IBM insight: Why energy transition relies on collaboration
While COP27 made progress on many issues, including establishing a loss and damage fund, it also showed us in plain terms that more needs to be done to close the emissions gap, and that we need to urgently accelerate pledges into real action.
Add to that the need for organisations to continue to manage the impact of the pandemic on supply chains, increasing cost of living and soaring energy costs in Europe, we recognise these are challenging times – what some are now calling a “polycrisis”.
Moving into 2023, governments and private businesses focussed on energy face a tough choice: navigating the immediate energy crisis – and the costs associated – as a priority or focussing on the existential and urgent threat of climate change. Thankfully, the answer could well be that we can, and must, focus on both. If 2022 was ‘the year of consequences’, 2023 must be ‘the year of action’.
The EU has set an ambitious goal to achieve carbon neutrality by 2050 with concrete plans to enable energy transition, including its Action Plan for Digitalising the Energy System published in October last year, which specifically recognised the importance of technological transformation in this transition.
Businesses operating in the energy sector, as well as those looking to reduce their energy consumption, have both the power and the opportunity to push forward in the fight against climate change in parallel with political processes.
Four steps to put plans into practice:
1. Open the energy market to allow all energy consumers to participate. Empowering all consumers to participate in the energy systems will help create new energy services and facilitate energy flows. High-volume energy consumers – such as building owners, real estate firms and supermarkets – can help adjust heat and power consumption and support grid balancing (e.g. by choosing to use less or making their ventilation, cooling and freezing facilities available to the grid when the supply is low). In the city of Copenhagen, IoT, artificial intelligence (AI), blockchain and the cloud have enabled integration with the energy ecosystem to drive real-time, intelligent grid optimisation.
2. Rethink system orchestration for decentralisation and decarbonisation. Energy transition will be a cross-industry effort built on new technologies, including systems to accurately track energy consumption, smart facilities, and energy-efficient computing platforms. The power of data, in tandem with technologies including IoT, AI and blockchain, running on open cloud platforms, can create these types of ecosystems by virtually bringing parties together, at speed and at scale in trusted and secure ways.
3. Provide trust, resilience, and security. As complex industrial systems are digitalised, trust, resilience and security become even more essential. With a growing number of distributed, connected devices and assets used in the system, it will be critical to ensure cybersecurity risks are better managed. While greater digitalisation increases these risks, technology tools are also critical to improve security processes, for example performance prediction or preventing asset failure. This means organisations will need to effectively address cyber critical high-risk assets and applications with advanced levels of cybersecurity, but also apply a wider holistic baseline for cybersecurity across the entire supply chain. Regulators have a key role to play in this area by promoting risk-based and principle-focussed cybersecurity policies, leveraging recognised international standards and best practices.
4. Serve social fairness, just transition, equal participation and economic prosperity. Our energy systems should be people-centric, involve citizens in the transition, and incentivise participation through better rewards. Digital tools can help increase consumer awareness, optimise their consumption, and monetise flexibility. At a time when energy costs have become a critical issue, we must ensure equity in access and not unfairly disadvantage certain communities.
Yet technology is not impact-free. Greater use of computing power, data centres and networks will require an increase in electricity production, which is why businesses must take measures to improve the energy efficiency of their digital infrastructure and develop newer, more efficient equipment. BBVA, for example, realised a 50% reduction in CO2 emissions and energy consumption in its data centre processors.
Effective energy transition will hinge on the collaboration between all key players in our economy – energy companies, technology providers, governments, and consumers.
The year 2023 is in our hands and, by leveraging data and technology to help switch to renewables and reduce our greenhouse gas emissions, we can ensure energy transition comes first when doing business.
About Ana Paula Assis
As a senior executive, Ana Paula Assis, Chair and General Manager at IBM EMEA, possesses more than 20 years' experience leading high-performing sales teams for information technology products, services, and solutions.
Currently, she operates at the helm of IBM's operations in the Europe, Middle East, and Africa region.
In 1996, Assis joined the company in sales management and has fulfilled many roles in strategic sourcing and management, originally focused on the Latin American markets.