To the uninitiated, the terms “carbon neutral” and “Net Zero” seem synonymous but they are, in fact, quite different. Carbon neutral was defined by the British Standard Institution in 2009—it allows companies to offset residual CO2 emissions from their operations (after implementing reduction strategies) by purchasing carbon credits. These credits are related to renewable energy generation projects but the large volume of credits in circulation means that their cost is low—around $1 per MWh . Given that commercial-scale electricity prices in the US are around $0.11 per kWh , telecom operators can achieve carbon neutrality simply by increasing their electricity spending by 1%. In addition, carbon credits relate to renewable energy plants that are already built; they do not incentivize additional capacity that would help wean the economy off fossil fuels.
Net Zero is a newer concept, defined by the Science Based Targets initiative (SBTi), a partnership between the United Nations (UN) and several non-profit organizations. In simple terms, Net Zero means reducing CO2 emissions as much as possible; for any residual emissions, an equivalent amount must be removed from the atmosphere by investing in carbon removal projects (e.g., afforestation or carbon capture and storage). These projects are generally much more expensive than simply buying carbon credits. Net Zero is more difficult to achieve than carbon neutrality because it involves the permanent removal of residual emissions.
Reach Net Zero before 2050 but do not only rely on carbon removal
The International Telecom Union (ITU) has published guidance for information and communication technology (ICT) organizations on how to set Net Zero targets, urging companies to reach Net Zero greenhouse gas (GHG) emissions by 2040, if possible, or by 2050 at the latest. Critically, the guidance states that while earlier targets than 2040 are encouraged, these should not come at the expense of the level of abatement (i.e., don’t reduce your carbon footprint by just 5% over 3 years and then plant a load of trees to reach Net Zero). The spirit of Net Zero is to try reducing GHG emissions as much as possible, then using carbon removal projects to deal with residual emissions that are not technically feasible to eliminate.
The ICT-specific Science-Based Pathway to Net Zero requires mobile network operators to slash operational emissions by 45% between 2020 and 2030. Over the same period, fixed network operators must reduce their emissions by 62% and data centers, by 53%.
Emission Scopes 1, 2, and 3
Another important distinction between carbon neutral and Net Zero is that carbon neutrality mainly covers Scope 1 and 2 emissions, whereas Net Zero also includes Scope 3. Scope 1 refers to all direct emissions from an organization’s activities. For telecom operators, Scope 1 emissions are usually below 10% of their total emissions and generally relate to diesel used in field service trucks and backup generators as well as refrigerant gases from air conditioning units. Scope 2 includes indirect emissions such as electricity purchased and used by the organization. Around 20% of telecom operators’ total emissions are Scope 2 emissions.
Scope 3 (included in the definition of Net Zero but not carbon neutral) includes all other indirect emissions from an organization’s activities, which stem from sources that they do not own. This includes purchased goods and services (around half of Scope 3) and the usage of products and services sold by telecom operators (around 40% of scope 3), such as mobile phones and broadband routers. Scope 3 emissions make up around 70% of an operator’s total GHG emissions. When selecting vendors, operators are placing a strong emphasis on GHG emissions from the products they purchase. For example, in 2020, AT&T integrated sustainability performance metrics into sourcing decisions for 80% of its expenditure. The company wants at least half its suppliers to set their own science-based Scope 1 and Scope 2 GHG targets by 2024.
How to reduce emissions
One way for operators to reduce Scope 3 emissions is to improve the energy efficiency of user devices provided to customers (e.g., broadband home gateways and video decoders). Because telecom operators have limited influence over their Scope 3 emissions (e.g., how much people use and recharge their mobile phone batteries) their immediate focus is more on Scope 1 and 2.
Improving the efficiency of field operations (reducing truck rolls) and switching from diesel vehicles and generators to electric vehicles and battery backup systems (sometimes supplied by onsite solar photovoltaics) are the main ways for operators to reduce Scope 1 emissions. Scope 2 emissions, on the other hand, can be reduced mainly by improving the energy efficiency of networks (including cooling) and ensuring that electricity is generated from renewable sources (through virtual power purchase agreements).
Good for the environment and good for the bottom line
Reducing GHG emissions is not just about being a good corporate citizen; it can also make sense financially. Energy is a major expense for the telecom industry. An Omdia study of major operators found that electricity costs equate to between 1% and 2% of revenue and hence have a meaningful impact on profit margins. After labor costs and site rental, energy is typically the third-largest network-related operating cost for operators. Reducing energy consumption not only helps telcos to meet their sustainability goals, but also benefits their bottom line.
5G must not derail the path to Net Zero
Mobile operators worldwide are adopting Net Zero carbon targets to meet the expectations of their customers, employees, and shareholders; over a third have met stringent criteria set by the UN’s Race to Zero campaign . The foremost strategies for decarbonization of the telecom sector include simultaneous implementation of energy efficiency plans and switching to renewable power sources. Mobile operators in North America have entered renewable power purchase agreements which generate cost savings and circumvent risks of energy price volatility.
However, with the nationwide rollouts of 5G in North America, operators must closely monitor their network power consumption. 5G technology is more efficient than prior generations, in terms of Joules of energy required to transmit each megabyte of data across a network. However, the new spectrum bands used for 5G and the use of massive MIMO (mMIMO) technology lead to many more megabytes being carried across networks. To avoid raising energy consumption, operators must explore all optimization techniques available for their 5G networks.
The telecom industry’s overall benefit to society’s GHG emissions
While it is important that telecom operators play their part in reducing GHG emissions, we must not forget that the electricity they use, on a per-subscriber basis, represents just 1% of the average electricity consumed in a typical US home. Moreover, ICT services today allow society to be more energy-efficient, with the CO2 abatement factor estimated to be nine—for every ton of CO2 equivalent emissions from the ICT industry, nine tons are saved across the economy, owing to dematerialization (e.g., electronic documents), demobilization (e.g., teleworking) and decarbonization (greater energy efficiency owing to smart manufacturing, agriculture, buildings, etc.). It is good to know that telecom operators worldwide are not only leading the path toward Net Zero but are also enabling other industries to do the same.
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— James Crawshaw, Principal Analyst, Service Provider Operations & IT, Omdia
This content is sponsored by Ericsson.