Digitalisation and environmental challenges interact in numerous ways. For example, technologies such as smart meters, active power grids and sensors and artificial intelligence can greatly enhance the transition to low-carbon power systems and reduce energy consumption. Digital technologies can also improve environmental monitoring and enforcement, through local sensing and earth observation from space. Finally, digitalisation can support the transition to a more circular economy. For example, digital passports provide an auditable record of a product’s journey from design to end of life. Digital technologies can also help to improve circular economy policy design by enabling access to unprecedented volumes of crowdsourced and online data. 

Digital technologies have a large and growing environmental impact. For instance, blockchain technologies, including cryptocurrencies, can create opportunities for more sustainable business models but generate significant emissions and can incentivise fossil fuel-based power generation. The rapid growth of digital technologies also poses challenges for the generation of electronic and other waste as well as the supply of critical minerals.  The development and use of these technologies must be carefully considered to manage their impact. OECD analysis aims to identify ways policymakers can harness digitalisation while minimising environmental impacts.

OECD work highlights the importance of taking into account the interactions between industrial and digital ecosystems when designing industrial, environmental and innovation policies.

For example, a recent OECD publication offers a novel and holistic view of the automotive sector and its surrounding ecosystem based on a combination of supply chains data, patent data, mergers and acquisitions transactions and firm-level balance sheet data.

The OECD analysis finds that the green and digital transition is growing in the automative ecosystem as illustrated by the large increase in innovation related to autonomous vehicles and that young digital firms play an essential role in the emergence of autonomous and electric vehicles technologies.