Telecommunications companies take the first steps towards reducing emissions

Maintaining phone calls and data packages around the world requires enormous amounts of energy. Small wonder, then, that the telecommunications sector, with its vast underground cable networks and data centers storing enormous amounts of information, accounts for between 1 and 2 percent of all energy consumed globally, according to industry estimates.

However, this year, the top three companies on FT-Statista’s list of European climate leaders were telecommunications groups: Sweden’s Tele2 and Telia, and Germany’s Deutsche Telekom. Between 2016 and 2021, they reduced their greenhouse gas emissions from their internal operations and purchased energy – the so-called Scope 1 and 2 emissions – by 99, 96 and 93% respectively. the sector entered the top 100.

The two main drivers of emissions reductions in the first three clusters were the drive to purchase renewable electricity and significant energy-inefficient infrastructure upgrades.

But, while companies have made strides in reducing their Scope 1 and 2 carbon footprints, emissions are still high in their supply chains.

Emissions directly from commercial activities (Scope 1) now account for just 3.2% of the total carbon footprint of the 15 largest telecom groups in Europe by market capitalization, according to S&P Global Market Intelligence. Indirect emissions deriving from energy purchases by companies (Scope 2) account for about a quarter.

But emissions from telecom groups’ supply chains (Scope 3), especially from the supply of products and equipment, make up by far the lion’s share of their total carbon footprint: those same 15 companies emitted 36.6 million tonnes of CO₂-equivalents as part of their Scope 3 emissions in 2020, compared to just 1.6 million tonnes for Scope 1, according to S&P.

Scope 3 emissions represent over 98% of Tele2’s total and 90% of Telia’s. In general, the biggest culprits are manufacturers of networks and network equipment, as well as manufacturers of mobile phones and devices.

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“There is an urgent need move from the current linear economic model to a more circular economy,” says Erik Wottrich, head of sustainability at Tele2, referring to the need to reuse and recycle more products.

This, he explains, requires “systemic change, where we need to engage with multiple players in the value chain: manufacturers, customers, repairers.”

“There is a lot of room for greater collaboration,” agrees Melanie Kubin-Hardewig, vice president of group corporate responsibility at Deutsche Telekom, where Scope 3 accounts for 98% of the group’s emissions.

Both believe that putting more pressure on supply chain partners is important, to create better strategies to reduce emissions.

In 2020, Telia began including climate goals and thresholds as criteria in its procurement process.

“That’s the carrot,” says Sara Nordbrand, head of sustainability at Telia Group, noting that some suppliers have shown a willingness to commit to measuring and demonstrating best practices.

Deutsche Telekom also includes sustainability criteria in its supplier selection process, which currently weighs in at 20% for procurement procedures.

Tele2, by contrast, has not yet made emission reductions a requirement in its code of conduct for business partners, and plans to do so only after talking to suppliers and asking them to implement their targets over the course of the year. next year.

What has allowed the companies themselves to make great strides in reducing emissions is a shift towards the use of renewable sources rather than fossil fuels to power the networks. Both Tele2 and Telia started buying all their electricity from renewable sources in 2020, enabling them to reduce their Scope 2 emissions by 94 and 85% respectively. Telia is using carbon credits to make the final leap to reducing Scope 2 emissions by 100% over the same period.

Deutsche Telekom has also only been using renewable electricity since 2021. But both it and Telia are now looking to secure more power purchase agreements (PPAs) with renewable energy suppliers, to create long-term deals that help protect suppliers from fluctuations. of the market.

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A recent report from consultancy firm Oliver Wyman found that telecom operators are supplying around 11% more renewable energy than the average for the countries they are located in and added that more PPAs would help accelerate this change across the industry.

But, in some ways, the transition to renewables is a low-flying fruit. Energy efficiency is a bigger challenge. As Steven Moore, head of climate action at the GSMA, the mobile phone industry association, points out, “when energy is a very high cost to you, you go out of your way to minimize it”. Energy procurement currently accounts for up to 40% of telecommunications companies’ operating expenses. However, while there was a 30% increase in data traffic between 2020 and 2021, power consumption only increased by 6%, according to GSMA estimates.

A factor leading to this decoupling of data traffic and energy consumption has been the upgrade of the network infrastructure, including the rollout of full fiber and 5G technology. The new equipment tends to be much less energy intensive than its predecessors.

But 5G networks may require even more power than 4G, up to 140% more in some scenarios – because they generally require more cell towers. And data traffic is set to ramp up dramatically as more devices connect to the internet, which could offset 5G’s gains in energy efficiency.

Telia is piloting new features, such as network “energy saving modes”, which helped reduce energy consumption by between 5 and 8% last year. It has also initiated pilot projects for using smart lithium-ion batteries to relieve pressure on the grid at times of peak demand.

Tele2 has implemented base stations with a new power saving feature, so they switch to standby mode when there is no data to send. It is considering consolidating sites and data centers where possible to reduce consumption.

Meanwhile, Deutsche Telekom has a pilot project evaluating how artificial intelligence could help manage energy use based on demand at certain times of the day. It’s also exploring how to store more renewable energy on site.

But, for Moore, “the most challenging area is around Scope 3.” “There is guidance on how to measure and report,” she notes, “but companies need to work more closely with suppliers if they are to achieve the goals.”