ERT Expert Paper – Action Plan for a Digitally Enabled Green Transition

Europe’s political leaders have set important ambitions for the transition that the EU economy and society must undergo during the coming decades. The EU and the Member States have agreed clear targets for making the industry more sustainable across both carbon emissions and materials use, and for developing and adopting innovative digital technologies by 2030. The Russian invasion of Ukraine, and Europe’s policy response to reduce energy dependency, has only increased the urgency of accelerating this transition, highlighting the existential importance of European technological capabilities, and of more diverse and sustainable energy supplies. However, the EU is still lacking a strategy for the twin transition and, in particular, how digital technology can enable and accelerate the green transition.

This paper sets out the potential benefits of linking the ambitions described as the ‘twin transition’ – achieving huge strides forward in digitalisation alongside achieving the decarbonisation and resource efficiency goals of the EU Green Deal – highlighting their interdependence in practical investment decisions. The paper attempts to build on existing regulation and efforts towards this end, for example the European Green Digital Coalition, considering ways to further harness and extend these frameworks in order to accelerate the twin transition.

With this paper, ERT would like to:

• Capture European companies’ successes in applying digital solutions to the green transition, supported by real-world use cases, and highlight remaining barriers to more rapid and widespread adoption of relevant technology;
• Set out the potentially transformational role that greater use of digital technology can play in the near-term, with concrete steps policymakers can take to unlock this potential.

Reviewing and comparing these use cases from companies led by Members of ERT, which represent a diverse set of investments and activities across sectors and industries, the commitment from businesses to innovate and invest in alignment with the twin transition is clear. Despite this decisive engagement from companies, we conclude that there is an opportunity for action at the European level to accelerate the twin transition by treating the green and digital agendas as mutually reinforcing objectives. This will require pursuing targeted reforms to the policy frameworks for data, ICT infrastructure, green software design, sustainable finance rules, energy markets and electricity grids. At the same time, it also means embracing and encouraging adoption of tools such as digital twins and the development of business networks that have demonstrated their value in industry. Ensuring a high level of cybersecurity and equipping the workforce with the needed dual skill-set to bridge the gap between digital and environmental expertise will be equally necessary.

It is clear from the use cases given in this paper and the lessons drawn from them, that two types of innovation are needed within the realm of digital sustainability: (a) ‘greening of’ digital innovations, where the hardware and software are ‘green’, meaning that they abide to resource efficient practices such as energy efficient coding and AI models; and (b) ‘greening by’ innovations, where digital technologies are used to drive sustainable outcomes along the entire value chain. While the greening of digital technology is already on the political agenda, the greening by digital innovation is still not fully understood. Thus, this paper focuses on the enabling role of digital technology on the green transition.

Embracing the role of digital technology in delivering green outcomes, diversifying energy supplies – and giving this political attention through initiatives such as RePower EU – supports European competitiveness and can help secure Europe’s global leadership role.