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Restructuring the Global Economy

Internet & E-Commerce Have Major Environmental Benefits

Livability and Community Renewal


 

 

By the Center for Energy and Climate Solutions

Fhe emerging New Economy created by the Internet is producing more than just a business revolution: It is also generating enormous environmental benefits. By reducing the amount of energy and materials consumed by business - often dramatically - and increasing overall productivity, the Internet stands to revolutionize the relation between economic growth and the environment, according to a new report by the Center for Energy and Climate Solutions, a non-profit organization outside Washington, D.C., that helps companies and public institutions reduce their greenhouse gas emissions.

Authors of the report, The Internet Economy and Global Warming: A Scenario of the Impact of E-Commerce on Energy and the Environment, believe the revolution is already manifesting itself as a sudden shift in the country's energy diet. While the economy grew more than 9 percent in 1997 and 1998, energy demand stayed almost flat in spite of very low energy prices. Such gains mark a major departure from recent historical patterns.

"The Internet economy could allow a very different type of growth than we have seen in the past," says Dr. Joseph Romm, lead author and executive director of the Center. "It means there is also a new energy economy that will have profound impacts on not only on the environment, but also economic forecasting." Dr. Romm previously headed the $1 billion energy efficiency and renewables program at the U.S. Department of Energy.

For example, the ratio of building energy per book sold in traditional bookstores versus the on-line retailer Amazon.com is 16 to 1. Internet shopping uses less energy to get a package to your house. Shipping 10 pounds of packages by overnight air - the most energy-intensive delivery mode - uses 40 percent less fuel than driving roundtrip to the mall. Ground shipping by truck uses just one tenth the energy of driving yourself.

If present Internet trends continue, major environmental benefits will accrue because:

  • By 2007, the Internet could avoid the need for some 5% of commercial building space, including up to 1.5 billion square feet of retail space, 1 billion square feet of warehouses, and as much as 2 billion square feet of commercial office space, the equivalent of almost 450 Sears Towers.
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  • The resulting energy savings from operations and maintenance alone total 53 billion kilowatt hours per year - the output of more than 21 average power plants - and 67 trillion BTUs worth of natural gas (67 billion cubic feet), preventing the release of 35 million metric tons of greenhouse gases into the atmosphere. Avoided construction of all those buildings saves the equivalent of 10 more power plants worth of energy, and another 40 million metric tons of greenhouse pollution.
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  • The Internet could save 2.7 million tons of paper every year by 2003, despite increased use of office paper. The resulting annual cut in global warming pollution equals some 10 million tons of carbon dioxide. Both figures could double by 2008.
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  • Each minute spent driving to the mall uses more than 10 times the energy of a minute spent shopping on line. On-line shopping avoids car trips and reduces congestion. Already, nearly 40 percent of people with Internet access say they go to the store or the mall less often.

"The Internet can turn buildings into Web sites, and replace warehouses with supply chain software," says Romm. "It can turn paper and CDs into electrons, and replace trucks with fiber optic cable. That means significant energy savings."

Most Americans know names like Amazon.com, E-bay, and Travelocity.com. But the lesser-known names of business-to-business e-commerce dwarf the consumer sector in both economic and environmental terms. While consumer e-commerce is expected to grow from $7.8 billion in 1998 to $108 billion in 2003, business e-commerce is expected to rise from $43 billion to more than $1 trillion, according to Forrester Research. As of mid-1999, General Electric alone was doing more than $1 billion worth of Web-based business annually.

The Internet Uses Little Energy, Saves A Lot

The authors found that the Internet itself is not a major energy user, largely because it draws heavily on existing communications and computing infrastructure. They report the average PC and monitor uses just 150 watts of power. Today's new computers are more than twice as efficient as those they are replacing. As for the fast-growing information technology sector in general, the report concludes it is far less energy-intensive than most conventional industries.

Something Big is Already Going on in the Energy Economy

Remarkable statistics published this fall by the Energy Department suggests a giant shift in the U.S. energy economy is already underway. Despite historically low prices, energy intensity, the amount of energy consumed for every dollar of economic output, fell 4 percent in 1997, and another 4 percent in 1998, the biggest gain in half a century. The Federal Energy Information Agency says 1999 figures will continue to show large gains. By contrast, the average yearly improvement from 1987 to 1996 was less than one percent.

About a third of the gain over the last two years is attributable to expansion in sectors with relatively modest energy needs -- especially the double-digit growth in information technology. The rest is due to increased efficiency throughout the economy. If the new pattern holds, Dr. Romm says it would double the average rate of energy intensity gains for the next decade.

Ramifications for Kyoto Climate Treaty

A recent EPA analysis concluded that the structural shift alone means standard estimates for U.S. energy and carbon dioxide emissions in 2010 may be overstated by the equivalent of 175 power plants and 300 million metric tons, respectively. Under the unratified Kyoto global warming treaty, the U.S. pledged to cut greenhouse pollution to 7 percent below 1990 of levels by 2012. Current business-as-usual projections put 2010 emissions from energy 33 percent above 1990. Such a drastic revision in that figure would significantly reduce both the difficulty and the cost of hitting the treaty targets.

For an Executive Summary of the Report, visit http://www.cool-companies.org/ecom/port.cfm. To review the entire report, visit http://www.cool-companies.org/ecom/index.cfm.
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