How technology can drive a sustainable economic recovery

This article was originally published back in January for the World Economic Forum. As leaders meet at COP26, this a critical moment for the world. We have the technologies to curb emissions; now we need to take collective and immediate action.

During the financial crisis of 2008, the world had the opportunity to shape a more sustainable economy. According to economist Nicholas Stern, the economic and technological conditions at the time would have made it easier to make progress on climate change . But we failed to grasp it. Thirteen years on, we find ourselves in an unprecedented health and economic crisis, with less than a decade to limit global warming and avert catastrophic climate change.

The present-day crisis gives us a unique opportunity to hit the reset button and put the world on a more sustainable path. With a growing and ageing global population and extreme poverty increasing again , we need to find new ways to increase productivity: to do more with less, and use fewer natural resources.

But to achieve this, we need to transform the sectors that form the backbone of our economies – our healthcare systems, our industries, our infrastructure, energy and transport systems. In short, we need to transform our everyday life.

The good news is that we have the technology to make this happen.

Technology has played an essential role in keeping our economy and society functioning during this crisis and it can play an even bigger role in driving a sustainable economic recovery.

Digital technologies can make manufacturing more productive and less resource-intensive, and supply chains more resilient. They can also enable the widespread integration of renewable energy, make cities more liveable, render transport more efficient and vastly improve healthcare delivery.

Healthy economies depend on healthy populations

As the pandemic reminds us, healthy economies depend on healthy populations. We must not lose sight of the fact that before the pandemic struck, healthcare systems around the world were already under pressure due to rising costs and insufficient resources.

Enter technology. It can improve the diagnosis and treatment of diseases and alleviate the burdens on healthcare systems. Digital assistants powered by AI, for example, can assist radiologists in diagnosing medical images. Automation solutions, as a second example, can speed up laboratory testing, such as the Atellica Solution from Siemens Healthineers, which can run up to 440 tests an hour and deliver results in just ten minutes .

The extraordinary resources and efforts that have been dedicated to developing a vaccine for COVID-19 have so far resulted in not one, but several vaccines. Our current predicament has also highlighted the challenges around developing vaccines in general , which can often take up to ten years. By creating a digital twin of the vaccine development process, at Siemens we enabled our partner GlaxoSmithKline to reduce vaccine development time by around 25%, as well as reduce waste by 10%.

Technology can also help industries beyond healthcare to adapt both during these turbulent times and beyond. For example, IoT applications can make it safe to return to work and also create future work experiences. Sensors collect real-time data on occupancy, enabling employees to reserve workspaces and maintain social distancing. Siemens joined forces with Salesforce to make such an offering available, and quickly so. Greater collaboration within ecosystems will be essential to tackle the challenges of our fast-changing world. To accelerate industrial transformation for our customers, we’re combining our expertise with SAP.

Technology for a clean economy

Given that the world generates four-fifths of its energy consumption from fossil fuels, the transition to a clean economy will be both one of the biggest challenges and opportunities in this decade. It will require a dramatic transformation, from the way we manufacture, to the way we consume energy and travel. And the actions we take will be decisive.

As well as facilitating the expansion of renewable energy, electrification - of cars, bus fleets, freight trucks, rail, shipping - will go a long way towards decarbonizing the transport sector, which accounts for nearly a quarter of all global emissions.

Hydrogen solutions offer a fast way to speed up this transition. Siemens is working with Deutsche Bahn, a German railway company, to develop hydrogen-powered fuel cell trains with a view to replacing their diesel fleet. The prototype train alone will save around 330 tons of CO2 a year during its trial operation. Deutsche Bahn currently operates around 1,300 diesel-powered trains in regional service. The new hydrogen drive will save around 330 tons of carbon dioxide a year.

Image: World Bank Group

Smart grid technologies can also speed up the energy transition by enabling the integration of renewables, as well as ensuring a reliable energy supply. One example, a smart microgrid in Northern California , has saved a tribal community over $200,000 in annual energy costs, eliminated 200 tons of carbon emissions per year and increased their resilience to climate-induced blackouts.

Technology alone is not enough

But technology alone is not enough. We need brave decisions and bold, collective actions, too.

For companies that means investing in new technologies even in a crisis. For governments it means driving transformation and innovation through the right policies and stimulus programs, resisting pressure to sustain inefficient businesses or carbon-intensive industries, instead supporting them to transform. It is encouraging to see political leaders in the European Union and other countries putting digital and green economic development at the core of their recovery programs.

The case for investment is clear. Investing in climate-friendly infrastructure can create jobs and stimulate economic growth. For instance, in just ten years, renewables have become a global industry and in 2019 the sector created some 11 million jobs worldwide . According to McKinsey , companies that invest in innovation during a crisis outperform their peers during the recovery. And industry leaders could potentially achieve a greater productivity increase from investments in new technology than followers (70% vs 30%) according to a study from the World Economic Forum.

Above all, to ensure a sustainable and equitable economic recovery, we need to ensure that people have the right skills to support them and businesses to thrive in the future. In addition to governments, companies also have a role to play. At Siemens, we recognize that our people are our greatest asset. Last year we invested €320 million in education and training for our employees.

We also have an obligation to societies where our company is active. For example, in Egypt, we provided occupational training for 5,500 young people over four years supporting local development of technical skills.

Technology has played a crucial role in keeping our economy and society functioning this past year and it can play an even bigger one in driving the global recovery. This crisis provides us with a unique window of opportunity to transform our economies – to be more sustainable and equitable. It would be a tragedy if we failed to seize this opportunity again.

This article was originally published by the World Economic Forum on 23 January 2021 as part of the Davos Agenda.