Digital Economy Report 2024

Digital economy report

Shaping an environmentally sustainable and inclusive digital future

The Digital Economy Report 2024 underscores the urgent need for environmentally sustainable and inclusive digitalization strategies.

Digital technology and infrastructure depend heavily on raw materials, and the production and disposal of more and more devices, along with growing water and energy needs are taking an increasing toll on the planet.

For example, the production and use of digital devices, data centres and information and communications technology (ICT) networks account for an estimated 6% to 12% of global electricity use.

Developing countries bear the brunt of the environmental costs of digitalization while reaping fewer benefits. They export low value-added raw materials and import high value-added devices, along with increasing digital waste. Geopolitical tensions over critical minerals, abundant in many of these countries, complicate the challenges.

The report calls for bold action from policymakers, industry leaders and consumers. It urges a global shift towards a circular digital economy, focusing on circularity by design through durable products, responsible consumption, reuse and recycling, and sustainable business models.

Quote icon
We must harness the power of digitalization
to advance inclusive and sustainable development, while mitigating its negative environmental impacts.
Secretary-General of UN Trade and Development (UNCTAD)
Rebeca Grynspan

Digitalization’s growing

environmental footprint

The digital economy is booming. Annual smartphone shipments have more than doubled since 2010, hitting 1.2 billion in 2023. Internet of things (IoT) devices are projected to surge 2.5 times from 2023 to 39 billion by 2029. New data from 43 countries, representing about three quarters of global GDP, show business e-commerce sales grew nearly 60% from 2016 to 2022, to reach $27 trillion.

This growth is taking an increasingly heavy toll on the environment.

The digital economy is resource intensive. A two-kilogram computer requires 800 kilograms of raw materials. A smartphone, from production to disposal, requires about 70 kilograms.

While the production phase is the most impactful – generating some 80% of smartphone greenhouse gas (GHG) emissions – environmental harm occurs throughout the lifecycle of devices and ICT infrastructure, including through e-commerce.

Digital waste is growing faster than collection rates. Waste from screens and small IT equipment rose 30% between 2010 and 2022, reaching 10.5 million tons. Improper disposal leads to pollution and other health and environmental hazards.

Increasing demand for data transmission, processing and storage for new technologies like blockchain, artificial intelligence (AI), fifth generation (5G) mobile networks and IoT is boosting emissions. For example, the ICT sector emitted an estimated 0.69 to 1.6 gigatons of CO2 equivalents in 2020, corresponding to 1.5% to 3.2% of global GHG emissions.

Addressing these issues requires policy reforms, technological innovations and action from all stakeholders – policy makers, businesses, and consumers – to make business models more circular, logistics more energy efficient, packaging more sustainable and consumption more responsible.

UN Trade and Development calls for

  • 1
    Governments and companies to link more closely environmental and digital policies and strategies.
  • 2
    Governments and businesses to harmonize reporting standards and improve data transparency and disclosure of environmental and social impacts.
  • 3
    All stakeholders to undertake more comprehensive assessments of digitalization’s environmental effects and increase the data available to governments, researchers and organizations.
  • 4
    Companies to reduce waste by designing devices to last longer and be easily reparable.
  • 5
    All stakeholders in e-commerce and the digital economy to increase their use of sustainable packaging and lower carbon logistics.

The emerging geopolitical challenges

and critical minerals

As digital devices become more complex, they require more mineral resources. Phones used 10 elements from the periodic table in 1960, 27 in 1990 and 63 in 2021.

As a result, demand for critical minerals critical for both digital and low-carbon technologies is soaring. For instance, demand for cobalt, graphite and lithium is expected to increase by 500% by 2050, according to the World Bank.

Securing access to critical minerals is increasingly a strategic priority for many countries, intensifying global competition and raising the risk of geopolitical challenges in a highly concentrated market.

In 2022, the Democratic Republic of the Congo produced 68% of the world’s cobalt, Australia and Chile accounted for 77% of lithium production, and Gabon and South Africa produced 59% of manganese. China handles over half of global processing for aluminium, cobalt and lithium, and nearly 100% for natural graphite.

For resource-rich developing countries, rising mineral demand presents economic opportunities. However, to fully capitalize they must advance up the value chains rather than just supplying raw materials. Otherwise, their commodity dependence could deepen, increasing economic vulnerabilities and preventing benefits from reaching local communities.

Mining these critical minerals also raises environmental and social concerns.

Addressing these challenges requires international cooperation, sustainable sourcing, and policies that balance the needs of all stakeholders to ensure a stable and ethical supply chain for critical minerals.

UN Trade and Development calls for

  • 1
    Governments and companies to balance the strategic importance of critical minerals with sustainable practices.
  • 2
    Governments to promote sustainable mining and production, implementing policies that effectively address environmental concerns and competition for local resources.
  • 3
    The international community to help mineral-rich developing countries to build the capacity to add more value to their raw materials.
  • 4
    Mineral-rich developing countries to diversify into other parts of global value chains.
  • 5
    Countries to support the work and outcomes of the UN Secretary-General’s Panel on Critical Minerals to ensure a just, fair and sustainable transition that fully benefits all countries and communities endowed with these resources.

Increasing energy and water use

in the digital era

A pressing concern is digitalization’s increasing energy and water needs.

From 2018 to 2022, electricity consumption by 13 of the largest data centre operators more than doubled. Worldwide, data centres are estimated to have consumed as much energy as France in 2022 – 460 terawatt-hours (TWh) of electricity. Their energy consumption is expected by the International Energy Agency to double to 1,000 TWh in 2026.

Such consumption can strain local electricity grids. For example, data centres in Singapore accounted for around 7% of the country’s electricity demand in 2020, and in Ireland that share was as high as 18% in 2022.

Cryptocurrency technologies are also energy intensive. For example, Bitcoin mining's global energy consumption rose 34 times between 2015 and 2023, reaching an estimated 121 TWh.

Digitalization’s water consumption is also growing, which is cause for concern in a world where two billion people still lack access to safe drinking water.

In 2022, Google’s data centers and offices consumed more than 21 million cubic meters of water. Newer technologies, such as generative AI, also require more potable water for cooling servers.

In the United States, one-fifth of data centre servers’ direct water footprint reportedly comes from watersheds that are moderately to highly water-stressed.

Addressing the energy and water footprints of digitalization requires coordinated efforts from tech companies and policymakers to improve energy efficiency and reduce water use.

UN Trade and Development calls for

  • 1
    All stakeholders in the digital economy, including transport and logistics companies, to power operations with low-carbon electricity.
  • 2
    Governments to implement stricter regulations on energy and water consumption for data centres, while limiting greenwashing.
  • 3
    Companies to focus efforts on improving data centers' energy and water efficiency, carefully considering the requirements for both.
  • 4
    All stakeholders to increasingly assess water usage and its impact on local resources in a location-specific context.
  • 5
    Governments and the international community to standardize energy and water policies globally.

The widening digital ecological inequalities

for developing countries

Developing countries bear a disproportionate share of digitalization’s ecological costs while reaping fewer benefits.

They generate less than 1 kilogram of digitalization-related waste per person compared to 3.25 kilograms for developed countries. For the least developed countries, it’s just 0.21 kilograms.

A significant portion of digital waste created in developed countries is sent to developing nations, where formal collection and recycling systems are often inadequate. In 2022, only 7.5% of digital waste in developing countries was formally collected, compared to 47% in developed countries.

However, higher-value parts of digital waste for processing or treatment (such as printed circuit boards) are mostly exported from developing to developed countries. As a result, developing countries remain locked in the low value part of the waste value chain.

The production phase of digitalization creates ecological costs in developing countries that are rich in the required minerals. Extracting and processing raw materials often lead to environmental degradation, pollution and competition for local resources like water between mining, agriculture and local households.

Developing countries are also disproportionately affected by climate change yet lack the resources to leverage digital technologies to mitigate the effects.

Addressing widening digital ecological inequalities requires concerted international efforts to ensure fairer practices such as promoting sustainable mining approaches, enhancing digital infrastructure, curbing illegal digital waste exports, and support capacity-building in developing countries.

UN Trade and Development calls for

  • 1
    Advanced economies to take the lead in addressing digitalization's environmental impacts and support developing countries with financial and technical assistance.
  • 2
    International organizations and developed economies to support developing countries to harness opportunities from digitalization and mitigate environmental challenges.
  • 3
    All stakeholders to collaborate to standardize policies and regulations and work together to reduce illegal digital waste exports.
  • 4
    The international community and development partners to work with developing countries to strengthen the infrastructure needed to properly dispose of digital waste.
  • 5
    Governments and companies to enhance recycling systems to improve material recovery from discarded products.

Shifting the world towards a circular

and inclusive digital economy

To tackle the environmental challenges of digitalization, we must transition to a circular and inclusive digital economy. This involves adopting sustainable practices throughout the entire lifecycle of digitalization – from design and production to usage and disposal – while ensuring equitable economic benefits.

The digital economy currently generates excessive waste, reinforced by programmed obsolescence – the built-in reduction of a product’s lifespan due to technical, functional or psychological reasons – in modes of production.

A circular economy minimizes waste and maximizes resource use through reusing, refurbishing, recycling, and extending product lifespans.

However, only 7.2% of the global economy is estimated to be circular, and this share is declining due to increased material extraction and use. As of 2022, only 24% of digital waste was formally collected globally, with much lower rates in developing countries.

Shifting to a circular and inclusive digital economy addresses environmental concerns while promoting economic opportunities and job creation. For example, the global market for electronics recycling is expected to grow from $37 billion in 2022 to an estimated $108 billion by 2030, led by the United States and China.

By optimizing resource use and reducing waste, businesses can lower costs and create new market opportunities. Sustainable practices can also lead to technological innovations that benefit people and the planet.

The report calls for a shift away from the “extract-make-use-waste” approach. Besides more appropriate policies, key strategies include designing for durability and repairability, promoting recycling and recovery, encouraging responsible consumption and supporting sustainable business models.

Moving towards sustainable digitalization will require those that are overconsuming to moderate their consumption of devices, so that the parts of the world that are insufficiently connected can continue to digitalize for development.

Collaboration among governments, businesses, consumers and civil society is crucial for success. Inclusive solutions require diverse perspectives.

UN Trade and Development calls for

  • 1
    Companies to design products that last longer and are easily repaired and offer sharing services like leasing, and governments to implement policies to address planned obsolescence.
  • 2
    All stakeholders to educate consumers on the environmental impacts of their devices and promote the use of refurbished and second-hand products.
  • 3
    Governments and consumers to support sustainable business models and promote sustainable practices in digital technology production and usage as well as in e-commerce.
  • 4
    The international community to foster cooperation to standardize regulations to ensure a unified approach to sustainability in digitalization.
  • 5
    The international community to develop an inclusive and integrated approach that aligns their digital and environmental policies at all levels, leveraging global processes such as the International Resource Panel and the Intergovernmental Panel on Climate Change, as well as the Global Digital Compact and the 20-year review of the World Summit on the Information Society.