Felippa Amanta
ASEAN’s digitalisation and decarbonisation ambitions will have massive economic, social and environmental implications for the region. The Digital Economy Framework Agreement (DEFA), which is currently under negotiation, is projected to catalyse the value of ASEAN’s digital economy to US$2 trillion by 2030. At the same time, ASEAN’s Strategy for Carbon Neutrality is expected to deliver an added value of US$5.3 trillion by 2050. Recognising the synergies and trade-offs between the two frameworks will be important to successfully deliver both ambitions.
Many parallels can be observed between ASEAN’s digitalisation and decarbonisation strategies. Both emphasise talent development and mobility, the interoperability of regional frameworks, trade facilitation and value chain integration and standard-setting. While these strategies allow ASEAN to be more globally competitive in digital and green markets, aligning the two goals will be difficult due to digitalisation’s energy consumption and carbon footprint.
Crossovers between the two issues have also emerged. DEFA materials claim that a strong digital economy will have a ‘positive climate impact’. Meanwhile, the Strategy for Carbon Neutrality includes digital technologies, such as deploying digital tracking tech for greenhouse gas emissions reporting. But the overall connections in the two documents are limited — despite the linkages between digitalisation and decarbonisation that ASEAN can use to its advantage.
ASEAN should explicitly identify other potential connections between digitalisation and decarbonisation to leverage the synergies. Prioritising these connections can help ASEAN deliver both goals more efficiently and cohesively. At the infrastructure and market level, digitalisation can help increase the share of renewables or improve the reliability of the energy grid. Digitalisation will also be crucial for the monitoring, reporting and verification of carbon markets. Digital solutions like digital product passports — introduced in the European Union as part of its Circular Economy Action Plan — help industries enhance product traceability, circularity and transparency.
At the consumer level, digital economy innovations in the mobility, food, housing and energy domains can have climate benefits by reducing, substituting or improving consumption. These innovations can lower waste and carbon emissions and should be incentivised instead of solely growth-oriented business models that lead to overconsumption. The development of digital solutions for sustainability, both at the consumer and industry level, is already attracting significant attention and resources that ASEAN should compete to attain.
Data centres consume almost 2 per cent of total global electricity and
are predicted to double by 2026 due to rising demand. Singapore
knows this challenge well, having to balance its data centre industry,
electricity needs and net-zero targets. Malaysia’s efforts to
attract data centre investments are also raising concerns
about straining the nation’s power and water supplies.
While the synergies may attract a techno-optimist mindset, recognising and addressing the trade-off between digitalisation and decarbonisation is crucial to achieving both goals. A 2024 review of 200 digital companies, including many in Southeast Asia, highlights the digital sector’s worsening environmental impact, exacerbated by declining corporate transparency and accountability.
One cause for this adverse impact stems from the energy- and water-hungry data centres that underpin a thriving digital economy. Data centres consume almost 2 per cent of total global electricity and are predicted to double by 2026 due to rising demand. Singapore knows this challenge well, having to balance its data centre industry, electricity needs and net-zero targets. Malaysia’s efforts to attract data centre investments are also raising concerns about straining the nation’s power and water supplies.
While data centres’ energy consumption continues to grow, efforts to supply data centres with renewable energy have been lacking, resulting in a large operational carbon footprint. The largest cloud service providers are among the top corporate purchasers of renewable energy. But the renewable energy they purchase is often from a different grid or region from their data centres.
Integrating renewable energy into the data centre infrastructure remains challenging. The combined operational greenhouse gas emissions of Google, Amazon and Microsoft have increased by 62 per cent between 2020 and 2023, due to energy-intensive artificial intelligence developments. Despite these concerns, data centres’ environmental impacts have not been sufficiently addressed in Southeast Asia. Technical solutions such as energy efficiency standards and sustainability reporting requirements must be prioritised.
Digitalisation can also undermine ASEAN’s carbon neutrality targets in other indirect ways. DEFA’s emphasis on cross-border trade facilitation and e-commerce will intensify transport levels and logistics and increase transport emissions. Without cross-border infrastructure for sustainable modes of transport and freight, the growth in logistics and infrastructure for e-commerce may deepen the region’s fossil fuel dependency.
The interaction between climate and digital justice must also be addressed. Groups like farmers and coastal or remote communities are more vulnerable to climate change, yet simultaneously less likely to have access to digital solutions due to the digital divide. These groups also bear the brunt of the environmental impacts of digitalisation — such as increased drought — as they compete for water with data centres. This raises the question of who will benefit from decarbonisation and digitalisation efforts and who will be left behind by the compounded disadvantages.
While efforts are still ongoing to negotiate DEFA and operationalise the Strategy for Carbon Neutrality, it is essential to proactively address the interconnections between digitalisation and decarbonisation. Digitalisation and decarbonisation can work together well. But digitalisation’s direct and indirect environmental impacts, if not managed properly, will threaten ASEAN’s decarbonisation efforts and disproportionately affect vulnerable communities.
Through more coordination between ministers and ASEAN bodies in the digital and climate sectors, ASEAN can ensure that policies and actions are not undertaken with a piecemeal approach, or worse, undermine each other.
Felippa Amanta is a PhD candidate at the Environmental Change Institute, School of Geography and Environment, University of Oxford.
Source: East Asia Forum