Digitalization in environmental technology and resource efficiency
Digitalization will further accelerate the pace of growth in the green tech industry. In 2025, environ mental technology and resource efficiency can expect it to add an extra 20 billion euros to the market volume. Digital data, automation, digital interfaces to the customer and connectivity are driving greater investment in green products, processes and services that are instrumental in avoiding or reducing pollution of the environment. In Germany alone, the digital transformation of environmental technology will save about 50 million tonnes of CO2 equivalent in 2025.
Five digital systems in particular are hugely important to the green tech industry and harbor considerable environmental relief potential. They are: connected energy, building information networks, Industry 4.0, urban connected mobility and smart grids. However, if environmental technology and resource efficiency companies are to benefit from the digital transforma tion, they must adapt to the new rules of the game brought about by the transition to the digital age. These rules state that new, disruptive business mod els are replacing old business models; that traditional corporate structures are becoming more flexible; that virtual platforms are forcing changes in market design; that new competitors are penetrating links in the value chain; and that network effects are beco ming established as a new competitive advantage.
The four keys to digital transformation, with sample applications
The digital transformation at a glance
"Megatrends are enormous shifts that genuinely change our society." That is how John Naisbitt, the intellectual father of the megatrend concept, explains what distinguishes hyped-up buzzwords from mega trends.1 Phenomena such as climate change, globali zation, demographic change, urbanization and digita lization belong in this category. These developments have a mutual impact on each other and will shape not only the world we live in today, but also the social, political and economic conditions that prevail in future generations. Logically, therefore, megatrends also have a significant influence on the corporate environment.
Digitalization is seen as both a megatrend and a driver of innovation. It affects all areas of social and economic life. At every link in the value chain, companies are encountering connected systems and working with tools and practices that are based on information and communication technology. In the process, the part played by the latter is changing. Digital technology no longer merely supplies auxiliary tools: It is bringing fundamental change to companies’ business models and processes. The level of intensity may differ, but the digital transformation affects every industry and every business enterprise, from large corporates to SMEs.
The far-reaching impact digitalization can have is graphically illustrated by pioneering industries such as the media (the eroding importance of print media), the music industry (fully digitalized products and sales channels) and retail (online shopping).
Literature on the subject currently provides no solid definitions of what exactly the "digital transformation" entails. The discussion that follows is rooted in the following understanding: "We understand digital trans formation as end-to-end connectivity across all areas of the economy, and as the [relevant] actors’ adjust ment to the new conditions that prevail in the digital economy. Decisions in connected systems involve data exchange and analysis, the computation and evalua tion of options, and the initiation of actions and the resultant consequences. These new tools will change many established business models and value creation processes from the ground up."
Digitalization will also bring change to environmen tal technology and resource efficiency. This chapter discusses the opportunities and risks with which digital transformation confronts players in the green tech industry.