Private sector digitalization — using digital technologies to improve business models, enhance revenue streams, and generate value-producing opportunities — is transforming how the world accomplishes innovation and conducts business. Yet, digitalization is largely relegated to the sidelines when it comes to climate policies and strategies.
Accelerating digital innovation not only enables climate and carbon transparency, but also unlocks the torrent of information needed to build cleaner and faster at the scale and speed needed to confront the consequences of climate change. It’s time for both parties to deliver on digitalization.
Energy efficiency, championed for decades on a bipartisan basis, produces “negawatts” of benefits by eliminating unnecessary watts through energy conservation or energy-efficient products. The digital revolution will similarly deliver “negatons” of emissions reductions and a major leap forward in U.S. global economic competitiveness. How?
Achieving net-zero emissions — the optimal balance between the greenhouse gases put into the atmosphere and those taken out — is essentially an accounting challenge that requires increasingly more data, more insights from that data, more methods to trust and verify that data, and ultimately, more ways to innovate, transact, and invest based on that data.
Digitalization is the only way to meet this challenge.
How do we get there?
Household, business, and government consumers increasingly expect more detailed information about the climate impacts of everyday purchases, including building materials, retail products, and even food.
This trend is also occurring in energy. For example, after France recently blocked a multi-billion dollar liquefied natural gas deal claiming concerns about the climate impacts of America’s natural gas production, a new market for “responsibly sourced gas” has emerged. Built on environmental data transparency and transactability, this market is made possible only with digital tools and platforms.
Investors are also demanding new levels of disclosure, and government agencies such as the U.S. Securities and Exchange Commission will soon require it. Facing the prospect of an unfolding tapestry of differing requirements and measurement methodologies, the private sector is calling for standardized carbon accounting. Digitalization will enable interoperability among the various platforms and provide for comparability and reliability of data and accounting measures.
Private sector-led digitalization is already facilitating this new consumer demand, enabling more meaningful disclosures, and driving more innovative and sustainable market-based outcomes. But these efforts are outpacing the “analog” legal and financial frameworks designed to address activities in the last century, requiring a leap forward into this century’s digital future.
Energy and infrastructure digitalization requires a new approach — removing barriers to facilitate new markets, standardizing new forms of transactions, and empowering consumers.
The role of government
Government can help by driving standardization and promoting interoperability of systems for market-driven corporate action, and accelerating the deployment of sensors, fiber networks, data centers, high performance computers, and the artificial intelligence/machine learning software platforms needed to run the applications that will make unprecedented gains in social welfare and environmental improvement possible.
Additionally, government can help by accelerating its own digital transformation, not only as to the sustainability of its own operations, but also to unleash widespread and equitable deployment of green infrastructure and energy systems through both automatic and greatly accelerated permitting and adjudication processes in line with the Aspen Institute’s BUILDING CLEANER, FASTER recommendations.
Digital technologies are critical to achieving net-zero carbon, transparency, accountability, and outcomes, while driving economic competitiveness. Early progress has begun with recent federal actions such as the Federal Data Strategy, the OPEN Government Data Act, and an amendment from Senator Bill Cassidy (R-La.) to the Infrastructure Investment and Jobs Act that directs the Department of Energy to assess the use of digital tools and platforms to drive climate solutions. These efforts, however, are not scaled to the mountainous scope of available opportunities to achieve national and global climate goals using market competitive and export leading U.S. digital technology products and services.
Every energy and climate policy developed and enacted by the Congress and the Administration should provide for the deployment of the digital infrastructure needed to spur consumer demand, open new markets, and compete to win globally.
James L. Connaughton is the CEO of Nautilus Data Technologies, and he previously served as the Chairman of the White House Council on Environmental Quality (2001-2009) under President George W. Bush.
Tom Hassenboehler is a partner at COEFFICIENT and is the founder and executive director of the Energy Consumer Market Alignment Project, and he previously served as the chief counsel for energy and environment at the U.S. House Committee on Energy and Commerce under Chairmen Fred Upton (R-Mich.) and Greg Walden (R-Ore.).