EU – Baltic States, Innovations, Modern EU, Technology

International Internet Magazine. Baltic States news & analytics Sunday, 29.03.2020, 08:03

Sustainability through digital means: inherent connections

Eugene Eteris, Turiba University, visiting professor, BC International Editor, 27.01.2020.Print version
Modern revolution in national growth patterns, ignited by the digital agenda, affected almost all spheres of socio-economic development. Global and European actions in sustainability are playing an active role: e.g. SDGs in the UN and several EU steps including digital economy-society and sustainability strategies. These aspects of modern growth are going to define the member states’ progressive development.

At the end of 2015, about two hundred UN member states adopted 17 ambitious sustainable development goals (so-called SDGs) to be reached by 2030. The goals are numerous: from ending extreme poverty and combating inequality to addressing climate changes’ emergency, to health care, to air and water quality and so on and so forth. The progress towards SDGs delivery is monitored by both the EU institutions and the authorities in the member states; however, after five years in action, the process is far from being optimal and in some SDGs the situation is even reversing. 

Using the modern digital “applications” and new technologies could have definite positive effects on SDGs implementation through the “green growth” development patterns by large and small companies, by economic sectors in general, by industries and by policy-makers.


According to “Global survey on Sustainability and SDGs” (2020), the SDGs are globally rather unknown in science and education with a negative SDG awareness in economic science (50% globally and 56% in EU). This the reason that presently, the SDGs are still “rarely addressed in classical business studies and research fields of economics”. Among various SDGs, priorities are attributed to SDG-12 “Responsible consumption and production”, SDG 13 “Climate actions” and SDG-4 “Quality 

education” with the most important SDG-17 “Partnerships for the goals”. 


Reference: https://www.globalsurvey-sdgs.com/wp-content/uploads/2020/01/20200123_SC_Global_Survey_Result-Report_english_final.pdf


Fourth Industrial Revolution, 4IR

All EU member states are desperately trying to unite the modern technologies (embedded in the 4IR) with the SDGs: no doubt, the 4IR is serving as a driving force in implementing SDGs. For example, about 70% of the SDGs could be actively implemented with already existing digital technology applications. However, the states are presently quite slow and inefficient in unlocking the digital potentials, including artificial intelligence’s (AI) means. The states’ governance structures have to be more active in deploying new technologies for both short-term growth and long-term (commercial) gains through a more responsible and purposeful approach in using digital technology in implementing SDGs. The table below shows the 4IR’s inherent connections in modern decision-making processes.




Source World Economic Forum Newsletter (2020), in: https://www.weforum.org/agenda/2020/01/decade-of-action-from-technology-optimism-to-technology-realism/



EU’s digital agenda

European digital policy and technologies are not only interconnecting the member states in developing new growth paths, but they are also integrating the EU countries into the global processes of which the SDGs are the vital component. EU institutions have already set the standards in telecoms and data protection, for instance, though the states fall behind in other areas of the digital economy. Investments in blockchain, high-performance computing, quantum computing, algorithms and new tools for secure data sharing and usage are the vital points on the path to innovation.


More in chapters 3.2 and 3.4 in E. Eteris Latvia in Europe and the world; reference to

https://www.rsu.lv/sites/default/files/imce/Dokumenti/Biblioteka/Eugene_Eteris_2018_gramata.pdf 

 

Digital data and AI technologies can definitely help to develop smart solutions in the member states concerning numerous socio-economic and sustainability issues: from health to farming, to food security, to manufacturing including “smart specialisation strategies”. In these directions, new approaches to education and learning –with improved quality education- are the keys to paving the way for a new area of sustainable growth.


The following are the main directions in the optimal use of digital solutions in sustainability:

- first, digital economy and society issues, which can ensure that citizens and businesses would have full advantage of digital opportunities. However, the Commission noted, about 47 per cent of the EU population is not properly digitally skilled, yet in the near future, about 90 per cent of all jobs will require some level of digital skills.

Source: https://ec.europa.eu/info/priorities/europe-fit-digital-age_en and

https://ec.europa.eu/digital-single-market/en/economy-society

- second, the member states (with the assistance from the EU institutions) actions in creating proper and efficient conditions for digital networks and services. The Commission acknowledges that the high-speed, secure and trustworthy infrastructures and services shall be supported by the EU. Only the “right environment” for innovative digital services will help in creating advanced infrastructures and feasible conditions for investment in digital networks.


More in: https://ec.europa.eu/digital-single-market/en/right-environment-digital-networks-and-services


Better regulations for digital networks and services are also important for creating rules that match the pace of technology, such as the next-generation of 5G mobile connections or the financial technology implementation, so-called fintech. There are presently several directions in the EU digital single market*); some of them are both directly and indirectly connected to sustainability. In creating a digital society, the European Commission aims for an inclusive digital society in the member states, which will benefit from the digital single market. Building smarter cities, improving access to e-Government, e-Health services and digital skills will enable a truly digital European society.


Source: https://ec.europa.eu/digital-single-market/en/policies/creating-digital-society

 *) General link on the EU digital single market: https://ec.europa.eu/digital-single-market/en

 

- third, the countries’ digital priorities: digital issues are not a “specific priority” in the new Commission; in the previous college, there have been even two “digital Commissioners” –one for the digital economy and another one for the digital society. Increasing “digital role” in the member states’ socio-economic development is a vital component in the European integration too. Data protection has become an important issues and reforming data protection will give people control over their data and help businesses comply with the single market. In May 2018, the General Data Protection Regulation entered into force in the member states, which provided for a single set of data protection rules for all companies operating in the EU, wherever they are based. Stronger rules on data protection mean that: a) people have more control over their personal data, and b) businesses benefit from a level playing field in digital spheres.


On data protection rules in: https://ec.europa.eu/info/priorities/justice-and-fundamental-rights/data-protection/2018-reform-eu-data-protection-rules/eu-data-protection-rules_en

 

- fourth, the commercial aspects of the “EU digital society”, which guarantee a better access to online goods for consumers and businesses by helping the member states creating a commercial level-marketplace. The new rules adopted in EU prevent an unjustified geo-blocking in the EU states: i.e. people can freely buying from a website based in another EU state; thus barriers for consumers in cross-border shopping are abandoned. New rules entered into force in the member states in December 2018, which ended online discrimination on the basis of nationality or place of residence. These rules ensured that people no longer face barriers as being re-routed back to a country-specific website, or having to pay with a debit or credit card only from a certain country. Besides, the online sellers are obliged to treat all EU consumers equally regardless of the “shopping place”. New Commission President, Ursula von der Leyen acknowledges the college commitment to upgrade the Union's liability and safety rules for digital platforms, services and products, with a new Digital Services Act.


Reference to the Commission web-site on e-trade in EU: https://ec.europa.eu/digital-single-market/en/new-eu-rules-e-commerce


Investment issues in the EU digital agenda

Successive implementation of the European Fund for Strategic Investments, EFSI (which was a focal point in the Investment Plan for Europe, originated in November 2014) the Commission extended in 2016 its duration and capacity to boost investment. The so-called "EFSI 2.0" will be active from mid-2018 to the end of 2020 and help to increase investment targets from €315 billion to at least half a trillion euros. In December 2017, the EU institutions together with the states agreed on the "EFSI 2.0 Regulation” and it became the law on 30 December 2017.\


More in: https://ec.europa.eu/commission/presscorner/detail/en/IP_16_3002 


One of the EU agencies, the European Policy Center, EPC launched in 2017 a programme “Connecting Europe” jointly with Stiftung Mercator. Connecting Europe enables projects and organisations to actively engage with EU policymakers. Besides, the programme focuses on joint activities both on the future of Europe and sustainability, climate change and other key EU issues. By conducting those activities, Connecting Europe fosters an open, constructive dialogue among the member states and the EU decision-makers. In this way it promotes favorable exchanges between civil society initiatives on the ground and the EU policy community. The project enhances mutual understanding among the EU states in positive contribution to sustainability. More in: https://www.epc.eu/en/programmes/Connecting-Europe~110d3c


Digital industry and sustainable services: financial aspects

The Commission launched in April 2016 the first industry-related initiative of the “digital single market package”, complementing the various national initiatives for digitising industry, such as Industrie 4.0, Smart Industry and l'industrie du future. The Commission is taking actions along 5 main directions: - use of policy instruments, - financial support, - coordination among the member states in “digital industry”, - legislative efforts to trigger further public and private investments in all industrial sectors, and – creating framework conditions for the digital industrial revolution.


On industry: https://ec.europa.eu/digital-single-market/en/fourth-industrial-revolution; on EIB’s support in the table below.  


Industry is one of the pillars of the EU economy: e.g. manufacturing sector in the EU accounts for 2 mln enterprises, 33 mln jobs and 60% of productivity growth. However, the new industrial revolution, driven by new-generation information technologies such as the Internet of Things (IoT), cloud computing, big data and data analytics, robotics and 3D printing has opened new horizons for industry to become more efficient and innovative. Recent studies showed that digitalisation of production and services can add more than € 110 billion of annual revenue to the European economy in the next five years.

 

European industry is strong in digital sectors such as electronics for automotive industry, security and energy markets, telecom equipment, business software, as well as laser and sensor technologies. European states are also having world-class research and technology institutes; however, there are large disparities in digitisation among EU’s regions.


Present EU plans are aimed at mobilizing up to € 50 billion of public and private investments in support of the digitisation of industry. This money is divided into the following activities: € 37 billion investment to boost digital innovation; € 5.5 billion national and regional investments in digital innovation hubs; € 6.3 billion for the first production lines of next-generation electronic components; and € 6.7 billion for the European Cloud Initiative.


More in: https://ec.europa.eu/digital-single-market/en/policies/digitising-european-industry  

 

Table: EIB’s efforts in activating investments




As to EFSI finances for the Baltic States approved by the EIB Group, Estonia has had €158 mln, Latvia - € 270 and Lithuania - € 386 mln; this financial “loans & guarantees” were supposed to trigger, correspondingly, €1335, €1133 and €1809 mln of investments. The investment’s activity, as to the share of GDP, is the highest in Estonia (second among EU-27), seventh in Lithuania and ninth in Latvia (first was Greece and third Portugal).


The EFSI can contribute to large, “green digital infrastructure” projects, with deployment of the latest technologies to allow access to ultrafast broadband in the EU states. These projects can originate from national broadband plans, regional initiatives or be led by private companies willing to invest in future oriented broadband infrastructures and digital services such as high-performance computing and cloud services. The EFSI is one of many EU financing tools available to start-ups in the digital sector: for example, projects suitable for financing in the digital sector under the EFSI could also benefit from the support of grants and financial instruments from Horizon 2020, European Structural and Investment Funds (ESIF) and the Connecting Europe Facility. This funding source may finance part of the project (in the form of a grant or a loan) while an EFSI-backed loan may cover the remaining costs of the project.


The European Investment Plan includes more than just guarantee’s provision to unlock additional investments through the EFSI. The digital economy and the digital sector should significantly benefit from the various elements of the Plan.

As for all sectors, project promoters in the digital sector can seek technical assistance through the European Investment Advisory Hub (EIAH). The Hub offers a single access point for advisory and technical assistance services to allow promoters get their projects off the ground.


About the EIAH see: https://eiah.eib.org/


The European Investment Project Portal– the #InvestEU Portal – is a platform to boost the visibility of investment opportunities, including those in the digital sector, across Europe. The aim of the Portal is to bring together project promoters seeking investment with investors seeking projects.


About InvestEUPortal see: https://ec.europa.eu/eipp/desktop/en/index.html

The European Investment Project Portal (EIPP) offers assistance in numerous viable projects connected to sustainability issues: 111 projects in “energy union”, 138 in transportation, 145 in environmental quality and protection, and in use of natural resources.


More on Latvian projects in the category “environment and natural resources” in Commission web-site “Find investment opportunities”: https://ec.europa.eu/eipp/desktop/en/card-view.

 

In order to implement the SDGs, it is critical to mobilize private finance at greater speed and scale. Financial innovations, new technologies and digitalization have the potential to contribute significantly to this task. In this regard, the UN Secretary-General has appointed recently a Task Force on Digital Financing in SDGs to investigate how this potential can be unlocked while managing at the same time the associated risks. The Task Force’s results and the outcomes were seen at the “German Sustainable Fintech” undertaken by the Sustainable Digital Finance Alliance to include representatives from business, politics, civil society and academia in Germany and Europe. The idea is to reveal new trends in the finance sector, to leverage innovation for financing sustainable development with key actors from the digital, sustainability and finance sectors to trigger further initiatives.


Most EU states created national SDGs solutions networks; thus, the German Sustainable Development Solutions Network (SDSN Germany) was founded in April 2014 which pooled together knowledge, experience and capacities of German academic, corporate and civil society to contribute to the sustainable development in Germany and around the world.


In this regard, the Sustainable Digital Finance Alliance is to leverage digital technologies and innovations to enhance financing for sustainable development. The UN Secretary General’s Task Force on Digital Financing of the SDGs is a clear example of activating some concrete and actionable steps to identify ways through which the digital revolution should be harnessed to help advance the SDGs.


Digital aspects in the European “green deal”

The Commission is of opinion that the “green transition” shall be a “window of opportunity” in the member states to foster sustainable and job-intensive economic activity.


Europe needs a digital sector that puts sustainability and green growth at its heart. Digitalisation presents new opportunities for: a) monitoring of air and water pollution, b) monitoring and optimising the consumption and usage of energy and natural resources.


The Commission is advocating a “sustainable products” policy, which will prioritise reducing and reusing materials before recycling them. However, presently, due to insufficient manufacturing technology’s opportunities, only minimum requirements will be set to regulate the share of environmentally harmful products being placed on the EU-27 markets; most important is to tackle “false green claims”.


Two visible examples: the Commission has proposed measures in 2020 to ensure that all packaging in the EU would be reusable and/or recyclable by 2030; new business models will be developed based on renting goods and services to assist the member states in shifting consumption patterns away from single or limited use products.


Since March 2020, the member states would follow the EU adopted industrial strategy to support the green transformation. Hence, the member states’ industries will be provided with assistance to modernise and exploit existing opportunities nationally and regionally. Generally, the main aim is to stimulate the development of new markets for climate neutral and circular products. As a by-target for the member states, the decarbonisation and modernisation of energy-intensive industries, e.g. steel, cement, chemistry, etc. will be essential.


The potentials in sustainability are great: so far, only about 12%  of the materials used by the EU member states’ industries come from recycling (Eurostat figures from 2016).


References to: https://ec.europa.eu/commission/presscorner/detail/en/fs_19_6724


Government actions

The EU states’ decision-makers shall be active in moving quickly to create new mechanisms in SDGs implementation and in digital technologies. As World Economic Forum-2020 underlined, “time and expertise on one hand” coped with “enabling government policies and regulations on the other” could trigger sufficient progress. As soon as the rapid pace of change of technological innovation will go on, the “channels of technology” will play a greater role in supporting states’ efforts in SDGs implementation.


Thus, government actions are likely to include the following actions: 

- developing responsible “technology codes and standards” as well as data protocols in consultation with industry;

 - harnessing public procurement tools (including sustainability standards) for digital assets and suppliers of “responsible technology requirements”; 

- prioritizing investment in the 4IR-enabling infrastructures including broadband, open cloud connections, satellites and energy grids;

 - taking a lead in basic/applied research and fintech at the “intersection of technology and societal/environmental impact”, including opportunities for more customers’ oriented research; 

- catalyzing innovation in new solutions, e.g. through incubators, accelerators and price support mechanisms; 

- performing perspective sectoral and environmental policy solutions through subsidy reforms; and 

-updating national structural policies to reflect the 4IR achievements, including reforms in labour market, taxation, social safety nets and education.


Reference to World Economic Forum web-site at: https://www.weforum.org/agenda/2020/01/decade-of-action-from-technology-optimism-to-technology-realism/, January 2020. 


Conclusion

Existing digital applications being deployed presently through the specialists’ exploration of the 4IR changers would provide for drastic innovation in the next decade in all spheres of socio-economic development. Digital aspects in the research, development and innovation’s phase are already providing an active support for quicker SDGs implementation.  


For example, quantum-computing is already determining optimal carbon capture materials and AI-enabled research assists in creating new antibiotics to address microbial resistance to current antibiotics; in short, there are apparent and breakthrough innovations –in technology and social/governments policies- to assist the SDGs’ implementation.  


Regardless of some problematic issues, modern societies are capable of turning available science, technology and digital achievements into breakthrough solutions that shall bring countries closer to optimal SDGs implementation.  






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