During a crowded late night party at the World Economic Forum hosted by German media company Burda, Internet stars such as Twitter’s Evan Williams and Google’s Marissa Mayer, grabbed the limelight. But in the cold light of dawn January 27, as heavy snow fell on Davos , the spotlight was on something potentially more lucrative and transformative than the Web.
Top level executives from the telecom and IT sectors started their day January 27 by discussing how the sector might take the lead in reducing carbon emissions. The tech sector as a whole currently contributes an estimated 2% of the world’s carbon emissions.
Reference was made to Green Touch, a new consortium formed by Alcatel-Lucent’s Bell Labs and partners such as China Mobile, Telefonica and AT&T, that aims to develop networking equipment that can cut energy consumption by a factor of 1,000, reducing emissions in the process. If it works the same amount of energy gulped by global networks in one day could power them for three years.
As important as such initiatives are, the real business opportunity for the tech sector is to help the industries contributing the other 98% of the emissions. The SMART 2020 report, an analysis of the tech sector’s efforts on climate change commissioned by the Global e-Sustainability Initiative, estimates that the telecom and information technology sectors could enable a reduction of up to 15% of global emissions, or more than five times the footprint of the sector itself, and create new business lines worth hundreds of billions of dollars in the process.
Smart grids, technologies which transform the existing grid into a two-way network where power and information flow in both directions between the utility and the consumer, are one of the most talked about new opportunities. The market is expected to grow from $69.3 billion in 2009 to $171.4 billion in 2014, according to a WEF report prepared by Booz & Co. which was discussed and distributed in Davos.
But there are lots of other opportunities as well: In the transportation sector, for instance, the global market for supply chain management software is projected to hit $8.3 billion this year, up from $5.5 billion in 2005. And, investment in building management systems for the urban planning sector is expected to exceed $67 billion by 2020.
All sorts of new businesses and business models are evolving. Serious Materials, a 2010 World Economic Forum Technology Pioneer presenting in Davos, aims to make the world’s windows dramatically more energy efficient, a replacement market CEO Kevin Surace estimates to be worth $5 trillion.
New York-based Global Solar Center, launched by technology entrepreneur Jack Hidary, is another example. Hidary, who was roaming the halls of the Hotel Belvedere in Davos January 27, says government subsidies aren’t enough to drive consumer adoption. Most consumers don’t have a clue how to transition their home’s heating systems or an easy way to calculate the upfront cost and the payback period.
Global Solar Center solves that problem through a service based on a geo informatics database and Web platform. Consumers or businesses type in their street address and the service automatically analyzes the roof of a home or a business from above and gives free quotes detailing solar costs and incentives, as well as the estimated payback period.
After seeing the numbers, if a consumer is interested in taking things further, the site links them to installers in their areas that have been vetted by Global Solar Center. The service is free to consumers. Installers pay a fee to Global Solar Center if a consumer referred to them through the site signs an installation contract.Consumers have already signed up for $30 million worth of installation work across 25 U.S. states and Hidary says he soon plans to develop the service for other countries.
The rest of the world is by no means standing still. Already new cities are being built in places like Abu Dhabi that are looking to incorporate power distribution, smart metering, smart transport and traffic control options.
Tech leaders were told in Davos that their companies have the chance to play a leading role in paving the way for the cities of tomorrow. But just as it was necessary for the tech industry to agree on standards to make the Internet work for everyone, big players now need to gather round the table and do the same with smart grid and other technologies that will power the future. The WEF is encouraging software, hardware and telecom companies to take up the challenge
The tech sector missed the opportunity to drive the sustainability agenda in Copenhagen but now that some of the biggest companies are starting to realize that they can do extremely well by doing good, that could change. Indeed, the pull of profits may do more to help the world reach green goals then governments meeting at climate change summits.