Technology growth can spur low-carbon energy system and save $1.6trn, says report
The rapid rise of technologies like Artificial Intelligence (AI), automation, data analytics and the Internet of Things (IoT) could save between $900bn to $1.6trn to the global economy by 2035, according to a new report from the McKinsey Global Institute (MGI).
MGI, the number one private sector think tank in the world according to the 2016 Global Go to Think Tank Index, has predicted that technological advancements will transform the energy resource sector, covering oil, gas, coal, iron and copper, over the next two decades.
The “Beyond the supercycle” report released on Thursday (16 February), notes that technology will enhance the energy efficiency of buildings, infrastructure and transport, the latter of which will generate between $150bn to $280bn by 2035.
Technological advancements will also slash at the costs of renewables, allowing low-carbon sources to power more than a third of the global economies energy mix in the same timeframe, rising from 4% today. The report also notes that resource producers, especially those sourcing raw materials for electronics, will be able to deploy new methods to raise extraction techniques, and utilise date analysis to enhance resource management.
MGI’s director Jonathan Woetzel said: “Changes in the resource sector in the past often came about as a result of regulation, but now it is technology that is driving the shifts. Our new research shows that the global economy has a significant opportunity to make substantial savings on energy in the next two decades by adopting and embracing technological change. But those savings are not guaranteed.
“Policy makers and resource companies both have a role to play in capturing the dividend from technological innovation. Governments of all countries, whether exporters or importers or resources, will be able to redeploy savings from reduced energy demand into other areas of the economy, and companies across all sectors will benefit –including those in the resource business.”
The research outlines two scenarios for resource demand. A “moderate” technology adoption across the globe could create $900bn in savings, while an “accelerated” system could pump $1.6trn into the economy. Overall, changes to the energy mix and limited demand for oil and natural gas could increase energy productivity by 40-70%.
The 2017 Global Opportunity report released last month by DNV GL, Sustainia and the United Nations Global Compact (UNGC) echoed the monetary gains to be made from the implementation of smart technology.
Smart water technology ranked as the highest business opportunity in the report. Providing and managing access to water protects the scarce resource and decreases water supply costs, the research claims. It estimated that the smart water tech market will be worth almost £16bn in 2021, up from £6.72bn last year.
A similar report, also published in partnership with DNV, revealed how leveraging the potential of technology would be a key mechanism to enable businesses and governments to achieve the targets of the Sustainable Development Goals (SDGs).