Could the Commission’s focus on productivity undermine the twin transition?

The idea that the economy, and society more broadly, can become increasingly digital and more sustainable at the same time is a powerful idea in EU policy. This “twin transition” has become a familiar refrain in speeches, strategies and policy documents, including the now dominant discourse on competitiveness.

But experts are more and more concerned that a focus on economic growth is weakening the synergies between the two transitions, so that any environmental gains that digital technologies can deliver will be wiped out by their environmental impacts.

The contribution that digital technologies make to sustainability is not in question, and they are widely deployed in environmental applications. Artificial intelligence, for example, has become especially useful in climate modelling, as evidenced by the Commission’s initiative to develop a digital twin of the Earth. Meanwhile, digitalisation can support the integration of renewable energy sources into the electricity grid.

But digital tools demand infrastructure whose building and operation generate planet-heating gases. As they grow in complexity, requirements for computational power rise, and so does their energy consumption.

According to EU data, digital technologies could account for up to 4% of Europe’s greenhouse gas emissions and between 8% and 10% of the energy that it consumes. And this is just the tip of the carbon iceberg, experts say.

The Commission is well aware that digital technologies have an environmental footprint and that for the twin transition to work, Europe must be able to rely on a more sustainable digital sector. But the potential paradox goes deeper than this.

For Sissi Knispel de Acosta, the general secretary of the European Climate Research Alliance, the EU must not only have a greener technology sector but also ensure that digitalisation doesn’t reinforce unsustainable consumption and growth models. 

“The paradox can be resolved if digitalisation is explicitly designed to enable sufficiency rather than merely increasing efficiency,” she explained. “Digital transformation should be guided by policies that prioritise low-carbon infrastructure, circular economy principles and energy-efficient technologies to align productivity gains with climate goals.”

This goes alongside the concept of “sobriety” in digital technology, which advocates limiting its use to necessary applications rather than every possible application. 

But “the ‘sobriety’ or ‘sufficiency’ levers are not part, at the moment, of the Commission’s thinking,” said Hugues Ferreboeuf, a project director for French think tank The Shift Project, which has promoted the sobriety concept.

Productivity first

What is very much part of the Commission’s thinking is the assumption that there is a positive link between digitalisation and productivity. “This link has never been scientifically demonstrated and there is no consensus on the fact that the Solow computer paradox [that investment in information technology may decrease productivity] would not be valid anymore,” Ferreboeuf said.

For Knispel de Acosta, this link depends on sectoral contexts, skills availability and the assimilation of digital tools. 

“Simply deploying AI or data-driven processes does not guarantee efficiency gains,” she said, citing adjustment costs for organisations such as new training needs, cybersecurity risks and the energy consumption of digital infrastructure. “Instead of GDP growth and productivity alone, innovation should be measured by ecological efficiency, resilience and inclusivity.”

According to Ferreboeuf, the synergies between growth and digitalisation can only be improved if the digitalisation is just. This is unlikely if the proposed digitalisation strategy imitates what happened in the US or in China. 

Following the US digitalisation pattern will lead to massive additional energy demand that the European power sector will have to meet with US or Russian liquefied natural gas, thus increasing the bloc’s dependencies, he said. 

There is also a concern that the digital industries tend to highlight sustainable uses, such as technologies that improve the reliability of electricity grids or optimise water use in data centres, while playing down those that push in the opposite direction, such as systems that help oil companies save operating costs, encourage compulsive shopping or feed climate misinformation.

“Whenever the Big Tech companies are giving flashy examples of how AI has made a scientific discovery or helped a company get greener, there will probably be an equal amount of very unsustainable use cases,” said a former adviser on AI and sustainability to intergovernmental organisations, who spoke to Science|Business on condition of anonymity. 

In those cases, he warned, “you’re just exacerbating the existing unsustainability of the economy by making whatever is unsustainable more efficient.”

The idea is to balance the energy efficiency gains from these innovations with the use that we make of them, he explained. But the as The Shift Project notes, “technological progress in energy efficiency has always fallen short of usage increases.”

In other words, the digital footprint will continue to expand unless we keep it in check.

The Commission has put forward some initiatives that move in this direction, such as the eco-design regulation for servers and data storage products and the action plan on the digitalisation of the energy sector. It is also conducting studies to measure the future carbon footprint of AI and assess the sustainability of data centres. And, under Horizon Europe, it is funding frugal AI, where the idea is to achieve the desired impact with the least possible resources.

But for Ferreboeuf, these studies don’t generally address the root causes of unsustainable digital dynamics, which pertain to market and business models and regulations driven by a few US firms. 

“There is a high probability that when the Commission advocates for enhanced digitalisation strategies and investments, it does not question these characteristics,” he said. “If that is so, the ‘twin transition’ will remain a buzzword.”