SMART 2020:: Enabling The Low Carbon Economy in The Information Age

SMART 2020: Enabling the low carbon
economy in the information age

United States Report Addendum
SMART 2020: Enabling the

low carbon economy in the
information age
United States
Report Addendum
The following materials were prepared

exclusively for the Global e-Sustainability
Initiative by a leading strategy consultant,
The Boston Consulting Group (BCG). BCG
makes no representations or warranties Acknowledgements
to any third party with respect to the The Steering Committee thanks Noah
information contained in this report. While Horowitz, Senior Scientist of the Natural
reasonable steps have been taken to ensure Resources Defense Council (NRDC) for
that the information in this report is correct, his participation and insight as an NGO
BCG gives no warranty and makes no stakeholder. The NRDC works to protect
representation as to its accuracy and accepts wildlife and wild places and to ensure a
no liability for any errors or omissions. The healthy environment for all life on earth.
study should not be used or relied upon by Special thanks to the experts we interviewed
anyone without independent investigation for graciously providing their time, insights
and analysis and BCG assumes no liability for and feedback to strengthen the quality of
any such use or reliance by third parties. this report.
Contact information:
• Luis Neves, GeSI Chairman, Luis.Neves@telekom.de

• Joan Krajewski, U.S. Addendum Steering Committee, Chair, JoanKr@microsoft.com
• Philipp Jung, Partner and Managing Director at BCG, Jung.Philipp@bcg.com Copyright © Global e-Sustainability Initiative, 2008
SMART 2020: Enabling the low carbon GeSI Forewords
economy in the information age 3
Forewords
Can the global political agenda afford increasing global consumer demand for
not to prioritize ICT? higher-powered ICT products and services. This
The Global e-Sustainability Initiative approach is essential to foster future investment
(GeSI) was created by a group of information and and support the diffusion of low-carbon
communications technology (ICT) companies in enabling technologies.
response to the United Nations Millennium I ask policy makers to prioritize the
Development Goals (MDG) to end poverty and role that ICT plays, help achieve the United
hunger, provide universal primary education, Nations Millennium Development Goals, and lay
ensure environmental sustainability and the foundation for a more sustainable and
develop global partnerships for development. harmonious future for all.
Each of the MDG is markedly different from the
other. Many industry sectors can only respond to
one goal; however, ICT can enable other sectors
to achieve many of these goals.
GeSI and the Climate Group recently
published the “SMART 2020” report, which
quantified the significant contribution that ICT
can make to improve energy efficiency and Luis Neves
address climate change. The SMART 2020 report GeSI Chairman
defines the potential of ICT to drive sustainable
change and enable other sectors to create
About GeSI
GeSI (www.gesi.org) is an international efficiencies that generate growth.
strategic partnership of ICT companies The primary roles of ICT will be to
and industry associations committed to
creating and promoting technologies facilitate the free flow of information and to
and practices that foster economic, build intelligent systems that will ensure a more
environmental and social sustainability and
drive economic growth and productivity. sustainable future and low carbon society. In this
Formed in 2001, GeSI fosters global and context, the question that needs to be answered
open cooperation, informs the public
of its members’ voluntary actions to is: How can global policy agendas best prioritize
improve their sustainability performance ICT’s role in achieving these goals?
and promotes technologies that foster
sustainable development. It partners with In the U.S., climate change has gained
two UN organizations: United Nations saliency as a public policy issue. Amid an
Environment Programme (UNEP)
which hosts GeSI’s Secretariat and the ongoing global financial emergency, questions
International Telecommunications have been raised about whether now is the right
Union (ITU). These partners help shape
our global vision regarding the evolution time to tackle this problem.
of the telecommunications sector and By launching the SMART 2020 United
how we can best meet the challenges of
sustainable development. States Report Addendum, the U.S.-based GeSI
members are sending a clear message that the
ICT sector is ready to fulfill its role as the enabler
of economic and social development. The ICT
sector cannot act alone. It needs the appropriate
policy environment and financial framework to
be most effective.
In conclusion:
Policy makers can help shape ICT’s role so that
we can re-define business as usual and address
how to reduce carbon output while meeting the
SMART 2020: Enabling the low carbon GeSI Forewords
The time for action is now of excellence, tax measures, procurement

The recent election of a new guidelines, or standards to encourage and
administration presents an opportunity for streamline technology adoption as cost-
reassessment and change. The U.S. economy effective efficiency measures.
faces enormous challenges. At the same time, The U.S. government should increase
the nation requires a transformative energy federal R&D and incentivize private research
agenda that strengthens our national security targeted at ICT. It should foster the development
and addresses global sustainability. Fortunately, and deployment of those projects whose
Americans have discarded the notion that potential is great but whose uncertain viability
energy efficiency and economic growth are or lengthy payback period prevent private
mutually exclusive. They now understand that investment.
future prosperity requires that these two aims In addition, availability of good
work together. This report demonstrates that information is the key to enabling our low
investment in information and communications carbon transformation when combined with
technology (ICT) should be an integral economic incentives to change behavior. Many
component of any U.S. economic and people lack a clear understanding of how much
sustainability development plan. energy is consumed and what types of behavior
Through the support of feasible policy drive consumption. Behavioral changes can
measures, ICT can enable positive occur only when adequate information is
environmental change with a 13-22% available for informed decision making.
abatement in CO2 emissions and gross savings As with any powerful tool, policies
of $140-240 billion from reduced energy use. ICT must be selected and implemented carefully.
can also promote green collar employment. By Policies should not pick ICT technology
understanding the potential contribution of ICT, “winners” or “losers.” Balance is important. Energy
federal, state and local policy makers can supply and consumption management must
facilitate and accelerate the adoption of both be addressed. Innovation needs to be
meaningful solutions. encouraged. Collaboration and information
Some of the policy recommendations sharing should be nurtured.
contained in this report may result in greater ICT Our nation must confront significant
deployment. Efficiency improvements will challenges. Our economy is stressed. Our energy
continue to be an important industry focus as policies must change. This report identifies the
ICT use increases. Much has been written about many positive partnerships that are possible
the potential environmental impacts of ICT use. between the U.S. government and ICT industry.
ICT is currently responsible for approximately The businesses sponsoring this report pledge
2.5% of national CO2 emissions in the U.S. This our support to the U.S. government in
impact is predicted to grow under the business- overcoming the challenge of establishing
as-usual scenario to 2.8% by 2020. The ICT sector economically sound policies that move us all to a
is committed to reducing these impacts as low carbon society. We need to move forward
individual companies and through industry by acting now.
initiatives such as GeSI.
This report identifies practical steps
that the U.S. government can take now to
unleash the ability of ICT to transform the U.S. to
a low-carbon society without diminishing the Joan Krajewski
need for increased ICT energy efficiency. ICT U.S. Addendum Steering Committee, Chair
already has helped us achieve radically new
low-carbon business models. To further alter the Steering Committee Members:
way we work, live and think about energy, a
carbon monetization agenda alone is Emily Barton Stephen Harper Lawrence Plumb
insufficient. Among many options, the U.S. Ed Butler Noah Horowitz Beth Shiroishi
government can increase the uptake of already Pierre Delforge Matt Krupnick Glenn Zaccara
existing ICT technologies. It can use investment David Douglas Christopher Lloyd
incentives to build out ICT infrastructure, centers Adam Golodner Luis Neves
SMART 2020: Enabling the low carbon Contents
Contents
06 Report summary
Chapter 1: Introduction
08 U.S. context
09 The role of ICT
Chapter 2: Creating an enabling economic and
regulatory framework
12 ICT as a solution for energy efficiency
13 Monetizing carbon emissions
13 Structural support for ICT solutions
Chapter 3: ICT-enabled CO2 reduction
opportunities in the U.S.
17 U.S. specific Smart opportunities
17 How the recommended policies were developed
18 Smart Grid
25 Road Transportation
32 Smart Buildings
38 Travel Substitution
45 Conclusion
46 Appendices
SMART 2020: Enabling the low carbon Report Summary
Report summary
1
Royal Commission on Environmental
U.S. carbon emissions today total 6 However, many economic, behavioral and Pollution Report, 2000.
billion tons, and if current trends continue, they informational challenges continue to stand in 2
Based on reduction of fuel consumption
will reach 6.4 billion tons by 2020. The the way of realizing these gains, and markets from Road Transportation and Travel
Substitution. EIA, “U.S. Imports by Country
Intergovernmental Panel on Climate Change have thus far been too slow in alleviating them.3 of Origin,” 2007; EIA, “How Dependent are
(IPCC) has called for an overall greenhouse gas Achieving these reductions will therefore We on Foreign Oil?” August 22, 2008; EIA
Annual Energy Outlook 2008.
emissions reduction of 60-80% below 2000 require government policies to speed progress. 3
IPCC WG3 “Mitigation of Climate Change,”
levels by 2050 to avoid significant environmental First, the U.S. government should May 2007
damage.1 Businesses and policy-makers alike publicly recognize the important role that ICT
now recognize that climate change is a global can play in realizing efficiency gains, as
problem that demands immediate and European and Japanese leaders have already
sustained attention. done. Second, it should establish a national
The information and communications “Center of Excellence” to establish standards and
technology (ICT) industry can enable a large metrics for CO2 emissions, consolidate and
portion of that reduction. By providing actors validate data, coordinate public-private
with the information necessary to make better collaboration and share best practices. Third, it
decisions about energy consumption, ICT should encourage the deployment and
solutions can reduce the carbon footprint of adoption of ubiquitous broadband, since
human activity while improving quality of life. connectivity is the backbone of all ICT solutions.
Altogether, ICT enabled solutions could cut Finally, the government can create market
annual CO2 emissions in the U.S. by 13–22% from mechanisms that reward energy efficiency and
business-as-usual projections for 2020. This emissions reduction by monetizing carbon.
translates to gross energy and fuel savings of The monetization of carbon is an
$140-240 billion dollars. 2 important step toward an energy-efficient
economy, but results from this policy may be
Four main ICT opportunities to cut emissions are slow to materialize. Instituting a carbon
described in this report. monetization policy should be done carefully
and deliberately. ICT can be a vital component
• A Smart Grid built on better information and of such a policy by increasing energy efficiency
communication could reduce CO2 emissions quickly. In order for this to happen, further
by 230–480 MMT of CO2, and save $15–35 policies specific to each ICT-enabled
billion in energy and fuel costs. opportunity area are necessary:
• More efficient Road Transportation could • Smart Grid: While states are the primary
reduce travel time and congestion, shaving regulators of utilities, the federal government
off 240–440 MMT of CO2 emissions and should offer financial incentives to states that
saving $65–115 billion. reform utility rate structures. This provides
utilities with the motivation to reduce energy
• Smart Buildings that consume less energy consumption and encourages investment in
could abate 270-360 MMT of CO2 and save Smart Grid technologies. The federal
$40–50 billion. government should lead by example and
integrate Smart Grid technologies into
• Travel Substitution through virtual meetings federally-owned utilities.
and flexible work arrangements could
reduce CO2 by 70–130 MMT and save $20–40 • Road Transportation: The federal
billion. government should provide incentives for
In many cases, the technology to states to increase the capability of road and
implement these ICT solutions already exists. public transportation infrastructure to
SMART 2020: Enabling the low carbon Report summary
capture, analyze and act on real-time buildings and supporting investment in R&D
information. It should also elevate the in both the public and private sectors.
importance of ICT solutions in current
government programs. • Travel Substitution: The government can
address behavioral challenges by embracing
• Smart Buildings: The government should travel substitution (both flex work and virtual
drive the adoption of smart buildings meetings) for government workers and by
through a combination of mandates and creating a repository of best-practices in that
incentives – most likely at the local or state area.
level. It can encourage the inclusion of
energy efficiency requirements into the
certification process for building
professionals in order to spread expertise in
the field. The government should also set the
example by commissioning high-performing
Figure 1: Summary of recommended policies
Over- • Recognize ICT solutions as part of a national energy efficiency strategy

arching • Accelerate payback of energy efficiency investments by monetizing carbon emissions
policies • Create "Center of Excellence" to coordinate information & develop standard measurement for CO 2
• Encourage investment in broadband connectivity (fixed line and mobile)
• Provide incentives for utilities to invest in Smart Grid technologies and energy efficiency
Smart
improvements
Targeted Grids
• Lead by example and integrate Smart Grid technologies into federally-owned utilities
policies
Road • Expand investment in smart infrastructure for roads and road-related equipment
Transport • Elevate the importance of ICT solutions in current government programs
• Use incentives & mandates to increase energy efficiency of new and existing buildings
Smart • Introduce environmental requirements into certification process
Buildings • Lead by example to create demand in the market and identify best-practices
• Encourage R&D in Smart Buildings, especially where industry is under-investing
• Lead by example to help encourage behavioral change

Travel
• Share best-practices and develop rigorous analysis to prove the case for Travel
Substitution
Substitution
Although government action is needed to recognizes both the symbolic and practical
leverage ICT-enabled efficiency gains to their significance of reducing its own emissions and
fullest, the ICT industry also bears responsibility meet that challenge with continued innovation
for reducing its own emissions. Today, the ICT and technological breakthroughs.
sector contributes 2.5% of U.S. CO2 emissions, Together with government, academia and other
and that share is expected to grow to 2.8% by industries, ICT is well equipped to help the U.S.
2020, as the nation shifts toward a service- and overcome its energy and environmental
information-based economy. The ICT industry challenges.
SMART 2020: Enabling the low carbon 01 U.S. context
01: Introduction
The U.S. context
4
In the next decade, climate change Venture capital money for clean energy has Lieberman-Warner, “Climate Security Act
2007,” S.2191
will shape U.S. politics and fundamentally grown about 40% annually since 2000.5 5
UNEP Global trends in Sustainable Energy
influence the lives of its citizens. U.S. CO2 American innovation has always Investment 2007 and “Betting on Green”
emissions are expected to grow from 5,980 enabled economic and social progress. In the Technology Review October 30, 2008
million metric tons (MMT) in 2008 to 6,380 MMT 19th and 20th centuries, Americans used their
in 2020, assuming the business-as-usual (BAU) ingenuity to expand an electrical grid to the
scenario (see Figure 2). While this 0.5% annual most remote corners of the country and to build
growth is slower than historical rates, several skyscrapers that housed thousands of people. To
factors are driving the need to address climate meet the challenges of the 21st century, the
change. Beyond environmental risks, innovation that once expanded capacity—of
dependence on oil from potentially unstable roads, wires and buildings—can be deployed to
regions of the world, volatile fuel prices and a use that existing infrastructure more efficiently,
stressed economic forecast are creating a effectively and intelligently. Now more than
new-found sense of urgency to improve energy ever, innovation is needed to unlock the U.S.
efficiency and secure a sustainable energy economy’s potential by improving the allocation
future. and utilization of resources. This kind of
Progress is under way on all fronts. innovation will allow Americans to reduce their
The American public has voted into office a new consumption of natural resources, improve
President with a clearly articulated vision for overall quality of life and strengthen economic
reducing carbon emissions. The U.S. Senate is prospects.
considering a bill for carbon monetization.4
Figure 2: U.S. carbon emissions baseline

MMT CO2 emissions in the U.S.
8,000
+0.5% p.a.
6,380
5,980
6,000
2,080 Transport
1,980
4,000
2,320 2,570 Buildings

Power Power
generation generation
2,000 2,630
2,390
1,680 1,730 Industry
0
2007 2020
BAU
Source: EIA Annual Energy Outlook 2008

SMART 2020: Enabling the low carbon 01 The role of ICT
The role of ICT
6
PCs and peripherals include workstations,
laptops, desktops, monitors, and printers. The ICT industry’s own carbon footprint share of U.S. carbon emissions is expected to rise
IT services include data centers and The ICT industry has long been at the from 2.5% to 2.8%—an annual growth rate of
component servers. Telecoms network
and devices include network infrastructure vanguard of American innovation. ICT consists 1.4% that is nearly triple the projected growth
components, mobile phones, chargers, of PCs and peripherals, IT services and rate of total U.S. emissions (see Figure 3). This
broadband routers, and IPTV boxes.
Consumer electronics such as TVs, video telecommunication networks and devices.6 It is estimate assumes that the ICT sector will
equipment, gaming, audio devices, and one of the fastest growing sectors of the U.S. continue to innovate and increase the amount
media players not included. See SMART
2020 Appendix 1 for more detail economy, and is expected to continue that of computing power it can provide per watt.7
7
GeSI and the Climate Group, “Global Smart growth in the years to 2020. Devices like PCs and The increases in emissions from adopting ICT
2020 report”, 2008 smart phones are gaining penetration, and solutions that will reduce emissions elsewhere
8
For a more detailed breakdown of the being used more often and frequently. Demand are excluded from these projections. Therefore,
projected growth of emissions within the
ICT sector, refer to Chapter 2 of the SMART for broadband services is also rising rapidly. it is important that the ICT sector ensures its own
2020 report which can be accessed at This quick adoption of technology has carbon footprint grows slower than the demand
http://www.smart2020.org/
a cost in terms of increased energy for its products.8
consumption. Between 2007 and 2020, the ICT
Figure 3: ICT industry’s carbon emissions in the U.S.
MMT CO2 emissions in the U.S. CAGR

8,000
6,380 ICT-based
5,980 1.4%
6,000 emissions
180
150 (2.8%)
(2.5%)
4,000
6,200 Non-ICT 0.5%
5,830
(97.5%) (97.2%) emissions
2,000
0
2007 2020
BAU
Source: GeSI and the Climate Group, “Global Smart 2020 report”, 2008; EIA Annual Energy Outlook 2008; BCG
analysis. In assessing ICT’s carbon footprint, the use and operation of all ICT equipment (including emissions
from cooling data centers) were considered, but the embedded carbon was not. To breakout U.S. ICT emissions
from U.S. and Canada total, share of U.S. GDP in 2020 was used from Euromonitor
SMART 2020: Enabling the low carbon 01 The role of ICT
9
These reductions are included in the BAU
Recognizing this need, the ICT consumed by ICT, the U.S. economy increases its scenario; GeSI and the Climate Group, “Global
industry has committed to reducing its own overall energy savings by a factor of 10. The Smart 2020 report”, 2008
emissions by investing in breakthrough report cites investment in ICT as a major factor in 10

“Information and Communication Technologies:
The Power of Productivity” Laitner and Ehrhardt-
technologies. Worldwide, these improvements allowing both the population and economy of Martinez, American Council for an Energy-Efficient
are expected to reduce 60% of the emissions the U.S. to grow faster than its energy Economy, Feb. 2008
caused by increased demand.9 Examples of consumption.10 11

Based on reduction of fuel consumption
from Road Transportation and Travel
these breakthroughs include: ICT’s capacity to enable energy Substitution. EIA, “U.S. Imports by Country
efficiency can help the economy and reduce the of Origin,” 2007; EIA, “How Dependent are
We on Foreign Oil?” August 22, 2008; EIA
• Data center: Server virtualization, adoption effects of climate change. By 2020, the ICT Annual Energy Outlook 2008.
of best practices in heating and cooling and solutions outlined in this report can reduce an
innovations in increased server efficiency estimated 810—1,410MMT of CO2 from the U.S.
improvements baseline of emissions, representing a 13—22%
reduction in the EIA’s BAU scenario. This
• PC efficiency: Substitution of energy- translates to gross savings of $140 – $240 billion
intensive desktops with laptops and thin in avoided electricity and fuel costs. These
clients, replacement of cathode ray tube savings also have significant national security
monitors with LCD screens and implications as they translate to a reduction in
improvements in standby power total oil consumption of 11-21% and a reduction
management in dependence on imported oil of 20-36%.11 The
range of estimates depends on the rate of
• Telecommunication network and device adoption of ICT solutions.
efficiency: Reduction of standby power use In addition to the CO2 abatements
of devices and greater adoption of network sized by this report, ICT can be a powerful lever
optimization processes to change and influence behavior, because it
touches the daily lives of people and provides
As the leading innovator of most of these powerful tools for understanding their decisions.
breakthrough technologies, the U.S. must be at ICT’s impact spans beyond technology—it
the vanguard of driving these reductions. enables the creation of radically new low-carbon
business models. For example, ICT can ease
The ICT industry’s ability to enable a coordination among different users to enable
low-carbon economy services like car-sharing or appliance-sharing to
While the ICT industry can reduce its replace individual ownership. These solutions
own emissions, the greater opportunity is in can help reduce the embedded carbon from
leveraging ICT to reduce the 97% of emissions manufacturing more goods. Thus, ICT’s ability to
coming from the rest of the economy. ICT is a create transformative change makes it a critical
powerful enabler because it gives people the pillar in an energy strategy for a sustainable and
information to understand the carbon impacts prosperous America.
of their decisions and pursue alternatives. ICT
solutions can be energy-efficient substitutes for
manual, mechanical, or physical processes.
Replacing physical experiences with virtual
experiences, providing information to make
better decisions, or cutting waste where it won’t
be noticed are just some examples. The
American Council for an Energy-Efficient
Economy (ACEEE) recently issued a report
estimating that for every 1kWh of energy
SMART 2020: Enabling the low carbon 02 Creating enabling economic and regulatory framework
02: Creating an enabling

economic and regulatory
framework
Figure 4: Overarching policies to support ICT-enabled CO2 reduction
Recognize the role of ICT in the Create demand for CO2 reduction by
National Energy Efficiency Strategy monetizing carbon emissions
• ICT is part of the solution for energy • Market based solution for CO2
efficiency and CO2 reduction reduction
Build "Center of Excellence" Ensure connectivity

• Standard measurement for CO2 • ICT solutions are dependent on
• Public-private collaboration broadband (fixed and mobile)
• Dissemination of information • Requires infrastructure investment
and application adoption
SMART 2020: Enabling the low carbon 02 ICT as a solution for energy efficiency
ICT as a solution for energy efficiency
The current National Energy Policy involving ICT that will improve energy efficiency. 12
www.barackobama.com, full Energy
Policy brief
Report sets out three key objectives for U.S. For example, the ICT Policy Support Program will
13
Centrum der Büro- und
energy strategy: promote energy conservation, channel EU funds to public agencies and ICT Informationstechnik; German for “Centre of
repair and modernize the U.S. energy suppliers that develop and implement efficient Office and Information technology”
infrastructure and increase energy supplies energy services. In addition, the Seventh 14
Speech by José Manuel Barroso,
President of the European Commission at
while protecting the environment. While the Research Framework Program will support the CeBIT trade fair, Hannover, March 2008
report states that energy efficiency will play a projects aimed at developing energy-neutral 15
The Green IT Initiative as a policy to
key role in meeting these objectives, it does not homes and buildings and improving local power provide a solution, Presentation in ICCP/
WPIE Workshop in Copenhagen, Sumita
specifically highlight the potential of ICT grids. Finally, the Commission has issued several Takayuki METI, Japan, May, 2008
solutions to help. regulatory schemes and guidelines to member
Since 2001, the ICT sector has states, encouraging the adoption of national
developed a wealth of applications that can policies that guide ICT integration into energy
significantly improve energy efficiency. With the processes.
new administration targeting a 15% reduction in Japan is also embracing ICT solutions
energy consumption from 2020 projections, for energy efficiency. The Japanese Green IT
these applications can make welcome Project, launched in early 2008, assembles
contributions.12 Therefore, as the new stakeholders from industry, academia and the
administration updates the U.S. energy strategy, government to discover and address
it should explicitly recognize ICT as one of the opportunities for the ICT sector to grow in
key enablers of efficiency gains. President-elect sustainable ways and to transfer those practices
Obama’s proposal to name a Chief Technology to other industries. The Japanese government
Officerwould also serve to demonstrate the provided ¥3B ($31 million) in 2008 fund R&D in
importance of the IT sector to efficiency gains. energy-saving technologies and to promote the
Europe already recognizes the adoption of ICT-based efficiencies. The goal is to
importance of ICT solutions in achieving energy create “an energy-efficient society through IT”
efficiency. At the CeBIT conference in March with “energy-saving IT equipment and systems,”
2008,13 European Union Commission President and for Japan to “achieve a 21st century in which
Barroso publicly acknowledged ICT as a major economic growth and environmental protection
force in helping the EU states to meet their are truly compatible.” 15
energy efficiency goals and to reduce their
carbon emissions. He said that “Europe must
more than double its rate of improvement in
energy efficiency and there is tremendous
untapped potential in using ICTs. The real gains
[in energy efficiency] will come from ICT as an
enabler to improve energy efficiency across the
economy.” 14
Barroso’s statement recognizes the
concerted effort already underway in the EU to
leverage ICT solutions. The European
Commission has launched several initiatives
SMART 2020: Enabling the low carbon 02 Monetizing carbon emissions;
economy in the information age Structural support for ICT solutions
United States Report Addendum 13
Monetizing carbon emissions

16
Buchner and Ellerman, forthcoming in
Environmental and Resource Economics As the U.S. focuses its attention on first phase of EU-ETS has enabled only a modest
17
U.S. Census Bureau and Kagan tackling climate change, the use of economic 5% reduction in pan-European GhG emissions
Research, LLC estimates. (Housing units
include occupied, seasonal, and vacant
incentives to reduce emissions will take center from the business-as-usual scenario. However,
households.) See also: “High-Speed stage in the economic and political debate. tighter caps in the second phase are expected to
Services for Internet Access: Status as of
June 30, 2007,” Report issued by Federal
Given President-elect Obama’s aggressive yield reductions that are more dramatic. 16
Communications Commission in March energy and emission targets, the adoption of a As the new administration begins to
2008
carbon monetization system seems increasingly devise a monetization strategy, a few
18
Leichtman Research Group, “Broadband
Internet access and services in the home”,
likely. Economic incentives to reduce emissions considerations should be noted. First, it will be
March 2008 will drive rapid adoption of energy-saving important for the chosen system to deliver
19
Pew Internet and American Life Project: solutions, and many of these will come from the energy savings by harnessing the
“Home Broadband Adoption 2008,” July
2008
ICT sector. resourcefulness of the free market. Creative,
In Europe, carbon monetization has cost-effective solutions are likely to be best
already been implemented through a” cap and elicited from a flexible market system. Second,
trade,” or “emissions trading system”, dubbed incentive flows must be carefully considered in
EU-ETS. Since its implementation in 2005, the order to limit unintended adverse effects.
Structural support for ICT

solutions
In order for ICT solutions to be deployment to underserved markets, the
effective, an appropriate technical and structural government can play an even more important
platform is needed. First, ICT solutions generally role in stimulating demand for broadband by
require adequate reach, bandwidth and placing more government services online, like
adoption of both fixed and mobile broadband. social security checks, and funding initiatives to
More than 94% of American households have at encourage digital literacy and broadband use
least one broadband Internet access option – through the development of compelling
viz, cable modems – and nearly 80% have three public-interest applications.
or more options.17 Still, 7-8 million U.S. Second, the successful roll-out of ICT
households have no broadband available at all. solutions and of other efficiency instruments
Only 57% of American families currently requires a central and reliable source of relevant
subscribe to broadband.18 Ten percent still use data and knowledge. Not only are national
dial-up access and more than one in four measurement standards crucial to enable
households don’t connect to the Internet and potential adopters to accurately gauge the value
have no interest in going online.19 There are of the different solutions, but they also foster
steps government can take to push broadband faith in the validity of these solutions and drive
to all Americans and encourage more people to adoption. Creating a national “Center of
connect. The Broadband Data Improvement Act Excellence” to assemble data, coordinate R&D
of 2008 authorizes state governments to receive activities and deliver knowledge about ICT
grants to map where broadband is and is not solutions would drive the implementation of
available so deployment can be encouraged these measures. Such a center might coordinate
where it is most needed. Progress is also on the information from the wealth of studies in the
way in documenting local broadband speed energy efficiency sphere to showcase best-
under the Act, which requires the Federal practices and increase the effectiveness of lead
Communications Commission to identify not by example policies.
only where broadband is available but also its Through public-private collaboration,
quality. Beyond addressing the challenge of experts from the Center could be made available
SMART 2020: Enabling the low carbon 02 Structural support for ICT solutions
to smaller businesses, whose limited internal

resources and expertise currently preclude them
from implementing energy-savings ICT
solutions.
Climate change is a system-wide
problem, and therefore requires a system-wide
response. As solutions are implemented, it is
critical to consider not only the direct carbon
impacts of these solutions, but the possible
second and third-order effects on jobs, national
security and quality of life. A Center of Excellence
would help to launch and focus those
discussions.
Altogether, ICT enabled solutions could

cut annual CO2 emissions in the U.S. by
13–22% from business-as-usual
projections for 2020. This translates to
gross energy and fuel savings of
$140-240 billion dollars.
SMART 2020: Enabling the low carbon 03 ICT enabled CO2 reduction opportunities in the U.S.
03: ICT-enabled CO2 reduction

opportunities in the U.S.
This section describes the four key ICT- through the adoption of ICT solutions in the U.S.
enabled opportunities that have the highest in 2020 (13—22% reduction from the baseline).
potential to reduce CO2 emissions in the U.S.: This could drive annual energy and fuel cost
Smart Grid, Road Transportation, Smart savings of $140—$240 billion in 2020. The
Buildings and Travel Substitution. For each estimated breakdown by opportunity area is
opportunity, it describes the existing solution, detailed in Figure 5.
outlines the main challenges that are slowing Note that all CO2 savings included in
adoption and explains the actions. Particular this report are annual numbers for the U.S. in
focus is given to government policies that can 2020. All savings are annual $2006 and are not
help accelerate the spread of these solutions. net of required investments.
Overall, an estimated 810—1,410
MMT of CO2 emissions could be reduced
Figure 5: Estimated ICT-enabled CO2 abatement potential in the U.S.

Total estimate of % of U.S.
Annual ICT-Enabled Abatement Potential in the U.S. in 2020 (MMT CO2 ) opportunity size 2020 BAU
High 1.4GtCO2 22%
1.1GtCO2 17%
Low 0.8GtCO2 13%
360 340 320
100
Smart Grid Road Transportation Smart Buildings Travel Substitution
Gross electricity $15-351 $65-115 $40-50 $20-402

and fuel savings
($2006 billion) Total: $140-$240 billion annually
1. Gross savings due to integrating renewable energy not included in SMART 2020 global analysis and left out of U.S. analysis as well. Renewable
energy is a direct substitute, not an energy efficiency savings.
2. Only jet fuel savings were included in the analysis for virtual meetings. Other savings from virtual meetings not considered.
Note 1: Buildings and Power Generation have different baselines although coincidently the size rounds up to the same figure
Note 2: Gross savings do not consider required investments to implement the opportunities
Source: EIA; EPA; DOE; NAIOP; NETL, EPRI; GeSI and the Climate Group, “Global Smart 2020 report”, 2008; Expert Interviews; EITCA; BCG Analysis
SMART 2020: Enabling the low carbon 03 U.S. specific Smart opportunities;
economy in the information age How the recommended policies were developed
United States Report Addendum 17
U.S. specific Smart opportunities

The Global SMART 2020 report Substitution, Road Transportation, Smart
outlined five areas where ICT could reduce CO2 Buildings and Smart Grid. This selection was
emissions: Dematerialization, Smart Motor based on the size of baseline U.S. CO2 emissions
systems, Smart Logistics, Smart Buildings and for that area and the perceived reduction
Smart Grids. These opportunities were assessed potential through ICT solutions (see Appendix 1
in detail and a select subset were then prioritized for the mapping between Global and U.S.
and included in this U.S. addendum report. The specific opportunities).
prioritized opportunity areas are: Travel
How the recommended policies were

developed
This report outlines government These challenges were prioritized in order to
policies that could help drive the adoption of ICT focus government intervention where it is most
solutions in the four prioritized opportunity needed.
areas. The process for developing these A number of policies were then
recommendations was as follows. First, potential identified to help overcome the prioritized
ICT solutions within each opportunity area were challenges. Those which best matched the
identified. For each opportunity, the policy principles outlined below were included
technological, economic/regulatory and in this report. The policy principles are the
behavioral/information challenges currently following:
hindering broader adoption were then assessed.
Create an enabling regulatory framework
• Commit to a long term strategy for reducing GhG emissions and aim for clear and
consistent legislation
• Create a level playing field that supports market-based solutions
Enable the development of solutions
• Conduct fundamental research benefiting all stakeholders (industry, consumer,

academia, etc.)
• Encourage innovation, not specific technologies
• Invest in required infrastructure
Support the business case when markets do not produce the desired outcome
• Create the right incentives

• Ensure that market mechanisms create the desired environmental and social
outcomes
Encourage positive behavior change
• Lead by example
• Facilitate and coordinate the sharing of information
• Support pilot projects
SMART 2020: Enabling the low carbon 03 Smart Grid
Smart Grid
Introduction Total emissions from the electrical 20

EPRI, “The Green Grid,” June 2008;
Department of Energy “Overview of the
power generation sector are estimated to reach Electric Grid,” http://www.energetics.
The U.S. context for Smart Grid 2,630 MMT of CO2 by 2020, of which com/gridworks/grid.html, accessed on
November 12, 2008
For most of the 20th century, the U.S. transmission and distribution losses are
21
Ibid
electricity grid was the envy of the world. Its estimated to comprise 8—15%. Roughly 75% of
22
EIA Annual Energy Outlook 2008
10,000 power plants, 200,000 miles of high overall power generation emissions are Appendix 18
voltage transmission lines and 5.5 million miles attributed to residential and commercial 23
EPRI, “The Green Grid,” June 2008
of distribution lines were the backbone of buildings, and the remaining 25% attributed to
American prosperity and quality of life. But even industrial uses.22
as the nation experienced astonishing economic
growth, technological innovation and The Smart Grid opportunity
improvements in living standards, the enabling With the vast complexity involved in
infrastructure did not keep up. The average delivering electricity, more information can go a
thermal efficiency of America’s power plants is long way toward balancing supply and demand.
33%, a state largely unchanged since 1960. The The objective for Smart Grid is to provide
annual investment in new transmission facilities specific, real-time information to end-users, grid
has been declining over the last 25 years. The operators and distributed generators so they
result has been increasing grid congestion, a can accomplish their tasks while minimizing
problem that has caused transmission and emissions. ICT achieves this by: 23
distribution (T&D) losses to double from 5% in
1970 to 10% in 2001. 20 • Transitioning the grid from a radial system
Aside from T&D losses, the power (point-to-node) to an interconnected
sector faces several other challenges. The total network (point-to-point or mesh), where
asset value of power generation, transmission distributed sources and end-users are
and distribution is $800 billion, but the average connected
turnover of an investment is 30 years, which
means upgrades happen slowly.21 In parallel, • Automating processes using distributed
habits of customers are changing rapidly as a intelligence
proliferation of electricity-hungry devices make
their way into everyday life. To complicate • Enabling two-way communication between
matters further, customers have high customers and suppliers to create a real-time
expectations on the reliability of service. In marketplace for energy consumption
essence, the power sector is being asked to
deliver an ever-changing amount of energy with
near perfect reliability on equipment that was
designed for the energy needs of three decades
prior.
Summary of Smart Grid opportunity

What ICT can do
U.S. reduction
potential in 2020 Description Example
MMT of CO2 • Balance unpredictable supply • Software algorithms
230-4801 from renewable sources with • Remote monitoring of
Integrating demand production
renewable energy
• Pool distributed sources into
"virtual power plant"
56% • Remotely monitor grid • Automatic detection and

performance and balance pre-emption of faults
Reduce T&D utilization of resources • Adaptive voltage control
losses • Extended granularity of
information for the grid's
remote control systems
25%
• Provide information on prices and • Smart meters with time of
usage to customers use prices
• Intelligent thermostats and
19% Consumer
appliances that adjust usage
awareness
based on prices
Breakdown of ICT-enabled • Web-based interface to
CO2 reduction potential control and analyze usage
1. Multiple levers contribute to the reduction potentials. The mid-

point was used to obtain the percentage break-downs. See
appendix for details.
What stands in the way What should happen

Challenges Policy Key considerations
• Limited technical maturity Provide • Incentives for demand
incentives for reduction are most critical
• Technology sequencing and
Technical utilities to • Adoption of smart meters
dependency
invest in energy can help address technology
• Need for interoperability efficiency sequencing issues
• Promote open competition
and encourage partnerships
• Low tolerance for errors
Economic • Complex business case for
Lead by • Capitalize on strong
utilities
example with signaling effect
federally owned • Strive for scale to drive
utilities down costs
Behavioral • Lack of awareness • Publicize benefits and the
lessons from experience to
encourage other adopters
Challenges where government intervention is most
necessary are underlined
A Smart Grid would work the same way that the

Internet does. The difference is that while the Internet
optimizes the routing of information, the Smart Grid
optimizes the routing of electrons.
A Smart Grid would work the same way that the transmission and distribution losses, reporting
Internet does. The difference is that while the real-time usage and cost data to increase
Internet optimizes the routing of information, consumption awareness and integrating
the Smart Grid optimizes the routing of renewable energy.
electrons.
In total, these ICT solutions can reduce Reduce transmission and distribution
the emissions of the power sector by 9—18%, losses
representing 230—480 MMT of CO2 in 2020 in An estimated 60—120MMT of CO2
the U.S. (see Figure 6). This reduction emissions could be reduced in 2020 in the U.S.
corresponds to savings of $15—35 billion to the by employing ICT solutions to reduce T&D losses.
economy from reduced energy consumption. This corresponds to gross energy savings of
The range for the size of the opportunity is $10—20 billion.
driven largely by uncertainty around the ICT solutions can achieve these
amount of renewable energy capacity that can solutions by giving utility companies the
be safely added to the grid and around the capability to remotely monitor the performance
amount of energy that is currently lost during of grid components and reduce losses through
T&D. voltage optimization. ICT provides better
information for operators, allowing transmission
Smart Grid: What ICT can do and distribution to occur in the lower end of the
tolerance band, instead of at current operating
ICT can help modernize the electrical norms in the high-end. The information
grid in three fundamental ways: reducing provided by ICT solutions allows grid operators
Figure 6: Smart Grid: U.S. impact 2020

MMT CO2 2,630 2,630 230-4801
Abatement potential
230 - 480 (9-18%)
Integrating renewable
56% energy
Power sector
2,630
• Generation
• Transmission (100%)
Remaining
• Distribution emissions
25% Reduce T&D losses
Consumer awareness
19%
(Real-time Pricing)
U.S. 2020 baseline of Addressable baseline and Breakdown of ICT-enabled

electricity sector emissions share of ICT-enabled abatement CO2 reduction potential
1. Multiple levers contribute to the reduction potentials. The mid-point was used to obtain the percentage break-downs.
Note: See appendices for baseline, adoption, and reduction assumptions
Source: EIA Annual Energy Outlook 2008, BCG analysis
24
Ibid; Cisco, “How Cisco’s Real-Time IP to fix potential vulnerabilities and allocate which devices and habits are most energy-
SCADA Enables Utilities to Adopt a Smart
Grid Approach and Master New Challenges resources quickly. Some examples of ICT intensive. Time-of-use pricing can be even more
in Control and Manageability,” 2008 solutions that could reduce T&D losses are: 24 powerful if it is integrated with the home’s
25
EnelSpa 2007 Annual Report thermostat or home appliances to intelligently
26
Harvey Michaels, “Bringing the • Automatic detection and pre-emption of reduce or time-shift demand based on price
Vision to Life—Will Advances in Energy
Communication Create a Significant faults triggers. Smart meters also provide utilities with
Resource Strategy?” ACEEE Conference knowledge about how consumers react to
2008
• Extended granularity of information for the prices, thus giving providers better information
grid’s remote control systems (e.g. on how to structure and price electricity to
Supervisory Control and Data Acquisition, or optimize efficiency.
SCADA) The smart meter success stories like
Enel SpA, an Italian utility with 30 million
• Adaptive voltage control to reduce customers which rolled out smart meters to
distribution losses generate annual savings of €500 million have
prompted widespread interest in the ability of
• Voltage controls to minimize reactive power the smart meter to decrease energy costs for
flows utilities and consumers alike.25 Initial responses
from pilot studies across the U.S. have shown
• Two-way communication and intelligence that consumers are price sensitive and respond
throughout the grid to real-time feedback on usage with
conservation or time-shifted demand requests. 26
• Remote meter reading to reduce physical Although meters for gas and water
trips for maintenance and meter data also provide opportunities for efficiency, they
collection have not been included in estimating the
abatement potential or the savings here. Like the
In addition to reducing CO2 emissions, ICT can additional benefits from reducing T&D, increased
improve customer service by increasing service consumer awareness can defer the need to
reliability and can delay or prevent the need to invest in expensive generating capacity.
build additional generation capacity.
Integrating renewable energy
Consumer awareness (real-time pricing) An estimated 130—260 MMT of CO2
An estimated 40—100 MMT of CO2 emissions could be reduced in 2020 in the U.S. by
emissions could be reduced in 2020 in the U.S. by employing ICT solutions to integrate more
employing ICT solutions to increase consumer renewable energy generation. ICT has a
awareness and aid demand-side management. significant role to play in measuring, monitoring
This corresponds to gross energy savings of and distributing the unpredictable supply of
$5—15 billion. renewable energy into the grid so that it does
ICT can reduce electricity demand by not disrupt service or overload the system. The
communicating real-time electricity usage and intermittent nature of wind and solar—gusty
price through a smart meter. These meters can one minute and cloudy the next—can lead to
go beyond traditional demand-side minute-by-minute fluctuations in power
management programs, which are in place to generation.
shed peak-load, to help people internalize the
costs of their energy use by letting them know
Grid intelligence can help accommodate this allow certain appliances like refrigerators to 27
Ibid, The Brattle Group, The power of Five
percent: how dynamic pricing can save $35
reality by identifying areas where demand can over-cool when production is abundant or rise billion in electricity costs, October 2007
be reduced or additional supply can be brought above optimal temperature when production is 28
Barack Obama and Joe Biden.
online quickly. scarce. This first requires the type of capabilities “New Energy for America.” http://
my.barackobama.com/page/content/
Until large-scale storage for electricity that a smart meter can provide, such as detailed newenergy
becomes cheaper and less loss-prone, utilities knowledge of customer preferences and 29
As published by the Database of State
will need to find ways for excess supply to be seamless integration between millions of Incentives for Renewable Energy, As of
November 8th, 2008
absorbed or non-critical demand to be reduced devices and the grid. 30
“The Potential Global CO2 Reductions
to balance the surges and lulls of renewable Greater ability to integrate renewable from ICT Use,” WWF, May 2008
energy generation. An installed base of smart energy would be a significant win for
meters and the corresponding Smart Grid greenhouse gas (GhG) reduction, because
infrastructure can aid this balancing act and power generated from solar and wind releases
allow for greater amounts of renewable energy zero emissions. Renewable energy currently
in the grid. For example, one way to even out the accounts for 2% of U.S. generation capacity, but
load from intermittent generation would be to many experts have recommended a target of at
least 10%. President Elect Obama’s energy plan
calls for 25% of U.S. electricity to come from
renewable sources by 2025.28 Some states, like
Case Study: In 2003—2004, a Illinois, Minnesota and Oregon, have committed
California smart meters pilot to a renewable energy portfolio standard of 25%
reduced peak demand by 13% by 2025.29 ICT will provide critical support for
The California pilot study integrating renewable energy systems through:
examined the effects of smart meters by 30
giving participants varying levels of
equipment to test the sensitivity of their • Monitoring of production plants, like wind
demand uses. The first group of participants farms, remotely
in the study received smart meters that
provided current hourly electrical rates. The • Performing short-term weather-pattern
second group also received a smart predictions to determine where and when
thermostat that made automatic power excesses or shortfalls may occur
temperature adjustments based on the
electricity rate at that time of day. The third • Pooling the energy generated from
group received a full “gateway” smart meter distributed sources to form a “virtual power
that adjusted the usage of multiple home plant” that can be controlled centrally and
appliances similar to the smart thermostat. brought online and offline
The pilot found that introducing
smart meters reduced critical-peak • Wide-area monitoring and protection of
consumption by 13%. Customers who were power systems that can calculate actual,
also equipped with a smart thermostat real-time conditions and allow the system to
reduced their critical-peak consumption by be operated closer to actually applicable
27% and those with the gateway cut back by limitations
43%.
Due to the pilot study’s success, • Increasing controllability, reliability and
PG&E is now installing 10.3 million smart lifetime utilization of the renewable source
meters throughout its service area by the generators themselves through
year 2012, and other utilities nationwide are performance and maintenance monitoring
following suit. A Brattle Group study
suggests that a 5% drop in peak demand Aside from reducing carbon dioxide emissions,
nationally would eliminate the need to employing ICT solutions in the grid can lead to
construct 625 U.S. peaking power plants, other benefits such as:
resulting in $3 billion annual energy savings
for utility companies. 27
• Increasing national security by enabling operators from investing in demand-side

decentralized operations and energy supply management, since reduced demand cuts into
utility profits. While reducing demand, especially
• Increasing job creation from developing, peak demand, can prevent or delay expensive
installing and operating renewable energy investments in building new supply, it may also
systems cause utilities to lose revenue. Investments for
Smart Grid, which seeks to reduce demand
• Providing a platform for electric vehicles through efficiency gains, may be hindered
without a change in the regulatory rate-setting
Smart Grid: What stands in the way process.
Despite the promise that ICT holds for Behavioral and Informational Challenges
modernizing the electrical grid, there exist many
technical, economic and behavioral/ Lack of awareness: Regulators and customers are
informational challenges that currently prevent just beginning to understand the economic and
or slow adoption of the solutions: energy-related savings that can come from
greater consumer awareness of energy
Technical Challenge consumption. Prevailing wisdom focuses on
adding supply rather than reducing demand.
Limited technical maturity: Sophisticated
distributed intelligent control systems are still in Smart Grid: What should happen
development. These systems need to be
adaptive, self-aware, self-healing and able to Improving the business case for
negotiate in order to match unpredictable utilities to engage in Smart Grid investments is a
supply with increasingly customized demand. critical gateway for overcoming other
challenges. Smart meters and Smart Grid
Technology sequencing and dependency: Lack infrastructure can play a central role in the
of pervasive smart meter deployment prevents modernized grid. Without them, it will be
other Smart Grid benefits from being realized. difficult for other improvements to occur. The
Smart meters will enable greater penetration of government has a uniquely important role to
renewable energy, by providing information on play in encouraging the adoption of Smart Grid
areas where the demand-side can tolerate technologies.
intermittent generation. Greater penetration of The major hindrance to addressing
renewable energy, in turn, will ease the loss from these challenges is the current incentive
T&D because renewable sources can be based structure for utilities. While many utilities do
close to where consumption occurs. promote demand management programs to
reduce peak load, many are wary of releasing full
Need for interoperability: Appliances, home control of information on usage and costs. Since
networks and the grid need to automatically many states set the rate of return on a utility’s
recognize and communicate with one other. This investment based on projected demand, a
must be done in a way to minimize the standby decrease in demand can depress return on
power used by networked appliances. investment for the utility and in some cases,
prevent recouping investment costs. Therefore,
Economic/Regulatory Challenges regulatory structures need to give utilities a
stake in embracing energy efficiency.
Low tolerance for errors: Due to the severe
economic penalty from unreliability, there is Provide incentives for utilities to invest
limited experimentation and a disincentive to be in energy efficiency
a “first mover.” Utilities should be given an incentive
to invest in Smart Grid solutions, from
Complex business case for utilities: In some generation to T&D to consumption. An effective
states, regulatory rate setting discourages policy would encourage states to give utility
31
American Council for an Energy-Efficient
companies an incentive to invest in solutions utilities operating at military installations and Economy, “California Electric Utility
Sector Policies,” August 2008; CEE “Energy
that will reduce consumption. There are many national parks. This could help technologies Efficiency Programs,” 2007 Report
different approaches to providing these achieve scale, drive down costs and provide a 32
Kushler, York and Witte, “Aligning Utility
incentives. Oregon and California have already model that addresses the needs and serves the Interests with Energy Efficiency Objectives:
A Review of Recent Efforts at Decoupling
put a stake in the ground by decoupling their interests of various stakeholders—the and Performance Incentives,” October 2006
utilities’ revenues from their profits. In addition government, utilities, ICT industry and 33
NETL Modern Grid Initiative, “Modern
to getting the benefits of a Smart Grid, the large consumers. Grid Benefits,” August 2007
CA utilities are collecting roughly $2 billion 34
Ibid
dollars over a three year period via a public Industry contribution
benefits surcharge.31 Other states have engaged Finally, the ICT industry can educate
in small decoupling pilots or have allowed consumers about the benefits of Smart Grid
utilities to earn a return on energy efficient investments. Many of the technologies translate
investments. In total, roughly half of the states directly into reduced energy bills for customers.
have seriously committed to helping reduce Greater consumer awareness of both the
demand through utility incentives.32 These environmental and economic benefits of Smart
states have made the most progress in adopting Grid will help put pressure on both regulators
Smart Grid capabilities. and utilities to make ICT investments. In
One way to achieve this policy addition, the industry should focus on
objective would be to expand federal and state continued R&D, especially in developing the
early adopter grants and programs that software to enable integration of renewable
encourage investment in Smart Grid energy sources. Finally, industry should embrace
technologies. Such a policy would honor the open platforms and interoperability, a necessary
state’s historical purview to regulate utilities, but step to gain the full benefit of a Smart Grid.
would give explicit incentives to first movers.
This approach would help overcome the Conclusion
reluctance to make changes to the grid and
would help prove the case for others to follow. Political momentum exists in the U.S.
Policymakers should not to upgrade the grid. There is growing concern
underestimate the impact of demand-side about GhG emissions, the economic impacts of
interventions. Traditionally, lowering demand service unreliability, and the damage that could
has been an overlooked strategy in energy be rendered from terrorist attacks and natural
management. However, many pilot studies have disasters. The estimated annual cost to the U.S.
indicated that imperceptibly small changes in economy of power quality disturbances and
behavior can create significant system-wide outages range from $100—180 billion. In
savings, without diminishing the quality of life August of 2003, a massive blackout left over 28
for the consumer. It is important to encourage million people in Michigan, New York, Ohio and
utilities to give customers transparency, Canada without electricity for up to four days, an
ownership and control of their usage event that was estimated to cost $10 billion. At
information. Regulators should promote open the current rate of demand increase, blackouts
competition and encourage partnerships across are projected to be more pervasive and
the value chain. Allowing players other than prevalent unless the grid is updated. 33
utilities to contribute will help adoption take off Terrorist attacks or natural disasters
more quickly. are other causes for concern. The grid’s
centralized operations and limited information
Lead by example with federally-owned gathering make it difficult to react effectively to
utilities outages and restore power. Real-time data
The federal government can send a would enable operators to detect and address
strong signal to the relevant stakeholders that it potential threats quickly and serve as a deterrent
is committed to grid modernization by to attack. The creation of a decentralized grid,
integrating Smart Grid technologies into utilities with many sources of distributed and renewable
that it controls. Examples are Bonneville Power energy, would allow it to recover from an attack
Associates, the Tennessee Valley Authority and more easily. 34
SMART 2020: Enabling the low carbon 03 Road Transportation
35
As published by the Database of State The expected retirement of many Act required each state regulatory authority to
Incentives for Renewable Energy, As of
November 8th, 2008 aging power plants and concern for the assess the possibilities for advanced meter
36
Table A6, EIA CBECS Detailed Table, environment are spurring action toward grid infrastructure (AMI). Other pieces of legislation
released on June 2006 ; U.S. Census modernization. Twenty-four states and the have explored the opportunity to create special
Bureau, Table 1064 “State Motor Vehicle
Registrations,” 2005 (All publicly and District of Columbia have committed to a tax incentives or provide an accelerated
privately owned trucks) renewable portfolio standard that requires depreciation for AMI investments.
37
World Road Statistics, 2008 electricity providers to obtain a minimum The momentum for modernizing the
38
Department of Transportation’s National percentage of power from a renewable source grid is likely to continue over the next decade
Strategy on Congestion, May 2008
39
by a certain date.35 In addition, demand-side and some of the most promising, most energy
Texas Transportation Institute’s Urban
Mobility Report, 2007 management concepts have begun to gain efficient and most economically palatable
40
“Private Fleet Management: NPTC to traction. In 2005, for example, the Energy Policy solutions will emerge from the ICT sector.
the Rescue,” John D. Schulz, Logistics
Management June 26, 2007
Road Transportation
41
IEA’s World Energy Outlook 2008
Introduction individual transportation. Research indicates

that 25% of all trucks on the road are empty,
The U.S. context for Road Transportation although recent advances in supply chain
The free movement of people and of management are closing that gap, especially on
goods are essential pillars of American longer hauls. Initial estimates show that
prosperity. However, this movement of people improving backhauls could save about 33% of
and goods is contributing to high emissions. current truck operations.40
Expansive suburban development with limited These realities have made the U.S. the
public transportation alternatives has made single largest contributor to worldwide carbon
private driving the primary mode of personal dioxide emissions from transportation, both on
transportation. In parallel, consumer an absolute and on a per capita basis.41 Road
expectations for around-the-clock access to an Transportation accounts for the largest share of
endless choice of goods have spurred the total emissions from transportation at an
development of a commercial supply system estimated 1,580 MMT of CO2 in the U.S. in 2020.
that spans 6.5 million miles of road, uses 100
million commercial trucks, and occupies 10
billion square feet of warehouse inventory
storage.36
The U.S. has a relatively attractive
opportunity for CO2 abatement in transport
because of its high car ownership, culture for
driving and sophisticated system of distributing
goods. U.S. residents rack up 45% of all the
vehicle miles driven in the world,37 a reality
which means that small improvements in
efficiency can have a large impact on the
environment.
Efficiency gains can also greatly
improve the quality of life of commuters.
Congestion costs Americans $200 billion in lost
economic productivity,38 a loss that translates to
3.7 billion hours and 2.3 billion gallons of fuel
wasted in traffic jams. These numbers are
projected to double by 2030 if significant action
is not taken.39 Opportunities for efficiency
improvement are not limited merely to
Summary of Road Transportation

opportunity
What ICT can do
U.S. reduction
MMT of CO2 • Improve how efficiently • Determine the optimal location of
240–4401 goods are delivered distribution centers
• Improve design of • Match spare space on vehicles with
Optimization of
supply chains goods that need to be returned or
commercial
• Eco-driving for trucks redistributed using electronic
logistics
exchanges combined with RFID
62% • Devices to monitor tire pressure for
optimal aerodynamic driving
• Help individuals make • Routing based on real-time information
better plans to avoid congestion
• Improve the journey's • Sensors on traffic lights and road
Optimization of efficiency surfaces to smooth flow of traffic based
individual logistics • Eco-driving for on volume of drivers on the road
38% passenger vehicles • Mobile applications to provide drivers
with real-time feedback on miles
per gallon
Breakdown of ICT-enabled
CO2 reduction potential


• Limited technical maturity Invest in smart • Need to focus on
Technical • Complicated user experience infrastructure investments that are system-
wide; refrain from one-off
investments
• Infrastructure investment • Invest in solutions that fit into
needed a larger vision and strategy
Economic for urban congestion
management
• Limited flexibility to optimize
Elevate • Promote ICT elements that
supply chain
importance of can save companies and
• ICT improvements ICT in current individuals money
Behavioral overlooked government • Publicize and encourage
• Potential privacy concerns programs stories of ICT solutions that
work across the value chain
• Cultural barriers

SMART 2020: Enabling the low carbon 03Road Transportation
ICT can offer solutions that do not depend on

changing the cars that people drive, but rather,
changing the way people drive.
The Road Transportation opportunity Transportation by 15—28%, representing a total

Fuel-efficient cars will have a large role abatement of 240—440 MMT of CO2 in the U.S.
to play in reducing carbon emissions, but they in 2020 (see Figure 7). Optimizing individual
are not the answer to reducing the congestion transport will contribute to 38% of that
that plagues America’s cities. In addition, the reduction and optimizing commercial transport
relatively high costs of these vehicles will slow will contribute the rest. These projected
their adoption. In contrast, ICT can offer abatements correspond to gross savings of
solutions that do not depend on changing the $65—115 billion to the economy from reduced
cars that people drive, but rather, changing the fuel consumption. The range in this opportunity
way people drive. ICT provides both individuals is driven by uncertainty in the reduction
and businesses the information they need to potential from individual logistics optimization
make real-time, contextual decisions on how and eco-driving. The reduction potential for
best to plan trips, avoid delays, consider individual logistics optimization comes from
alternatives, maximize gas mileage and international benchmarks, and a wide range was
maximize utilization of a trip. This information applied because of uncertainty around the
will both lower emissions and reduce results’ direct applicability to the U.S. The
congestion. reduction potential range on eco-driving is also
In total, ICT solutions offer the large because the impact from these solutions is
opportunity to reduce the emissions of Road still too new to have definitive results.
Figure 7: Road Transportation: U.S. impact 2020

MMT CO2 2,080 1,580 240-4401
Abatement potential
Road transportation 240 - 440 Delivery
• Light-duty (15-28%) 29%
implementation
vehicles
• Freight and other
trucks Commercial
• Bus 1,580 Supply chain
(76%) 21%
design
Eco-driving
Other transportation Remaining 12%
(commercial)
• Air emissions
• Ship Optimization of
• Rail 23% individual
logistics Individual
500
(24%) Eco-driving
15%
(individual)

transport-related emissions share of ICT-enabled abatement CO2 reduction potential
Road Transportation: What ICT can sensor technologies to maintain tires in

do optimal condition)
ICT can help reduce emissions from • Off-the-shelf devices that connect to a car’s
both individual and commercial Road existing onboard computer to give drivers
Transportation by optimizing logistics and real-time information about their fuel use
improving driving efficiency.
However, adopting these improvements may
Optimization of individual logistics cause rebound effects. Many of the energy
An estimated 70—190 MMT of CO2 savings that are promised give people access to
emissions could be reduced in 2020 in the U.S. data that will improve their transportation
by employing ICT solutions to optimize decision-making. However, this will result in
individual road transport. This emissions increased usage of data processing equipment
reduction corresponds to gross fuel savings of that consumes electricity. Individuals also might
$20—50 billion. use the time that was saved by technology on
ICT can help people craft better pursuing even more carbon-intensive activities.
transport plans and implement those plans Government and businesses should try to
more effectively based on contextual cues. ICT combat the rebound effect by giving individuals
can optimize personal logistics by providing information on the carbon tradeoffs associated
real-time information about traffic congestion, with their decisions.
public transportation schedules and potential
carpool options to help individuals weigh
alternatives about when and how they want to
travel. It can also make the journey smoother by Case study: Mobile applications
better controlling the flow of traffic, locating Because of their ubiquity, mobile
accident sites for quick removal, providing phones will play a large role in optimizing
opportunities to batch errands and providing personal logistics. Many such solutions are
information to avoid excess driving while already in development. For example, Ecorio
looking for parking or sitting in traffic. Finally, ICT is a mobile application that suggests best
can give people the information they need to be routes, including public transportation
better drivers. This feedback can be as practical alternatives, and helps plan and manage
as engine and tire performance alerts, as carpools. On the eco-driving side,
complex as shifting sequences on uneven applications like Rev provide graphical
terrain and as holistic as speed adjustment. representations of real-time vehicle data on
a vehicle’s fuel consumption. Rev interacts
Some specific ICT solutions include: with a car’s on-board diagnostics system to
provide drivers with information on fuel
• Real-time information on bus routes, consumption, fuel pressure, tire pressure,
availability and waiting times graphs of the G-forces generated by
cornering, braking and acceleration and a
• Car routes based on real-time information to bevy of other metrics to help the driver
avoid congestion maximize vehicle efficiency.
• Sensors on traffic lights and road surfaces to

smooth flow of traffic based on volume of
drivers on the road
• Social networking and other collaboration

tools to ease carpooling and car-sharing
• Mobile applications to monitor the operating

conditions of car components (e.g. using
42
San Diego Union Tribune, July 13, 2008
43
Microsoft transportation & climate
change presentation, Law Seminars
Case study: Smart parking network Case study: Integrated ICT-based
International, August 25, 2008 to ease San Franciscans’ parking commuting program at Microsoft
woes abates CO2 emissions by 3,077 tons
As of fall 2008, 6,000 of San annually
Francisco’s 24,000 parking spots will be The “commute” website on the
connected to a wireless network that alerts Microsoft intranet forms the heart of a fully
drivers to free spaces nearby. Using their integrated ICT-based commuting program.
mobile phones, parkers can search a city On the website, employees can consult the
map for free spots, receive parking alerts corporate “Connector” bus’ real-time
and potentially even feed a meter remotely. schedule information and make
Embedded sensors glued onto reservations, obtain local road congestion
the street monitor the speed of traffic and data to make the best decision about an
wirelessly relay parking availability and upcoming commute, or schedule a carpool
congestion information to a central home through Microsoft’s RideShare
management office. This information is software. The RideShare program matches
tracked by the city’s transportation officials employees by their departure address,
and posted on websites that smart phones destination address and desired commute
can access. hours and provides the user with a map of
The data will allow officials to carpools and vanpools that match his or her
track congestion in real-time and adjust needs.
parking durations and pricing to reflect For those who choose to drive,
“market” conditions. The city also plans to Microsoft’s “SmartPhlow” software can
expand the use of the sensor network to predict traffic patterns throughout Seattle
better serve the public by monitoring air from just hours to several days in advance
quality conditions and detecting possible and alert users via their phones when
safety threats. something out of the ordinary is going to
Officials estimate that a full 30% happen. This allows commuters to plan their
of all traffic in downtown areas is caused by transit smartly and avoid congestion and
drivers searching for curb-side parking. They stress, while also reducing their carbon
hope that these initiatives may reduce the footprint.43
city’s environmental footprint in addition to
improving San Franciscans’ lifestyle.42
Optimization of commercial logistics – Shift to less carbon intensive modes of

An estimated 170—250 MMT of CO2 transport
emissions could be reduced through ICT- • Improve delivery implementation
enabled improvements in commercial logistics – Use real-time information to plan routes
in 2020 in the U.S. This amounts to gross energy that avoid congestion and reduce idle
savings of $45—65 billion. time
ICT can help companies improve their – Match spare space on vehicles with
road transport logistics and increase the goods that need to be returned or
performance of truck drivers. Companies can redistributed using electronic exchanges
use ICT to optimize commercial logistics in three combined with radio frequency
ways: identification (RFID)
• Create better supply chain designs • Enable eco-driving for trucks
– Determine the optimal location of – Same as individual eco-driving solutions
distribution centers using software
algorithms
– Analyze packaging type for load
maximization
44
UPS Corporate Sustainability Report,
One of the greatest rewards of equipping the 2007
Case Study: UPS cuts energy costs road network with ICT will come in the form of
through ICT-based optimization of increased safety. ICT can help improve road
package tracking, route planning safety by providing capabilities in:
and pick-up and delivery practices
UPS employs a full set of • Management of traffic flow
integrated ICT-based tools to minimize its
carbon costs. In 2007, the combined use of • Feedback to drivers on their habits and
these technologies cut 29 million miles from behaviors
already streamlined delivery routes and
saved 3 million gallons of fuel and 32,000 • Enhanced enforcement of traffic laws
MMT of CO2 emissions. This is equivalent to
removing 5,300 passenger cars from the • Prediction and prevention of accidents by
road. imposing historical analysis on real-time
Four main technologies drive UPS conditions
efficiency in logistics. First, its “Package Flow
Technology” automates the path of a • Quick location detection and automatic
package through the UPS system. It dispatch when an accident occurs
matches postal addresses with appropriate
loading and routing data and directs a Road Transportation: What stands
package’s route using GPS. It constantly in the way
re-optimizes delivery routes according to
what packages are in transit, minimizes fuel Despite the benefits that ICT can
costs and helps avoid loading and delivery provide in improving personal and commercial
errors. UPS expects $500 million in savings transport, some challenges stand in the way of
over 10 years from this tool. broader adoption and implementation of these
Aiding in this optimized delivery solutions.
process is the DIAD (Delivery Information
Acquisition Device), a real-time portable Technological challenge
device that allows the driver to view and
perform each scheduled delivery in the Limited technical maturity: Well-integrated
optimal order. This allows drivers better technology for real-time traffic flow optimization
control in fulfilling service requirements is still under development and progress will be
while also minimizing fuel costs. limited by the lack of an installed equipment
Finally, UPS employs telematics, a base to track and transmit real-time data. More
wireless technology installed in trucks to sophisticated data structures to allow both easy
collect data on vehicle performance and retrieval and user input, like geo-tagging, is
conditions, such as tire pressure, fuel needed to allow travelers to benefit from full
economy and usage and emissions. This context-awareness. Standards for effective
data is fed into a vehicle maintenance vehicle-to-infrastructure and vehicle-to-vehicle
system that maximizes fuel economy and is communication are also needed.
used to train drivers on best practices and
improve customer service. In 2007, UPS was Complicated user experience: Currently, many of
able to cut idling time by 24 minutes per the devices and applications do not have
driver per day and dramatically reduce fuel user-friendly interfaces and few of them are
costs and CO2 emissions in several U.S. interoperable. This is a challenge because many
locations.44 benefits will not be captured until there is a
seamless integration among data gathered and
stored on the smart phones of many travelers.
Until that network effect occurs, adoption will be
low because travelers will be unable to use the
technology fully.
Economic/Regulatory Challenges provide incentives for states to increase the

capability of road and public transportation
Infrastructure investment needed: Before infrastructure to capture, analyze and utilize
individuals can see the benefits from having real-time information. This could be done, for
real-time information, state and local example, by expanding the requirements for
governments need to upgrade current road integrating ICT solutions into the Department of
infrastructure with ICT capabilities, such as Transportation’s Urban Partnership funding or
sensors, and integrate road equipment with the by giving greater focus to ICT solutions in the
existing communication infrastructure. In up-coming Federal Highway Bill. This would not
addition, governments need to improve the only encourage states to consider upgrading
reliability and usefulness of public their road infrastructure, but would also create
transportation information, such as real-time early case studies and experiences that can be
tracking of bus locations. beneficial to late adopters. In addition, such
investments can create jobs and spur economic
Behavioral/Informational Challenges growth.
It is critical that funding focuses on
Limited flexibility to optimize commercial solutions that fit into a larger strategy of
supply chain: Commercial transport companies reducing congestion. Policy-makers should
generally design their logistics systems based on favor solutions that take a system-wide
speed and customer service rather than energy approach to solving congestion over those that
efficiency. make only incremental improvements (e.g.
adding a bus or tolling a road). Although these
ICT improvements overlooked: Truck companies solutions may be more expensive and require
tend to focus on engine and other mechanical more time, they will have the greatest impact.
improvements for efficiency rather than ICT
solutions. Elevate the importance of ICT solutions
in current government programs
Potential privacy concerns: Many people may be Government policy should guide
unwilling to use technologies that track their individuals and businesses to adopt the easiest,
location and behaviors. most economical and most effective ways to
lower their carbon footprint. In doing so, ICT
Cultural barriers: People are accustomed to solutions should be considered and encouraged
owning and driving their own cars and have a when they provide good alternatives to
hard time imagining or accepting alternatives. accomplish the objectives of current programs.
While the Center of Excellence can
Road Transportation: What should help reach this goal, the government can take
happen two specific actions to increase impact. First, it
can promote the utilization of ICT solutions in
Despite the challenges, significant current government transportation guidelines
technical progress is occurring. Government can and certification programs, such as EPA’s
have the greatest impact by investing in areas SmartWay certification. This will legitimize ICT as
where the private sector has limited control and a solution and bring an awareness of ICT to
by trying to modify cultural norms that prevent industries that may otherwise overlook
the adoption of ICT solutions. information solutions in favor of mechanical
solutions.
Invest in smart infrastructure Second, the government can
The goal of government policy in publicize success stories of large, system-wide
transport should be improve infrastructure so transformations in transport management.
that people can meet their transport objectives Policy-makers should focus on selecting
without causing unnecessary harm to the examples where players have worked across the
environment. To achieve this, system-wide value chain to bring both customers and
investments are needed. suppliers into the decision making process of
The federal government should energy efficiency and promote public/private
SMART 2020: Enabling the low carbon 03 Smart Buildings
ICT can help travelers use the current road

infrastructure more intelligently. This can both defer
large expenditures and also educate people about
the environmental impact of travel.
45
Department of Transportation, “National
partnerships that have done the same. This will sustainable.46 Thus, building more roads may not Strategy on Congestion,” May 2006
help ease the change of business norms by be the answer—both because of today’s 46
Ibid
demonstrating that energy-efficiency can be a economic realities and tomorrow’s environmental 47
EIA, Annual Energy Outlook, 2008
criterion for customer satisfaction. condition. Therefore, ICT solutions are attractive 48
McKinsey and the Conference Board,
The key to successfully implementing because they can help travelers use the current “Reducing U.S. Greenhouse Gas Emission:
How Much at What Cost?”, December 2007
these policies is to focus on promoting the ICT road infrastructure more intelligently. This can 49
U.S. Green Building Council LEED
elements that will save money. There is no need to both defer large expenditures and also educate registered projects, April 12, 2007
make a certification harder to get, but rather, use people about the environmental impact of travel.
the certification process as a way to raise
awareness on how to achieve the same ends with
a variety of means.
Smart Buildings
Industry contribution Introduction
The ICT industry needs to understand
and pursue opportunities where near-term The U.S. context for Smart Buildings
successes are possible, especially within industries Buildings should be at the center of any
that may traditionally opt for mechanical solution to greenhouse gas emissions. They
improvements. Meanwhile, the ICT industry can represent about 40% of CO2 emissions in the U.S.47
make its products more attractive by developing In late 2007, the commercial building stock was
partnerships and business models that will drive forecasted to grow by 48% by 2030, while the
down the cost of their solutions and make them number of new homes was forecasted to increase
accessible to businesses and people. by 34 million between 2005 and 2030.48 While
In addition, the ICT industry must these forecasts might need to be revised in light
continue improving user experiences and of the current economic climate, the case for
protecting user privacy. The first goal can be making buildings more energy efficient is
achieved by focusing on open standards and nonetheless strong. The emissions from buildings
interoperability of devices. The second goal can are expected to reach 2,570MMT of CO2 in the U.S.
be achieved by recognizing and respecting the by 2020. The addressable portion of this
enormous trust and responsibility given to those baseline—1,760MMT in 2020—represents new
that anonymize potentially sensitive data. construction or buildings that are likely to be
retrofitted.
Conclusion Ideally, all new buildings should be
built for energy efficiency from the outset. It is far
In May 2006, when the Department of less expensive to build energy efficiency into a
Transportation published a National Strategy on new building than to retrofit one that is several
Congestion, the Secretary of Transportation decades old. Fortunately, momentum is growing
declared that “Congestion is not a fact of life. We in support of buildings with lower environmental
need a new approach, and we need it now.”This footprints. The Leadership in Energy and
message reflects a growing sense of frustration Environmental Design (LEED) certification has
from the public. In 2005, traffic congestion become a widely recognized brand name and the
appeared above education and health care when de-facto standard for energy efficiency in
voters were asked to cite areas that had buildings. The number of new buildings
deteriorated the most in the last five years.45 The registered with LEED grew by 40% annually
Urban Partnership Program has already taken between 2001 and 2006.49 By many accounts, the
steps to address these concerns, but many U.S. Green Building Council (USGBC), which
lawmakers acknowledge that existing financing administers LEED, is one of the fastest-growing
mechanisms for highway infrastructure are not non-profit in the U.S.
Summary of Smart Building opportunity

What ICT can do
U.S. reduction
MMT of CO2 • Design buildings that • Simulation and modeling design
270–3601 have minimal, or even software: building size, lighting, choice
negative, energy of material, air flows and HVAC sizing
consumption • Building Information Modeling (BIM)
Smart Building
design
50%
• Optimize energy • Smart appliances

consumption of an • Smart sensors and controls
entire building in real- • Building Management Systems (BMS)
Smart Building
50% time based on inputs • Smart meters
technology from occupants, local • Decision-making software
utilities and outdoor
weather


• Limited interoperability Combine • Support consistent,
Technical mandates and performance-based building
• Limited deployment of Smart
incentives to standards
Grid infrastructure
drive change • Balance "carrot" and "stick"
Add
• Misaligned incentives
environmental • Address the shortage of
Economic requirements in expertise
• High up-front cost
certification • Build on existing efforts
process
Lead by • Both new builds and retrofits
• Shortage of expertise example • Share learnings with building
Behavioral
and ICT industry
Invest in R&D • Support investment in both
public and private sector

Smart Buildings rely on both design and embedded

technology to lower energy consumption. While
design sets the initial energy consumption of a
building, technology optimizes the energy use of
building operations.
50
E.g. better choice of building materials,
The Smart Buildings opportunity Smart Buildings: What ICT can do optimization of the construction process
Smart Buildings rely on both design and reduction of building waste. 84%
of energy consumption occurs during a
and embedded technology to lower energy Smart Building design building’s occupation. WBCSD, “Energy
consumption. While design sets the initial energy The objective of Smart Building design Efficiency in Buildings - Facts and Trends”,
2007
consumption of a building, technology optimizes is to create buildings that have minimal energy
the energy use of building operations. An consumption. An estimated 140—170MMT of CO2
estimated 270—360MMT of CO2 emissions could emissions from building energy use could be
be reduced through Smart Building in the U.S. in reduced through Smart Building design in the U.S.
2020, representing 15—20% of the addressable in 2020. This could yield an estimated $20—25
baseline (see Figure 8). In addition, Smart billion in gross savings through lower energy
Buildings could yield $40—$50 billion in gross consumption. The energy efficiency
savings in 2020 in the U.S. from lower building improvements of Smart Buildings range from
energy consumption. The range in estimates making better use of sunlight and natural
exists because reliable data about energy savings ventilation to the proper sizing of heating,
has not been compiled on a large enough scale. ventilation and air conditioning (HVAC) systems.
Smart Building design also reduces a building’s
embedded energy; however this factor was not
quantified here.50
Figure 8: Buildings: U.S. impact 2020

MMT CO2 2,570 1,760 270 - 3601
Abatement potential
270 - 360
(15% to 20%)
Energy efficient
41% design Building
design
New builds and 1,760
likely retrofits (68%)
Reduced space
9% through design
Remaining 16% BMS

emissions
13% Voltage optimization Building
Lighting & technology
Untouched installed 810 appliance automation
9%
base (32%)
6% HVAC automation
6% Other2

building-related emissions share of ICT-enabled abatement CO2 reduction potential
2. Other includes Ventilation on Demand, Intelligent Commissioning and Benchmarking and Building Recommissioning
Smart Building design is supported by

a vast array of software solutions. Several Case study: Design software
simulation and modeling design software produced 48% in energy efficiency
products assist architects and engineers during gains
the design process. Software tools also aid in “Green” design software, such as
choosing materials, modeling lighting, assessing Autodesk’s building information modeling
air flows and sizing HVAC systems. Building product, allows architects to model, analyze
information modeling (BIM) helps different and optimize building energy efficiency
stakeholders understand the impact of each throughout the design process. The
51
USGBC data, CapitalE analysis as design decision on energy efficiency (see Case software allows architects and engineers to
referenced in “Energy Efficiency in study). simulate and analyze project energy
Buildings”, WBCSD, July 2008
Beyond its impact on CO2, Smart performance, appearance and cost while
Building design provides several additional also providing sustainable design and code
benefits. First, the occupants generally have a compliance information. For example,
higher quality of life. They breathe better air architects and designers can perform
because Smart Building design avoids materials energy, water and carbon-emission analysis
that emit high quantities of volatile organic and evaluate the energy profiles and carbon
compounds, and they have more access to footprints of various building designs
daylight. The buildings often have additional against the LEED standards. The software
impacts such as reduced water consumption can also simulate how factors such as solar,
and environmentally-friendly building locations. thermal, shading, lighting and airflow will
affect the building, creating a virtual
Smart Building technology representation of how a building will
Smart Building technology describes perform under different environmental
the intelligence embedded in a building. An conditions.
estimated 130—190MMT of CO2 could be BIM has already been widely applied to
reduced through Smart Building technology in office and public building design, enabling
the U.S in 2020. This includes savings both in many to gain LEED certification and
new buildings and in retrofits of existing significantly cut utility costs. A study by the
buildings. This could result in $20—$25 billion in USGBC concluded that achieving LEED Gold
gross savings through lower building energy certification costs only an additional 2% in
consumption. total building costs, while producing an
These savings are enabled by ICT average 48% in energy efficiency gains. This
solutions that are capable of optimizing energy reduction usually makes the investment
consumption in real-time based on inputs from well worthwhile. 51
occupants, local utilities and outdoor weather.
Smart Building technology is most effective
when it can access a Smart Grid, as outlined
below.
• Occupancy sensors help guarantee that
Many ICT solutions for Smart Building lights and appliances are turned off when an
technology exist today. office is empty
• Smart appliances are generally energy • Some systems can optimize the building’s
efficient and can switch on and off to smooth energy consumption by controlling multiple
a building’s overall energy consumption devices at once. For example, building
management systems (BMS) are wireless and
• Smart controls such as programmable Web-enabled systems that integrate and
thermostats allow occupants to manage monitor equipment such as HVAC, lighting,
their energy consumption based on their power, fire and security systems
needs
52
OSIsoft, Inc., “Customer RtPM Solution
Case Study,” 2007; Martin Jetté, OSIsoft
Case study: Fully integrated Smart Canada, “How Performance management
• Smart meters and gateways can connect to a Building technologies led to 17% systems improve energy efficiency,” Plant
Engineering, August 2008.
Smart Grid, allowing energy consumption to yearly energy savings in a California 53
www.echelon.com, 2008
vary with price signals, as discussed in detail building.
in the Smart Grid section Echelon has pioneered the concept
of “open building systems,” in which different
Intelligent software to capture and building automation products are able to
analyze data and make decisions is embedded in communicate with one another and can be
many of these technologies. The devices managed through a Web-enabled control
described above work best when they can interface. Facility managers can easily monitor
seamlessly communicate with one another, the and control lighting, security, HVAC and other
building occupants and the grid. The devices functions onsite or remotely 24 hours a day.
must also be maintained and recalibrated to Employees can set individual lighting and
temperature levels for their workspaces
through a desktop Web interface.
Echelon’s control system also
Case study: Demand-side receives alerts from utilities at peak times
management at Kodak Park saved when load needs to be shed. Depending on
several million dollars the level of severity, the system will dim
Kodak Park in Rochester, New York is lighting on surfaces where sensors indicate
the size of a small town, with two dedicated that natural light is already sufficient or let
power plants and 150 buildings spread over air-conditioned rooms warm gradually until
1,300 acres. This makes the installation’s the peak condition passes.
energy interests similar to those of a small Echelon’s technologies have
utility. slashed energy costs by up to 50% for some
The company contracted with historical European buildings. Most recently, a
OSIsoft to integrate information about renovated building in Terra Linda, California
building automation and control systems reported savings of 17% per year.53
across the buildings and monitor energy use
in real-time. Managers accessed this ensure actual energy consumption conforms
information on a portal to identify and to the original predictions.
address key problem areas. They discovered, As with Smart Building design, Smart
for example, that the simultaneous start-up of Building technology will frequently provide
equipment was generating brief periods of occupants with better comfort because the
very high energy demand, that operators heating, cooling and air conditioning are
were not trained adequately to manage optimized to people’s needs.
energy use and that there was no
management of lighting and heating. Smart Buildings: What stands in
Thanks to this Web-based the way
performance management system, managers
can now use the plant’s generation assets Smart Building design and technology
more economically, identify and address areas There are five main challenges for
of opportunity for energy reduction and track both Smart Building design and technology.
actual performance against conservation
targets. These changes have allowed Kodak to Technological challenge
shut down one of its two power plants and
according to Kodak, save several million Limited interoperability: Both building design
dollars.52 and technology solutions have had some
challenges with interoperability. Today, the
different types of design software do not
integrate seamlessly. BIM may be one way to
The government should strive to combine incentives

and mandates to gradually drive change in the
industry and increase the payback for energy-
efficiency investments.
solve that challenge. In addition, interoperable governments have already been implementing
communication standards can be developed. many of these ideas, but broader adoption is still
required.
Limited deployment of Smart Grid
infrastructure: In areas without Smart Grids, the Combine mandates and incentives to
potential for Smart Buildings to optimize energy drive change
consumption in the building is limited by the The government should use
lack of visibility into real-time energy incentives and mandates to increase energy
consumption. In addition, the lack of time-of- efficiency of new and existing buildings. The
use pricing reduces the incentive to lower government (most likely at the state or local
consumption during peaks. level) should encourage the creation or
development of building codes that focus on
Economic and regulatory challenge energy efficiency. It should combine tighter
standards with incentives for ultra-efficient new
Misaligned incentives: In both the building buildings and retrofits. The incentives could
design and technology areas, stakeholders often range from expedited building permits to tax
have misaligned incentives. For example, a breaks for investments in energy efficiency. For
building developer may not want to invest in this to be successful, it is critical to use
energy efficiency because the tenant will be the consistent, performance-based building
one to reap the savings. standards that do not favor specific
technologies. This tightening of standards
High up-front cost: In both areas, there is should be introduced gradually and maintain an
reluctance to experiment due to the higher adequate balance between “carrot” and “stick,” so
upfront costs of energy-efficiency investments that the building industry has time to learn and
and the thin profit margins in construction. adjust.
Actors do not know if Smart Buildings can
command a premium to justify increase in Add environmental requirements in
buildings costs. certification process
The objective should be to address
Behavioral challenge the shortage of expertise by fostering the
development of a knowledgeable workforce.
Shortage of expertise: The entire building Whenever possible, the government should
industry is experiencing a shortage of labor encourage the inclusion of energy efficiency and
skilled in designing, building, and operating environmental requirements into the
Smart Buildings. In addition, the diffusion of certification process for building professionals,
best-practice knowledge is still limited. either during initial certification or as part of
ongoing requirements.
Smart Buildings: What should
happen Lead by example
The government should drive
The two most severe challenges adoption in the market by increasing demand
facing Smart Buildings today are the misaligned and creating trustworthy data on cost/benefit of
incentives and the overall shortage of expertise new builds and retrofits. In addition, this will
in the building industry. The following four provide the building industry actors with more
policies would correct incentives and help opportunities to perfect their skills.
spread expertise. Some state and local
SMART 2020: Enabling the low carbon 03 Travel Substitution
54
“Commitment to leading by example
It can also commission new high- supported by both private and public by achieving a 40 percent increase in
performing buildings and retrofit existing ones investments are helping to ensure this vision efficiency in all new federal buildings
within five years and invest in cost effective
at all levels of government. This will contribute to becomes a reality. For example, the U.S. retrofits to achieve a 25 percent increase
a better understanding of building costs and Department of Energy has awarded $15 million in efficiency of existing federal buildings
within 5 years” - Obama-Biden New Energy
expected energy efficiency, as well as increase to 21 companies in an effort to encourage the for America plan, http://my.barackobama.
the knowledge base for building professionals. adoption of energy-efficient technologies for com/page/content/newenergy, accessed
on Nov. 5th 2008
Adjusting government procurement new construction and retrofits in commercial 55
www.ca.gov
policies to include full life-cycle cost will buildings.56 In the public realm, the Lawrence 56
http://www.energy.gov/news/6577.htm
complement this measure. Berkeley National Laboratory has created 57
Regularly is “more than 1 day per week”.
modeling tools such as Radiance and Energy U.S. Department of Census, 2006
Invest in R&D Plus which have significantly enhanced the 58
“76% of Americans drive to work
The government should encourage accuracy of Smart Building modeling. These by themselves” - U.S. Department of
Commerce, U.S. Census Bureau, American
R&D in energy efficient building designs, promising initiatives should provide Community Survey (2006); Average
especially in areas where the industry is under- encouragement for the broader adoption of the commuting time, U.S. Department of
Census, 2006
investing because of long or uncertain payback recommended policies consistently across the 59
EIA, Annual Energy Outlook, 2008
times. It should support investment in R&D in U.S.
both the public and private sector. Public/
private partnerships will ensure the commercial
applicability of the research. Policies could range Travel Substitution
from expanding the mission of Department of
Energy National Laboratories, to increasing R&D Introduction
tax credits for Smart Buildings.
The U.S. context for Travel Substitution
Industry contribution In the past 10 years, the spectacular
The ICT industry should drive further development of the Internet and high-speed
innovation in Smart Buildings both in terms of connectivity has brought many changes to the
design software and technology. In addition, it way Americans live. Collaboration tools and
should participate in the creation of videoconferencing can virtually eliminate the
measurement tools and methodologies need for employees to ever meet in-person. In
alongside the government. Finally, it can help parallel, the rise of “information workers” has
spread expertise in the building industry by created a labor force that can work from
sharing best-practices. anywhere at anytime. U.S. workers, however, are
A Smart Grid would help further not fully taking advantage of these
accelerate the deployment of Smart Buildings by developments: only 3.9% of the workforce works
providing users with a better understanding of outside of the office regularly.57
their energy consumption and associated costs, This missed opportunity has high
and giving them the ability to act on price costs for productivity, employee engagement
signals. and the environment. Three quarters of
Americans spend about 50 minutes driving to
Conclusion work alone every day, a reality that creates
avoidable environmental harm, congestion and
There is significant momentum toward Smart stress.58
Buildings in the government. The President- The need for business air travel has
elect New Energy Plan recommends that all new increased as companies become more global
buildings be carbon neutral by 2030 – starting and decentralized. Collectively, air and road
with the federal government’s own buildings.54 travel are expected to account for approximately
Already several states have helped jump-start 1,370 MMT of CO2 emissions in 2020.59 Thus,
the adoption of high energy efficiency buildings. today’s technology provides a growing
For example, the “Green Building Order” issued opportunity to replace many of these high-
by California Governor Schwarzenegger requires carbon activities with virtual meetings, flexible
that all future state-owned buildings over 10,000 working arrangements and other solutions.
square feet be certified LEED Silver.55 R&D efforts
Summary of Travel Substitution

opportunity
What ICT can do
U.S. reduction
MMT of CO2 • Bring work to the • Office hoteling solutions
70–1301 employee instead of • Smart work centers
bringing employees • Unified communications
to work • Smart devices ranging from laptops to
Flexible work smart phones
• Pervasive fixed and mobile broadband
75%
• Replace in-person • Advanced videoconferencing closely

meetings with remote mimics in-person meetings
interactions (advanced • Intermediate solutions with large
Virtual meetings systems most likely to screens and good-quality audio
replace in-person • Desktop solutions with webcams
25% meetings)


Lead by • Provide adequate support to
Technical • Limited challenges example with ensure initiatives are
both flex work successful
and virtual • Consider encouraging
meetings government contractors to
adopt as well
• Adverse government
Economic
regulation Share best- • Accurate data can drive long
practices lasting behavior change
• Link with "Center of
Excellence"
• Unfavorable work culture
• Do not duplicate initiatives
Behavioral • Experience unknown already underway
• Employee sense of isolation

Flexible work brings work to the employee instead of

bringing the employee to work.
The Travel Substitution opportunity work in the U.S. in 2020, yielding $15—$30 billion
Businesses can reduce CO2 emissions in gross savings in 2020 from lower spending on
by an estimated 70—130MMT in the U.S. in 2020, gasoline.
which represents 5—9% of air and road CO2 Rebound effects were captured in this
emissions, by allowing employees to choose their analysis. Although flex workers can reduce their
optimal work location and meet virtually instead carbon footprint on the road and in the office,
of in-person (see Figure 9). In addition, Travel they may end up increasing it at home. Home
Substitution could yield $20—$40 billion in gross workers may heat or cool their home more than
savings in the U.S. in 2020 through lower fuel they would if they were absent, they may buy
consumption. The exact savings will depend on more electronic equipment than otherwise and
the rate of adoption of the solutions identified. they may use their cars to run personal errands
that they otherwise would have done driving to
Travel Substitution: What ICT can and from work. However, a number of other
do effects were not quantified: the footprint of
“opportunists” who decide to drive once
Flexible work congestion is reduced, the high-carbon activities
Flexible work (or flex work) brings work of flex workers in time that would otherwise be
to the employee instead of bringing the spent commuting, or the results from potentially
employee to work. An estimated 50—100MMT of increased urban sprawl.
CO2 emissions could be reduced through flexible
Figure 9: Travel Substitution: U.S. impact 2020

MMT CO2 2,080 1,370 70-1301
70 – 130 (5-9%)
Abatement
potential
Light-duty vehicle
road transportation 1,370
and air (66%) 75% Flexible work
transportation
Remaining
emissions
Other transportation
• Truck 710
• Bus (34%) 25% Virtual meetings
• Ship

transport-related emissions share of ICT-enabled abatement CO2 reduction potential
Flex work allows employees to work from any

location, and most of the hardware and software Case study: Sun Microsystems’
technology required is not new. It includes: OpenWork program cuts emissions
by one quarter
• Pervasive broadband, both fixed and mobile, At Sun Microsystems, 53% of the
that enables employees to connect workforce commutes into the office only
60
seamlessly from anywhere through secure rarely. For the past 10 years, as part of Sun’s
A typical worker pays $688 annually for
work-related gasoline costs - Rockbridge networks OpenWork program, employees have
Associates Inc., p9; Sun estimates that its selected one of three work categories:
flex work employees save $800 per year in
fuel costs - Sun OpenWork study, 2008 • Unified communication that integrates all traditional “assigned” staff (47%), “flexible”
61
Sun Open Work report, October 2008 communication tools into one interface: staff (35%) or “work-from-home” staff (18%).
presence status, instant messaging, email, Assigned employees usually work from the
voice over IP and videoconference to ensure office, while flexible workers commute only
that employees can be reached instantly by once or twice a week, where they use an
the most appropriate means available office for the day. Work-from-home
employees generally go into the office less
• Devices ranging from laptops to smart than once a week. Sun provides the “flexible”
phones that allow employees to remain and “work-from-home” employees with all
connected from any location the necessary equipment and funding to set
up their home offices.
To capitalize on and further encourage this In 2007, Sun undertook an
movement away from the physical office, some internal study of 100 U.S. employees to
companies have changed part of their real- document the energy impacts of the
estate operating model: program. The results were relatively striking:
reduced commuting time amounts to the
• Some companies have introduced hoteling equivalent of 2 ½ extra weeks of vacation for
systems which reduce office space by using each OpenWorker. It also saves each
shared desks, instead of assigning a seat to employee 3,720 miles and 151 gallons of
each employee fuel—an estimated $800 in gas savings per
year.
• Smart work centers offer an intermediate In addition, rebound effects were
solution for employees who cannot or do not measures and results show that
want to work from home. These centers OpenWorkers use about half the amount of
provide a productive work environment power for electrical and electronic devices at
(high-speed connectivity, videoconference home as they do in their corporate offices,
equipment, meeting rooms and other tools) through a combination of more economical
and amenities ranging from administrative computing devices, greater use of energy-
services to child day-care. They are generally management software and more energy-
located in suburbs, closer to where people conscious behavior. In addition, 75% of
live. flexible and work-from-home employees
operate their home heating and cooling
Flex work also holds benefits that are unrelated systems the same whether they are working
to the environment. Employees can expect to there or not.61
save $700 to $800 in gasoline costs a year,60 have
more free time, be interrupted less frequently
and thus more productive and be better able to In communities, flex work helps reduce
balance work and life. Employers will be more congestion, and allows downtown office areas
likely to maintain continuity of operations in the to be developed for more residential and
advent of a pandemic or of a natural or man- commercial purposes.
made disaster.
The tools that support virtual meetings range in

both cost and capabilities from simple desktop
solutions to highly sophisticated systems. In all cases,
broadband connectivity is a critical enabler.
62
Does not include other costs savings
Virtual meetings decision making and time to market. On the associated with the reduction in travel
Virtual meetings can replace in-person personal side, they are able to spend more time costs.
63
meetings with remote interactions, and thus with their families and friends. Cisco, “Economic & Green Benefits of
Cisco TelePresence”, Fact Sheet, 2008
reduce the need for air travel. An estimated
20—30MMT of CO2 emissions could be reduced in
the U.S. in 2020 thanks to virtual meetings. This Case study: Advanced
could also yield $5—$10 billion in gross savings in videoconference systems can reduce
the U.S. in 2020 from lower spending on jet fuel.62 the need for business air travel
High-end videoconferencing is the
The tools that support virtual meetings range in latest technological advance in virtual
both cost and capabilities from highly meetings. Early adopters Procter & Gamble,
sophisticated systems down to simple desktop Wal-Mart and SAP are realizing significant
solutions. In all cases, broadband connectivity is a cost-savings from reduced executive travel.
critical enabler. Adoption is growing at 300% a year. Cisco
Systems says its internal TelePresence
• Advanced videoconferencing solutions are rooms—which boast a 45% utilization
the ones most likely to replace in-person compared to 1% for standard
meetings and reduce air travel. The high- videoconference—saved it $70 million on
definition screens and extremely clear sound travel-related expenses in 2007. The savings
streams allow participants to perceive the came despite the fact that it had to upgrade a
subtle facial and body language of their portion of its network backbone. The payback
counterparts thus creating the feeling of a on the initial 110 TelePresence rooms
genuine person-to-person interaction. deployed in the first year was 9 months and
However, the quality of the experience comes adoption in the market is growing at 300% a
at a cost: these set-ups are significantly more year.63
expensive and top-of-the-line systems require
dedicated conference rooms
Travel Substitution: What stands in
• Intermediate solutions with large screens and the way
good-quality audio can provide an acceptable
experience at an affordable price Flexible work location
A number of challenges hinder the
• Routine videoconferences can be run through broader adoption of flexible work.
computer Webcams. These desktop solutions
are cheap and require little bandwidth but do Technological challenge
not offer a very rich experience and are thus
less likely to replace business trips Existing technology already allows flex work.
Current development focuses on further
Virtual meetings have additional benefits. improving data integration between different flex
Notably, reduction in travel budgets can help work hardware devices and on enriching the flex
offset the cost of advanced videoconference work experience available through mobile
equipment. By wasting less time and energy on devices.
traveling, employees are more productive. They
can also interact better and more frequently with
a broader array of stakeholders, allowing faster
64
Telecommuter Tax Fairness Act of 2007
to overturn this legislation was referred Economic and regulatory challenge Economic and regulatory challenge
to House Subcommittee on 3/30/2007,
Library of Congress accessed on November
5th, 2008 Adverse government regulation: In some states, Desktop virtual meetings are very affordable—
65
HP news release, March 2008; government regulation hinders flex work. For many of the required tools now come pre-
Marketwatch.com, October 2008 example, New York State taxes employees from installed on laptops. At the other end of the
out-of-state who work remotely for in-state spectrum, advanced videoconferencing systems
employers. Those workers are usually also taxed usually require significant capital investments,
in their home state, threatening telecommuters although the payback can be swift, especially in
with a double tax.64 large, global corporations that hold many
internal meetings.
Behavioral challenge
Behavioral challenge
Unfavorable work culture: Many employees are
still managed based on their level of activity, not Experience unknown: Many people have a bias
by objectives and results. Managers are against virtual meetings, often because of
unwilling to allow flex work because they cannot negative past experiences or because they are
measure employee activity remotely—other unaware of the latest immersive technologies.
than through indirect measures such as email The prevailing assumption is still that virtual
traffic. In addition, some managers believe that meetings are less effective than in-person
employees are less productive when working meetings, which will change as people
away from direct supervision. experience the advanced solutions.
Employee sense of isolation: Flex work may not

be for everyone. Some employees might feel Case study: Public videoconference
isolated when working remotely, miss the rooms provide more affordable
opportunities for networking and feel less virtual meeting solutions
affiliation with their employer’s work culture. To accommodate the needs of
those for whom in-house advanced
Virtual meetings videoconference rooms represent too large
of an investment, HP and Cisco have both
Technological challenge struck deals with major business hotel
chains Marriott and Taj. The hotels will
A wide range of technology for virtual meetings provide public-use virtual meeting facilities,
exists today. However, the full set of allowing smaller companies and individuals
videoconferencing features is not available to use the systems for one-off meetings.
when people communicate using different These will cost around $300 an hour—
systems and advanced videoconferencing significantly less than the cost of travel. Taj
sometimes requires an upgrade in enterprise hotels are aiming to have 100 rooms set up
network infrastructure. Adoption of advanced by 2009 in the U.S., U.K. and India.65
videoconferencing is still in the early stages but
good progress is being made in addressing
existing issues as the technology becomes more
widespread.
66
Texas Transportation Institute Mobility
those results. Therefore, the government should Report, 2007
Travel Substitution: What should analyze, assess and share results from pilot
happen studies and best practices to create long-lasting
behavior changes. In doing so, it should avoid
The government can help spread the duplicating initiatives already undertaken by the
adoption of Travel Substitution by leading by industry and instead encourage the private
example and sharing best-practices to influence sector to share its knowledge, possibly in the
behavior. Although not quite as crucial for the context of the “Center of Excellence” described
deployment of Travel Substitution, financial earlier in this report. Finally, the government
incentives from the government would help (federal, state or local) could provide training
significantly accelerate adoption of travel- assistance for small and medium size businesses
substitution solutions, in particular for smaller to help them successfully implement flex work
companies which cannot justify the investment. and virtual meetings.
The two preferred policies for the government to
adopt are: Industry contribution
The ICT industry also has a significant
Lead by example role to play in setting an example for other
The government should show industries and encouraging the adoption of
leadership by proving the business case and Travel Substitution. The industry should further
driving the adoption of enabling technologies drive penetration of these technologies by
to encourage behavior changes. The enhancing the user-experience and reducing
government can lead the way in breaking down costs. It can also develop both new technologies
resistance to flexible work by supporting flex and new business models, as it already has with
work for government workers—and by the development of advanced
publicizing its programs and progress in this videoconferencing equipment and the creation
area. It could even consider requiring or at least of smart work centers. Finally, the industry can
encouraging government contractors to adopt play a key role in education by creating and
flex work initiatives. By virtue of its size, the carefully documenting pilot cases so that other
government needs to be careful about how it businesses gain a better understanding of the
implements flex work programs. It should process changes required to take advantage of
thoughtfully select participants, both Travel Substitution.
employees and managers, and provide
adequate support and training during the Conclusion
transition, in order to ensure the initiative is
successful and can be replicated. Similarly, the Travel Substitution is a quick win for
government should adopt and encourage the the reduction of CO2 emissions. The technology
use of virtual meetings that can effectively for flex work and virtual meetings exists today;
substitute travel such as advanced its adoption is poised to expand greatly. The
videoconferencing. For example, it could business case for Travel Substitution is strong,
consider offering video links for all public events and will only improve as videoconferencing
or renting out its videoconference facilities to technology spreads and costs come down.
private interests when they are not in use. In Travel Substitution is also becoming an
both cases, the government should measure increasingly important factor in employee
and communicate its results so the private retention, as employees’ frustration with
sector can learn from its initiatives. congested roads and with the time they lose to
commuting grows.66 For dual-income families
Share best-practices with demanding schedules and lifestyles, flex
Data drives decisions and leads to work can be a blessing. Policy makers can help
market adoption. The government can increase drive the adoption of Travel Substitution by
the spread of innovative technology by becoming role models and influencing behavior.
developing objective and reliable data and
analysis of its own initiative, and by sharing
SMART 2020: Enabling the low carbon Conclusion
Conclusion
67
EIA, “U.S. Imports by Country of Origin,”
2007; EIA, “How dependent are we on
Climate change is a leading challenge social outcomes. These policies will help
foreign oil?” August 22, 2008; EIA Annual for this generation. Fortunately, ICT provides a improve the incentives for stakeholders to both
Energy Outlook 2008. Foreign oil accounts
for ~58% of total oil demand in the U.S.
tremendous opportunity to reduce carbon provide and use the information necessary to
in 2007. emissions. This report outlines ICT solutions that make more informed energy consumption
could reduce U.S. carbon emissions in 2020 by decisions. At a minimum, the government
13–22%. Beyond the CO2 reduction, these should be a trustworthy broker of reliable
solutions will generate a welcome boost to the information, a proponent of public-private
U.S. economy by creating $140–240 billion in collaborations and an advocate for bottom-up
gross energy and fuel savings and increasing the behavioral change. Other key elements will be
number of “green collar” jobs. Beyond the the monetization of carbon emissions, the
economy, ICT solutions can help America make support for investment in ubiquitous broadband
progress on energy independence – the and the creation of a Center of Excellence to
reduction in fuel-related emissions is equivalent capture and disseminate knowledge efficiently.
to reducing foreign oil imports by 20-36%.67 The Finally, targeted policies will accelerate the
broad adoption of energy efficiency technology adoption of ICT solutions within the highlighted
will also improve the productivity of employees, opportunity areas.
the competitiveness of U.S. corporations and In isolation, ICT can provide efficiency
overall quality of life. gains. But working in combination with
Unlocking this potential will require government, academia and other industries, ICT
the concerted effort of many stakeholders: innovation can transform the U.S. economy into
federal, state and local governments, industry, a high-tech, high-growth and low-carbon
academia and consumers. In this endeavor, the beacon.
ICT industry is prepared to collaborate closely
with the government , for example through an
Ad Hoc advisory committee. In many cases
however, responsibility for implementation will
rest not with the federal government but with
state or local authorities (e.g., revising building
codes or utility rate structures) and company
CEOs. And the ultimate responsibility will rest
with the consumers of energy, a group of actors
whose decisions will be shaped by the
leadership of government and businesses.With
such a multitude of stakeholders, the federal
government’s role will frequently be to align the
objectives of stakeholders by setting aspirations
that can be embraced by all. The first step in this
direction should be to declare a visionary
National Energy Efficiency Strategy, which
recognizes ICT’s central role.
As a next step, the government should
implement the policies recommended in this
report to accelerate the adoption of promising
ICT solutions—especially where markets have
not produced the desired environmental and
SMART 2020: Enabling the low carbon Appendix
Appendix 1: Selection of the U.S.

specific opportunities
Smart 2020 U.S. Reduction Included in the

opportunity Sub-opportunity Baseline1 potential2 U.S. addendum
Renewable Energy High Low 9

Smart Grid T&D Loss Low High 9
Consumption efficiency High Low 9
Road High Medium 9
Air Low Low
Smart Logistics
Ship/Rail/Other Low Low
Global
SMART Warehouse Low Medium
2020
Smart Buildings
Design Medium High 9
Technology High Medium 9
Dematerialization
Travel substitution High Medium 9
Substance (e.g. ePaper) Low Low
U.S. moving toward a service economy, resulting in a smaller and declining baseline
Smart Motors • U.S. factories have largely exhausted the "low hanging fruit" in automation;
remaining opportunities difficult to execute Baseline Range
(MMT of CO2)
High = > 1,000
1. Based on EIA Annual Energy Outlook 2008 and BCG analysis Med = 500 - 1,000
2. Based on the expected ICT adoption and reduction potential estimates in GeSI and the Climate Group, “Global Smart 2020 report”, 2008 Low = < 500
Appendix 2: CO2 abatement

assumptions
Assumptions behind the CO2 abatement
calculations are detailed below for the four
priority opportunity areas
Smart Grid
Potential abatement: 230-480MMT of CO2 in the
U.S. in 2020 – Assumptions behind numbers in
Figure 6, Chapter 3
ICT-enabled
abatement potential Reduction Potential
Sub-Opportunity (MMT of CO2) Addressable Baseline Assumption
Integrating renewable 130 – 260 Emissions from power generation 5 – 10%

energy
Reduce T&D losses 60 – 120 Emissions due to power lost during 30%
transmission and distribution (estimated to be
8-15% of all emissions from electrical
generation in the U.S.)
Consumer awareness 40 – 100 New buildings 5 – 10%

(real-time pricing) • Emissions from 75% - 100% of residential
• Emissions from 60% - 100% of commercial
Retrofitted buildings
• Emissions from 50% - 75% of residential
• Emissions from 60% - 75% of commercial
Road Transportation
U.S. in 2020– Assumptions behind numbers in
Figure 7, Chapter 3
ICT-enabled
Delivery 60 – 110 Emissions from commercial light trucks and 14% - 25%
implementation: freight trucks
Itinerary planning
(Commercial)
Delivery 15 – 20 Emissions from commercial light trucks and 5%
implementation: freight trucks less the abatement achieved
Route planning through itinerary planning
(Commercial)
Supply chain design 70 Emissions from commercial light trucks and 15%
(Commercial) freight trucks
Emissions from rail, ship and air (from 1%

intermodal shifting)
Eco-driving 25 – 50 Emissions from commercial light trucks and 12% - 20%
(Commercial) freight trucks less reductions from routing,
itinerary, and optimization
Optimization of 45 – 120 Emissions from light-duty vehicles less 4% – 11%

logistics (Individual) reduction from travel substitution
Eco-driving 25 – 70 Emissions from light-duty vehicles less 3 – 7%
(Individual) reduction from travel substitution and
individual optimization of logistics
Smart buildings
Figure 8, Chapter 3
ICT-enabled
Improved building design 120 – 140 • 60% of all new builds • 40 – 45% for all retail
(Building design) • 15% of all retrofits • 30 – 35% for all other
Reduced space through 20 – 30 • 60% of warehouse and retail new builds • 20 – 30% for retail and
design (Building design) • 20% of warehouse and retail retrofits warehouse
Building management 40 – 55 • 40% of retail and office new builds • 10 – 15% on residential and
systems (Building • 33% of all other new builds retail
technology) • 25% of retail and office retrofits • 5 – 10% in warehouse
• 10% of all other retrofits • 30 – 40% in offices
Voltage optimization 35 – 45 • 80% of all new builds • 10 – 12% in HVAC and

(Building technology) • 30% of commercial retrofits appliance emissions
• 20% of residential retrofits
Lighting and appliance 20 – 35 • 40% of retail and office new builds • 15 – 30% in lighting and
automation (Building • 33% of all other new builds electronics emissions
technology) • 50% of commercial retrofits
• 25% of residential retrofits
HVAC automation 15 – 25 • 40% of retail and office new builds • 10 – 15% of HVAC-related
(Building technology) • 33% of all other new builds emissions (excluding
• 25% of all retrofits warehouses)
Benchmarking and 10 – 15 • 25% of commercial new builds • 30 – 40% of HVAC related

building recommissioning • 50% of commercial retrofits emissions
(Building technology)
Intelligent commissioning 5 – 10 • 60% of institutions, office and retail new • 10 – 20% of HVAC related
(Building technology) builds emissions
Ventilation on demand 5 • 60% of institutions, office and retail new • 3 – 5% of HVAC related
(Building technology) builds emissions
• 25% of institutions, office and retail
retrofits
Travel substitution
Figure 9, Chapter 3
ICT-enabled
Flexible work 50 – 100 Emissions from light-duty vehicles 4–9%

• 15 – 20% of the labor
population are flex
works in 2020
• 2.6 to 3.6 MT CO2
reduced annually per
flex worker (average)
Virtual meetings 20 – 30 Emissions from air transportation 8 – 12%

• 40% of air travel is for
business reasons
• 20 – 30% reduction
through virtual
meetings
Appendix 3: Energy and fuel

savings assumptions
All savings included in this report are annual 2020
projections in $2006 and are not net of required
investments
Smart Grid
$15-$35 billion in gross energy savings in the U.S. in 2020
Equivalent TWh avoided
104 – 195
Savings from reduced T&D2 x

$10 – $20 billion
Electricity price ($/kWh)1
$0.09
Gross Smart Grid energy
savings +
$15 – $35 billion
58 – 170
Savings from reduced
consumption2 x
$5 – $15 billion
Electricity price ($/kWh)1
$0.09
Note: CO2 abatements due to integrating renewable energy not converted into energy savings because it is a direct substitution (high carbon to low carbon)
1. Projected price in 2020 in $2006, from EIA's Annual Energy Outlook 2008 Appendix A8
2. Final price rounded to the nearest $5B increments
Road Transportation
$65-$115 billion in gross fuel savings in the U.S. in 2020
Equivalent barrels of oil avoided

(million)
194 – 506
Savings from individual road
transportation2 x
$20 – $50 billion
Oil price ($/barrel)1
$99.12
Gross road transportation fuel
savings +
$65 – $115 billion
(million)
457 – 661
Savings from commercial road
transportation2 x
$5 – $15 billion
$99.12
1. Projected price of motor oil in 2020 in $2006, from EIA's Annual Energy Outlook Appendix A12
2. Final price rounded to the nearest $5B
Smart Building
$40-$50 billion in gross energy savings in the U.S. in 2020
213 – 308
Savings from building
technology2 x
$20 – $25 billion
Energy price ($/kWh)1
$0.09
Gross Smart Building energy
savings2 +
$40 – $50 billion
227 – 288
Savings from building design2 x

$20 – $25 billion
Energy price ($/kWh)1
$0.09
1. Projected price in 2020 in $2006, from EIA's Annual Energy Outlook Appendix A8
Travel Substitution
$20-$40 billion in gross fuel savings in the U.S. in 2020

(million)
145 – 283
Savings from flexible work
location3 x
$15 – $30 billion
$99.12
Gross Travel Substitution fuel
savings +
$20 – $40 billion
(million)
70 – 105
Savings from virtual meetings4 x

$5 – $10 billion
1. Projected price of motor oil in 2020 in $2006, from EIA's Annual Energy Outlook Appendix A12
$75.25
2. Projected price of jet fuel in 2020 in $2006, from EIA's Annual Energy Outlook Appendix A12
4. Savings include only those from avoided fuel costs. Does not include additional costs saved from reduced business travel (e.g. hotel accommodations)
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SMART 2020: Enabling the low carbon

economy in the information age

SMART 2020: Enabling the

The following materials were prepared

• Luis Neves, GeSI Chairman, Luis.Neves@telekom.de

The time for action is now of excellence, tax measures, procurement

Figure 1: Summary of recommended policies

Over- • Recognize ICT solutions as part of a national energy efficiency strategy

• Lead by example to help encourage behavioral change

Figure 2: U.S. carbon emissions baseline

2,320 2,570 Buildings

1,680 1,730 Industry

Source: EIA Annual Energy Outlook 2008

The role of ICT

Figure 3: ICT industry’s carbon emissions in the U.S.

MMT CO2 emissions in the U.S. CAGR

emissions by investing in breakthrough report cites investment in ICT as a major factor in 10

caused by increased demand.9 Examples of consumption.10 11

02: Creating an enabling

Figure 4: Overarching policies to support ICT-enabled CO2 reduction

Build "Center of Excellence" Ensure connectivity

ICT as a solution for energy efficiency

Monetizing carbon emissions

Structural support for ICT

to smaller businesses, whose limited internal

Altogether, ICT enabled solutions could

03: ICT-enabled CO2 reduction

Figure 5: Estimated ICT-enabled CO2 abatement potential in the U.S.

High 1.4GtCO2 22%

Low 0.8GtCO2 13%

360 340 320

Smart Grid Road Transportation Smart Buildings Travel Substitution

Gross electricity $15-351 $65-115 $40-50 $20-402

U.S. specific Smart opportunities

How the recommended policies were

Create an enabling regulatory framework

Enable the development of solutions

• Conduct fundamental research benefiting all stakeholders (industry, consumer,

• Create the right incentives

Encourage positive behavior change

Introduction Total emissions from the electrical 20

Summary of Smart Grid opportunity

56% • Remotely monitor grid • Automatic detection and

1. Multiple levers contribute to the reduction potentials. The mid-

What stands in the way What should happen

A Smart Grid would work the same way that the

Figure 6: Smart Grid: U.S. impact 2020

U.S. 2020 baseline of Addressable baseline and Breakdown of ICT-enabled

• Increasing national security by enabling operators from investing in demand-side

Introduction individual transportation. Research indicates

Summary of Road Transportation

1. Multiple levers contribute to the reduction potentials. The mid-

What stands in the way What should happen

Challenges where government intervention is most

ICT can offer solutions that do not depend on

The Road Transportation opportunity Transportation by 15—28%, representing a total

Figure 7: Road Transportation: U.S. impact 2020

U.S. 2020 baseline of Addressable baseline and Breakdown of ICT-enabled

Road Transportation: What ICT can sensor technologies to maintain tires in

• Sensors on traffic lights and road surfaces to

• Social networking and other collaboration

• Mobile applications to monitor the operating