Digital Transformation Trade, Climate, and Net Zero Pathways: Scenarios and Implications for Developing Countries and Climate-Resilient Development

This briefing note by the Forum on Trade, Environment, & the SDGs (TESS) examines the 'twin transition'—the simultaneous pursuit of digital and green transformations. It analyzes how digital technologies can both enable climate action and contribute to greenhouse gas emissions, focusing on the implications for developing countries and the pathways toward a net-zero digital economy by 2050.

• The 'twin transition' involves the interconnected pursuit of digital and green transformations, where digital tools are used to accelerate low-carbon economies, though this potential is not automatic and depends on policy and capacity. Digitalization can reduce emissions through 'dematerialization'—replacing physical goods with digital alternatives—but can also create 'rebound effects' where efficiency gains drive higher overall consumption.
• The digital sector has a significant environmental footprint, contributing between 1.4% and 4% of global greenhouse gas (GHG) emissions, a level comparable to the airline industry. To meet the Paris Agreement's 1.5°C target, digital sector emissions must be reduced by at least half by 2030. Energy demand is rising sharply, with data centre electricity consumption projected to increase from 460TWh in 2022 to over 1,000TWh by 2026.
• A significant digital divide persists, with approximately 2.6 billion people (32% of the global population) offline as of 2024, and internet penetration in low-income countries at only 27%. This exclusion hinders the ability of developing countries to access technologies essential for climate adaptation and participation in green markets.
• Efforts to decarbonize the digital sector are currently fragmented and uncoordinated, consisting of a 'patchwork' of non-binding standards from the ITU, multistakeholder declarations like the COP29 Declaration on Green Digital Action, and voluntary private sector pledges. The GSMA's Mobile Net Zero Initiative reports that while operational (Scope 1 and 2) emissions are decreasing, Scope 3 emissions still account for 70% of the mobile industry's carbon footprint.
• Developing countries face specific opportunities and challenges in the transition to green digital infrastructure. Countries with abundant renewable energy, such as Kenya, Morocco, and South Africa, are well-positioned to attract investment in green data centres. However, these nations are often constrained by high capital costs, unreliable electricity grids, and limited access to green finance.
• The document identifies five priority levers for decarbonization: green and energy-efficient infrastructure/data centres; green ICT operations and digital trade logistics; sustainable and transparent digital supply chains; a digital circular economy for e-waste management; and resilient, climate-compatible digital infrastructure.
• To support developing countries, the report recommends several policy priorities: directing subsidies and public procurement toward renewable-powered ICT; using carbon taxes to fund efficiency upgrades; fostering public-private partnerships; integrating environmental provisions into digital trade agreements; and ensuring affordable access to green and circular technologies through technology transfer.

APA

Ismail, Y., & Bayat, N. (2025). Digital Transformation Trade, Climate, and Net Zero Pathways: Scenarios and Implications for Developing Countries and Climate-Resilient Development. Forum on Trade, Environment, & the SDGs. https://lyrical-cormorant.files.svdcdn.com/production/assets/images/Publications/TESS-Briefing-Note-Digital-Transformation-Net-Zero.pdf?dm=1757416928

Chicago

Ismail, Yasmin, and Nadira Bayat. Digital Transformation Trade, Climate, and Net Zero Pathways: Scenarios and Implications for Developing Countries and Climate-Resilient Development. Forum on Trade, Environment, & the SDGs, 2025. https://lyrical-cormorant.files.svdcdn.com/production/assets/images/Publications/TESS-Briefing-Note-Digital-Transformation-Net-Zero.pdf?dm=1757416928.

Wikipedia

{{cite report |last1=Ismail |first1=Yasmin |last2=Bayat |first2=Nadira |title=Digital Transformation Trade, Climate, and Net Zero Pathways: Scenarios and Implications for Developing Countries and Climate-Resilient Development |publisher=Forum on Trade, Environment, & the SDGs |date=September 2025 |url=https://lyrical-cormorant.files.svdcdn.com/production/assets/images/Publications/TESS-Briefing-Note-Digital-Transformation-Net-Zero.pdf?dm=1757416928 |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ismail2025digital, author = {Ismail, Yasmin and Bayat, Nadira}, title = {{Digital Transformation Trade, Climate, and Net Zero Pathways: Scenarios and Implications for Developing Countries and Climate-Resilient Development}}, institution = {Forum on Trade, Environment, \& the SDGs}, year = {2025}, month = sep, url = {https://lyrical-cormorant.files.svdcdn.com/production/assets/images/Publications/TESS-Briefing-Note-Digital-Transformation-Net-Zero.pdf?dm=1757416928}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }