As the telco sector experiences growth in consumer demand, the entire value chain—from network infrastructure providers to data centers and telco operators—faces increasing pressure to decarbonize. These pressures are driven by rising regulatory demands, investor scrutiny, and consumer expectations for sustainability.
As the telco sector experiences growth in consumer demand, the entire value chain—from network infrastructure providers to data centers and telco operators—faces increasing pressure to decarbonize. These pressures are driven by rising regulatory demands, investor scrutiny, and consumer expectations for sustainability.
In 2022, the telco industry accounted for 2-3% of global carbon emissions, a figure lower than industries such as manufacturing and energy. However, global consumer internet traffic, mainly from video streaming, has rapidly increased by approximately 34% at a Compound Annual Growth Rate (CAGR) since 2015 (GSMA, 2022). Ultimately, this rise in traffic translates to higher electricity use and increased carbon emissions. The International Energy Agency states that the telco industry needs to reduce emissions by at least 45% to reach the Net Zero Scenario by 2030.
Arguably, one of the biggest drivers of the challenges that the industry faces is how generative AI drives increased demand for data center space, intensifying competition for real estate and leading to a shortage of co-location facilities. This expansion escalates the industry's carbon emissions due to the energy-intensive infrastructure required and places additional pressure on real estate choices that may not prioritize sustainable energy sources or efficient designs.
This signals an urgent need for comprehensive decarbonization across the telco value chain, which includes network infrastructure providers, data centers, and telco operators. Each key player contributes to the rising energy demand, driven by advancements such as 5G network deployment, expanded cloud services, and the proliferation of AI. Addressing these interconnected challenges requires nuanced and targeted strategies.
Balancing the Pressure to Decarbonize and Reduce Carbon Footprints
Network infrastructure providers, data centers, and telco operators face increasing demands for regulatory compliance, sustainability, and investor and consumer confidence. As the telco industry faces increasing pressure to decarbonize, operators need integrated strategies to reduce their carbon footprint. Specific efforts to cut direct (Scope 1) emissions, reduce indirect energy-related (Scope 2) emissions, and address supply chain (Scope 3) emissions may vary depending on individual sector requirements in the value chain. The right combination of solutions highlights opportunities for a multi-faceted approach to decarbonization, combining energy-efficient technologies, renewable energy procurement, and strategic partnerships to minimize the environmental impact of network infrastructure providers, data centers, and telco operators.
Effective decarbonization strategies for telecommunications
To effectively reduce their carbon footprint, telcos must integrate multiple and often interconnected solutions:
- Activating Energy Efficiency projects: Power consumption is one of the key issues these locations face. Energy efficiency projects allow companies to implement efficiency projects that decrease energy consumption and improve network performance, helping to minimize operational emissions.
- Sourcing Renewable Electricity: Reducing Scope 2 is easy when done through Energy Attribute Certificates (EACs), Power Purchase Agreements (PPAs), or Virtual Power Purchase Agreements (VPPAs). These mechanisms allow the industry to greenify their consumption.
- Exploring Biomethane: Renewable natural gas (RNG) or BioLNG (liquefied biomethane) can help power data centers in an efficient way while decarbonizing operations.
- Biofuels Solutions: to minimize Scope 1 emissions while maintaining reliability, data centers can use Hydrotreated Vegetable Oil (HVO), biodiesel, and other biofuels for their backup generators.
- Supplier Engagement: Collaborating with suppliers is crucial for telcos to address Scope 3 emissions. By encouraging suppliers to adopt green energy solutions and set science-based targets, telco operators can decarbonize their entire value chain, contributing to the overall reduction of industry emissions.
- Beyond Value Chain Mitigation: For unavoidable emissions, such as those from equipment manufacturing or third-party services, telco players can purchase carbon credits.
Meeting the demand for fast, reliable data while pursuing a low-carbon future is no small feat. Data centers can significantly reduce their carbon footprint through strategic decarbonization initiatives.
At STRIVE by STX, we specialize in creating tailored solutions to guide companies through every step of their decarbonization journey. Get in touch to discover the right strategy for your business.
