Tim Hatt, Head of Research and Consulting, GSMA Intelligence

The Business of Net Zero

While 2021 was, sadly, another year of the pandemic, it was also a year of mobilisation on climate. COP26 in Glasgow was the major staging ground for global policymakers, industry leaders and activists to lay down commitments to give us the best chance of reaching net zero. This has garnered significant attention because of the obvious urgency of the situation and need for actions to match the laudable goals laid out in the Paris accord of 2015. However, commitments at a governmental level remain stratified. Europe, the US (under the Biden administration), UK, and a long tail of smaller nations disproportionately exposed to climatic change are broadly supportive of phased change. Others, particularly in Asia, including China, remain more circumspect or constrained by conflicting factors, be that economic dependence on oil exports or low renewable energy capacity. It is interesting, then, that the level of commitment to net zero carbon emissions is now higher in the private sector (26% of companies) compared to national government (13%). Climate can be business – good business.

The telecoms sector sits at the vanguard in this respect. Our analysis indicates that over one third of operators have publicly stated net zero timelines. Most of these are for 2050 but some are more aggressive (Vodafone, for example, has moved up to 2040 while Telia in the Nordics is targeting 2030). This move is in line with the broader ESG (environmental, social and governance) investment movement, from which a previously niche contingent of activist shareholders have been joined by large institutional investors in redesigning the criteria for capital allocations under the general umbrella of sustainability. The telco shift is playing out in two arenas.

Getting your own house in order

The clear demand among telcos for energy-efficient solutions (92% rate sustainability as a core priority in network transformation objectives) has invited a significant level of innovation among equipment vendors and others in the supply chain. One can think of these improvements as targeting different levels in a telecoms business, as we laid out in our inaugural Telco Energy Benchmarking study in June 2021:

Radio Access Network. At 70% of energy consumption, the RAN is the largest source of electricity usage for operators – and the lowest hanging fruit. AI-driven signal routing, base station siting, and ‘sleep states’ to preserve power when not in use are all in play. Cloudification has conferred the concept of ‘zero touch provisioning’ in which cloud native RAN equipment is upgraded, set up and authenticated remotely, therefore saving truck rolls and the human personnel that go with those.
Core networks and datacentres. Centralised structures, virtualisation and economies of scale, modular upgrades, and workload sharing underpin a more energy-efficient layout and a decrease in power consumption, heat production, and air conditioning.
Operations outside the network. With the help of analytics, operators can reduce the size of crews conducting drive tests of network performance and associated fossil fuel and electricity costs. Incremental gains can also be achieved from eco SIM cards made from recycled plastic and handset trade-in schemes. Finally, the use of electric vehicles (EVs) and sustainable building/campus design with IoT enabled heating and cooling systems

Finally, artificial intelligence (AI) and machine learning (ML) are becoming enablers to a ubiquitous system-level approach that improves energy efficiency across hardware and software. The optimism seen for AI’s role in helping networks become more sustainable is clear: GSMA Intelligence partnered with Nokia to release research – informed by a survey of operators – that indicates nearly 70% anticipate energy savings of over 10% from AI in the next 2 years. Those not planning to use AI-driven energy management risk falling into a long-term competitive disadvantage.

Enablement effects on other industries

For any country or company to get to net zero by 2050, reductions of 50% will be required in each successive decade leading up to that point. The next 10 years to 2030 will be the toughest. With global CO2 emissions now approximately 53 gigatonnes (GT), the required cut this decade is around 26 GT. Put in context, that is 26 billion tonnes of carbon, or 3 tonnes of CO2 taken out of circulation for every person on earth over the next 10 years. Beyond the investments telco operators make to improve the energy efficiency of their own mobile and fixed networks, a larger proportionate impact is available through the digitisation of other industries. This is premised on a so-called ‘enablement effect’ wherein mobile connectivity, associated digital infrastructure and AI improve productivity in other industries an order of magnitude more than for telecoms directly.

To help quantify this benefit, and understand the corporate strategies for achieving it, we again teamed up with Nokia, who was asking like-minded questions. The modelling published in Industry Pathways to Net Zero suggests that mobile and digital technology could amount to just under 40% of the required CO2 reductions over the next 10 years within the top 4 emitting industries that account for 80% of global emissions – manufacturing, power and energy, transport, and buildings. While the RoI to recoup upfront investments is likely to be realised over a longer term horizon (5-10 years), this must be considered against the productivity and environmental benefits that accrue indefinitely.

Where next?

Sustainability is a paradigm shifting issue here to stay. To further the body of knowledge – and in the spirit of ‘you can’t manage what you can’t measure’ – we will shortly be launching the second year of our telco energy benchmark study in February 2022 with a view to publishing the results in the summer. If you are interested in joining, please get in touch with Tim Hatt (thatt@gsma.com), Emanuel Kolta (ekolta@gsma.com) or Steven Moore (smoore@gsma.com).

About GSMA Intelligence

GSMA Intelligence is the definitive source of global mobile operator data, analysis and forecasts, and publisher of authoritative industry reports and research. Our data covers every operator group, network and MVNO in every country worldwide – from Afghanistan to Zimbabwe. It is the most accurate and complete set of industry metrics available, comprising tens of millions of individual data points, updated daily.

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