How Green Is the Digital Economy?

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How Green Is the Digital Economy?
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New Research Sheds Light on Energy and Environmental Impacts of Digital Technologies Like Artificial Intelligence, Blockchain, and Sharing Platforms

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Q2 2020 hedge fund letters, conferences and more

Digital Technologies Are Benefitting Our Economy

(Washington, D.C.): Digital technologies have steadily weaved itself into the global economy, transforming the pace at which we access and process information. According to the Bureau of Economic Analysis, the digital economy accounted for 9% of the U.S. gross domestic product in 2018. Now the fourth largest sector in the United States, digital services are rapidly expanding our energy and environmental footprint while promising broad societal benefits. For example, can sharing platforms help reduce food waste? Does ride-hailing generate more greenhouse gas emissions? How much direct energy is needed to run blockchain applications? And what benefits can artificial intelligence bring to more traditional industries?

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A series of research papers on the topic have been released, contributing important insights to an emerging body of knowledge on three key technologies:

Artificial Intelligence (AI)

Blockchain

Sharing Platforms

ELI Visiting Scholar David Rejeski helped launch the project four years ago and noted that, “governments are spending only a fraction of the funding necessary to unravel the environmental impacts of our digital lives.  Our society needs to develop an empirical grounding for assessing both the positive and negative impacts of information technologies, especially as they become more ubiquitous and invisible.”

Sloan Foundation program director Evan Michelson said, “digital technologies like blockchain and artificial intelligence have enormous potential to help decarbonize the energy system and address climate change, but only if we deploy them correctly. The key question is: How do we best develop 21st century technologies in ways that help move us toward a low-carbon future? There remain many unanswered questions that need more attention from scholars and funders, but these studies are an important step in improving our understanding of these issues.”

This work is at the core of ELI’s Innovation Lab, a venture focused on supporting high impact research that can drive improved environmental governance and performance. The Innovation Lab explores breakthroughs in science, technology and policy that promises to reshape the future of sustainability; investigates feasible governance mechanisms; and works to build interdisciplinary communities of practice. In addition to exploring the relationship between the digital economy and the environment, the Innovation Lab is advancing an understanding of a future governance role of these technologies, with a particular focus on the role of algorithmic decisionmaking.

To answer these critical questions, the Environmental Law Institute, in partnership with the Center for Law, Energy & the Environment at UC Berkeley and the Yale School of the Environment, formed the Project on the Energy and Environmental Implications of the Digital Economy. Supported by the Alfred P. Sloan Foundation, this Project provided early stage funding to seven interdisciplinary research teams.

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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

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