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Decarbonization in the telecommunications industry

Reflections on decarbonization: challenges and opportunities for the telecommunications industry

Digitalization has become a structural part of how we work, learn, produce and relate to each other. Telecommunications infrastructure drives global connectivity and enables advances in sectors such as health, education, mobility and industry. However, this growth brings with it a relevant discussion: today the sector represents around the 1.7% of global greenhouse gas emissions (World Bank, 2024), but the expansion of services, the increase in data traffic, the massification of devices and the technological transition anticipate that this percentage could increase if the adoption of more sustainable energy and operational solutions is not accelerated.

The telecommunications sector's emissions come mainly from its networks, data centers, transportation and internal operations, which mostly correspond to Scope 1 and 2, that is, direct emissions and those generated by the consumption of electricity in its operations. In spite of this, the Scope 3, related to indirect emissions from the value chain, is becoming increasingly important, especially for devices, whose impact is generated on their manufacture, use and end of life. Although the electricity used to power grids and data centers remains the biggest driver of emissions, each region's energy mix, particularly those that rely on fossil sources, amplifies this challenge. With the growing demand for digital services, the industry is facing an urgent need to find sustainable solutions that not only address its direct emissions, but also the environmental impact associated with the devices it uses and distributes.

Circularity, energy efficiency and renewable energy, trends in the industry

The industry is adopting various strategies to reduce its environmental impact. One of them is the energy efficiency in networks and data centers, which remains the core of the carbon footprint. The optimization of infrastructure and the use of more efficient technologies are demonstrating that sustainability is not only beneficial to the environment, but also to economic results.

A second trend is the transition to renewable energy sources, such as clean energy purchases through renewable energy purchase contracts (PPAs) and own generation. Companies such as Telefónica have taken an important step in committing to supplying their network with 100% renewable energy, which has been essential to reduce their indirect Scope 2 emissions.

La circularity of technological assets and sustainable design of the materials that enable connectivity today constitute a strategic variable of the business model. Network deployment and modernization demand critical inputs intensively (copper, steel, cement; aluminum, semiconductors, rare earths; lithium) which account for a significant portion of Scope 3 emissions, as well as structural risks related to cost, supply and socio-environmental exposure at source. Proactive management of this basket of materials is critical to margin protection, supply chain resilience and compliance with deployment schedules. This involves moving forward with low-carbon specifications. (steel and cement with verified EPD), circular copper and aluminum purchasing schemes, the transition to LFP battery technologies accompanied by second-life and recycling programs, and the modular and repairable design of antennas and CPE equipment to extend their useful life. The systematic integration of criteria for recycled content, traceability of critical minerals and carbon intensity targets in contracts with suppliers has become a direct lever for competitiveness, resilience and long-term value creation, beyond mere regulatory compliance.

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Overcoming Barriers and Seizing Opportunities

Despite advances towards decarbonization, the sector faces significant challenges, which are amplified in Latin America. The high investment costs of adopting new technologies and renewable energies are especially difficult for small operators or in markets with limited access to clean energy, which is made even more difficult in contexts of heterogeneity of energy infrastructure, inequality in the level of access to renewable energy, informality and evolving regulatory frameworks.

In addition, indirect emissions (Scope 3) related to the supply chain and the use of devices complicate measurement and reporting due to the diversity of actors and data formats. The growing demand for digital services, driven by the expansion of 5G networks and the use of technologies such as AI and cloud computing, can also increase emissions despite efforts to improve energy efficiency.

However, challenges bring opportunities, and not only in environmental terms but especially in economic terms. First, optimizing energy consumption and adopting renewable energy, for example, is associated with a direct reduction in operating costs, and it also protects companies from the volatility of energy prices and improves their reputation. Companies have recently managed to reduce energy consumption by 33% using AI to manage the network. On the other hand, decarbonization can become a strategic asset for attracting investment and opening new lines of business, such as renewable energy solutions and articulated by its key role in the decarbonization of other sectors, by offering connectivity and sustainable digital services. This encouraging scenario is not alien to Latin America, where the potential of renewable energies, market growth and the possibility of public-private partnerships are keys to moving forward with sustainability criteria.

The decarbonization of telecommunications is no longer just an environmental challenge, but a key decision for the operational efficiency, resilience and competitiveness of the sector.

Decarbonizing the telecommunications industry is a complex challenge but full of opportunities. Trends towards energy efficiency, the use of renewable energy and the circularity of materials are advancing, and the integration of new technologies can be key to achieving sustainable goals. However, overcoming barriers such as high investment costs and measuring indirect emissions will be essential to achieve an effective transition to a more resilient, efficient and sustainable future.

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