five key categories of ICT enabled emission
reductions as outlined below:
11Source: NBS & MIIT from CCID Consulting, Jan 2009
China ICT emissions intensity, [tCO2 /M RMB]
191
70
0
50
100
150
200
ICT sector intensity(tCO2/M RMB)
2007
-63.5%
2020
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Exhibit 14: ICT enabled emission reduction opportunities
WWF and Ecofys outline further applications such as in changing knowledge and
behavior through electronic labeling, simulation and analysis tools, and in furtherdematerialization such as e-health and e-government, and precision agriculture.
27
A number of international studies have sought to quantify the potential of these
opportunities. The SMART 2020 Report estimates there is a potential for abating 7.8
Gt CO2eq of emissions in other sectors using existing ICT technologies – meaning
that overall for every ton of CO2 emissions associated with ICT use globally up to
2020 there could be five tons of savings.
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Exhibit 15: International studies on ICT enabled emission reductions
Study Energy/emission
saving potential
Ratio of
savings to
use
Key opportunities
GESI/Climate
Group
7.8 GtCO2e emissions
savings globally by
2020. This represents
15% of emissions in
2020 based on a
business as usual
estimation.
5:1
(carbon
emissions)
Smart grid
Smart buildings
Smart logistics
Smart motors
Dematerialization (inc. Telework)
European
Commission
In Europe, by 2020 ICT
could be responsible of
energy savings of up to
32% of projected use.
7:1
(energy
use)
3:1
(carbon
emissions)
Energy use in buildings (control of HVAC)
Ecofys/WWF 1-8 Gt GtCO2e (low,
medium and high
scenarios)
In-vehicle ICT (smart transport)
E-commerce and dematerialization
Smart buildings
ICT for energy efficiency in industry
Transport mode switching
IDC 5.8 GtCO2e in 2020 in
the G20 countries,
representing more
than 25% of G20
countries' totalemissions in 2006.
Buildings (energy management, teleworking)
Power(smart grid)
Transport (smart logistics, eco driving,
navigation, efficient vehicles)Industry (dematerialization, smart motors)
American
Council for
Energy
Efficient
Economy
25% of projected US
energy use could be
saved by 2030 through
intensive semi-
conductor technology
use.
1:10
(energy
use)
Power supply and management
Ecommerce and telecommuting
Smart motors , sensors and controllers
LEDs and Smart lighting systems
Alternative energy applications and smart
grid
[Source: GESI/Climate Group (2008) Smart 2020:, European Commission (2008) Impacts of
Information and Communication Technologies on Energy Efficiency, Ecofys/WWF (2008) Outline for
the first global IT strategy for CO2 reductions: A billion tons of CO2 reductions and beyond through
transformative change, American Council for Energy Efficient Economy (2009) Semi-conductor
Technologies: the potential to revolutionize US Energy Productivity]
As the international studies indicate, the potential for ICT enabled emission
reductions is much larger than the direct footprint of the production, use and
disposal phase of ICTs themselves. We have looked at the potential to apply the
technologies, as identified by Smart 2020 to China’s growing economy.
Overall we estimate that ICT enabled solutions could result in a saving of 1.4 – 1.7 Gt
CO2e by 2020, if these technologies are taken up at rates comparable with
international trends. This estimate is in line with one produced by the International
Data Corporation (IDC) as part of a broader study of G20 countries. They used a
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similar methodology, although with somewhat different assumptions on the impacts
of smart metering, ecodriving, teleworking and smart motors. The individual
technology assessments and assumptions are included in the annex to this report.
In order to estimate the potential for these technologies to achieve emission
reductions in China, we have used where possible, existing credible academicestimates of enablement potential for particular ICT technologies in China (for
example smart motor systems). Where the potential has not been calculated we
developed a measure of sectoral footprint in each area and used this as the basis for
determining the ICT enablement impact, using the international benchmarks derived
from the Smart 2020 research. The assumptions we used were chosen to represent
a realistic achievable level, rather than a technical maximum. For example, The
penetration rate of ICT controlled variable speed motor systems was projected as
60%, while the penetration rate of ICT driven automation was projected as 30%.
Exhibit 16: ICT enabled emissions reduction potential
[Source: Smart 2020, team analysis]
Our estimate highlights a significant opportunity for ICT enabled emission reductions
to contribute to China’s emission intensity targets. As official baseline measures
have not been released it is impossible to say with certainty how large this
contribution would be, but initial estimates are that it would amount to between 13
and 18 % of needed intensity reduction, compared to a 2005 baseline.28
Total
Dematerializa on 167
Smart Logis cs 274
Smart Motors 286
Smart Buildings 328
Smart Grids 481
1,536
Emission reductions from ICT enablement in China in 2020, MtCO2e
1,382 1,689
A
B
C
D
E
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Exhibit 17: ICT enabled contribution to national carbon intensity targets
The opportunity for carbon emission enabled reductions in China are larger in
absolute terms than those in the US and Germany, although smaller in relation to
China’s projected overall emissions in 2020.
In general, the greatest potential for ICT enabled energy savings, per unit of energyused, comes through smart logistics (i.e. transport substitution impacts) while there
are less energy savings to be made through smart motors. Given that energy
consumption is dominated by industry in China and by transportation in the US, the
ICT enabled energy savings potential is greater in the US.
Exhibit 18: China ICT enabled emission reductions compared to other countries
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
20202005
-40%
33
40% emissions intensity reduction,
tCO2e/RMBm GDP
Assumes constant exchange rate over time of RMB6.83/USDSource: CEIC Database; “China’s Low Carbon Development Pathways by 2050 – Scenario Analysis of Energy Demand and Carbon Emissions” – by EnergyResearch Institute of NDRC; Smart2020, team analysis
45% emissions intensity reduction,
tCO2e/RMBm GDP
15.2 –
18.5%
ICT contribution to intensity reduction
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
20202005
-45%
13.5 –
16.5%
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Exhibit 19: China’s ICT enabled emission reduction potential compared to India
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Exhibit 20: China technology opportunities compared to other countries
[Source Smart2020 Country studies, team analysis]
Our estimate is significantly higher than that produced by WWF and China Mobile in
their study. They examine a more limited range of solutions (mainly focused on
transport substitution and dematerialization impacts) and estimate that a total of
0.6 GT CO2e could be saved by 2020, rising to 1.3 GT in 2030.
A key factor that shapes the ICT enabled emission reduction opportunities in China
in the medium term is industrial energy efficiencies (which was not included in theWWF study). Industry consumes about 70% of China’s total energy, a share that has
been growing due to massive investment in energy-intensive industries producing
steel, aluminum and glass to support domestic construction of roads and buildings.
NDRC’s report on “Scenario analysis of Energy Demand and Carbon Emissions” and
DRC’s “2050 China Energy and CO2 Emissions Report” both predict that industry’s
energy use will significantly decrease from 70% to 50%, but that this won’t take
place until after 2020. While modernized enterprises and large state owned
corporations have adopted technological solutions and reduced energy intensity to
international competitive levels, a large number of medium and small enterprises
still rely on inefficient and outdated equipment. While smart logistics and smartbuildings are responsible for a smaller proportion of the potential emission savings
in China up to 2020, compared to the immediate gains to be made in industrial
efficiency, they are likely to grow in importance after that. In the next two decades,
nearly 350 million people are expected to migrate to China’s cities, a number
exceeding the current total population of the United States. This will mean
increasing demand for energy as the use of air conditioners, home appliances and
cars increases. A large share of China’s buildings, transport and energy infrastructure
in 2020 – including 50,000 new high-rise buildings and 170 new mass transportation
systems are yet to be built. It is much more cost effective to adopt high-productivity
solutions for new systems than to retrofit older ones. This means that China has
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opportunities to introduce cutting edge technologies at an earlier stage of
development than other countries, effectively leapfrogging older, inefficient
technologies. Developing low-carbon buildings, infrastructure, transportation and
neighborhoods over the next ten years will help to create productive, livable and
inclusive cities, and achieve significant carbon emission abatement in the longer
term.
These longer-term emission reduction potential reflects the ability for ICT to catalyze
transformative solutions, new business models, lifestyle changes and new ways of
organizing public services, rather than just incremental efficiency improvements.
Conversely if these opportunities are not taken the result is a long term high-carbon
lock-in of infrastructure.
Our estimates do not take into account the ‘rebound effect’ that can occur when
technology enables time, money and energy savings together. People may use the
time and money freed up by ICT efficiencies to engage in other, more energy
intensive activities. However, given that China’s low carbon growth targets areintensity targets which incorporate the need for economic growth and rising level of
consumption this may be less of a problem in relation to this analysis than in other
countries which are already facing the need for absolute emission cuts.
Finally, our analysis looks at China as a whole. There is significant regional diversity in
levels of carbon intensity between costal developed regions and inland provinces, as
well as in the energy producing, heavy industry dominated Western regions, and the
opportunities to apply ICTs to reduce emissions will also need to be tailored to these
different challenges. These disparities relate to economic development and structure
and the level of technological adoption and are reflected in different regional energy
and carbon efficiency goals.
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3 Realizing the potential for ICT enabled low
carbon growth in China
This paper has gone some way in identifying and quantifying the potential for ICTs to
contribute to China’s low carbon development. The potential for carbon intensityreduction is based on an analysis of existing technologies that are already on the
market internationally, and in many cases are being trialed and developed in China.
However, as Zhang Jiutian, Director, Ministry of Science and Technology (newly
added panelist, need confirm with DESC) highlighted “calculation of emission
reduction maybe not the most difficult task, but how feasible or realistic is if for the
potential to be realized, and how to make it known and accepted, are the key. “
Companies such as HP, Lenovo and Nokia highlighted how they are taking leadership
in improving, reporting and benchmarking their own energy and carbon
performance, and that of their suppliers. In this way they are showing how it is
possible to save energy through applying smart technologies and sound corporate
processes in their own buildings, manufacturing and logistics.
Beyond the ICT sector itself, some technologies such as smart motors are already at
the ‘early majority’ stage, and have been adopted by many larger businesses. For
example one company, SUPCON began research, development and implementation
of advanced process control technology in 1993, and released multivariable
predictive control software, which was successfully applied in many industries,
including petrochemical, oil refining and chemical industry. Such software solutions
not only enhance total performance of the system but also help factories to reduce
energy consumption by between 3 to 5%, as well as reducing waste. However thesesmart solutions have tend to be introduced in the larger and most modernized
enterprises, and there remain significant opportunity for expansion.
However, many of the technologies such as smart logistics, smart grids and smart
buildings remain at the ‘early adopter’ stage in China.
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Exhibit 21: Stages in technological diffusion
3.1.1 What are the barriers to technology adoption?
Experts and industry players at the ICT and Low Carbon Development Forum
discussed the barriers that they see to greater uptake and adoption of ICTs for
energy saving. Many emphasized the problem of basic lack of Information and
awareness on the opportunities for cost-effective energy saving. Without common
metrics of performance, and systems for sharing this it is impossible to assess, and
communicate the energy and emission reduction performance of different ICT
products and solutions.
Maturity Laggards
R&D – technology development Innovators
Demonstrating viable business model Early adopters Demonstrate and localise
Achieving critical mass Early majority
Becoming industry standard Late majority
Technology diffusion stage Adopting business
Take up solution once benefits aredemonstrated and costs brought
down
Time
Market penetration
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“ In general, people are not clear about how ICT can work to help
emission reduction. Both engineers and entrepreneurs, companies and
the public need education. Their primary concern is about cost and
investment. Energy saving effect cannot be seen very easily and
instantly. So we can think of new operational models to solve this
conflict and prove the effects. Therefore pilot projects should be
initiated, specially for ICT’s potential for reducing emissions in other
industries – that helps to realize the potential in practice.”
Wen Zongguo, Director,
China Circular Economy Industry Research Center, Tsinghua University
“ICT probably constitutes one of the single biggest suites of options to
decarbonize the world economy. This is not a new concept – the way we improve our quality of life is by improving our productivity. ICT
helps to improve our energy productivity. But there is a gap between
actual and potential of ICT: it comes down to market failures. It takes
action by government, collaboration between industry and government
to overcome these failures.”
Stephen Harper, Global Director, Environment and Energy Policy,
Intel Corporation
First of all, there’s lacking of awareness in understanding ICT’ s role in
emission reduction. We hope an effective platform could be established
with support from the government. Secondly, a healthy industrial value
chain should be formed which government can also play an important
role. The upfront investment in energy efficient equipment is huge and
the payback is long-term – China Mobile has initiated various programs
but most companies may not be able to afford. Meanwhile the effects of
energy efficiency need to be proved but convincing methodology to
calculate the benefits is still lacking. Lastly, assessment and verification
of return on investment is needed, which should be reflected in the policy considering characteristics of specific industries and sectors.”
Peng Jun, Department of “Green Initiative” China Mobile
While ICT enabled efficiency delivers both financial and carbon savings, there remain
financial barriers to investment. One is simply that the lacking of indicators and
methodology to measure ICT use effects means that benefits are not clearly
demonstrated and companies are therefore reluctant invest. Sometimes, however,
opportunities for energy and money saving exist but the pay-back periods are too
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long in relation to the risk and the cost and availability of capital for investors, or
their willingness to sustain the opportunity costs of lost business and time to switch
to new systems in the face of competitive pressures. Therefore it is not just
technology adopting firms, but also financial institutions that need to be convinced
that energy saving ICT delivers good and stable returns.
Capability to implement and integrate ICT enabled solutions can also be a key issue,
particularly amongst small and medium sized enterprises. There is often poor
awareness of the business case for reducing energy use and a lack of capacity and
skills to operate and integrate ICT solutions into current processes such as buildings
management, production systems, architecture and transport planning.
Often when new technologies are developed they cannot be immediately introduced
within existing business models. Finding new ways of bringing together partners and
aligning incentives between who pays for up-front investment and who benefits
from total cost of ownership savings are critical to enabling technologically feasible
solution to be adopted. Energy service companies (ESCOs) are own key mechanism
that serve to bridge the gap between the savings opportunities, and the knowledge
and ability for individual firms to invest to save. ESCOs identify and finance energy
conservation projects and use the energy savings to pay back the initial investment,
however at present they are not making full use of ICT enabled savings
opportunities.
Other studies, such as those by Smart 2020 and WWF have also highlighted the
problem of coordination, when seeking to go beyond incremental efficiency gains
and use ICTs to enable radically different ways of organizing logistics, transportation,buildings and commerce. Existing infrastructure which ties many businesses into
high-carbon systems can make it difficult to find a pathway for transition. For
example, electric vehicles may be more efficient to run than gasoline cars, but for
consumers to use them depends on having a network of charging stations. Pursuing
opportunities for the most transformational ICT enabled low carbon growth
opportunities such as smart cities and logistics, is often a coordination problem of
ensuring action on many fronts, or interoperability between different systems.
What is clear is that for low carbon ICT solutions to move up the technology diffusion
curve and reach a critical mass, firms must take action, both as ICT technology
providers and technology adopters, and governments can play an enabling rolethrough procurement, regulation, price incentives and subsidies and standard
setting.
.
“Any individual party alone cannot make things happen, there must be
collaborations between government, enterprises, and NGOs.
Government and companies should be aligned, and can learn from
each other to turn the vision into actions and policies.”
Wu Chenghua, China Director, The Climate Group
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3.1.2 What should technology users do?
In order to overcome the barriers to adoption, ICT enabled opportunities for
reducing carbon emission intensity, need to be understood and managed as part of a
broader process for energy and carbon saving, integrated into business processes in
buildings and industrial process design, materials choices, logistics and energymanagement.
Companies such as Intel, HP, Lenovo and Nokia highlighted how they were already
doing this in their own operations.
Exhibit 22: Key steps for technology users
The key steps for energy users are:
1. Develop a firm level inventory of carbon emissions, and understand the role
that carbon plays in their organizations, in terms of energy and fuel
consumption and direct emissions from land use, agriculture and chemical
processes. Compiling a comprehensive GHG inventory improves a
Assess carbonemissions in a
firm levelcarbon
inventory
Iden fyopportuni esfor saving and
benefit
Priori zeinvestments
Assess overallemission
reduc on planand set overall
target
Implement plan
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organization’s understanding of its emissions profile and can help identify the
most effective reduction opportunities.
2. Identify opportunities. A carbon emission inventory areas identifies areas of
high carbon emissions, and provides a basis for identifying opportunities to
reduce emissions. Given the pervasiveness of energy and emissions impacts,
and the need for strategic transformation companies have found that
creating a dedicated cross-functional team is crucial to identifying and
prioritizing initiatives across the organization. Key people that need to be
involved then include chief financial officers, and chief information officers,
and those involved in decision making on product design, industrial systems,
logistics and buildings, as well as those directly concerned with energy
generation and use. Ideas may come from employees or a review of
previously-identified opportunities, they also be the result of energy audits or
other third-party evaluations of a company’s operations, as well as from
suppliers of new equipment, technologies and solutions.
3. Align incentives. There are often opportunities to early quick wins whereenergy is being needlessly wasted, and could easily be conserved through low
cost measures. Longer term measures that involve more involved changes,
and investments will need to be identified, compared and prioritized in order
to decide where best to invest resources. Budgeting cycles, capital planning,
available subsidies, equipment downtime and many other variables need to
be taken into consideration.
4. Set and manage towards to meet a reduction goal is crucial to
communicating progress to investors and regulators, and to engaging
employees, suppliers and customers. Once projects have been defined and
an implementation timetable developed it is possible for the organization tocalculate the projected impact on emissions and costs over time. They can
then consider whether this level of performance would be an aggressive and
competitive goal, or whether a more ambitious goal should be set. Firm level
intensity goals allow organizations to account for increases in activity over
time and thus provide the basis for key performance indicators (KPIs) over
time and benchmarks between companies. Normalizing factors may be
physical units, such as tons of steel or measures of economic value added.
Setting a goal and tracking and reporting performance ensures accountability
for performance and creates cycles of learning and continuous improvement.
3.1.3 What tools and measures of support are already available?
A number of key tools already available to help technology users realize the
potential energy and carbon savings to be made through ICT use.
Tools and approaches to encourage and support technology adopters to choose and
use the most efficient solutions include:
Standards for measuring organization, project and product level emissions.
Internationally recognized tools such as the World Resources Institute/ World
Business Council for Sustainable Development Greenhouse Gas Protocol(GHG Protocol offer a basis to understand, quantify, and manage greenhouse
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ICT and Low carbon growth in China Page 42
gas emissions and develop a baseline for comparison and a starting point for
evaluation.29
In China MIIT is taking the lead by developing framework
guidance and a catalogue of examples for how ICT can be used effectively.
Energy audits and energy and carbon management software. While a first
round of carbon emission accounting may be done using basic spreadsheet
software, leading companies are recognizing the benefits of energy
management software, automatic metering sensors and controls to manage
carbon emissions.
Life cycle analysis. Life cycle analysis provides robust data to enable choices
to be made between different products or design solutions based on their
total impacts over their life cycle. GESi working with the Boston Consulting
Group has developed a lifecycle assessment methodology for ICT enabled
carbon reductions which provides a step by step guide to identifying,
assessing and communicating product level emissions impacts.
Exhibit 23: Life cycle assessment approach for ICT
Total cost of ownership accounting models. Making the case for energy
saving measures often involves comparing different design and technology
options on a ‘full cost of ownership’ basis. In some cases this may mean
making accounting changes within the business, such as in accounting for
electricity costs within individual cost centers, rather than as an overhead.30
Public procurement standards and incentives. Carbon and energy
performance measures can be built into specifications for building design and
equipment purchase. For example, in the EU Member States have agreed to
include specifications for total lifetime costs for public lighting in public
procurement. In China there has already been leadership shown by the
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government in terms of private sector education and public private
partnerships. Many of the long term opportunities in buildings and logistics
can best be realized through coordination between transport, ICT, land
planning, procurement and building codes at the city scale. A number of
‘Smart City’ plans and partnerships have already been developed at the city
level in Guangdong, Liaoning, Hubei, Shanxi, Yunnan; Tianjin, Chongqing,
Shenzhen, Xiaomen, Hangzhou, Nanjing, Guizhou, and Baoding – seeking to
connect transport, communications, energy and building infrastructure to
achieve better outcomes for the livelihoods, health and lifestyles of city
residents.
Financial incentives. For example, in the case of smart motors take up has
been supported by measures such as government subsidies to pay the
difference between regular and high-efficiency motors and research by the
Ministry of Science and Technology in areas such as motor system energy-
saving technology for the mining industry.
External benchmarks for target setting. Firm level targets for high intensitysectors are often set following technical and economic analyses of energy-
saving technologies and potential. They may be negotiated at sector level
between industry body and government, or set of a firm-by-firm level. The
key question in setting such reduction goals is what is an appropriate,
achievable and ambitious goal is for a particular company or organization,
within an overall global, national or sectoral target. One approach to this is
the ‘Climate Stabilization Intensity Target’ methodology developed by British
Telecom. It provides a simple and effective tool for setting company level
reduction targets, linking company’s financial and environmental
performance to the necessary carbon reductions needed to reach national orglobal targets.
31
Learning and leadership networks. Learning and leadership networks can
provide companies and organizations with practical peer-to-peer support and
targeted training. The US Energy Star, the UK’s Carbon Trust, China’s top
1000 enterprises program, WWF’s Climate Savers program and the
WRI/WBCSD national networks linked to their GHG protocol implementation
are just some of the public, private and voluntary initiatives working to build
capacity in this way.
3.1.4 The need for collaboration
Many participants highlighted the need for more in depth case study research to
demonstrate the benefits of ICT enabled emission reductions. They highlighted the
need for businesses in the sector to work with others to enhance understanding of
the technological risks, opportunities and barriers to key technologies and to
develop common training, product standards, benchmarking and measurement tools
which would enable successes to be communicated and replicated.. This might
include a bottom-up process technology, economic and stakeholder research to
understand context in which individual technologies are being rolled-out in China
and the cost and other barriers that are in place. Associated with this is the adoption
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and use of standardized metrics and measurement tools to assess and communicate
the carbon reduction potential and performance of key technologies.
There is a need for more detailed policy analysis, alongside the technical and
commercial case studies Participants agreed that enabling national policyframeworks are crucial. While China has a set of ambitious strategies both for energy
efficiency and for ICT, they are not strongly joined up, and as the World Economic
Forum’s ‘Network Readiness’ analysis highlights there is much still to be achieved.
Continuing to develop a stronger ICT infrastructure, and expanding broadband
access is crucial but further areas that should be explored include:
The role of public procurement in demonstrating the benefits of smart grid,
smart transportation, travel substitution, smart buildings and other smart
technologies.
“ICT is widely connected with all industries and energy sectors, for eachindustry we need to find good examples and then promote these. There
must be standards to specify how energy-efficiency can be achieved
through ICT applications. Currently there is no standard for evaluation and
assessment. It should be drafted by companies and then upgraded into
industry standards or government policy. We therefore need leadership
from companies, and pilot projects. DESC should choose some samples to
demonstrate how to realize the emission reduction potential of ICTs. Once
the best practice is disseminated, people will have the right reference to
benchmark, and will improve or optimize their own practice. There should
be cases in individual sectors to specify each process. “
Cuizhong, Professor, China Institute of Strategy and Management
“For many energy efficiency technologies, a large upfront investment is
required with long payback times. For example, some technologies that
China Mobile has implemented have a 10 year payback – many other
companies will not be able to afford such an investment. We need third
party verified proof of savings..”
Peng Jun, “China Mobile Green Action Program”, China Mobile
“We need to do more case studies and implement more pilot pro jects to
have more persuasive evidence.”
Wu Chenghua, Climate Group
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The potential for adopting or creating protocols for measuring the energy-
efficiency and climate impacts of ICT in other economic sectors, and for the
interoperability of devices.
The potential for integrating ICT tools and approaches into training, tools
and incentives as part of the overall strategy for industrial energy efficiency.
International collaboration and experience sharing might be useful here, focused
on public policy approaches in China and abroad. The EU Digital Agenda for Action
for example is pursuing a number of relevant actions in this area where lessons,
models and experiences could usefully be shared.C
Collaborative action by ICT industry players, MIIT and other relevant ministries,
and international collaborators in both developed and emerging economies could
help develop the tools and capacities needed for ICT to make a full contribution to
China’s low carbon growth. Key areas for immediate productive collaboration
would include:
Development and sharing of detailed case studies covering technical,
commercial and policy aspects of technology adoption, to advance the level
of awareness and understanding in China, and provide a platform for mutual
learning.
Supply chain investigation of ICT industry supply chain carbon footprint and
opportunities for carbon emission reduction.
Development of a policy roadmap through detailed policy analysis of the
critical gaps and opportunities for advancing low carbon ICT opportunities in
China.
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“ We hope that the government can establish a good platform for creatingawareness. China should develop world class standards otherwise you are
always passively responding to standards. Telecom equipment
specification standards are needed nationally. For example, data center
can save energy use by 20% but there’s no standard to follow, so the
current equipments are operating in low energy-efficiency and poor
reliability.”
Peng Jun, “China Mobile Green Action Program”, China Mobile
“ICT covers so many industries, so many interrelated policies are needed. There is tremendous potential and opportunities to furthering energy
efficiency and emission reductions. China’s 12th FYP focuses on adjustment
of economic and industrial structure, while the 7 key emerging strategic
sectors (including new generation information technology) will contribute
the added value between 8 to 15% in GDP by 2020 – this demonstrate an
improvement of awareness about the potential of ICT to contribute to
China’s low carbon development.”
Wu Chenghua, Climate Group
“Information exchange is critical between ICT companies, suppliers, usersand government. We need to enhance capacity building amongst all
stakeholders”
Zhang Junhua, Professor, School of Management, Zhejiang University
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1Jorgenson, D., and K. Vu. Information Technology and the World Economy. Scandinavian Journal of
Economics. Vol. 107, Issue 4. December 2005.2 Growth rate estimated based on historical correlation of GDP and emissions’ growth in 2006-2009,
and on NDRC GDP growth estimate for 2010-2020. CECEIC Database, NRDC (2009) China’s Low carbon
growth Pathways by 2050 – Scenario Analysis of Energy Demand and Carbon Emissions abd
Netherlands Environmental Assesment Agency.3
State Council of the People’s Republic of China (2008) China’s Policies and Actions on Addressing
Climate Change, Information Office of the State Council, Beijing.4
Jing, Li (2010) Fight hard and long to save environment, Wen tells nation, 2010-03-06, China Daily5
Li (2010) 李 毅 中 接 受 专 访 谈 “ 十 二 五 ” 工 业 领 域 核 心 任 务 , MIIT 28/09/10
http://www.miit.gov.cn/n11293472/n11293832/n13095885/13429977.html6 Information Office of the State Council of the People’s Republic of China (2007) China’s Energy
Conditions and Policies.7
CPC (2010) Full Communique of the 5th Plenum of the 17th CPC Central Committee8 World Bank ICT Glossary9
European Commission (2010) Communication from the Commission to the European Parliament,
The Council, The European Economic and Social Committee and the Committee of the Regions, A
Digital Agenda for Europe10
www.ict4ee.eu 11
DESC/CII (2010) ICT’s Contribution to India’s National Action Plan on Climate Change, December
2010.12
YANG, T, HU, Y, ZHENG, P and Pamlin, D (2010) 5 Low Carbon Telecommunication Solutions in
China: Current Reductions and Future Potential13
Jorgenson, D., and K. Vu. Information Technology and the World Economy. Scandinavian Journal of
Economics. Vol. 107, Issue 4. December 200514
Source: OECD Productivity Database, September 2005, www.oecd.org/statistics/productivity ;
World Bank Databank; team analysis15
World Economic Forum (2010) ICT for Growth16
Qiang, C. and Rossotto, C. (2009). ‘Economic Impacts of Broadband’. In World Bank (ed.),
Information and Communications for Development 2009: Extending Reach and Increasing Impact.
Washington, D.C., USA: The World Bank.17
Zongzhou, L (2006) China’s Informatization Strategy and its Impact on Trade in ICT Goods and ICT
Services, UNCTAD Expert Meeting In Support of the Implementation and Follow-Up of WSIS, Jointly
organized by UNCTAD, OECD and ILO 4 - 5 December 200618
Liu, Y and Cao, S (2010)The Sustainable Development of ICT in China: The Rise and Future
Development of the Internet, World Economic Forum19
CNII Reuters (2007) Information industry accounted for 7.5% of GDP, up to a good start to achieve
Eleventh Five-Year http://www.cnii.com.cn/20070108/ca403505.htm
20 National Statistic Bureau21GeSI/Climate Group (2008) Smart 2020
22European Commission (2008) Impacts of Information and Communication Technologies on Energy
Efficiency23
Hilty, L et al (2009) The Role of ICT in Energy Consumption and Energy Efficiency, Technology and
Society Lab Empa, Swiss Federal Laboratories for Materials Testing and Research24
Hischier, F et al (2005) Does WEEE recycling make sense from an environmental perspective?
Environmental Impact Assessment Review 25, 2005.25
http://www.itu.int/ITU-T/studygroups/com05/index.asp 26
Author’s calculation based on Dutta, S and Mia, I (2010) Global Information Technology Report
2009 –2010: ICT for Sustainability, Insead/WEF
and GESi/Climate Group (2008).27
Ecofys/WWF (2008) Outline for the first global IT strategy for CO2 reductions: A billion tonnes of CO2 reductions and beyond through transformative change
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28 Growth rate estimated based on historical correlation of GDP and emissions’ growth in 2006-2009,
and on NDRC GDP growth estimate for 2010-2020 Source: CEIC Database; “China’s Low carbon
growth Pathways by 2050 – Scenario Analysis of Energy Demand and Carbon Emissions” – by Energy
Research Institute of NDRC; Netherlands Environmental Assesment Agency.29
WRI/WBCSD (2004) Corporate Accounting and Reporting Standard30 Sullivan, J (2009) SAP White Paper – Excelling at Enterprise carbon management and sustainability31
Tuppen, C (2008) British Telecom’s Climate Stabilization Intensity Targets, BT.
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Annex
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ABOUT THE AUTHORS
Dr Simon Zadek is a non-resident Senior Fellow at the Centre for Government and
Business of Harvard University’s Kennedy School, an Honorary Professor at the
University of South Africa and an Associate Senior Fellow and the International
Institute of Sustainable Development. He founded, and was until recently Chief Executive of AccountAbility, where he established the organization’s global
leadership in sustainability standards, collaborative governance and responsible
competitiveness, extending its impact from bases in Beijing, Sao Paulo, London and
Washington, and through activities in South Africa and across the Middle East. Simon
sits on the International Advisory Board of the Brazilian business network, Instituto
Ethos, the Advisory Board of the sustainability fund manager, Generation Investment
Management, and the Boards of the International Centre for Trade and Sustainable
Development and the Employers’ Forum on Disability. In 2003 he was named a
World Economic Forum ‘Global Leader for Tomorrow’. www.zadek.net
Maya Forstater has worked for fifteen years in the field of sustainable business,leading research and helping organizations learn, improve and communicate on
issues ranging from climate change to supply chain labor standards. She has worked
with major corporations, multi-sector partnerships and business groupings in the
energy, ICT, apparel, mining and minerals and mobility sectors, and has written
extensively on a range of issues related to sustainability and business. She has
worked with Project Catalyst on analysis of best practice in Low Carbon Growth
Plans and with the World Business Council for Sustainable Development’s Mobility
Working Group on prospects for sustainable mobility in cities in emerging
economies.
Kelly Yu is one of China’s pioneering practitioners in corporate social responsibilityconsultancy and a dedicated professional in sustainability research, she has
significant experience working with both local and international institutions in China,
including companies, government agencies, think-tanks and development
organizations. Her background spans from inside company operations, consulting
firm services, to collaborative delivery of research, networking, consulting and
training across various institutions. Her recent work includes working with DRC
(Development Research Center of State Council) to implement the breaking-through
research, “Responsible Business in Africa: Chinese Business Leaders’ Perspectives on
Performance and Enhancement Opportunities”.
Jon Kornik J has lectured on finance, strategy and economics at the University of
Cape Town, focusing primarily on fixed income securities and derivatives, and
consulted with McKinsey and Company in Johannesburg, focused on transport and
logistics, mining and energy. Jon is founder of the Sub-Saharan African office of
South Pole Carbon Asset Management, a Swiss international carbon firm, specializing
in carbon financing and climate change consulting and has assisted the C40 Cities
develop their thinking on reducing their transport sector emissions. He has a