Digital transformation: combatting economic downturn and climate change
Government and industry leaders from around the world have convened at major international events in 2022 to tackle the economic and climate crises facing
all nations. Facts, figures and research predictions in these two critical arenas trigger the discussion on policies and developments that spotlight the impact and influence ICT and smart technologies – with digitalisation top of mind.
This year’s G20 Summit in Indonesia brought together 19 leading countries plus the European Union in a crucial gathering to meet a host of global chal- lenges. At the same time, the 2022 United Nations Climate Change Conference (COP27) in Egypt saw 90 heads of state and delegates from 190 countries come together to agree on policies to limit global temperature rises and adapt to impacts associated with cli- mate change.
Both events had a major focus on the appli- cation of ICT and digitisation technologies as solutiuons to the issues faced. A drive to establish universal connectivity and extend digital to enterprises, without delay is the main aim put forward at the G20 by the Digi- talization Taskforce within the group (B20) that represents the global business com- munity. Stressing that without connectivity people miss out on access to education, jobs and social activities, while micro, small, and medium enterprises lose their competitive edge, the B20 Digitalization Taskforce focus ed its message to G20 leaders on universal connectivity, digital skills and the digitaliza- tion of enterprises of all sizes.
To accomplish these goals, networks need to be put in place at scale, fast and affordably. This, according to the B20, is a global engine of sustainable economic growth, a funda- mental lever in fighting climate change and a powerful enabler of social inclusion. Yet its progress is uneven and the consequences significant.
According to ITU’s latest State of Broad- band report, an estimated 2.7 billion people still do not have access to connectivity. Ad- dressing this challenge requires innova-
tive efforts across the board. This includes reaching out to MSMEs, which account for some 90 percent of global enterprises, 50 percent of global GDP and two-thirds of all jobs. MSMEs have often been left behind in the rush to digitalize during the COVID-19 pandemic. Greater adoption of digital tech- nology by MSMEs will drive a virtuous cycle of economic benefits and increased demand for digital capacity.
B20 at G20 Summit
For the past three years, Ericsson’s Presi- dent and CEO, Börje Ekholm, has co-chaired the Digitalization Taskforce within the group (B20) that represents the global business community, providing concrete recommen- dations and policy actions in a common voice.
Ahead of the G20 summit, the taskforce – comprising over 100 enterprise representa- tives – created a policy paper with four main recommendations for G20 governments.
These are to drive universal connectivity; build the foundation for a sustainable and resilient digital economy; ensure a digital- ready mindset for individuals and micro, small and medium enterprises and enable them thorough access to digital platforms; and promote risk and evidence-based, in- teroperable, and technology-neutral cyber security standards and best practices that support companies’ efforts to protect their networks. Universal connectivity was a top priority in previous years, and it remains the first, and in many respects, foundational rec- ommendation to G20 members in 2022.
The taskforce urges governments to pri- oritize private sector network expansion, including promoting fair competition, pro- moting global standards and removing de- ployment barriers for networks.
Investment, innovation and cooperation can be spurred when competition is fair; avoid governments picking winners or distorting markets and technology and vendor neutral- ity reigns. Global standards, which are so
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important in achieving scale, affordability and interoperability of technology, should be promoted. Standards make it possible for us to travel the world with one phone, and a global ecosystem means an innovation from Indonesia or India can today be rolled out globally in seconds.
With the largest economy in Southeast Asia, the Indonesian government has compiled a Digital Indonesia Roadmap for 2021-2024 as a strategic guide to drive the nation’s digital transformation. Within this context, spec- trum availability is particularly important to accelerate Indonesia’s digital transforma- tion and boost economic growth. Maximizing spectrum availability is also one of several concrete suggestions by the taskforce to the G20 to remove deployment barriers.
There is more than enough proof of the ben- efits of universal connectivity. Digital tech- nology has the potential to reduce global emissions by up to 15 percent by 2030. Re- search that Ericsson performed in conjunc- tion with Imperial College London shows that on average a 10 percent increase in mobile broadband adoption can increase economic growth (GDP) by up to 0.8 % with the effect being significantly larger in low-in- come countries. The Economist Intelligence Unit (EIU) report – Connecting Learners: Narrowing the Educational Divide – spon- sored by Ericsson – also found that for every 10 percent increase in school connectivity in a country, GDP per capita could increase by 1.1 percent. The ITU estimates there is a
Ericsson’s President and CEO, Börje Ekholm, co-chairs the B20 digitialization taskforce
need for USD 428 billion additional invest- ment over ten years to deliver high-quality broadband to the world’s unconnected popu- lation by 2030.
As part of this, Ericsson is working to close the school connectivity gap through our sup- port of UNICEF and ITU’s Giga initiative. Giga aims to connect every school in the world to the internet by 2030, and by doing so connect every young person to informa- tion, opportunity and choice. Over the past two years Ericsson has supported Giga in connecting more than 5,500 schools and 2 million children and youth to the internet.
Micro, small and medium sized enterprises
This year, Indonesia has brought a focus on MSMEs. The Broadband Commission’s Ad- vocacy Target #6 emphasizes the need to get MSMEs connected and performing on- line. The target aims to reduce the number
who are unconnected by 50 percent before 2025. For MSMEs, connectivity is often a sig- nificant issue. A lack of cyber-security poses major risks, and networks are too complex to manage, with in-house IT far beyond their budgets. The uptake and use of digital tech- nologies by MSMEs will determine the extent of overall Internet economy growth, particu- larly in developing countries. For example, Accenture estimates that by 2025, the inter- net economy could contribute 5.2 percent of Africa’s GDP, depending on the intensity of digital technologies usage by enterprises.
Research from the International Trade Center (ITC) finds that what makes a com- pany competitive in good times also makes it more resilient during crises. Digitalization, underpinned by connectivity, can therefore give MSMEs a competitive edge especially in connecting to international markets.
Digital skills
One of the primary recommendations of the digital transformation task force is “ensur- ing a digital ready mindset for individuals and MSMEs.” The Indonesian government estimates that it needs nine million new digi- tal talents by 2030 to accelerate the digital economy. Literacy and skills represent the single biggest, self-reported barrier to inter- net access, and one-third of people in Africa, Latin America, East and South Asia report it as their top barrier.
To bridge the digital skills gap, we need to address the high cost of devices and internet service, the availability of public services on- line and the lack of meaningful local content in many areas. Ericsson Educate, a digital skills program that provides access to on- line courses on key technologies such as: 5G networks, artificial intelligence and machine learning, automation, cloud computing, data science, IoT and telecommunications.
The program can also be customized for the needs of governments. The Smart Af- rica Digital Academy will adopt the Ericsson Educate program to enhance the digital skill competencies of top management in ICT, pol- icy and regulatory organizations in member countries. The carefully curated workshops are intended to provide participants with a robust and versatile understanding of 5G- enabled technologies and applications.
The G20 Summit saw 19 leading countries plus the EU gather to address global challenges
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Connecting people
Digitalization opens new possibilities to con- nect, engage and share with others, to earn, learn and socialize, to find solutions that can reduce our climate impacts.
Critically, there is a risk that the “digital di- vide” will grow wider if connectivity and technologies spread heterogeneously. For example, by 2027, Ericsson estimates that 90 percent of all mobile subscriptions in North America will be 5G, while in sub-Sahara Af- rica, 5G will represent only 10% of mobile subscriptions.
Networks need to be put in place at scale, fast and affordably. More than this, people need access. They need devices they can af- ford, and they need the skills and education enabling them to use those devices and thrive as digitally connected, opportunity enabled, people.
Digital sustainability
Progress in digitalization sustainability solu- tions and how to be more localized than their manufacturing is an issue embraced by Sie- mens. CEO of Siemens USA, Barbara Hump- ton, says manufacturing industries may be embracing the virtual world, but there is a need for real things and broken supply chains are not helping. “So what we recognize is it’s a moment for glocalization taking advantage of global innovation, but manufacturing more locally,” she said. Then bringing those digital tools all the way through to the production and then the operation of the items being created, that digital thread may lead to a real revolution in the way manufacturing is done.
In light of this, when President Joe Biden spoke about building electric vehicle chargers as part of his Made in America initiative, he
Barbara Humpton, Siemens CEO, is active in President Joe Biden’s green energy drive
turned to the U.S. wing of a German technolo- gy conglomerate, Siemens. Barbara Humpton announced $54 million in new investments, including a new plant that promises to be a centerpiece of the company’s efforts to pro- duce over a million EV chargers in the U.S. over the next four years.
The prominent placement puts Siemens alongside U.S. companies like Ford and GM as Biden’s preferred corporate faces to help achieve its ambitious EV goals. The adminis- tration wants half of all cars sold in the U.S. to be electric by 2030 with a network of 500,000 public charging stations up and running to match.
COP 27 – keys to innovation
Prior to this year’s COP27 conference, Bill Gates, the co-founder of Microsoft, said in- novation is not just a check-writing process — the cost is way greater than what anyone could fund. He believes the key value-add is finding the basic idea for much safer, cheaper, low-waste solutions, and bringing those bril- liant people together on the software model- ing skills.
And having some realism about how tough it is to create something that not only will pass the regulator’s standards, but also be ac- cepted by the broad public. The leading-edge indicator of seriousness is did the energy R&D budgets go up. In a recent interview, Bill Gates said “without innovation, you will never solve climate change, and the exist- ing tools only apply to areas like electricity generation”. They do not apply to most of the emissions. Breakthrough Energy ventures re- ally entered the climate innovation space at a time when there was almost nothing going on, and by having deep expertise, it has been able to not only do its funding, but also get other funders involved. He believes this ne- cessitates use of government R&D budgets, and to find the right people to get behind it.
Bill Gates said a lot of the money in there is for things like long-duration storage, green hydrogen, better electricity transmission, di- rect air capture and manufacturing processes that are zero-carbon emission, including ce- ment and steel. But unless it is gained on a volume learning curve, there would be a “gi- gantic green premium”, that does not drive costs down.
Climate change technology key for COP27
Referring to Europe and the Ukraine war, he said natural gas is an important input for heating houses, making electricity and indus- trial processes. The German chemical indus- try, a key input is low-cost natural gas. “And so overall, that equation of okay, can you use less electricity or shift back to other ways of getting electricity? Well, sadly, right now, the wind’s not blowing well, the French nuclear reactors are partly shut down. The rainfall in Norway is bad. I mean, you know, there’s a lot of things that have gone wrong in terms of what that equation looks like for Europe this summer.
Bill Gates: innovation is not just a check-writing process
But, he added, in the meantime, it means jobs in the German chemical industry and people not freezing to death, so where is the trade- off between green technologies or non-green technologies? “Build more LNG ships, more pipes. Should you reopen coal plants? Prob- ably. These pragmatics are pretty important. Should that Netherlands’ gas field be re- opened? Maybe so. It’s a very tough set of trade-offs.”
COP 27 – technology
Senior officials from several governments, the UN Environment Program (UNEP) and the UN Framework Convention on Climate Change (UNFCCC) launched a new five-year work programme at COP27 to promote cli- mate technology solutions in developing countries.
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The Technology Executive Committee (TEC) and Climate Technology Centre and Net- work (CTCN) – the two bodies of the Tech- nology Mechanism under the UNFCCC and Paris Agreement – launched their joint work programme to accelerate the deployment of transformative climate technologies that are urgently required to tackle climate change. The new joint work programme of the Tech- nology Mechanism covers work from 2023- 2027. It foresees specific joint activities to be implemented by the TEC and CTCN, including technology roadmaps, work on gender and technology, technology and NDCs and digita- lization, and common areas of work for the two bodies, including national systems of in- novation, industry, and the water-energy-food nexus.
According to UNFCCC, time is running out to achieve the key goals of the Paris Agreement. The rapid scaling up and effective transfer of climate technologies is imperative to limit the global average temperature rise to 1.5 degrees Celsius and to build resilience to climate change. A reinvigorated Technology Mechanism is needed to unlock appropri- ate climate technologies everywhere in the world, and that is what this new work pro- gramme is designed to achieve.
IPCC’s Sixth Assessment Report (IPCC AR6) and the contributions from Working Group III (IPCC WG III) on Mitigation of Climate Change spotlight technology as an enabler to accelerate mitigation and to drive effective adaptation solutions. The assessment also highlights that limiting global warming will require significant transitions in primary sec-
Work at COP27 included the launch of a five technology solutions in developing countries
tors and areas, including energy, cities, point- ing to several key areas with high potential for emission reductions such as: cities/urban areas, industry, agriculture, forestry, and land use change. This joint work programme is a significant milestone for the Technology Mechanism and signals a new era of work for climate technology under the Convention and the Paris Agreement. It is guided by science, aligned with the long-term goals of the Paris Agreement, and focused on high-potential sectors and high-impact actions.
Support pledges
The United States also announced a contribu- tion of USD 3 million to support the implemen- tation of the Joint Work Programme. U.S. Spe- cial Presidential Envoy for Climate John Kerry stated: “The UNFCCC Technology Mechanism is galvanizing action in this decisive decade through smart technology solutions for cli- mate resilience and mitigation. With this contribution, the United States is supporting a new, strategic approach to cooperation on technology and innovation in developing countries and fulfilling a key pledge made at COP26. The United States helped lead the de- velopment of this first joint work programme for the Technology Mechanism in support of the Paris Agreement Technology Framework. We are committed to ensuring that the Par- ties cooperate effectively to accelerate ac- tion at the scale and pace needed through research, development, demonstration, and deployment of climate technologies.”
Across the Atlantic, Executive Vice President
year programme to promote climate to help fight major disruptions
Technology transfer is crucial: VP of the European Commission Frans Timmermans
of the European Commission Frans Timmer- mans said: “Technology transfer is crucial for the success of the global green transi- tion. Whether it is in energy, infrastructure, mobility or food: we need to make sure that knowledge is shared to help build up indus- trial capacity and support developing coun- tries to tackle the climate crisis. The new joint programme for the UNFCCC Technology Mechanism opens up new possibilities for in- novation and targeted action. The European Commission will continue its support in years to come by providing a new EUR 2 million con- tribution to the Climate and Technology Cen- tre and Network.”
Meanwhile, Parliamentary State Secretary at the Federal Ministry for Economic Affairs and Climate Action Stefan Wenzel underlined Ger- many’s support and announced a voluntary contribution of EUR 1.5 million to CTCN and EUR 500.000 to TEC in 2022: “Accelerated and fast deployment of climate technologies is a highly important building block in the set of solutions for transformational change necessary to reach the targets of the Paris Agreement and the Glasgow Climate Pact.” For this purpose, Germany says it supports the TEC and CTCN in implementing their joint work program and the targeted sectoral transformation on mitigation and adaptation. The new joint work programme marks an im- portant milestone in the further development of the Technology Mechanism. In addition, the Canadian government has confirmed a CAD 6 million grant to the CTCN, alongside Japan, which has committed to continue its current level of funding for the CTCN.
by Victor March