Environmental Implications of Product Servicising

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IIIEE DISSERTATIONS 2004:3

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Environmental Implications of Product Servicising. The Case of Outsourced Computing Utilities. Doctoral Dissertation, September 2004

Andrius

PLEPYS

The International Institute for Industrial Environmental Economics ⎯⎯⎯⎯ Internationella miljöinstitutet ⎯⎯⎯⎯

The photo on the cover was taken by author in Skåne, one of the most beautiful parts of Sweden. The picture symbolises the long road toward understanding current environmental issues and discovering possibilities for sustainable development.

© You may use the contents of the IIIEE publications for informational purposes only. You may not copy, lend, hire, transmit or redistribute these materials for commercial purposes or for compensation of any kind without written permission from IIIEE. When using IIIEE material you must include the following copyright notice: ‘Copyright © IIIEE, Lund University. All rights reserved’ in any copy that you make in a clearly visible position. You may not modify the materials without the permission of IIIEE. Published in 2004 by IIIEE, Lund University, P.O. Box 196, S-221 00 LUND, Sweden, Tel: +46 – 46 222 02 00, Fax: +46 – 46 222 02 10, e-mail: [email protected]. Printed by KFS AB, Lund. ISSN 1402-3016 ISBN 91-88902-35-8 ISRN-LUTMDN/THME-04/1013-SE

Acknowledgements I would like to convey my appreciation to a number of people for their help in writing this doctoral dissertation. First of all, I would like to express my sincere gratitude to my main supervisor Dr. Thomas Lindhqvist at IIIEE, who spared no effort in providing stimulating research ideas. Thank you Thomas for your patience and encouraging example. Thanks are due also to my second supervisors Prof. Chris Ryan (Centre for Design at RMIT University, Melbourne Australia) for his valuable input during the initial stages of this research and Prof. Han Brezet (IIIEE/Delft University of Technology, The Netherlands) for the fruitful discussions and constructive comments on the thesis drafts. I thank also our director Prof. Thomas B. Johansson for his concise and practical comments on my articles and the last version of the chapeau. Dear Lars, thank you for those loooong and valuable discussions on functional units and the theory of economics. I also want to thank Dr. Casper Boks (TU Delft) for his last-minute comments on the “never-ready” draft. Throughout my research a number of colleagues at IIIEE provided input on different phases of this research. I particularly appreciate the help and encouragement of my fellow colleagues Adriana, Bea, Calle, Charlotte, Chris, Dagmara, Hanna, Håkan, Mårten, Naoko and Peter – thank you all for the good working atmosphere, team spirit and comradeship. This especially includes the “sauna committee” Murat, Renato, Tareq and Åke, who facilitated our not always conclusive, but always relaxing and pleasant discussions in the hottest room of IIIEE. I am also grateful to our administrative personnel, especially our “computer guys” Mats and Miguel for sharing their knowledge about how the “stuff works”. Thank you, Karin, for helping with the design of the cover and all those little tedious practical arrangements in handing in the thesis. A number of external people contributed to this research though interviews and e-mails. I especially appreciate the help of Kent Söderlund (Telecomputing AB, Sweden), Anna Granberg (HSB Bolina, Malmö) and Sheila Lugenbuehl (Research Committee, International ASP Industry Association) in gaining knowledge about the subject and collecting the empiric materials.

My special gratitude is for my mother and my sister Julija for their remote support from Lithuania. Thank you for being with me. And lastly, I thank my beautiful wife Oksana for giving love and encouragement during the “process”.

Andrius Plepys Lund, August 2004

Executive summary Problematisation

The thesis focuses on the environmental aspects associated with the life cycle of electronic products. The main premise of this research is that the growing consumption and rapid obsolescence of electronic products are the main contributing factors for their increasing environmental impacts. Furthermore, many functions of electronic products remain under utilised by the average consumer, which implies unnecessary environmental impacts throughout the life cycle of complex semiconductor components. Another important premise is that technological improvements based on eco-efficiency and dematerialisation strategies are important, but are insufficient to reduce the absolute environmental impacts of the electronics sector. Innovation in product design and manufacturing processes has allowed the reduction of environmental loading per production unit while increasing product functionality. However, the constantly shrinking prices of semiconductor and electronic products have resulted in rapid consumption growth, which erodes the environmental gains achieved by the industry. Therefore, addressing the levels and patterns of consumption in this respect is a vital complementary strategy. The existing consumption-oriented approaches such as consumer information, awareness raising and market interventions by policy makers have not yet proved to be sufficient in reducing the rate of consumption. Altering consumption patterns requires a cardinal behavioural change, which is not readily acceptable by most consumers. Numerous obstacles often hinder regulatory interventions such as high political sensitivity, vested interests, the increasing number of international trade agreements etc. Alternative strategies are needed to help businesses find new ways of generating profit in a less material manner and allow for the decoupling of economic growth from the associated environmental impacts. The thesis’ main argument is that the dematerialisation of consumption based on the product servicising concept is an effective strategy to address the problems of consumption. The concept views products as being mere vehicles to deliver user utility rather than the final objective of consumption. Examples of servicising from different sectors shows that moving from product- to service-based business models has the potential to be economically viable and induce lower overall environmental impacts than traditional product-sales based business models. i

Andrius Plepys, IIIEE, Lund University

Research questions

The concept of product servicising is also interesting to explore for electronic products. Computers, delivering largely immaterial output – information, offer plenty of opportunities for service-based consumption models. The growing spread of the Internet makes information highly transportable, thus computer networks are valuable assets in servicising solutions. Although business examples of delivering computer functions through different service arrangements exist, their environmental effectiveness has been poorly explored. The purpose of this research is to explore the environmental implications of servicising electronic products and contribute to a better understanding of its environmental and business implications. The research focuses on the servicebased provision of computer functions practiced in some emerging business models, which has proved to be competitive in delivering user utility comparable to the traditional product-based computing systems. The thesis explores three research questions: 1. What are the environmental effects of substituting traditional computing systems based on owned personal computers with outsourced computing services? 2. How can the challenges in the environmental assessments of electronics products and services be dealt with in future studies? 3. What are the factors for the success of business models providing servicised IT solutions?

Research design and methods

This research has evolved though a series of studies conducted by the author during 2001-2004. The thesis summarises and discusses research findings published by the author in five attached papers that have been selected as the most relevant to the discussion. Papers I and II were based largely on literature reviews and provide a background understanding about the nature of environmental problems and allow the identifying questions to be explored. Papers III-V provide direct contributions to the research questions A number of research methods were used at different stages of this enquiry and include interviews, case studies, surveys, statistical analysis and scenario modelling. The research questions were largely explored based on empiric ii

Environmental Implications of Product Servicising

material collected from interviews with a number of organisations. On the supply side, the interviews were conducted with hardware manufacturers, telecom companies and IT service providers. On the demand side, the interviewees were various organisations using computing solutions delivered by different types of Application Service Provision (ASP) services. Part of the research investigated the applicability of the servicising concept in the residential sector, where the main source of empiric data was a survey testing the responses of private consumers to a series of IT service scenarios. The environmental implications of computer servicising were explored in a comparative study of traditional product-based and alternative service-based computing systems. In the former, most of the computing power is decentralised and requires full computer functionality on the user side. In the latter, most of the system functionality is concentrated on a server and shared by several users, which allows the use of simplified hardware and outdated equipment. These types of systems are usually designed as server-based computing (SBC) architectures. The study focused on the key system attributes that have important environmental implications, such as product lifespan, energy consumption, the amount of embedded bulk materials and semiconductor components. In the case of the traditional architecture, the author studied an existing system that was considered as being representative for a large share of systems used in typical office applications and was used as a baseline for comparison. The alternative was modelled as a SBC system by designing it to be functionally equivalent to the decentralised architecture.

The research findings and conclusions

The main findings of the study are provided as answers to the three research questions.

1. What are the environmental effects of substituting traditional computing systems based on owned personal computers with outsourced computing services? User-side hardware in outsourced computing systems has a much lower dependency on technological change, which reduces the rate of equipment obsolescence. The studied examples of existing SBC applications showed that the lifespan of user hardware could be more than doubled when compared to traditional IT systems. The lifetime of server hardware is comparable in iii


both systems and is mainly determined by economic considerations rather than technological obsolescence. The functionality of electronic products is closely linked to the amount and the complexity of embedded silicon components. These are important factors that determine the overall environmental impacts of electronic products, since the bulk of environmental impacts take place during semiconductor fabrication. The author argues that centralising and sharing computing power in SBC types of systems allows for a more rational utilisation of product functionality using fewer silicon resources. Lower performance requirements for the end-user hardware in outsourced systems allows utilising less advanced hardware built with fewer silicon components, especially in products such as thin clients. In this case, a minimum of a factor 2 reduction in the total amount of silicon is possible on the user side, while no significant changes should be expected in network infrastructure equipment. Centralising computing functions in systems where all computing is performed on the server side is not associated with significant increases in data traffic. The research did not find any strong links between the increase in data traffic and the total energy consumption of the systems. Outsourced systems allow energy savings when using thin clients, while no significant energy consumption changes should be expected on the server side. One reason is that in addition to similar user density per server, the traditional PC-based systems have almost the same number of components as SBC architectures. Another reason is that centralised systems do not necessarily imply increased data traffic and in some cases this can be significantly lower than in the traditional decentralised architectures. In addition, no energy savings should be expected on the user side unless streamlined hardware such as thin clients is being used.

2. How can the challenges in the environmental assessments of electronics products and services be dealt with in future studies? Although the lack of data is a characteristic of all environmental assessments, the problem is especially evident when studying semiconductor products. The problem is aggravated by the large variety of products, materials and manufacturing processes, global supply chains, high product complexity and the dynamics of the electronics sector and the largely proprietary nature of data. Furthermore, most of chemicals used in semiconductor manufacturing are high-purity materials, which require extensive purification and could imply significantly larger environmental impacts than technical iv


grade materials. The existing LCI databases do not contain data on highgrade materials. For these reasons, environmental assessments of semiconductors often exclude parts of the product life cycle or use surrogate data that results in high levels of uncertainty in life cycle assessments. Upstream manufacturing stages have been explored particularly poorly. To improve assessment quality, practitioners should combine different assessment methods. The most promising of these are hybrid-LCAs and parametric methods. The former utilise the strong sides of the traditional processLCA assessments based on input-output data collection methodologies. Assessing the environmental effects of servicising computing services also faces methodological challenges such as choosing an appropriate functional unit and setting system boundaries. The shift from product- to service-based solutions in computing systems creates an ambiguity in defining and measuring the amount of function delivered. This could be especially difficult when looking at alternative solutions from the perspective of total utility. Setting a utility-based functional unit could be difficult, since physical parameters on alternative systems may be inadequate for describing and measuring the utility delivered to final users. In this, a functional unit expressed in monetary terms could be the most appropriate solution. 3. What are the factors for the success of business models providing

servicised IT solutions?

Mostly, servicised IT solutions are still immature and require cooperation between relevant actors such as infrastructure providers, hardware manufacturers and software developers, in order to minimise market entry barriers, improve service quality and provide more added value in comparison to product-based consumption models. Another important factor is low awareness of the economic benefits of outsourcing computing functions from the reduced total costs of IT ownership. Many potential users do not understand the potential environmental gains from IT servicising. However, the role of environmental factors is far lower than economic and performance quality related issues. The largest economic benefits from using outsourced computing models are in those organisations with dynamic computing needs and uniform IT environments. Outsourcing IT utilities to service providers makes the best economic sense in large-scale solutions when incremental changes leading to an v


increased variety of computing environments (and thus maintenance costs) are avoided. So far, servicising IT utilities has mainly been applied in non-residential sectors. The private consumer market does not show sufficient demand for viable business solutions to emerge. The main barriers are the almost total unfamiliarity with this form of IT ownership as well as concerns related to data safety and privacy issues. While the commercial sector seems to be overcoming these issues, private consumers still need time to familiarise themselves with the services and overcome mental barriers. The success of IT servicising in this sector will depend on the providers’ ability to offer more added value than in traditional consumption models. However, as in the business sector, ASP services are not a universal solution for every customer.

Research contribution

The author performed the initial steps to the environmental assessment of service-based computing alternatives, which have so far been poorly addressed in previous studies. The empiric material collected from service users revealed that providing computer functions as services deliver user utilities equivalent to the traditional product systems. The comparative study showed that service-based consumption has a potential for reducing the environmental impacts from electronic products. The thesis also provided a deeper understanding of the limitations of environmental assessments of electronic products and services. Specifically, the author illustrated the significance of upstream life cycle stages of semiconductor components, which are poorly accounted in the existing LCA studies. Addressing the identified lack of data, the author tested the feasibility of data collection methods based on material price. Alternatively, the author proposed a simplified framework based on material use patterns that will allow the reduction of data collection efforts. The thesis also reveals an ambiguity in choosing functional units and setting system boundaries when comparing product and service alternatives. The author suggested using a monetary measure of product utility rather than physical function as a guiding principle for setting functional units in environmental assessments of services.

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Suggestions for future research

There is still little understanding about the environmental implications of upstream life cycle stages in manufacturing semiconductor products. Increasing material purity requirements may imply that the centre of environmental aspects is gradually shifting to upstream production stages. Improving the knowledge about the issue would help electronics manufacturers in optimising material selection and assist in prioritising environmental efforts and involving new actors in the supply chain of electronics. Another interesting research area is in understanding the role of computerisation in overall company productivity improvements. Placing high expectations on owning IT infrastructure may not deliver the expected returns on capital investments, which is an interesting argument for outsourcing IT infrastructure and buying only the final IT services The author also calls for exploring the broader environmental and/or social effects stemming from the application of electronic products in other sectors. Information technology acts as an “economic lubricant” increasing economic productivity and changing production costs, which has important implications to the consumption of other commodities and services as well as to people’s lifestyles. These changes can potentially be associated with rebound effects and negative environmental implications far greater than those associated with the life cycle of electronic products. Studying these transformational effects is conducive to understanding and addressing a broader spectrum of IT-related environmental effects.

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Table of Contents 1.

INTRODUCTION ........................................................................ 1 1.1 ELECTRONICS AND THE ENVIRONMENT .................................. 1 1.1.1 Growth of the sector ........................................................ 1 1.1.2 The environmental footprint............................................ 4 1.2 INDUSTRIAL ENVIRONMENTAL STRATEGIES............................ 8 1.2.1 Conceptual frameworks................................................... 8 1.2.2 Outcomes in practice in semiconductor industry .......... 10 1.3 COPING WITH CONSUMPTION GROWTH ................................. 12 1.3.1 Product servicising........................................................ 13 1.3.2 Computer servicising..................................................... 15

2.

RESEARCH DESIGN ............................................................... 19 2.1 2.2 2.3

RESEARCH PATHWAYS .......................................................... 20 METHODS USED ..................................................................... 24 THE INTENDED AUDIENCE ..................................................... 26

3. ENVIRONMENTAL IMPLICATIONS OF COMPUTER SERVICISING .................................................................................... 27 3.1 3.2

TECHNOLOGY BEHIND SERVER-BASED SOLUTIONS ............... 27 INDIVIDUAL VS. SHARED: A COMPARATIVE STUDY OF TWO COMPUTING SYSTEMS ........................................................................ 31 3.2.1 Study Setup .................................................................... 32 3.2.2 Evaluation results.......................................................... 33 3.3 DISCUSSION ........................................................................... 40 3.3.1 Data traffic vs. energy consumption.............................. 40 3.3.2 Product innovation and environmental implications .... 44 3.4 REFLECTIONS......................................................................... 47 3.4.1 Comments on study results ............................................ 47 3.4.2 Data limitations............................................................. 50 4.

LIMITATIONS OF ENVIRONMENTAL ASSESSMENTS . 53 4.1 INCOMPLETENESS OF LIFE CYCLES ........................................ 53 4.2 PROS AND CONS OF DIFFERENT ASSESSMENT METHODS ....... 55 4.2.1 Process-LCA.................................................................. 57 4.2.2 Input-output based approaches ..................................... 58 4.2.3 Hybrid LCA ................................................................... 59 4.2.4 Parametric assessment methods.................................... 61 4.3 UTILITY PROBLEM IN MULTIFUNCTIONAL SYSTEMS ............. 63 I


4.3.1 Multifunctionality of product systems ........................... 63 4.3.2 Duality of “function” and “utility”............................... 64 4.3.3 Setting functional unit for IT functions.......................... 65 4.4 REFLECTIONS ......................................................................... 67 5.

BUSINESS CASE OF SERVICISING COMPUTERS........... 69 5.1 THE ASP BUSINESS MODEL ................................................... 69 5.2 THE SUPPLY SIDE OF THE STORY ........................................... 72 5.3 THE DEMAND SIDE OF THE STORY ......................................... 75 5.3.1 Experiences from B2B applications of ASP .................. 76 5.3.2 ASP applicability in the B2C sector .............................. 80

6.

CONCLUSIONS......................................................................... 83 6.1 6.2

ADDRESSING RESEARCH QUESTIONS ..................................... 83 FUTURE RESEARCH ................................................................ 88

REFERENCES .................................................................................... 91 ABBREVIATIONS ........................................................................... 109 DEFINITIONS................................................................................... 110 APPENDIX A. TABLES................................................................... 111 APPENDIX B. SELECTED PAPERS............................................. 117 PAPER I ............................................................................................ 119 PAPER II........................................................................................... 137 PAPER III ......................................................................................... 149 PAPER IV ......................................................................................... 157 PAPER V........................................................................................... 165

II


List of Figures Figure 1-1. Global personal computer and semiconductor shipments. .................. 2 Figure 1-2. Global PC shipments and memory content per PC. ............................... 3 Figure 1-3. Number of different generations DRAM chips for a minimum memory size PC. Source: (Patterson, Anderson et al., 1997).................. 3 Figure 1-4. Distribution of energy consumption in semiconductor fab.................... 5 Figure 1-5. Resource efficiency improvement rates in semiconductor manufacturing facilities. ............................................................................. 11 Figure 2-1. The main components of the thesis and contributions of selected articles. .......................................................................................................... 24 Figure 3-1. The basic developments of SBC............................................................... 29 Figure 3-2. DRAM volume shipments by density. ..................................................... 38 Figure 3-3. (A) breakdown of component costs in the sample product; (B) correlation between component price and die sizes. ............................. 39 Figure 3-4. AEC of IT equipment in non-residential buildings. .............................. 42 Figure 5-1. Simplified model of ASP services............................................................. 70 Figure 5-2. Hardware depreciation and sub-optimal investments............................ 74 Figure 5-3. Frequency of preferences for different service packages in the scenarios. ...................................................................................................... 81 Figure 5-4. Frequency of different ranges of consumer willingness-to-pay for ASP services................................................................................................. 81

III


List of Tables Table 3-1.

Estimated power use and silicon content in the two systems for 60 users. ............................................................................................................. 35

Table 3-2.

Total electricity consumption in different countries.............................. 41

Table 3-3.

The shares of data centres in the annual electricity consumption (AEC)............................................................................................................ 43

Table 3-4.

The environmental comparison of two generation of microprocessors from Intel. ...................................................................... 46

Table 3-5.

Comparison of two generations of mobile phones................................ 47

Table 4-1.

Results of parametric comparison of different manful processes........ 62

Table 4-2.

Power (kW) in different fabrication processes in production and idle modes. ................................................................................................... 62

Table 5-1.

Characteristics of application outsourcing............................................... 71

Table 5-2.

Drivers for ASP adoption as claimed by the ASP industry................... 75

List of Appendix Tables Table A - 1. Total electricity consumption in semiconductor facilities per area of processed wafer. ................................................................................... 111 Table A - 2. Water consumption per total wafer area................................................ 112 Table A - 3. Generic profile of user hardware in system “A”. Technical specifications of personal computers and monitors............................. 113 Table A - 4. Server side hardware inventory in system “A”. .................................... 114 Table A - 5. Server-side hardware inventory in system “B”. .................................... 115

IV

CHAPTER

ONE 1. Introduction 1.1 Electronics and the environment 1.1.1 Growth of the sector At the beginning of the “information age”, few believed that information technologies would become so pervasive. In 1949 the journal Popular Mechanics wrote: “…computers in the future may weigh no more than 1.5 tons”. In 1943 Thomas Watson, then chairman of IBM, said: “…I think there is a world market for maybe five computers”. In 1977 Ken Olson, president, chairman and founder of Digital Equipment Corporation thought that “there is no reason anyone would want a computer in their home.” Obviously, they were wrong. An entirely new Information and Communication Technologies (ICT) sector emerged and has developed into one of the most innovative and dynamic sectors in the world. Since the invention of the first transistor in 1947, ICT has evolved into a global multibillion industry with extraordinary development rates. Improvements in the performance of electronics and successive price reductions were only possible due to successful miniaturisation based on rapid innovation rates in the semiconductor manufacturing industry. As described in the famous Moore’s law1, the size of semiconductor components has been shrinking at an exponential rate. Between 1950-2000, transistor feature sizes were reduced by 1,000 times and the manufacturing costs of one transistor have dropped by over 100 million. As a result, electronics have penetrated into virtually every industrial activity. Today, the sector includes a broad variety of manufacturing and service industries providing different ICT products and services. Computers and

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Gordon Moore, a CEO of Intel Corp., in 1965 observed that that the number of transistors per unit area of on integrated circuits had been doubling every 18 months. He postulated that this trend would continue (and it did) for the foreseeable future (Moore, 1965).

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computer related products represent the largest group of electronic products. In 1977, Apple introduced the concept of the personal computer (PC). In 1981, IBM rolled out its first mass-produced computer based on a 4.7 MHz Intel 8088 processor and 16 kBt of memory at a retail price of about $1,500. Twenty years later, an average PC has a 2 GHz processor and 256 MB of memory, while prices have fallen to as low as $299 for the cheapest desktop. Increasing affluence has made computers affordable to millions and consumption has soared. By 2003, total PC sales have increased to 158 million units from 0.3 million in 1980. The global production of integrated circuits measured in area units has surpassed 3 million sq. meters per year, reaching a market value of $200 billion (Figure 1-1). The largest contribution to the growth comes from computer-related products and consumer electronics, which accounts for 42% and 33% of all semiconductor shipments respectively. An especially rapid growth is observed in the consumer sector, which is fuelled by the increased demand of new products such as mobile phones, DVDs, playstations and digital cameras (SIA, 2004b). In addition, more and more functional features are added to different products every year, requiring faster processors and more memory resources. Worldw ide shipments of integrated circuits (millions m2 of silicon)

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Figure 1-1. Global personal computer 2 and semiconductor 3 shipments. With the development of more advanced software, requirements for the minimum memory content per computer have been growing at exponential rates (see the curve in Figure 1-2). However, in parallel there has been a sig2

Sources: (SEMI, 2003; SIA, 2003, 2004b, 2004a; VLSI Research Inc., 2004).

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nificant progress in circuit integration resulting in higher memory densities per silicon area allowing reducing the number of memory chips per computers (Figure 1-3). 800

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Figure 1-2. Global PC shipments and memory content per PC. 4 Throughout the 1990s, the average annual rate of miniaturisation was about 60% (the reduction of physical component size), while the growth rate of minimum memory requirements per PC was about 25% (Patterson, Anderson et al., 1997). This suggests that increasing memory demands do not imply the growth of memory-related silicon content per single computer. A much more important contributing factor to the increasing total consumption of memory-related silicon is the growing use of computers. Over the last 10 years, annual computer shipments have more than quadrupled (see bars in Figure 1-2).

Figure 1-3. Number of different generations DRAM chips for a minimum memory size PC. Source: (Patterson, Anderson et al., 1997). 4

Based on data from Data Quest, IDC, VSLI Research and HEI Marketing.

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Recent surveys by Eurostat have shown that in the EU-15 about 95% of all companies use computers, 70% have web access and close to 50% have their own web site (Deiss, 2002). In OECD countries, the share of value added generated by the ICT sector in the total business value added during 1995-2000 ranged between 5 and 16.5%. Northern European countries, such as Ireland and Finland, the share of the ICT sector is over 25% of total manufacturing and about 10-15% of the total business value added (OECD, 2002, p22). An interesting question is what are the environmental implications accompanying the increasing economic importance of the ICT sector?

1.1.2 The environmental footprint Traditionally, the electronics and especially semiconductor sectors have been associated with miniaturisation and lightweighting and thus perceived as relatively clean and environmentally benign, especially in comparison to other manufacturing industries. However, with increasing production and consumption this perception is changing. Waste. Society is increasingly concerned with the environmental side of electronics and in particular semiconductor components, primarily groundwater contamination from semiconductor facilities and large volumes of post-consumer e-waste. During the last 25 years, an estimated 30 million metric tons of computers and monitors alone have been retired worldwide and most of them have ended-up in landfills. In addition, an unknown amount of other electronics has been scrapped. In the EU, the weight-share of e-waste already accounts for 4% of the total solid waste stream (EC, 2000). An estimated 5-7 million tons of electronics become obsolete in the U.S. alone every year, with a 3-5% annual growth rate. No reliable statistics exist on how many computers are scrapped every year and what percentage is recycled. In the U.S., an estimated 50 million PCs are retired annually (Matthews & Matthews, 2003). Assuming an average weight of 15 kg results in 0.75 million tons of waste every year, only a small part is recycled in the country. Since the U.S. has not ratified the 1992 Basel Convention prohibiting the exports of toxic waste, about 80% of all e-waste collected in the U.S. is shipped to developing countries for uncontrolled recycling (BAN, 2002). In the EU, the collection and treatment of e-waste is regulated by the Waste Electrical and Electronic Equipment (WEEE) Directive, which came into force on 13 February 2003. The goal of the Directive is to prevent e-waste and reduce the disposal of waste by reuse, recycling and other forms of recovery. The directive sets a minimum collection target of 4 kg/person per 4


year from private households by 31 December 2006 and stipulates recovery targets differentiated for different product groups. Resource consumption. Resource consumption is another increasing concern in electronics manufacturing. The fabrication of integrated circuits in this respect is particularly resource intensive. For example, Williams et al. (2002) estimated that for the production of a sample product (a 2-gram 32 MB DRAM packed chip) the total weight of primary fuel and chemical inputs was about 1.7 kg. The weight of the integrated circuit (a little rectangular silicon die inside a microchip) is about 30 mg, whereas most of it is silicon base and the weight of the active semiconductor circuitry, which essentially is the final product, is only about 3 mg (Murphy, Kenig et al., 2003). This makes the weight ratio between the process inputs and the product in the order of more than 500,000. Most of the energy used in semiconductor fabrication is electricity. Process tools (equipment) consume about 40-50% and auxiliary systems, mainly chillers, recirculation air, ultra-pure water (UPW) preparation and nitrogen plant, consume the remaining 50-60% of the total fab energy (Mallela, English et al., 2002; SEMATECH, 2003). Most of the energy in the auxiliary systems (35-40%) is consumed by cooling and air ventilation processes (Figure 1-4). The latter is essential to maintain dust-free environments and ensure high process yields and is thus dependant on established air purity standards.

Figure 1-4. Distribution of energy consumption in semiconductor fab5

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5


A survey of 14 typical semiconductor fabs at the end of the 1990s indicated the overall facility-level energy consumption to be 0.8-1.6 kWh per cm2 of output wafer (Mallela, English et al., 2002). At an average monthly capacity of 25,000 wafer starts per month, such a facility consumes close to 100 GWh of electricity per year (AMD, 2000, 2001, 2002). Some semiconductor facilities with high production volumes consume more than 300 GWh/yr (Price, Murtishaw et al., 2003, p47) and the consumption is likely to increase with growing air quality requirements and overall trends towards economies of scale, especially with the shift to larger, 300 mm, diameter wafers. Water is by far the largest process input in semiconductor fabrication. It is used for multiple cleaning operations to ensure low defect density in the final products. Data collected by the author on typical water consumption in different facilities shows that at the end of the 1990s the typical water utilisation in 200 mm wafer fabs was 10-25 l per cm2 of processed wafer. With a typical production output of 30,000 wafers per month, this results in daily consumption of 3-8,000 m3 (Plepys, 2004a). For example, the daily worldwide water consumption of the Intel Corporation in 2002 was 60,000 m3 (Harrison, 2003). Most of the water used in semiconductor fabs is ultra-pure (UPW) and typically constitutes up to 80% of the total water input (Mendicino, McCormack et al., 1999). The production of one unit of UPW demands about 1.5-2 units of feed water, which usually comes from a municipal supply system and requires 11-14 kWh/m3 of electricity for purification and an additional 3-4.5 kWh/m3 for pumping and sewer treatment (Mendicino, McCormack et al., 1999; Mendicino, Dietrich et al., 2001). The production of printed wire boards (PWB), on which electronic components are mounted, is also resource intensive. According to aggregate data from PWB industry in Japan, the production of 1 kg blank PWB required 16 kWh of electricity, 3.3 litres of oil and generated about 5 kg of acidic and 2.5 kg of alkaline waste (Williams, 2003a). This does not include the additional chemicals used in etching the connecting patterns by stripping off most of the metal layer. Due to high the resource intensities and the use of toxic chemicals, the manufacturing processes for some electronic products may be responsible for the bulk of product life cycle-related impacts. Conservative estimates show that the entire manufacturing chain (including raw material production, circuit fabrication and product assembly) of a desktop PC with CRT monitor requires at least 240 kg of fossil fuels, 1.5 m3 of water and 22 kg of 6


chemicals (Williams, 2003a). The primary energy demand for PC production is in the range of 7-12 GJ (Hilty, Ruddy et al., 2000; Williams, 2004). For comparison, the production of a colour TV requires about 2.8 GJ. Depending on how intensively a PC is used, the production-related energy share can reach up to 90% of the total life cycle energy consumption (Hilty, Ruddy et al., 2000). Chemicals. The least explored area is the use of hundreds of chemical mixes for the manufacturing of semiconductor circuits. Quantifying chemicals is extremely challenging, due to the huge variety of products and technologies as well as constant introduction of new chemical mixtures. Many substances are known or are suspected to cause cancer, endocrine disruption, birth defects, miscarriages and other negative health effects and environmental damages. However, the impacts of many individual chemicals and especially their synergistic effects are still not entirely understood. Obtaining information about the origin and properties of chemicals is hindered by the increasing globalisation of supply chains and outsourcing. One of the bestquantified groups of chemicals is perfluorocompounds6 (PFCs) – greenhouse gasses released in large volumes with high global warming potential. In 1997, the U.S. semiconductor industry emitted PFCs corresponding to 1.3 million metric tons of carbon equivalents or about 2% of the national carbonequivalents. This figure could reach as high as 20% by 2020 in the “business as usual” scenario (US EPA, 2001). Toxic substances are also embedded in the final products. Discarded electronic products are the single largest contributor of heavy metals to the U.S. waste stream, excluding car batteries (Klatt, 2003). Out of the top 50 materials by weight embedded in a typical integrated circuit around year 2000 14 were heavy metals, 15 others were known carcinogens, while the rest still largely remain unclassified (Cook & Thompson, 2000). Although most of the toxic substances are present in minute concentrations, some, such as lead in computer monitors and solder pastes, are used in large quantities. An average CRT monitor, for example, contains about 0.5 kg of pure lead (Socolof, Overly et al., 2001-7).

6

Among the most frequently used are nitrogen trifluoride (NF3), trifluoromethane (HFC23), perfluoroethane (C2F6), perfluoromethane (CF4), sulphur hexafluoride (SF6), and perfluoro-propane/-butane (C3F8 / CC4F8). The 100 year global warming potentials (GWP100) of the first four compounds are 23,900; 11,700; 9,200; and 6,500 respectively (US EPA, 2001).

7


Regulating the use of chemicals is difficult since many substances have unique properties and are essential for semiconductor manufacturing. Nevertheless, attempts are being made to phase out some of the most dangerous materials. For example, the EU RoHS Directive, which will be enforced from 1 July 2006, will be restricting the use of lead, mercury, cadmium, chromium (VI) and polybrominated flame retardants (biphenyls and diphenylethers) in many electronic products (EC, 2000).7 Proactive electronics manufacturers including Ericsson, Intel, Sony, HP, IBM and many others, have already adopted a number of voluntary initiatives ahead of regulations. For example, lead is being eliminated from solder pastes, the use of polychlorinated biphenyls (PCBs) and mercury is now practically eliminated from personal computers and the use of lead, beryllium, cadmium and sodium antimony has been reduced without significant regulatory efforts (OECD, 2000).

1.2 Industrial environmental strategies 1.2.1 Conceptual frameworks Together with the growing general societal concern for the state of the environment, numerous business strategies for addressing environmental impacts of products and processes have been developed. One such business strategy is the concept of eco-efficiency defined as “…the delivery of competitively priced goods and services that satisfy human needs and bring quality of life, while progressively reducing ecological impacts and resource intensity throughout the life cycle, to a level at least in line with the earth’s estimated carrying capacity” (Frank Bosshardt (1991), Business Council for Sustainable Development).8 The concept has attracted considerable attention in industry and government as a key tool for businesses to evaluate and improve the environmental performance of their operations, products and services (Schmidheiny, 1992). Eco-efficiency is a broad concept and includes improving energy and material efficiency of manufacturing processes, reducing risks to human health,

7

Lead will be phased out from solder pastes, but will still remain in batteries, CRT-based computer screens and some other products.

8

A comprehensive description about industrial activities in implementing the ecoefficiency concept in practice can be found on the website of Factor 10 Institute, URL: http://www.factor10-institute.org.

8


designing products compatible to ecological cycles (e.g. recyclability) and extending product lifespan and functionality. Eco-efficiency approaches are designed to reduce the environmental impacts of production processes per unit of output. However, they do not address the aggregate levels of resource consumption and emissions (Moezzi, 2000). The concept of dematerialisation refers to absolute as well as relative reduction of resource consumption and waste generation in the production of a unit of economic output (Ausubel & Sladovich, 1989; Herman, Ardekani et al., 1989; Cleveland & Ruth, 1998b) It is defined by UNEP as “the reduction of total material and energy throughput of any product and service, and thus the limitation of its environmental impact. This includes reduction of raw materials at the production stage, of energy and material inputs at the use stage, and of waste at the disposal stage.”9 During the last two decades, dematerialisation became an important field of environmental and economic research attracting interest from both governments and businesses (UNEP, 2001). Dematerialisation is generally defined either from a life cycle perspective as reduction of material use per unit of delivered service or from a macroeconomic perspective (almost always a national perspective) as shifting to service economy, that is to less material intensive economic activities. These perspectives led to the distinction of “weak” and “strong” dematerialisation (de Bruyn & Opschoor, 1997). The former refers to relative resource improvements per unit (physical or economic) of product or service, and the latter refers to the total reduction of resource consumption. The favourite examples of relative dematerialisation have been the reduction of steel content in an average car (Herman, Ardekani et al., 1989) or the amount of materials embedded in early mainframe computers when compared with a modern notebook (Ayres & Ayres, 1996). Absolute dematerialisation is often measured from a national perspective. Material flow analysis for the overall economy has shown that although a certain amount of decoupling of material intensity per unit of GDP has taken place, the improvements in relative material intensities have been absorbed by the effects of economic growth (Cogoy, 2004). For example, Adriaanse et al. (1997) showed that during 1975-94 material intensity per unit of inflation-adjusted GDP in the U.S. had fallen by 60%, while the ab-

9

http://www.uneptie.org/pc/cp/understanding_cp/related_concepts.htm

9


solute material consumption largely remained flat with an increase of 2%. Country data from WRI (2004) shows, that over a 30-year period, energy consumption per GDP in the U.S. has fallen by 40%, but the total energy use has increased by 40%. During the same period in Japan, the use has almost doubled and in China it has almost tripled.10 With the arrival of information technologies, an increasing number of studies suggest absolute dematerialisation (Romm, Rosenfield et al., 1999; Laitner, 2000, 2002). Most of these studies are conducted on a national level and typically they do not account for resource intensive industries displaced to other countries. From a global perspective, dematerialisation has not taken place yet neither due to the use of IT, nor other factors such as the increased role of the service sector in different economies. For instance, global trends for the consumption of fossil fuels do not show any signs of dematerialisation, although energy intensity per unit of economic output has fallen in many regions of the world (EIA, 2004).

1.2.2 Outcomes in practice in semiconductor industry The conceptual development of approaches for dealing with the growing environmental problems was followed by practical applications in industry. Over the years, the semiconductor sector has been working on improving its environmental record and has in fact succeeded in many areas. This was the outcome of both environmental concerns and economic considerations, such as the drive to reduce manufacturing costs. Resource efficiency improvements in the semiconductor industry allowed decoupling the growth of total resource use from the growth rate of the sector. According to the U.S. Census statistics, wafer, chemical and energy use of the semiconductor industry in the late 1990s increased by 6-10% annually, while the economic growth of the industry was about 15% on average (Ayres, Williams et al., 2004). Resource consumption in semiconductor fabrication represents a sizable part of total manufacturing costs. Competition within the sector has been strong for decades and the downward pressure on product prices has resulted in shrinking profit margins, encouraging the industry to continually improve production efficiency and reduce pollution. Moreover, the industry continually develops products that become more and more energy efficient

10

10

See profiles of other countries on World Resource Institute’s website, which is updated monthly. URL: http://earthtrends.wri.org/country_profiles/.


and contain less harmful and fewer amounts of chemicals. Nevertheless, the current environmental profile of electronics is far from being benign, although some industry groups go as far as claiming that: “…PCs of today and yesterday do not pose significant environmental risks. PCs are mainly composed of non-hazardous constituents. Hazardous constituents that may be present are usually contained in de minimis concentrations – usually lower than the concentrations found in other household items managed as municipal solid waste. Many potentially problematic compounds can be easily removed and recycled at properly equipped facilities with trained personnel.” (Electronic Industries Alliance, 2000). However, despite the measures undertaken to improve production and product efficiency in the electronics industry, the current rate of consumption growth is faster than the improvements of resource efficiency. Semiconductor manufacturing resource efficiency data collected by the author shows that during the last 10 years, the annual rate of energy efficiency improvements has been around 10% in typical and 4-5% in state-of-the-art facilities. For water intensity the respective figures were 5.5% and 1.5% (Figure 1-5). At the same time, global computer shipments over the last decade have been growing on average by 30% and semiconductor shipments by 15-30% per year.11 4

Energy consumption, kWh/cm

2

Average Fab specific ITRS 1997 ITRS 1999-02 ITRS 2003

Most of the fabs

3

Water consumption trends, L/cm2-wafer

60

Improvement rate in most of the fabs

50 40

2

30

150 mm wafer 200 mm wafer 300 mm wafer ITRS 2003 ITRS 1997

Improvement rate in the best fabs

20 1

10 Best fabs

0

0 ´82

´87

´92

´97

´02

´07

´12

´92

´95

´98

´01

´04

´07

´10

Figure 1-5. Resource efficiency improvement rates in semiconductor manufacturing facilities.12 In addition to increasing consumption rates, the lifetime of many electronic products is shrinking, affected by rapid technology cycles. The average life-

11

Based on reviews by the largest market research firms, such as Data Quest, IDC, iSupply and VLSI Research.

12

Source: (Plepys, 2004a). For data see Table A - 1 and Table A - 2 in Appendix A.

11


time of a personal computer is 2-3 years in commercial and 3-5 years in residential sectors. In addition, many products carry some degree of “over functionality”, i.e. an average consumer rarely utilises all functional features offered by a product and discards it when a new product generation is available on the market. The trend is likely to continue for as long as new functional features and higher performance is available. A slowdown in technology cycles can be observed only in a few products, such as pocket calculators, which have remained virtually unchanged after they reached their “functional saturation”. Most electronics, especially the largest product segments such as computing and telecom equipment, are far from being functionally saturated. These products are somewhere in the middle of their innovation curves and will remain there for as long as technological development will allow for the addition of new functional features. Product over-functionality causes unnecessary environmental burdens along the entire product life cycle. Manufacturing more complex products based on high-performance integrated circuits is associated with complex manufacturing infrastructures, global supply chains, new materials and higher material purity and facility cleanness standards, all of which are associated with higher environmental costs (Plepys, 2004a). Technology innovation in the semiconductor and electronics industry has led to relative resource consumption improvements in the manufacturing of some products. However, product consumption has been increasing at a higher rate, which has negated manufacturing improvements and resulted in an absolute increase of material throughput.

1.3 Coping with consumption growth The problems associated with consumption growth started to appear on the political agenda in the early 1990s. These problems were mentioned in many important documents, such as the Agenda 21 and the communications from international organisations such as OECD (1997), UNEP (1999) and others. A number of different approaches have been discussed to address the consumption issues. For example, different norm-forming initiatives from governmental as well as non-governmental organisations have been targeting consumer behaviour on a number of aspects, such as waste separation and energy conservation. Other approaches focus on the provision of information, such as green purchasing manuals and guidelines. Changing the patterns and especially the levels of consumption is associated with the socalled sufficiency principle, which propagates a cardinal change that is not 12


readily acceptable in every day behaviour. From the governmental side, besides eco-labelling, very few policy tools exist that address consumption issues. Regulatory interventions are often hindered by high political sensitivity and vested interests as they diverge from the perceived paradigm of continuous economic growth based on increasing material consumption (Dalhammar & Mont, 2004). The informative (raising consumer awareness and consumer education) and the regulatory approaches (e.g. restrictions, bans or environmental taxation) are useful but insufficient for reducing the environmental impacts of consumption. Alternative strategies are needed that would help businesses to find alternative ways of profit generation in a less material manner. Such strategies should ultimately decouple materialbased economic growth from the associated environmental impacts and resource consumption.

1.3.1 Product servicising The problem of raising material consumption can be addressed in line with consumer and/or business interests by a concept that is based on the idea of generating economic value by selling product function through services rather than selling material products. The idea is not new and has been driven by economic considerations (White, Stoughton et al., 1999). Similar ideas are reflected in a number of concepts such as “qualitative growth”, “customised economy”, “experience economy”, “eco-efficient services”, “eco-leasing”, “utilisation-based economy” etc.13 Their common idea is that economic growth is feasible when business models are built on product servicising strategies, i.e. providing product function rather than the product per se. Walter Stahel was among the first who recognised the potential environmental value of this business logic and suggested that provision of product function could reduce energy consumption and lower pollution levels (Stahel & Geneviève, 1977). The field of product servicising and its meaning for sustainable development has been rapidly expanding, now focusing on utility-based service economies (Stahel, 1994a; Stahel, 1994b), service unit and material intensity (SchmidtBleek, 1994; Hinterberger, Luks et al., 1997; Schmidt-Bleek, 1998; Hinterberger & Schmidt-Bleek, 1999) and product life extension through servicising (Stahel, 1998). The basic premise of this emerging research field can be

13

An overview of these concepts is presented PhD thesis of Mont, O. (2004). Product-Service Systems: Panacea or Myth? Lund University, IIIEE Dissertations 2004: 1.

13


summarised by the notion of function-based economy or “functional economy”, suggested by Walter Stahel as an economy that: “optimises the use (or function) of goods and services and thus the management of existing wealth (goods, knowledge, and nature). The economic objective of the functional economy is to create the highest possible use value for the longest possible time while consuming as few material resources and energy as possible. The functional economy is therefore more sustainable, or dematerialised, than the present economy, which is focused on production as its principal means to create wealth and material flow” (Stahel, 1997). In a functional economy, the central business idea is the provision of value to customers with a reduced dependency on the physical product – commonly called “product servicising”. Products are seen as mere vehicles to satisfy people’s needs and wants rather than the objective of consumption. According to Lancaster (1971), consumption is guided by the properties a product carries and the product is required to deliver these properties to consumers. For a rational consumer, the economic value of products should be based on the amount and type of functions the products deliver. It then makes economic sense to sell product function as a commodity, which can be delivered in different ways without selling the product as the final objective of consumption. The relationship between product providers and customers changes and incentives are created to reduce the total cost per unit of product function. This, among other things, implies improving manufacturing efficiency and extending product lifespan. The existing business models based on this concept include renting, sharing and leasing with examples such as car sharing, carpeting, furniture, washing and copying services, energy utility and chemical services, most of which have been extensively studied. The environmental benefits have been achieved through product refurbishment, remanufacturing and increase of intensity of product use. The latter often leads to the reduction of product stocks (Heiskanen, Halme et al., 2001). Empiric studies of washing services (Zaring, Bartolomeo et al., 2001), carpet leasing (Fishbein, 2000), car sharing (Mejkamp, 1998), copying and other services (Heiskanen & Jalas, 2000) show that moving from product- to service-based business models has the potential for reducing the overall environmental impacts of consumption through extending product lifetime and increasing service intensity per product by sharing schemes. One of the strategies to address this problem is the concept of product-service systems. The concept is based on the overall idea of a functional economy, i.e. the belief that it is possible to satisfy customers by providing merely product 14


function, not by selling the product itself to the customer. A product-service system is defined as “…a system of products, services, networks of actors and supporting infrastructure that strives to be competitive, satisfy customer needs and be more environmentally sound than traditional business models” (Mont, 2002b). The PSS concept suggests that the environmental impacts of products and associated services should already be addressed at the product and process design stage, while special attention is to be given to the possibility of reducing environmental impact from the use phase by providing alternative solutions to owning products. In this way, possibilities are provided for producers to treat products as capital assets and to develop systems for their shared and more intensive use.

1.3.2 Computer servicising The concept of product servicising is also interesting to explore for electronic products. Computers, delivering largely immaterial output information – offer opportunities for service-based consumption models with reduced use of physical products. The increasing accessibility and penetration of the Internet makes information highly transportable, thus computer networks are valuable assets in servicising solutions. Server-based computing (SBC) and application service provision (ASP) provide the same function by centralising and sharing computing resources and allow reducing the need for high-performance hardware on the user side. In this way, the integrated product functionality is better utilised and most of the typical consumption inefficiencies are avoided. Exploring the environmental implications of servicising computer functions is relevant since computer-related products represent the bulk of electronics and correspond to about half of all semiconductor shipments. The strategy of dematerialisation is often mentioned when talking about the shift towards the knowledge or information society, where the “information content” in the products is the key source of added value. The characteristics of many services, e.g. the handling of different kinds of information, delivered by information and communication technologies, present interesting servicising possibilities. Information is easy to reproduce and deliver to final destinations by different electronic means. An example of the product (not system) dematerialisation is a voice mail service outsourced to a telecom provider. No additional product other than a telephone is needed on the user side, although additional infrastructure is required on the provider side. The example of answering machines demonstrates that the idea of substituting material products with dematerialised services, implying that the latter is 15


less environmentally burdensome, is faulty once we have analysed the function delivered and not just the product sold. Therefore, a more systematic exploration of the potential to reduce environmental impacts of ICT products and applications is needed. A concept that promises to address and reduce the environmental impacts at a systems level is the concept of productservice systems. A number of studies have been conducted focusing on estimating the potential of ICT applications to improve the environmental profile of productservice systems and servicised products. The range of services included substitution of travel with videoconferencing (Arnfalk, 2002), on-line shopping (Goedkoop, van Halen et al., 1999; Orremo, Wallin et al., 1999; Matthews, et al., 2000; Matthews, et al., 2001; Behrendt, Jasch et al., 2003), telemedicine (Elander, 2000), e-banking (Tuerk, Kuhndt et al., 2003), distance education (Eneroth, 2000; James, 2001) and others. These studies demonstrate the potential of ICT in improving logistics, information management and efficiency of different services and PSS, reducing unnecessary transportation or delivering more efficient options that substitute traditional environmentally burdensome solutions or products. Some studies, however, point to problematic areas when shifting to ICT-based applications (Öko-Institut, 1997). Indeed, there is very little evidence to show that the wide spread of ICT solutions at the macro-level leads to decoupling of the total material requirements of the economy from economic growth (Cleveland & Ruth, 1998a), though some positive results have been shown for separate sectors or specific solutions (Romm, Rosenfield et al., 1999). Little attention has been paid to developing IT-based services and solutions in an environmentally sound way (Welford, Young et al., 1998). Few studies specifically focused on strategies for reducing the environmental impact of electronics by organising the end-of-life stage through leasing arrangements1, for instance, Fishbein et al. (2000). These studies provide examples of producers who retain at least some part of the product ownership after sales and search for strategies that would help capitalise on the end-of-life value of electronic products and simultaneously reduce their environmental impacts. The most profound examples demonstrate that care for the end-oflife stage may create incentives for changing product design to adapt to easier disassembly, reuse of parts and recycling (Tojo, 2001). Despite the efforts of companies to reduce environmental impacts through product design, growing consumption levels reduce the effectiveness of improvements. Very few, if any, studies considered applying the PSS concept to organise the use phase of electronic products. As was noted above, the 16


majority of studies have investigated either the supply side, where producers develop strategies for optimising production processes, or are triggered by legislation to take back their products and in that way incorporate end-of-life considerations into product design. Therefore, other approaches are needed to reduce the environmental impacts associated with the use phase of electronics. A large number of studies have investigated the business and economic opportunities that are associated with application service provision and other ICT-based solutions.14 However, their environmental potential of extending product lifetime, reducing product complexity and over-functionality has so far been poorly addressed. Only a few studies have explored the environmental effectiveness of servicising electronic products. Greenberg et al. (2001), for example, estimated that substituting PCs for thin clients and outsourcing computing power to a service provider allows for energy savings up to factor 7 in user hardware. Similar results were achieved by WYSE (2001) and Söderlund (2004a). Unfortunately, the prime focus of these studies was energy consumption on the user side and other environmental implications were largely unexplored. Therefore, addressing broader life cycle related issues would facilitate a better understanding of the value of servicising in reducing negative environmental impacts of electronics. The question is open: would these types of servicing solutions be viable both economically and environmentally for products such as computers, which have been traditionally associated with ownership? The concept of server-based computing (SBC) is interesting to explore from the environmental perspective. Since most of the computing power is outsourced to the server side, it reduces performance requirements for the user side hardware where hardware performance is optimised to absolute minimum needs. Simplified equipment, such as thin clients, are used and streamlined for network applications. In this way, less computing power on the side of the user computers will require fewer silicon resources. This avoids some of the environmental issues related to product manufacturing and reduces the amount of e-waste, which leads to reduced life cycle environmental impacts. 14

See, for example, (Klemenhagen, 1999; Wainewright, 1999; Sound Consulting, 2000), as well as different web releases from the “big 5” consulting companies such as IDC, Gartner, Forester Research and others.

17

CHAPTER

TWO 2. Research design The premise of this research is the author’s perception that moving towards sustainable development requires addressing consumption growth. Technological improvements in product design and manufacturing are important but are not always sufficient to reduce environmental impacts. This is especially evident in the electronics sector, where growth effects have negated higher resource efficiency. Therefore, reduction of product consumption is an important complementary strategy for reducing absolute environmental impacts of high resource consumption and toxic pollution. The focus is on how to deliver product services that are compatible with the principles of sustainability, rather than designing a perfect product compatible with the principles of sustainability. In line with this, the thesis explores the environmental effectiveness of the product servicising concept in shifting from product- to function-centric consumption by looking at the example of computers and by analysing the environmental implications along the product life cycle. The assumption is that servicising computing functions can provide user utility comparable to the traditional product-based systems. The discussion will cover analyses of economic, organisational and environmental effects of substituting traditional decentralised computers by on-line services in centralised computing systems. Consequently, the main goal of the thesis is to explore the environmental effectiveness of servicising solutions for electronic products. The research questions addressed are:

1. What are the environmental effects of substituting traditional computing systems based on owned personal computers with outsourced computing services? 2. How can the challenges in the environmental assessments of electronics products and services be dealt with in future studies? 19


3. What are the factors for the success of business models providing

servicised IT solutions?

The following sections will explain how the research moved from question to question and what studies by the author contribute to the discussion in the thesis.

2.1 Research pathways The purpose of this section is to link research published in the articles and explain how they contribute to the overall research goal. The first section summarises research by the author published in selected articles and reports. The second section lists the articles selected for the thesis and explains how the research was conducted. Related previous research (papers not included in the thesis) The author has conducted a number of studies, which are related but not included in the thesis. The synopsis of published papers is provided below: Plepys (2001a)

– Conference paper. Provides a largely qualitative discussion on ICT role in resource conservation and its rebound effects.

Plepys (2001b)

– Conference paper. Presents and discusses economic and environmental benefits of software renting services practiced in the business-to-business area.

Kisch, Mont and Plepys (2002)

– Project report. Investigation of the structure of Swedish service sector and its contribution to economic growth and environment implications. The study identified and mapped the most important environmental impacts as well as drivers and tools for environmental advance in the service sector companies.

Plepys (2002a)

– Conference paper. Focuses on information flows along supply chains of electronics, investigates implications of new governmental policies regarding the use of hazardous substances in electronic products to the suppliers from developing countries; analyses the case of Indian electronics manufacturers.

Plepys (2003)

– Conference paper. Reviews a number of studies in Internet infrastructure related electricity consumption in different countries and discusses the significance of energy saving potentials.

Mont and Plepys (2003)

– Project report. Provides a literature review on consumer satisfaction and its implications to product-service systems

Mont and

– Project report. Provides the results of case studies on environ-

20


Plepys (2004)

mental effectiveness of a service-based lifestyles; includes a case of joint use of power tools and a case of shared computer resources

Plepys and Schischke (2004)

– Conference paper. Discusses a problem of not including upstream manufacturing of ultra-pure materials in the existing environmental life cycle assessments. The original version of the paper is included in this thesis (see next section), as it clearer shows the original contribution of the author.

Papers included in the thesis The thesis summarises and discusses the findings from studies published in the five attached articles, marked with roman numerals. Paper I:

Paper II:

Plepys, A. (2002). “The grey side of ICT.” Environmental Impact Assessment Review. Vol. 22, issue 5, pgs. 509-523. Plepys, A. (2002). “Software Renting - Better Business, Better Environment: The Case of Application Service Providing (ASP)”. Proceedings of the 2004 International Symposium on Electronics and the Environment (ISEE), San Francisco, CA, USA. Institute of Electrical and Electronics Engineers (IEEE), pgs. 53-60.

Plepys, A. (2004). “Substituting computers for services - potential to reduce ICT's environmental footprint.” Proceedings of Electronics Goes Green Paper III: 2004+: Driving Forces for Future Electronics, Berlin, Fraunhofer Institute, Germany. Plepys, A. (2004). “The environmental impacts of electronics. Going beyond the walls of semiconductor fabs.” Proceedings of the 2004 International Paper IV: Symposium on Electronics and the Environment (ISEE), Scottsdale, AZ, USA. Institute of Electrical and Electronics Engineers (IEEE), pgs. 159-164. Paper V:

Plepys, A. (2004). “The feasibility of adopting server-based computing in commercial and residential sectors.” (An abbreviated version of the paper is submitted to IEEE Internet Computing).

The research is built on analysing the case of computer servicising, whereby third party companies provide computing functions to the final users through commercial service solutions. The author discusses product life cycle related environmental issues by comparing decentralised (PC-based) computer architectures to centralised server-based systems where most of the computing resources are shared among several users. This research has evolved though a series of studies conducted by the author during 2001-2004. The early stages of research explored a spectrum of the environmental impacts of information and communication technologies 21


(ICT), which allowed the formation of a picture about the cross-sectoral and multi-faceted nature of interaction between technology, society and environment (Paper I). ICT impacts span from direct effects, related to the life cycle of electronic products, to indirect – stemming from IT application in other sectors. However, understanding the overall environmental effects of ICT is a huge endeavour, which requires analysing system dynamics that take into consideration economy-wide boundaries and involve countless variables. Modelling the relationships between the variables demands significant amounts of data, which are still largely unavailable and for which data collection methods are still under development. Therefore, the analysis in the thesis focuses on direct first order environmental effects (see Paper I) of electronic products, which in itself is a sufficiently broad, challenging and important task. In the later stages of research, it was seen that increased consumption levels and other economic effects are often offset by the environmental efficiency gains delivered by technology innovations (rebound effects). The growing consumption of electronics as one of the main causes for increasing absolute environmental impacts and addressing consumption impacts was seen as the prime topic of discussion. Among the broad spectrum of environmental strategies, dematerialisation through product servicising was identified as one of the best generic approaches to address the increasing environmental impacts of IT products. Technological solutions oriented at improvements in product design and manufacturing have proven incapable of coping with the growth effects of consumption. On the other hand, organisational/managerial solutions, based on providing products in new business models, are believed to deliver alternative ways of consumption, which offers interesting environmental opportunities. The concept of product servicising and the framework for product-service systems was found to have a good potential to deliver customer services with lower dependency on the amount of physical products. The existing business models based on this idea in many sectors have proved to be economically viable and able to deliver customer services with lower environmental impacts than traditional product sales-based models. Therefore, this research turned to exploring the economic and environmental implications of function-oriented consumption of electronic products. To explore the environmental effectiveness of such approaches an existing business model of Application Service Provision (ASP) was analysed (Paper II). Particularly, that study focused on the implications of outsourc22


ing and sharing ICT resources through server-based computing systems (SBC) and ASP services. In the case study, the focus was given to analysing the economic/business (Paper V) and environmental (Paper III) advantages of ASP in comparison to the traditional computing systems. In this part of the research it was realised that, in spite of sufficient evidence of organisational and economic benefits of ASP computing, the concept is not widely accepted and the research was directed to exploring the key factors influencing its success. It was also realised that marketing literature is filled with examples of successful economic case studies, but does not address the environmental side. From the interviews with ASP users, it was evident that the environmental issues of shifting to these services do not play any role in current decisionmaking. It also became apparent that the potential users of ASP are hardly aware of the possible environmental gains. A better understanding of environmental implications may help to see the full benefits of service-based computing and facilitate a broader uptake of servicising as a concept. Therefore, the continued research explored the environmental sides of product-service substitution by analysing a case study of ASP systems based on centralised computing architectures. Literature reviews and interviews with the relevant actors provided input data for analysing the most critical factors for the environmental effectiveness of server-based computing (Papers II and V). This has led to a comparative study of traditional and service-based computing systems (Paper III). To understand this, trends in semiconductor manufacturing have been studied and their links to resource consumption and pollution were analysed. The scope was limited to analysing the implications to product lifespan and some resource consumption and waste generation issues. The discussion also touched upon the environmental implications of increasing product complexity circuit integration and purity requirements in semiconductor manufacturing processes. System boundaries include parts of raw material acquisition and component fabrication stages (Paper III and Plepys and Schischke (2004)). In the course of research, the author observed a number of data and methodology related challenges hindering more comprehensive environmental assessments (Paper III and Paper IV). The most important aspects such as functional unit choices, selection of system boundaries, implications of system cut offs and data collection issues are examined in the discussion part of the thesis. The main components in the research logic are presented in Figure 2-1 and the outline of the thesis is provided in the next section. 23


TECH. CHANGE AND INNOVATION IN ICT

CONSUMPTION IS THE PROBLEM

DEMATERIALISATION What are the environmental implications of substituting traditional systems with outsourced IT systems?

THROUGH PRODUCT SERVICISING

ENVIRONMENTAL PROBLEMS WITH ICT

ASP –

A SERVICISING EXAMPLE

SCOPING AND RESEARCH QUESTIONS

PAPER I

PAPER II

PAPER I PAPER III

PAPER IV

LCA PERSPECTIVE ON ALTERNATIVE PRODUCT SYSTEMS

What are the challenges in assessing the environmental effects of electronic products and services?

COMPARATIVE STUDY OF TWO ALTERNATIVE SYSTEMS

COMMENTS ON THE PROBLEMS AND CONCLUSIONS

ASP CASE STUDY IN THE B2B SECTOR & A HOUSEHOLD SURVEY

PAPER V

What are the factors for success of business models providing servicized IT solutions?

Figure 2-1. The main components of the thesis and contributions of selected articles.

2.2 Methods used The different stages of research used a variety of approaches, including interviews, scenarios, case studies, survey, statistical analysis and a screening life cycle inventory study of traditional and centralised computing systems. Literature reviews provided a background understanding about the nature of the problems caused by the use of electronics and computers in particular and allowed the identification and exploration of critical research areas and questions. Literature sources indicated that equivalent computing functions could be competitively delivered through on-line services and provided a number of successful examples from different companies. At the same time it was observed that, in spite of the success stories, the servicising concept was still largely underused. Furthermore, in spite of some obvious benefits such as reduction of equipment turnover in the ASP solutions, environmental factors are almost never mentioned, neither in the marketing material nor in the success stories from ASP users. This led the author to explore the drivers and barriers to wider adoption of the concept as well as the environmental implications of using ASP instead of traditional computing systems. To address the questions, empiric information from business-tobusiness (B2B) and business-to-consumer (B2C) sectors was collected. Information from the B2B sector was obtained through a series of interviews with providers and users of ASP services. In total, over thirty inter24


views (mainly in Sweden) were conducted. This gave a better understanding regarding the practical experiences from using computing utilities provided as services. On the supply side, interviews were conducted with various representatives of three service companies (Telecomputing AB (Sweden), Telecomputing AS (Norway) and IT-Genesis), four hardware manufacturers (HewlettPackard, Sun Microsystems, WYSE and ChipPC) and three Internet service providers (Telia AB, Bredbandbolaget AB and HSB Bolina). The interviews on the demand side were with governmental (County Council of Jämtland, Hallstahammar municipality, County administration of Sundsvall), academic (Danish Technical University, Swedish University of Agricultural Sciences, Technical Faculty of Linköping University), health care (Kvalita AB), housing (HSB Bolina, Heimstaden AB), retail (Electrolux Home) and manufacturing organisations (Ragn Sells and Swedish Road Administration). Since no existing examples of computer servicising solution were found in the B2C sector, user perceptions about the applicability of the ASP concept were collected through a scenario analysis. The author developed a hypothetical scenario for a set of household-oriented IT solutions, including data hosting and software application provision, and collected the responses of private consumers through an on-line questionnaire. The survey targeted over 8,000 household computer users and achieved a 12% response rate. This was considered as significant for the statistical analysis of consumer preferences. The information from the B2B and the B2C sectors provided a better understanding about challenges in expanding service-based computing solutions and allowed a comparison of findings with the materials from reviewed literature sources. To explore the environmental implications involved in shifting from traditional to outsourced service solutions, the author conducted a comparative study of two conceptually different computing systems. The baseline was a decentralised PC-based system with all computing power on the user side. In this system, a typical user profile and key hardware performance requirements have been established in order to provide a background for modelling an alternative system with centralised computing resources shared by all system users. The alternative system was modelled to be functionally equivalent to the baseline system with the reference to a range of user applications, computing speed, memory and data storage resources. System components were selected referring to these criteria and following the recommendations of equipment manufacturers. The comparison evaluated key system parameters determining the life cycle related environmental aspects of the two systems. The analysis focused on hardware lifetime, weight of equipment, en25


ergy consumption in the use phase and the total amount of silicon embedded in both systems. The comparison allowed drawing preliminary conclusions about the most obvious environmental benefits of centralised computing based on reduced computing power and equipment complexity on the user side. At the same time, a number of difficulties for a more comprehensive environmental assessment have been identified and discussed. One of the most interesting questions concerned the life cycle implications from using simplified hardware such as thin clients.

2.3 The intended audience This research explores the possibilities of providing computer functions to the final users through sharing computing resources in centralised IT systems. The thesis targets a broad range of stakeholders who are interested in reducing the environmental impacts of electronic products through an innovative concept of product servicising. Firstly, the thesis is intended for decision-makers in companies and governmental institutions who are interested in finding opportunities to reduce the negative economic and environmental effects of rapid obsolescence of computers and related equipment. Further, the research may be of interest to practitioners who are contemplating on employing the concept of product servicising in their organisations. The thesis describes the conditions under which the business applications of this concept are worthwhile considering from both the environmental and economic points of view. Secondly, it explores the possibilities and limitations for providing servercentric computing services to residential consumers, which could be useful for telecom companies, Internet service providers and housing companies. Thirdly, the author provides his reflections upon the value and limitations of different environmental assessment methods. This section may be of interest to the research community, environmental practitioners and businesses, which intend to conduct comparative studies of existing and new ways of providing computer utilities.

26

CHAPTER

THREE 3. Environmental implications of computer servicising Increasing complexity of computing systems, shortening technology cycles and rapid retirement of IT hardware translate into significant costs for many organisations. Realising the high costs of IT utilities, organisations are searching for the ways to reduce their total costs of IT ownership. Some companies rediscover economic value of centralised maintenance and sharing IT resources through internal networks or outsourced external services, which allow limiting computing power on the user side. In both cases, computing resources are provided from highly centralised server-based computing (SBC) systems, where powerful servers compensate for limited hardware performance on the user side. This chapter discusses the environmental implications of using decentralised (PC-based) and centralised (SBC-based) computing architectures.

3.1 Technology behind server-based solutions In essence, server-based computing (SBC) is the same computing principle that was used in the mainframe systems of the 1960s and the 1970s. These were largely based on mid-range mainframe machines from Digital and IBM. The operating principle was very simple – all users were connected to a powerful machine and shared its computing resources, including computing time and data storage space. The access to these resources was made through “dumb” terminals – user equipment with virtually no computing power, which was used as a mere “window” into users’ virtual space on the server. The move away from these computing architectures took place in the 1980s with the arrival of reasonably cheap personal computers with enough computing power to be used independently from a server. Along with increasing PC shipments, more and more software applications were written for stand27


alone hardware, which further contributed to the rapid popularisation of personal computers (PCs). However, the transition to decentralised (distributed) computing did not necessarily mean a reduction in IT ownership costs. Rather the opposite, with the rapid innovation on the hardware and the software sides the transition to the PC became increasingly associated with short technology cycles and rapidly obsolescing hardware. Computer users had to upgrade and replace their equipment more frequently than ever before. Together with the need to maintain increasingly complex software and to protect against virus attacks the total cost of ownership of PC-based systems has been growing steadily ever-since. With the advent of the Internet and a range of affordable mid-range severs, an opportunity to cope with the increasing IT costs was found in reconsidering the concept of server-centric computing. In fact, the Internet itself can be viewed as the best (and the most wide-spread) example of server-based computing – web resources are stored on servers and accessed by users via public computer networks. Since the introduction of graphic user interface in web browsers in the early 1990s, programmers have begun developing programmes adapted for web applications (e.g. Java and ActiveX scripts), which allowed traditional PC applications to be executed from servers. Today, SBC enables applications written for PCs to be deployed, managed and supported completely from servers, which run on multi-user operating systems and allow multiple concurrent users to log on and run standard applications simultaneously in separate protected sessions. There were several enabling factors for the increasing popularity of the modern-day SBC. Mainframe computing of the 1970s and the 1980s had a number of limitations, most important of which were non-graphic desktops, slow response time from the central machine and the inability to run many computing-intensive applications in real time. Most of them have been eliminated with the arrival of the Internet, graphics-enabled browsers, new communication protocols and increased network capacity, and other such innovations. In addition, network connectivity of users increased not only due to network pervasiveness but also because of the increasing variety of alternative access technologies, for instance, standardised wireless communication protocols, such as Bluetooth and IEEE 802.11b.

28


In the server-centric computing systems, users can employ a broad variety of hardware. It is usually classified by the amount of computing power on the user side, where the applications are being run and where user data is being stored. Generally, the hardware can be divided into three broad categories: “dumb” terminals, network computers and clients (Figure 3-1).

Figure 3-1. The basic developments of SBC.15 A dumb terminal (DT) is a jargon term for the simplest version of user-side equipment used in mainframe computing of the 197s and the 1980s. At that time, they consisted of monochrome displays and keyboard with practically no processing ability and very limited user interface (a non-graphic display and no mouse). Network computers (NCs) are devices which in order to run an application locally must first download parts of it from a server. NCs typically run Java applications within the so-called Java Virtual Machine or Java applets on Java-enabled browsers. NCs were the result of collaboration between Sun, IBM, Oracle, Apple and Netscape to counteract the growing rivalry from Microsoft in the mid-1990s. The proponents of network computers originally argued that, besides being much cheaper than PCs, NCs are more flexible and provide better data reliability and easier updates of applications. However, cynics of the NC concept are critical about the actual value of NCs and argue that it is largely an outcome of strategic anti-Microsoft moves by the makers of large computer databases, servers and Java software

15

Graphics: Sound Computing (2000).

29


to try and regain their market positions. The actual user value of NCs remains to be tested by the market. However, one aspect is clearly different in comparison to the thin client or “dumb” terminal concepts, namely – the much higher bandwidth requirements to run NCs. Client devices, different from network computers, execute all applications on a server. No applications or user data needs to be downloaded, the only information transmitted by a user is keystrokes and mouse clicks and the only information coming from the server are screen updates. Transmitting this type of information does not require large bandwidths and, according to some estimates, client systems could run on as low as 20 kB/s bandwidth (Ross, 2000; Newburn Consulting, 2002, p7). In practice however, these bandwidths are insufficient, since many users today access multimedia-rich web content and run graphics-intensive applications with frequent screen updates.16 The main technologies used for server-client communications are Microsoft’s RDP and Citrix’s ICA protocols. Although both are more or less equivalent, the latter is more flexible in terms of compatible application platforms and hardware logic. Clients in SBC architectures could be broadly divided into “fat” and “thin” clients depending on how much of the computing and data storage capabilities reside on the user side. Thin clients (TC) are the most streamlined versions of computers typically having slow processors, a limited amount of memory and no hard disks or CD-ROM drives. An average TC today runs on a 200-500 MHz processor and has 32-64 MB RAM compared to 2.53.0 GHz and 256-512 MB RAM in an average PC. Fat clients are usually personal computers (brand new or outdated), which are converted into server terminals. The systems are “fat” because user hardware has the capability to execute and store applications locally if needed. Some fat clients could be configured to work as both a stand-alone PC and a server client, which is typically practiced by mobile users working on notebook computers. One useful advantage of the SBC concept is the possibility to extend the lifetime of old computers, which have become too slow for modern applications. The old computers usually retain their original operating system and, with the help of additional communication software, they can execute some computing operations on a server.

16

30

Based on the author’s interviews with several SBC users.


The latest addition to the SBC concept is that a variety of handheld devices, such as Java-enabled mobile phones and PDAs. Web access is enabled on an increasing number of handhelds and connecting them to centralised computing systems can expand their functionality. However, small screen sizes and less convenient user interface limit the application of handheld devices as an equivalent alternative to desktop systems. Most of server-based solutions reduce user dependency on technology change, allow the more efficient utilisation of IT resources to avoid functional overcapacity on the user side, minimise the need for hardware upgrades and can prolong hardware lifespan. This makes them interesting to discuss from an environmental perspective. However, these issues have not as yet been extensively addressed (Plepys, 2001b, 2002b).

3.2 Individual vs. shared: a comparative study of two computing systems This section discusses the results of one of the author’s studies summarised in Paper V. In this research, the author conducted a comparative study on hardware inventories in a traditional decentralised (PC-based) and a serverbased computing system. The premise for the study was that the shift to SBC systems allows for improved utilisation of computing resources and may have positive environmental implications. The main focus of the comparison was on system characteristics likely to have significant environmental effects throughout the life cycles of different hardware components. Data limitations did not allow for a full investigation of the environmental impacts. The study was limited to product inventory analysis and included an evaluation of hardware resources and a discussion on system characteristics, which are most significant for negative environmental implications. These included product lifespan, electricity consumption in the use phase and the amount of bulk materials and silicon-rich components embedded in the electronic products constituting both systems. The following section summarises the main points of the study and discusses the broader implications not addressed in Paper V.

31


3.2.1 Study Setup In order to compare two systems, they should ideally deliver equivalent functions. No such equivalent systems of both types of architectures (centralised and decentralised) were found to exist. The author investigated a number of cases of SBC use but did not find examples that were directly useful for comparisons. All contacted organisations, which converted from PC-based to SBC systems, did some sort of changes, for instance changed system capacity or the range and types of applications used by the final users, which in the end made the systems unequal. For this reason, the author decided to take an existing PC-based system and use it as a baseline for modelling an alternative, but functionally equivalent, server-based system. For practical reasons, the best choice was the system currently installed at the author’s institution (system “A”). It was considered representative for a majority of typical office IT systems as it included a range of typical applications. These included office packages, web browsers, e-mail applications, internal office collaboration databases and so forth. The system was based on four servers providing common data storage, e-mail accounts, website hosting, file sharing and printing resources. Although some applications, such as the MS Office package, were installed on the servers, the system was considered decentralised since most of the computing power resides on the user side and all applications in principle are executed locally. User hardware was also considered representative for typical office uses consisting of a midrange PC with a performance corresponding to the bulk of computer stock currently in use. The system had about 60 permanent users among whom 20%, having higher requirements to hardware performance (essentially more memory), were assumed to be “advanced”. The alternative system (“B”) was a server-based computing (SBC) system with most of the computing functions concentrated on the servers. To be equivalent to the baseline system, system “B” was modelled to be of the same size (number of users17) and functionally equivalent to system “A”. That is, it provided the same functions to final users without infringing their performance. Practice shows that users shifting from decentralised to SBC systems do not feel any significant performance differences (even the desk-

17

32

Actually, to make it closer to the existing system, the servers in system “B” were sized for 100 users, assuming 60 permanent and 40 temporal user accounts (e.g. quests and a group of students leaving the institute every year.


tops look the same) and this allows the assumption that the two systems are equivalent alternatives and could be compared on a one-to-one basis. The author decided to model the system with thin clients (TCs) as hardware on the useer side as this architecture was the most conceptually different from the PC-based system. Network computers were not considered due to their resemblance to the hardware in the existing system, “A” in particular, and the need to download parts of applications to execute them locally. The selection of user and server side hardware in system “B” was based on recommendations from manufacturers and interviews with organisations practicing server-based computing. Data related to energy consumption and silicon content was based on product specifications from manufacturers, as well as the author’s estimates based on the relevant literature. The amount of silicon was estimated to best degree possible, although it disregarded all components other than the microprocessor and memory, that is, network and graphic controllers and discrete components (transistors, diodes etc.). Details on hardware inventories in both systems are presented in Table A - 3 and Table A - 1 of Appendix A.

3.2.2 Evaluation results Product lifespan. According to a number of literature sources18, the typical lifespan of personal computers is 2-3 years in commercial and 4-5 years in residential applications. In the baseline system “A” the lifespan was artificially extended to 3-4 years by taking a strategy of less frequent software upgrades and extending PC performance with more memory when needed. Interviews with the users of SBC systems showed that transferring computing power to a server and sharing it among several users reduces the need to periodically update user hardware, which allows extending the lifetime of personal computers and other types of hardware to up to 6-8 years. Interestingly, the replacement of old hardware in SBC systems partly depends on the lifetime of computer monitors, which has much to do with the offers on the market. It is often cheaper to buy computing equipment pre-packaged with a screen than to procure them separately. In many cases thin client models are integrated with the screens and are retired only when the latter need a replacement. 18

(Kawamoto, Koomey et al., 2000; Barthel, Lechtenböhmer et al., 2001; Katsumoto, 2001; Mitchell-Jackson, 2001; Türk, 2001; Roberson, Homan et al., 2002; Roth, Goldstein et al., 2002; Aebischer, Frischknecht et al., 2003; Cremer, Eichhammer et al., 2003; Williams, 2004).

33


The 6-8 year hardware lifespan in SBC systems is an observed average for all types of end-user hardware. In case of thin clients it could be even longer (especially in organisations with rather static computing needs), since the mean time between failures (MTBF) of TCs is much longer than for PCs. For example, the MTBF for Wyse TCs reaches 175,000 hours compared to 25,000 hours of a typical PC.19 Such a case was found in Finnish Border Police, which were using the same TCs for more than 10 years without upgrade (except for chaining the monitors). An interesting observation was made in regard to the lifetime of server hardware. The lifetime of servers in SBC systems was estimated to be 3 years, which was based on the author’s interviews with outsourced service providers in Sweden. The companies practiced these server replacement rates mainly because of technology change and higher failure probabilities towards the end of their lifetime. However, in the existing system the lifetime was largely limited by warranty rather than performance issues. For the IT manager in system “A” it made more economic sense to retire a server after a 3-year warranty period than to face uncertain repair costs in case of a failure. This may not be a universal practice in all organisations, since it obviously depends on internal organisational policies and budget situation. According to Roth (2002, p35), the server lifetime varies depending on server class. For high-end servers it was estimated at up to 7 years and for low-end servers (the ones in system “A”) – 3 years. Energy consumption. In both systems, power consumption was estimated from the manufacturers’ specifications, except for the use hardware in the existing system, where energy consumption was measured for different operation modes. Product overviews show that thin clients available on the market today have a wide range of energy consumption, on the extreme ends ranging from 3.5 to 35 W per device without monitor (Söderlund, 2004b). Products selected in the current study (Transmeta Hewlett Packard) represent thin clients, which occupy the largest market share today (e.g. WYSE thin clients) and have typical energy consumption of about 20 W.20 A typical thin client server consumes about 1,000 W and can serve up to 100 terminals (Daukantas, 2001), which in total per TC user makes max 35 W on average. Other architectures, such as network computers or “fat” clients, are

19

Source: Wyse Ltd. URL: http://www.wyse.com/overview/energy/index.htm.

20

The author observed that the most prevailing models of thin clients on the market (e.g. WYSE, Boundless, Neoware and HP) consume on average 15-25 W.

34


generally more power-hungry since they contain faster processors, more memory and local storage resources as well as components with moving parts, such as hard disks and CD drives. Server power consumption was estimated by multiplying rated power from equipment specifications by a load factor for typical operation modes. The rated power of low-end and mid-range servers has been observed to be 2550% higher than the power in typical operation conditions (Hipp, 2001 in: Roth, Goldstein et al., 2002). The load factors for systems A and B were assumed at 40% and 50% of the respective rated power following consultations with system administrators and thin client server operators.21,22 Power consumption of the air conditioning system (HVAC) in the server room was calculated based on estimates for equipment heat dissipation, assuming 60% HAVC efficiency and 30% of time when cooling is needed (this was for Swedish conditions and assumes that no additional heating is required).23 The results showed that the main energy consumption differences were on the user side (57% less for system “B”). Server hardware consumed about the same amount of energy in both systems (Table 3-1). Table 3-1. Estimated power use and silicon content in the two systems for 60 users. System

Silicon content, cm2

Electricity MWh/yr

Users

Servers

Total

Users

Servers

Total

“A”

18.4

12.5

37.2

316

148

464

“B”

8.0

10.1

23.3

156

114

270

The lower energy consumption by system “B” servers (18% less than “A”) are believed to be largely influenced by system design and sizing aspects, since the results are rather sensitive to the number of system components such as PCI slots and hard disks. The total storage space in system “A” was significantly oversized and partitioned on a large number of hard disks. Sys-

21

Personal communication (2003-10-16). Mr. Bryan Finn, PhD. IT Department, Swedish University of Agricultural Sciences. Tel: +46(0)40-415 318.

22

Personal communication (2003-04-16). Mr. Burje Lindh. Product manager, Sun Microsystems, Göteborg, Sweden. Tel: +46-(0)31-634 908.

23

Personal communication (2004-05-05). Mrs. Ronit Pasternak. Product manager. ChipPC, Israel. Tel: +972-4-8580-999/111.

35


tem “B”, on the other hand, was sized more conservatively but it is likely that it will grow and the eventual differences in energy consumption will even out. Therefore, no energy reduction on the server side should be expected when shifting to a SBC solution and the main savings are on the user side. Material content and post consumer waste. The longer lifetime and the low weight of TCs contribute to reducing the amount of end-of-life (EOL) waste entering the waste management system. The average weight of a desktop computer is 10-15 kg without monitors, while stand-alone TCs typically weigh less than 2 kg. However, the amount of waste going to final the deposition is hard to foresee. The material recycling rate of PCs could be higher than TCs because the relatively large amounts of bulk metals (steel in chassis and casings, copper and aluminium in wiring) could make PCs more attractive for the recycling industry. Recycling thin clients may not be profitable due to the low content of bulk materials and the high labour to material weight ratio. In addition, the amount of precious metals is also lower since TCs have fewer electronic components and expansion slots. Reuse possibilities may also be limited, since TCs are based on many specialised electronic components. At this point, no conclusive evidence has been found regarding the eventual environmental implications in the end-of-life stage, which also depends on existing waste management options. Further investigation is needed but is outside the scope of the paper. Still, the conclusion must be that a significant benefit from using thin clients or extending the lifetime of outdated PCs stems from avoiding the life cycle impacts associated with equipment manufacturing. Silicon content. A number of studies have shown that an important determinant of the environmental impacts of electronic components is the total amount of silicon measured in area units (DeGenova & Shadman, 1997; Spielmann & Schischke, 2001; Schischke, et al., 2002; Williams, Ayres et al., 2002). The amount of silicon can be referred as the area of semiconductor die or the total silicon area, which is the sum of all semiconductor component layers contained in a die. The latter metric is a better representative of product complexity24 and it is widely used by the semiconductor industry to track its energy, water and chemical consumption. Together with the information about product complexity described in terms of number of mask layers used in manufacturing, the sizes semiconductor dice embedded in an 24

Another parameter of product complexity is the minimum feature size (also called “technology node”) and the number of metal-interconnect levels.

36


electronic product allow aggregate estimates on resource flows involved in product manufacturing. The author explored what amount of silicon (in terms of die sizes) was embedded in each analysed system. Given the lack of reliable data only the largest silicon-based components, such as microprocessors and memory, were accounted for. Furthermore, the author chose to disregard small differences in mask layer counts and used information on die sizes instead, which as regarded as a reasonable approximation in the given system. The number of mask layers in microprocessors in both systems was similar (CPUs used in thin clients had only one layer less than the CPUs of PCs). Information on mask layers in memory components was unavailable, but assumption that the same type of technology is used in memory produced during the same time period is not unreasonable. The estimates on processor-related silicon area in the two analysed systems were based on manufacturers’ data. This information however, was not available for memory (RAM) and had to be estimated from average industry data on prevailing technologies at the time of product manufacturing. This was considered to be a better approach, given the variety of memory brands and product technologies, since the variation of memory densities for different DRAM types produced during the same time period is insignificant. Estimating the amount of silicon is difficult and requires comprehensive data. Silicon area used for RAM depends on memory density, which is a moving target influenced by feature size and technology design. Several memory generations are typically produced at the same time, with each generation reaching maximum production output within 1-2 years (Figure 3-2). Therefore, memory related silicon estimate was based on average data assuming that all DRAM chips manufactured around 2001-02 are based on a 0.13 µm technology node, with the average cell density of 4 Mb/mm2 (SEMATECH, 2002, p156). A summary of estimations on silicon content in terms of die sizes is presented above in Table 3-1. With a reasonable degree of accuracy, it could be considered that the amount of silicon embedded in the server side hardware in both systems was more or less similar. The largest difference was on the user side equipment, where system “A” contained twice as large a silicon area (in terms of die sizes). In this comparison, the amount of silicon embedded in other components (transistors, diodes) was considered to be insignificant and was left unaccounted for. Other silicon-rich devices, such as 37


memory, graphic and network controllers, were left unaccounted due to the lack of data. However, the contribution of these components to the total silicon area could be significant and requires a closer look. For example, a teardown analysis has shown that the total silicon area in Toshiba’s Portege notebook was 22 cm2, while microprocessor- (CPU) and memory-related silicon was 2.5 cm2 and 4.3 cm2 respectively. That is only 30% of the total amount of silicon (Portelligent, 2000). DRAM shipment (millions) by density 3000

2500

2000

1 kBit

4 kBit

16 kBit

64 kBit

256 kBit

1 Mbit

4 Mbit

16 Mbit

64 Mbit

128 Mbit

256 Mbit

512 Mbit

1 Gbit 1500

1000

500

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

1978

1976

1974

1972

0

Figure 3-2. DRAM volume shipments by density.25 The author suggests that the amount of the unaccounted silicon can be estimated based on the example of component price information provided in the study of Portelligent. More than half of the product component costs are attributable to integrated circuits (Figure 3-3, a) and there is a strong correlation between the component prices and silicon area (Figure 3-3, b).

25

38

Based on data from (Flamm, 1997; Aizcorbe, Flamm et al., 2001; Nadejda & Ausubel, 2002).


Toshiba Portege 7010TC component prices

Discrete comp. $50.9 10%

Connectors $ 23.8 5%

Assembly & test $54.7 11% Substrate (PWB) $97.6 18%

Module $7.8 2%

Integrated circuits $285.2 54%

35

(b)

Number of entries: 60 Correlation coeficient: 0.946

30 Component price, $

(a)

25 20 15 10 5 0 0

0,1 0,2 Component silicon area

0,3

Figure 3-3. (A) breakdown of component costs26 in the sample product; (B) correlation27 between component price and die sizes. The price of mainstream TCs is about half the price of an average desktop PC. Assuming that the amount of silicon will scale down proportionally, the silicon area of the unaccounted components in TCs could be twice as small than in PCs. This is not an unreasonable assumption, because TCs compared to PCs have much less functionality and flexibility (in terms of performance expansion by adding new functional modules). Then, taking the same partition of silicon area in TCs between the main (processor and memory) and the other components as in the notebook example (30/70), the unaccounted silicon area in all thin clients of system “B” could be about 360 cm2 and in all system “B” PCs about 700 cm2. This means that the results in the Table 3-1 will increase proportionally and result in the same conclusion – namely, that fewer silicon resources are required in thin client architectures. In this evaluation it was assumed that all memory components had the same density and were produced at the same time. However, environmental impacts are not determined solely by the amount of embedded silicon but also by the complexity of integrated circuits. The latter is described in terms of integration level, of number mask layers and the size of chip area. Complex circuits generally require more mask layers and more process steps and, consequently, more material inputs during manufacturing and higher wastage due to lower production yields. Unfortunately, this information is largely unavailable from semiconductor manufacturers, which limits the extent of the

26

Source: Portelligent (2000).

27

Derived by the author from Portelligent (2000) data.

39


estimates. It must be acknowledged that the performed comparison of the two systems is still very rough. Nevertheless, the discussion provides an indicative answer that the environmental potential of SBC systems is significant enough to deserve attention. Sensitivity of results. The most important assumptions for the results in the study regarded the density of components on integrated circuits present in computer memory and the amount of server memory per user in centralised system. The evaluation followed recommendations of practitioners and hardware manufacturers. However, in reality a centralised system could demand slightly different values of these variables. Nevertheless, the eventual differences would be in a few percents and not in the order of factors.

3.3 Discussion 3.3.1 Data traffic vs. energy consumption Obviously, centralising computing resources puts a lot of emphasis on computer networks. These must be robust, reliable and capable of efficiently handling data flows, otherwise the SBC concept will not be a good alternative to the traditional decentralised systems. Fulfilling these conditions will have system-wide implications. One important question is what are the effects on the energy consumption related to network infrastructure? Growing computerisation demands increasing amounts of electricity to run the equipment and control temperature in offices. At the end of the 1990s, a series of rolling blackouts took place in Canada and the USA where the increased use of IT equipment was thought to be an important contributor. As a result, the issue about the significance of electricity consumption by ICT infrastructure during the last decade attracted considerable attention.28 Studies showed that non-residential office and telecom equipment in the U.S. consumed between 78 TWh/yr in 2000 (Kawamoto, Koomey et al., 2001) and 97 TWh in 2001 (Roth, Goldstein et al., 2002), or less than 3% of the total annual electricity consumption (AEC). These figures also include the non-Internet equipment, such as printers and copiers. An estimate on Internet-related energy consumption was about 81 TWh or 2.3% of AEC 28

40

A lot of research results are compiled on the website of the National Lawrence Berkeley Laboratories, MA, USA. URL: http://enduse.lbl.gov/projects/infotech.html.


(Roth, Goldstein et al., 2002, p97). Studies in other countries showed results comparable to the U.S. (Table 3-2) suggesting that in developed countries ICT infrastructure is responsible for about 3-4% of the total electricity demand. Table 3-2. Total electricity consumption in different countries. Country

USA (1999 and 2000)

System boundary

All non-residential office and telecom (network) equipment

74 (1999) 97 (2000)

% of total AEC 2.0 (1999) ≈3 (2000)

All Internet-related equipment in commercial & residential sectors

81 (2000)

≈2.329 (2000)

30

3.3

(NTT/FRIC, 2002)

41.2

4.3

(ISTEC, 2000, p3-6)

n.a.

3-4

(Digital Europe, 2003)

38-40 (1999)

7-8 (1999)

20

≈4

Japan (2000)

All Internet-related equipment in commercial and residential sectors

Germany (end1990s)

All Internet-related energy consumption All electronic equipment in commercial and residential sectors All office and Internetrelated equipment in commercial and residential sectors

TWh

Source: (Kawamoto, Koomey et al., 2001) (Roth, Goldstein et al., 2002, p143) (Roth, Goldstein et al., 2002, p97)

(BAE, 2000; Geiger & Wittke, 2002; Cremer, Eichhammer et al., 2003) (Plepys, 2003)30

While some energy analysts consider this level as relatively small (Koomey, 2000; Laitner, 2000; Laitner, Koomey et al., 2000), the author perceives that it is significant and worth addressing, especially given the existing power saving potential by optimising hardware operation and utilising less powerhungry equipment such as thin clients and notebook computers. Replacing traditional hardware by less energy intensive equipment, such as thin clients and LCD-based monitors, holds large saving potentials. Energy consumption shares attributable to different elements of computing and of-

29

Figures are as indicated by the authors. However, the AEC proportion is slightly inconsistent with the AEC of the 97 TWh estimate (all office and network related equipment).

30

Recalculated for just ICT equipment using the data from Cremer et al. (2003).

41


fice infrastructure can be illustrated in Figure 3-4, where PCs and computer displays take the largest energy shares. Obviously, in the best case of SBC, i.e. replacing PCs with thin clients; the PC-related share could be reduced by 50-75%. In addition, most of TCs available on the market today are prepackaged with LCDs, which demand around 30% of the CRT power.31 Annual energy consumption of non-residential office & telecomm equipment for 2000 (total 97 TWh primary energy)

UPSs 6%

Other* 10%

Printers 6%

Monitors and displays 22%

Computer Networks 7%

PCs and workstations 20%

Telecomm Networks 7% Copiers 10%

Server Computers 12%

Figure 3-4. AEC of IT equipment in non-residential buildings.32 At the same time, server computers, uninterrupted power supply (UPS) units and telecom and computer networks comprise more than 40% of the total energy use of the IT infrastructure (Figure 3-4). A shift to SBC systems implies higher server loads and may increase data traffic. Although sending data is not the same as supplying electrical power, it requires a lot of power hungry infrastructure. Consequently, there is a danger that energy savings on the user side could be negated by an increased energy demand from the network infrastructure. Server rooms typically have high power densities. Robust operation requires a reliable energy supply associated with significant investments into auxiliary infrastructures such as power backup and cooling systems. Some studies have estimated that server rooms stand for 20-30% of all ICT-related electricity consumption (Huiberts, 2001), which is about 0.5% of national AEC 31

In some countries LCDs already take a large share of all displays, e.g. up to 70% in Japan (LCDIRC, 2003). In addition, old CRT monitors are generally replaced by LCDs with higher resolution and larger screen area (Roberson, Homan et al., 2002, p17), which demand more energy.

32

The data for the graph is from Roth, Goldstein et al. (2002, p22). Other estimates show that energy consumption by PCs and monitors could reach up to 60% (Overcash, Kim et al., 2001) and 85% (Kawamoto, Koomey et al., 2001) of total electricity use in offices.

42


in the Netherlands. Studies in other countries have shown similar results (Table 3-3). Table 3-3. The shares of data centres in the annual electricity consumption (AEC). Country

Netherlands

AEC Source

0.5% (0.5 TWh) (Huiberts, 2001, p45)

USA 0.62% (22 TWh) (Mitchell-Jackson, 2001, p52)

Switzerland 0.4% (0.21 TWh) (Huser, 2002, p15; Cremer, Eichhammer et al., 2003, p1)

The comparative study conducted by the author did not show any significant changes in server-related energy consumption due to more intensive use of server resources. The two systems, while providing the same user function, consumed an equivalent amount of electricity on the server side. Servers in the SBC system actually consumed less than in the decentralised system but this was attributed to the largely oversized storage space of the latter. With a proper sizing of server resources, the author assumes that energy uses would be even closer. The author also believes that this conclusion is not highly dependent on the size of the modelled systems. Observations and interviews with data room operators have shown that in a typically centralised (SBC) system one server serves about 30-60 users.33 While user count per server in decentralised systems in theory could be much higher (here servers are typically used for file transfers, printing and mail traffic), this is rare in reality. Companies practicing decentralised systems often have distributed facilities using hierarchical server architectures with a low- to mid-range server installed locally to provide printer sharing and other functions with similar user counts per server as in SBC systems. In addition to having (at least small) server rooms, all of these facilities also require auxiliary infrastructure such as server power back-up systems, routers and switches. Therefore, the eventual user count per server is likely to be similar in both computing concepts. An even stronger argument is based on the potential implications of data traffic. Systems (both centralised and decentralised) where applications are executed on the user side, imply much higher data traffic compared to thin client architectures (Cherry Tree & Co., 1999; Wainewright, 1999; Sound Consulting, 2000). In “fat” client or NC systems, parts of applications and all user data must be first downloaded from a server, then processed locally and sent back to the server. The implications of this for data traffic can be 33

Personal communication (2002/05/03). Nicklas Thorén, Genesis-IT, Umeå, Sweden.

43


seen from the typical bandwidth demands in decentralised systems and SBC systems with “fat” clients, which today even for small-size organisations are in the order of 100 MBt and up to 1 GBt in large networks. On the other hand, studies have shown that thin client systems could in theory work with the bandwidth of 20 kBt/s per user, since only user inputs and desktop images are travelling between the user and the server (Newburn Consulting, 2002, p7). However, it must be said that in systems where users are often browsing public Internet pages, such a low bandwidth is rarely used in practice due to the graphics-intensive nature of the Internet content. Nevertheless, the bandwidth required for thin clients is much lower than those of the systems with more local computing power. Tests have shown that TCs when compared to fat clients require 40 to 80 times less bandwidth. The author’s observations in the existing SBC systems showed that a network of 20 users (not running graphics-intensive applications) connected to a server 600 km apart occupied a bandwidth of 2 MBt.34 Therefore, the author argues that on a system level (for instance, per company), the SBC concept is not necessarily associated with higher energy needs for network infrastructure.

3.3.2 Product innovation and environmental implications An interesting issue is how the environmental loadings depend on product complexity. New product generations generally tend to have higher component densities and are manufactured with more mask layers and more metal interconnect levels.35 On the other hand, Hardware with limited functional performance is generally based on less complex components. For instance, thin clients run on slower processors with less complex logic and lower transistor count (thus a smaller die). The clients analysed in the comparative study were based on Geode type of processors, which depending on the model, can have 4-5 (Al) metal layers and 28-45 million transistors. For comparison, Intel’s Pentium 4 processors typically have 6-7 (Cu) metal layers and up to 55 million transistors.

34 35

44

Personal communication (2003/04/16). Mr. Börje Lindh, Sun Microsystems (Sweden). A useful overview of semiconductor technology trends can be found on IC Knowledge Inc. website. Internet URL: http://www.icknowledge.com/trends/trends.html. Updated regularly.


Manufacturing less complex integrated circuits requires fewer resource inputs. For instance, comparing microprocessors (CPUs) with 6 and 8 metal layers Murphy at al. (2003, p5380) found that for the latter energy is higher in several key fabrication processes. Etching one additional metal layer was found to add about 20% to the total manufacturing energy. If this is a universal observation, then for our study it implies that the production of CPUs for thin clients could be less energy intensive. The same could apply to other semiconductor components. Unfortunately, this example cannot be the basis for any far-reaching conclusions, since other studies indicate that manufacturing new generation (generally more complex) products does not necessarily imply higher environmental loading. Intel, for example, has found that new generation CPUs with more metal layers require less material inputs and generate fewer emissions, except for chemical waste (Table 3-4). An independent study at the Fraunhofer Institute (IZM) also found that newer products have lower manufacturing energy intensities. The total primary energy demand in manufacturing a typical PC in 1999 was about 1.8 GJ, while a typical PC produced in 2003 had a 10% lower energy intensity (Schischke, Kohlmeyer et al., 2003). These are potentially interesting findings, which could show changes in environmental loads in relation to technology development. However, understanding the relationship between product complexity and environmental impacts of manufacturing requires much more evidence studying different product generations. Another aspect worth discussing is what are the implications of increasing product functionality to the total silicon content. Although technological innovation increases component densities, additional features often require more components and result in a larger amount of total silicon area per product. For example, studies from Portelligent show that the average amount of silicon area in GSM phones between 1995-99 has gone down from 3.2 cm2 to less than 2.6 cm2. However, with the introduction of colour screens, wireless communication services and imaging functions, the trend has been reversing. For example, the total silicon area in a new Sharp JSH04 phone is 3.9 cm2 (Portelligent, 2004). A comparison of two generations of mobile phones showed a clear increase in both component count and total silicon demand along with the increasing data transfer capabilities (Table 3-5).

45



Table 3-4. The environmental comparison of two generation of microprocessors from Intel. Number of transistors (millions) 5.5

(mask) 20

(metal) 4 (Al)

Pentium Pro

166

Technology node (nm) 600

Pentium 4

2,200

130

55

21

Resources and emissions (per chip):

UPW (litres)

Electricity (kWh)

Wastewater36 (litres)

Pentium Pro

32

4.9

Pentium 4

18

3.5

Product specifications:

Clock rate (MHz)

310

Power draw in use (W) 27.5

6 (Cu)

131

8

2003, Q3

NOx (g)

PFCs (g)

HAPs (g)

VOCs (g)

Chemical waste (g)

79

0.3

2.7

0.10

1.7

29

18

0.2

0.3

0.04

0.2

33

Layers

Die size (mm2)

Data age 1997, Q1

Source: (Wilson, Yao et al., 2004) Notes:

36

UPW – ultra-pure water PFCs – perfluorocompounds (see footnote on pg.7) HAPs – hazardous air pollutants VOCs – volatile organic compounds

Why there is much bigger difference in the wastewater figures between the two products was not explained in the study. It could be that cooling water was included in the figure for Pentium Pro.

46


Table 3-5. Comparison of two generations of mobile phones. Model A baseline handset Samsung SPH-X4200 Panasonic P2101V

Type of technology

Data speed

# of components

Silicon, cm2

Cost

GSM

56 kbps

331

1.26

$56

144 kbps

544

3.30

$127

384 kbps

702

9.48

$280

3G

(CDMA2000)

3G

(W-CDMA)

Source: (Portelligent, 2002)

New features are also being added to thin clients, which are designed with ever-faster processors and more memory to be able to work with graphical applications and multimedia-rich Internet content. Older thin client models may not be suitable for such applications. In fact, the author’s observations of thin client development indicate a clear tendency towards “heavier” products, i.e. with faster processors and more memory resources. While an average thin client 5-6 years ago had a 133 MHz processor and 16 MB memory, today a typical TC runs at 200-500 MHz and contains 32-64 MB RAM (Söderlund, 2004a). Some models can contain up to 256 MB RAM and require an additional flash memory module of a similar size, which in terms of memory resources makes them comparable to stand-alone PCs. This indicates that TCs are following a similar pattern of technology cycles as PCs, although at a slower rate. Falling prices of components, such as mini hard disks, make them an increasingly attractive option for thin clients, which may change from very simple, scaled down devices to full-featured hardware. Since the growth rate of thin client worldwide shipments is predicted to grow by over 20% per year jumping from 1.5 million in 2003 to 3.4 million units in 2007 (IDC, 2003), the environmental benefits of having “lighter” computing alternative can be quickly eroded.

3.4 Reflections 3.4.1 Comments on study results Sever-based computing (SBC) systems could be regarded as an equivalent alternative for decentralised (PC-based) systems, since in principle both systems can provide similar functionality to the end-users. Placing most of the computing power on servers and sharing it amongst several users allows for 47


a more efficient utilisation of systems’ functionality with fewer performance requirements for user side hardware. This enables the use of simplified computing platforms, such as thin clients, as well as outdated computers. Based on empiric material, the author argues that the lifetime of user hardware in the SBC systems can be doubled when compared to decentralised architectures (6-8 years and 3-4 years respectively), which brings the environmental benefits from a product life cycle perspective. At the same time, no considerable changes in the lifespan of server side hardware should be expected with the shift to SBC systems. Here, the same aspects as in decentralised systems determine the lifetime of server hardware i.e. technological obsolescence and economic considerations. Regarding energy consumption, two issues are worth mentioning. Firstly, significant energy savings are possible mainly on the user side and only in the case of using simplified hardware, such as thin clients, which typically consume 2-3 times less power than personal computers. Other alternatives, such as network computers, “fat” clients or outdated PCs, do not allow for energy savings and in case of the latter could even be responsible for higher power consumption due to outdated technology. Secondly, SBC cases, where the bulk of computing power is on the server side (e.g. client-server architectures), do not imply a significant increase in network loads and do not lead to higher infrastructure-related energy consumption. However, if SBC architectures retain some computing power on the user side (e.g. using network computers), it may imply the opposite, although in this case energy consumption changes due to higher data traffic may not be significant. If the lifetime of hardware can be extended, the amount of e-waste generated by SBC systems is clearly lower than in the decentralised system. Some products, such as thin clients, are based on fewer silicon components and have much lower amounts of embedded materials. The weight of an average TC unit is around 2 kg when compared to 15-22 kg of a typical central unit in a desktop PC system. However, although the amount of post-consumer waste on a per product basis is lower in TC architectures, the amount of waste entering landfills is unclear since it depends on product recycling rates. Recycling products with low content of bulk materials may not be profitable. Reducing computing power on the user side also implies a lower amount of total silicon content on a per system basis. Substituting TCs for personal computers has proven to allow for a factor 2 reduction of total silicon content. The study also showed that SBC computing does not imply higher silicon requirements on the server side. This suggests that environmental im48


pacts related to manufacturing and post-consumer life cycle stages are at least proportionally lower in TC architectures. A more precise answer requires product-specific investigation. Centralised computing systems on the user side allow using products based on less complex semiconductor components (e.g. slower processors, with lower component density and fewer mask layers), which has positive environmental implications in manufacturing stages. The question of whether or not manufacturing less advanced electronics implies lower environmental impacts requires an insight into product design and production technologies. The environmental impacts of semiconductor fabrication depend on process complexity (e.g. component density, number of mask layers and metal interconnects) and wafer treatment technologies (e.g. the use of vertical vs. horizontal furnaces, wet bench vs. spray rinsing, chemical vs. plasma etching etc.). The lack of manufacturing data did not allow for a comprehensive evaluation of other environmental issues related to product manufacturing, which would require a full life cycle assessment of specific products. The issue of product complexity and its relation to environmental life cycle impacts is interesting and worth exploring. Increasing consumption of electronics so far negates efficiency improvements in semiconductor manufacturing and technological innovations play an important role in determining the overall environmental impact of electronics. The eventual impacts depend on a number of counteracting trends. For instance, as the feature sizes shrunk, the demands on air quality and water use increased but in conjunction with this the technology and equipment efficiency have improved significantly. The shift to larger diameter wafers allows reducing edge losses if die size is to remain the same. The latter however, shows a tendency to increase, which can more than counteract the improvements on a per chip basis. In addition, the chips become more complex having more metal interconnect levels and mask layers, all of which requires additional process steps. Determining the impacts of these trends is difficult and eventually depends on the particular product. The potential technology improvements in terms of resource consumption may also be eroded by the general trend of products becoming “heavier”. The dynamics of computing needs in an organisation are considered to have a significant impact of overall product lifetime in computer systems, although to a somewhat lesser extent in the SBC architectures. The increasing use of multimedia-rich Internet content and graphic applications are posing increasing demands for local computing power, which will have repercus49


sions to the technological lifespan and demand more advanced products. The addition of new functions, such as local operating system and multimedia application support in thin clients, requires components with high performance parameters, which often implies faster processors and more memory. The additional functions are not always used effectively and the falling costs of electronics encourages consumers to buy the additional function for the “just in case” situations. More flexible systems of function provision, such as the centralised computing system discussed here, avoid the suboptimal use of product resources without limiting the access to additional functions when these are needed. A more comprehensive analysis of environmental attributes of different designs of computing systems requires significant amounts of data, which is scarce. The main observations by the author regarding data limitations during the study are summarised in the following section.

3.4.2 Data limitations Lack of data is a characteristic problem facing any product life cycle impact assessment (LCA). This problem is especially evident in LCAs on electronic products and semiconductor components. The main contributing factors are rapid technological innovation and a large variety of products. Electronics are also among the most complex products produced, using a large variety of input materials and manufacturing processes. Conducting an environmental assessment of a particular product requires product- and processspecific data. Unfortunately, most of the manufacturing related data is highly fragmented. Publicly available data is scarce, outdated or offered primarily in a highly aggregated form. To overcome the lack of specific data, practitioners are often forced to use surrogate data, substituting missing product-specific data by industrial averages or best-case data such as SEMATECH’s International Technology Roadmaps for Semiconductor Industry (ITRS). In some studies, data on the materials and energy used to produce chips in a computer is estimated by allocating computer semiconductors-related share of energy consumption in the global semiconductor industry and dividing it by the total production of all computer devices, including all types, models and brand names. This method could be adequate if the goal is to reach an indicative result, but it is not suitable for conducting an LCA of a specific computer type (for instance, a generic notebook or a thin client). 50


Data on resource consumption in semiconductor manufacturing varies greatly depending on facility design. Publicly available data generally applies to the older pre-1990s fabs for 100-150 mm wafers, while the bulk of semiconductor are manufactured in 200 mm and increasingly 300 mm facilities. The data from these fabs is still largely unavailable, although indicative figures are provided in technology roadmaps issued by SEMATECH. Unfortunately, according to the author’s observations, these figures are often far from average since the roadmaps intend to provide industry guidelines for attainable performance standards and refer to the best manufacturing practices (see Figure 1-5, pg. 11). Improving data quality requires close collaboration with the manufacturing industry, which is often hindered by proprietary concerns. Industrial data disclosed to the public often lacks transparency and is inconsistent, which limits its comparability with other sources. There is a broad variety of performance metrics used by the industry. In some companies environmental reports resource consumption is indicated only as a percentage-change from previous years. Other companies indicate total resource consumption without referring to production volumes so that the resource efficiency per product output cannot be established. Some manufacturers indicate production output in monetary terms along with resource consumption and environmental emissions, which does not allow disaggregating data to specific products. A number of studies, as well as many EHS reports from industry, are not always clear if the final yield has been taken into consideration when resource intensities per functional unit are calculated. Production yield in the semiconductor industry is a parameter, which is highly sensitive to technology nodes (i.e. component feature sizes), product and process complexity (i.e. density of components per unit area of silicon, number of mask layers and metal interconnect levels), as well as the geometries of wafers and product die sizes. Unfortunately, the data on process yields is highly proprietary information. Also, yield is a product- and process-specific variable and is not easily transferable to other products. Therefore, external environmental assessments are often forced to resolve highly probabilistic simulations using industry-wide data, which considerably deviates from the site-specific data.

51

CHAPTER

FOUR 4. Limitations of environmental assessments This chapter focuses on the limitations of conducting environmental assessments for electronic products. The discussion is based on the author’s analysis of different life cycle assessment studies for semiconductor components as well as methodological challenges faced by the author when conducting the comparative study between the two computing systems discussed above.

4.1 Incompleteness of life cycles Most of the existing environmental life cycle assessments (LCA) of electronic products have not been able to adequately address the entire product life cycle. The most frequently omitted parts are related to the upstream manufacturing of semiconductor materials, especially high-grade specialty chemicals. It has been pointed out in a number of studies that omitting these parts of product life cycle may result in a significant underestimation of the full environmental impacts of electronics (Andræ, 2002; Williams, Ayres et al., 2002; Schischke, Kohlmeyer et al., 2003; Krishnan, Boyd et al., 2004; Plepys, 2004a; Schischke & Griese, 2004; Williams, 2004). The author has addressed issues relating to upstream manufacturing processes in Paper IV. This section will provide a short summary and highlight the most important issues raised in the paper. The main problem for including upstream material production stages in most of the existing LCA studies is a severe lack of data. A number of existing commercial life cycle inventory databases, reviewed by the author in 2003, did not contain sufficient information regarding the manufacturing of specialty chemicals (Plepys, 2004a; Plepys, 2004c). According to the provid-

53


ers of the databases37, the main reasons are rapidly evolving material standards, high data collection costs and a relatively low demand for this kind of information. In the best case, LCA practitioners include the upstream processes but use manufacturing data for technical-grade materials, which have purity levels several orders of magnitude lower than the requirements of the electronics industry. Standards for input material purity have been raised parallel to increasing component densities and the overall growing complexity of integrated circuits, which has resulted in a number of materials that are today demanded in sub-ppb purity levels. Manufacturing pure materials is likely to be associated with significant energy requirements in upstream life cycle stages. Indeed, a limited number of studies of silicon manufacturing chains (Alsema & Phylipsen, 1995; Williams, 2000; Taiariol, Fea et al., 2001; Williams, Ayres et al., 2002; Williams, 2003b) have shown that the production of ultra-pure silicon requires much more energy than the production of technical grade silicon. In Paper IV, the author discussed the feasibility of using material price as a proxy for some of the environmental aspects, such as energy intensity of chemical production. The discussion is based on the author’s observation that semiconductor chemicals cost much more than technical grade materials. Knowing that extreme purification requires more energy than traditional processes, the author hypothesised that there could be a relation between chemical price and the amount of manufacturing-related energy. The author conducted a number of interviews with chemical manufacturers in order to gain an insight into the price structure of specialty chemicals. The collected information shows that the share of direct energy consumption in the final product price is low in comparison to other costs such as capital depreciation, facility management, chemical packaging, storage and preservation, testing, certification etc. In addition, increased specialisation in the segment of specialty chemicals normally allows much higher profit margins than for technical grade materials. This suggests that in this case price is not a reliable indicator for energy consumption. Nevertheless, material price may still be interesting as a proxy for generic upstream infrastructure related environmental impacts. This could perhaps be a topic for a separate investigation in the future.

37

54

Personal communication (Dec, 2003). Dr. Ian Boustead (Boustead Consulting Ltd., UK); Mrs. Carmen Alvarado (Pre-Consultants, Netherlands); Dr. Roland Hischier (ECOINVENT, Switzerland); Dr. Mike Chudakoff (Öko-Science, Switzerland)


Another idea suggested by the author, was a framework for data collection in order to overcome data deficiency. The framework was based on observed trends in chemical manufacturing and material procurement strategies practiced by the electronics industry. To reduce defect densities in final products, semiconductor manufacturers used to acquire the most pure input materials possible. Today, economic considerations have forced the producers to shift from the “as pure as possible” to “as pure as necessary” strategy in material procurement. This has resulted in falling demand for chemicals of ultra-high purity, except for materials that come into direct contact with the bare silicon. Furthermore, the author reviewed a number of industry publications and observed that not all high-purity chemicals are used in large volumes. The proposed framework suggests using these observations as a guidance to prioritise the data collection process. By focusing primarily on highgrade materials used in large volumes allows for the accounting of a large part of the manufacturing related energy consumption. Much of the data can be found in the existing databases or estimated from an insight into the prevailing chemical technologies used for different grade chemicals. Inventories are available in the existing LCA databases for some mid-grade materials (for example. VLSI standard grade) that are produced by selecting the purest batches of technical grades and then applying additional standard purification steps. The missing data for mid-range grades could be calculated from thermodynamic calculations focusing on the most energy-intensive processes, such as vacuum distillation, while low-energy processes could be arbitrarily disregarded. The biggest challenge is to collect data for the highest material grades where the first approximation could be equipment specifications provided by manufacturers. It is most likely that this will still require conducting on-site measurements due to the high variation of production yields between different chemical facilities, especially in the high-grade materials sector. Although the suggested data collection framework is still imprecise, the author believes that it allows for a better approximation of the semiconductor life cycle related impacts.

4.2 Pros and cons of different assessment methods Analysts have traditionally struggled with providing quick and reliable environmental life cycle assessments that could also be communicable to the decision-makers. The main obstacles are the chronic lack of reliable data and the uncertainty in valuating and weighing different environmental impacts. 55


To overcome some of these limitations, a number of assessment approaches have been developed, which can be classified by their focus and data collection methods. Depending on the focus of analysis, the assessments can range from an evaluation of resource flows disregarding their environmental properties to full investigations of the environmental and human health impacts of all anthropogenic interventions associated with the life cycle of a product or a service. For instance, environmental life cycle assessments (LCA), aim at establishing links between product life cycle aspects and environmental impacts (see: SETAC, 1993a, 1993b; Guinée, Goree et al., 2002). Others, such as material flow analysis (MFA), are streamlined to predominantly assess resource intensity issues without addressing eco-toxicological, human health and biodiversity issues (see: Bringezu, Schütz et al., 2003; Hinterberger, Giljum et al., 2003). Depending on the prevailing data collection techniques, all assessment approaches can generally be divided into the so-called “bottom-up” and “topdown” methods (Hendrickson, Horvath et al., 1998; Suh & Huppes, 2002; Weidema, 2003). The main difference is in the type of data that is used as an input for analysis. The bottom-up models have traditionally been used in life cycle assessment inventories to collect data for specific products and basic relevant unit processes, which are eventually aggregated into larger processes finally modelling the entire product life cycle inventories. LCAs based on the bottom-up models are also called process-LCA (P-LCA). They are intended to be as product-specific as possible by tracing the environmental issues in each life cycle stage of a particular product. The alternative “top-down” data collection methods rely on highly aggregate data sources, such as national input-output matrices of economic crosssectoral transactions. For this reason, life cycle assessment methods based on this type of data are commonly called input-output LCAs (I/O LCA). Combined with the information on material, product or service prices and the environmental data on different environmental accounts, such as average emission factors in typical industries, the methods allow deriving cross sectoral resource flows and the associated environmental emissions. Since the original source data represents average industrial characteristics, the results cannot be product-specific and are interpreted as national averages.

56


Both types of assessment methods have been practiced in evaluating the environmental impacts of semiconductor and electronic products and produce diverse results, which are worth discussing.

4.2.1 Process-LCA The life cycle assessment (LCA) method has been practiced for evaluating product-related environmental impacts as early as 1964, starting with the first applications by companies such as Coca Cola and Tetra Pack. Since then, it has evolved through different codes of conduct (SETAC, 1993a, 1993b, 1994) and a number of methodological guidelines (Lindfors, Christiansen et al., 1995; Guinée, Goree et al., 2002), which allowed the standardisation of the method on an international level (ISO/TC 207, 1998). The LCA method basically consists of two parts – material inventory and environmental impact assessment. Conclusions about the environmental profile of a product or a service can be drawn from either of them. The strong side of LCA is the product-specificity, which should be particularly appreciated in the electronics sector due to the great variety of products, materials and manufacturing technologies. However, successful application of LCA in the electronics sector suffers from the significant shortage of inventory data on material flows as well as a lack of understanding about the nature of their environmental impacts. Besides being very diverse, electronics are among the most complex products involving hundreds of materials acquired through global supply chains. The variety and global nature of the industry requires large amounts of data, although most of it (as discussed in section 3.4.2) is either outdated or fragmented and ranges from productspecific to industrial averages. Acquiring the data directly from the industry is hindered by the proprietary concerns. Facing data limitations, LCA practitioners are forced to streamline system boundaries by cutting off life cycle stages, which are considered insignificant or which have severe data gaps. Process-LCAs often omit material flows associated with capital buildings, services and many upstream manufacturing processes. Services, for example, play an increasing role in the semiconductor industry, which due to economic considerations and increasing process complexity, choose to outsource some manufacturing operations to service providers (for instance, those requiring the use of specialty chemicals). Unfortunately, practical limitations prevent many LCA practitioners from including services-related data in their environmental assessments. 57


As noted in Section 4.1, many upstream life cycle stages, such as manufacturing of ultra-pure specialty chemicals, are due to data gaps that are often omitted or are accounted for using surrogate data from other sectors. The resulting system imperfections in process-LCAs, (including the upstream and many other life cycle stages), leads to significant underestimations of product environmental impacts. The magnitude of the potential error is certainly different from case to case, however some authors have estimated it to be at least 50% when compared to the results of alternative assessment methods (Hendrickson, Horvath et al., 1998; Lenzen & Treloar, 2002). This will be discussed further in the next section.

4.2.2 Input-output based approaches The problem of system cut-offs (leaving some life cycle parts unaccounted for) in process-LCAs can be addressed by the I/O-LCA methods, which use cross-sectoral data from the national economic input-output tables. In these methods, monetary data is supplemented with energy and material flows in physical units allowing, for instance, measurements of changes in the energy intensity of an economic activity (e.g. Hannon 1982) or studying material waste flows and recycling (Cleveland & Ruth, 1998b). The I/O framework method is not new and has been applied in environmental analysis since the late 1960s (Leontief & Ford, 1970; Leontief, 1986). The environmental I/O analysis is based on combining economy-wide data on cross-sector economic flows with environmental data on total emissions from each sector. The strongest benefit of the method is that it includes the “ultimate” system boundary (assuming that I/O tables accurately cover the entire economy). This avoids errors due to cut-offs in system boundaries and includes environmental loadings typically unaccounted for in process LCAs. A number of semiconductor I/O-LCA studies have been using U.S. data, which has the most elaborate description of its economy divided into more than 500 sectors. Studies on primary energy consumption in the life cycle of personal computers have shown that the total energy consumption calculated using process-LCAs (with system cut-offs) may be 2-3 times lower than the energy estimated by I/O-LCA, encompassing data from the entire national economies can be up to 2-3 times (Della-Croce, 2001; Norris, Jolliet et al., 2001; Loerincik, Suh et al., 2002). For instance, Williams (2004) used a process-LCA for estimating the energy consumption for manufacturing a desktop computer system (PC and CRT monitor) to 3.1 GJ, while accounting for extended system boundaries by combining an LCA with inputoutput assessment (see next section) resulting in 7.3 GJ of total energy. 58


However, I/O-LCA methods also have a number of limitations. High level of data aggregation is the most important limitation, which does not allow producing product or process specific results. This method assumes data homogeneity (i.e. foreign and domestic producers have the same factor inputs) across different industries and across different products both within the country and abroad. In industry sectors with significant resource consumption variations, such as semiconductor and electronics, the applicability of the method is limited. The data itself has inherent uncertainties due to sampling and reporting errors and produces highly generic results. Since I/O-LCAs are based on economic input-output data, wastes are poorly reflected in the environmental analysis. Wastes often have no price and thus cannot be accounted for in the I/O analysis. Most importantly, prices of cross-sectoral resource flows do not include the external costs of pollution to society. In addition, the use phase cannot be accounted for using the economic I/O data. For example, it is impossible to obtain the share of electricity consumption in the residential sector that goes to computer equipment, because I/O tables are still aggregated showing how much of the energy is used without specifying what it is used for. Accounting for the use phase is important for many electronic products, since it is one of the largest sources of energy consumption and associated emissions. Another drawback is that most of the I/O data is rather outdated, dating back ten years or more. For some rapidly evolving sectors, such as semiconductors and electronics, using this data leads to significant errors. In addition, most of the existing I/O databases cover only national economies, which for small countries are not resolute enough to be representative for the global production chains such as semiconductor manufacturing. However, it could be argued that the globalisation of the economy, assuming that many sectors have a high degree of technological similarity between different countries at similar level of economic development, facilitates transposing national data to the global level. In this case, the data of large economies (e.g. USA, Japan, Germany), at least to some degree, can be considered representative of the “world’s average”. On the other hand, the existing I/O databases tend to have quite different geographical scopes, divisions into final product groups and divisions into industry sectors, which make transposing the data between the countries difficult.

4.2.3 Hybrid LCA The benefits of process LCA and I/O analysis can be combined in what is called a “hybrid” assessment method (hybrid-LCA), which has lately been 59


tested by a number of researchers (Lenzen, 2000; Lenzen & Treloar, 2002; Loerincik, Suh et al., 2002; Suh & Huppes, 2002; Krishnan, Boyd et al., 2004). The common approach is to apply process-LCA to downstream life cycle stages (manufacturing, use, end of life) and, if possible, to some lowerorder upstream stages. Those components of the product life cycle for which specific data are typically not available (e.g. raw material extraction and processing), are then addressed through the input-output approach. The ultimate goal is to combine the advantages of both methods (for instance, completeness and specificity) to the best degree possible. The general approach is to use I/O-LCA to map the preliminary ranking of the most important material flows (those having the highest magnitude, not environmental impacts). Then, for the most significant processes, a sitespecific inventory could be established with a step-by-step substitution of I/O estimates with specific process data. The substitution could be done until the required level of accuracy and specificity is achieved or until a limit of process data, research time or other resources is reached (Lenzen, 2000, p144; Suh & Huppes, 2002). In the context of this research, detailed process-specific data is preferable for most of the product life cycle stages, but especially for manufacturing high-grade materials and those processes that change rapidly. Application of I/O-LCA is very limited for life cycle stages associated with manufacturing high-grade materials, which is due to the structure of input-output tables that do not distinguish between the different qualities of the same materials. For technical grade materials, such as bulk plastics and metals, and for rather static processes (transportation, electricity mix, capital buildings) the I/O based approach should be suitable. Hybrid approaches allow more precise environmental estimates of the unaccounted life cycle stages, which are omitted due to the cut-offs of system boundaries in the traditional process LCA. Using a hybrid LCA approach, Williams (2004) investigated the total energy consumption in manufacturing a personal computer with a CRT monitor. Using process-LCA, the study was able to account for only 25% of the total life cycle energy consumption. The remaining 75% was estimated by adding system cut-offs and through I/O-LCA, which included the remaining parts of product life cycle. The product manufacturing phase turned out to be responsible for 83% (7.3 GJ) of the total energy consumed over a 3-year old product life cycle. The 3-year use phase was responsible for 17% (1.5 GJ) of energy consumption (mainly electricity). According to Williams (2004), even these estimates are likely to 60


be uncertain and conservative. For the I/O part of the assessment, the author was forced to use surrogate data from other manufacturing sectors, such as Electrical Machinery, Equipment and Supplies Sector, since he was not able to find adequate data on the production of specialty chemicals from the economic U.S I/O tables used in the study.

4.2.4 Parametric assessment methods Another alternative method to cope with the limitations of the process-LCA and I/O methods could be to organise inventory data collection around selected unit operations, which could provide “typical” mass and energy flows for generic manufacturing processes. This method could be particularly useful in reducing data collection efforts in the electronics sectors, which exists due to the broad variety of products and processes. The method was tested by researchers at Texas University and builds on establishing parametric relationships between process and/or equipment characteristics and results in generic inventory modules applicable in a vast majority of semiconductor manufacturing lines (Murphy, Kenig et al., 2003; Murphy, Laurent et al., 2003a). Parameters of unit operation modules are less dynamic than overall production “recipes” (i.e. sequence of processes and materials), so they can be combined and repeated as building blocks for a particular product. This method, although still laborious, requires less time than any of the “bottom-up” LCA approaches and produces more accurate results than the “top-down” or facility level approaches. It is also applicable for emerging technologies in the early stages of their ramp-time.38 Counting the number of total process steps for each mask layer and obtaining average material consumption for a given process, it is possible to calculate total resource flows in manufacturing each product. For instance, Murphy et al. (2003) showed a calculation example for thermal oxide growth as a function of layer thickness. The same can be applied to other process steps using specific production parameters such as time, temperature, pressure, flow rates etc. and estimating the corresponding material use. Parametric methods produce easily comparable results for each unit operation, which in the end allows the choice between better process options (Kruwinus & Oyrer, 2000). Differences in material consumption, depending on the choice of process type, are exemplified in Table 4-1.

38

Personal communication. 2004-05-11. Cynthia Murphy, University of Texas, TX.

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Table 4-1. Results of parametric comparison of different manful processes. Material

49% HF H2SO4 HCl H2O2 NH4O4 UPW IPA N2

Wet bench, cm3 per 200 mm per cm2 wafer 6 0.02 110.3 0.35 23 0.07 56.5 0.18 16.1 0.05 21391 68.09 324.8 1.03 No data No data

Spray cleaning, cm3 per 200 mm wafer 2.6 71.2 20.2 94.8 21.7 37,754 0 1,017,554

per cm2 0.01 0.23 0.06 0.30 0.07 120 0 3,239

Source: Murphy et al. (2003).

An important benefit of parametric methods is the ability to disaggregate facility level data on resource consumption and identify the share of nonproduction related losses. Apparently, large amounts of resources are consumed in numerous test runs, maintenance procedures and equipment idling time (Murphy, Laurent et al., 2003b). For instance, chemicals and water are often run through idling equipment to prevent bacterial growth and maintain chemical equilibrium and furnaces are idling to avoid particle contamination and minimise thermal cycling that reduces the lifetime of equipment. Estimates on idling-related energy consumption are shown in Table 4-2. Table 4-2. Power (kW) in different fabrication processes in production and idle modes. Process/Power Implant CVD Wafer clean Furnace Furnace (RTP) Photo (stepper) Photo (coater) Etch (pattern) Etch (ash) Metalisation CMP Source: Murphy et al. (2003).

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Production 27 16 8 21 48 115 90 135 1 150 29

Idling 15 14 7.5 16 45 48 37 30 0.8 83 8

% of production 56% 88% 94% 76% 94% 42% 41% 22% 80% 55% 28%


4.3 Utility problem in multifunctional systems Complex product systems, such as computers, deliver more than one function. An LCA practitioner comparing different computing systems may face the dilemma of choosing a relevant functional unit that would allow selecting functionally equivalent product alternatives and setting system boundaries. The problem will be discussed in this section.

4.3.1 Multifunctionality of product systems The problem of product multifunctionality has been recognised and discussed by a number of LCA practitioners (Lindfors, Christiansen et al., 1995; Udo de Haes, Clift et al., 1996; Guinée, Goree et al., 2002; Jungmeier, Werner et al., 2002). Two basic types of multi-functionality in product/service systems are identified. First, are systems that are possible to disaggregate into primary (most important) and secondary functions. In these cases, the practitioners suggest disregarding the auxiliary functions if it is appropriate for the goal of the analysis. Second, are systems where the primary and the secondary functions are not identifiable or indistinguishable. Even in the simplest form of design they deliver several functions all of which are essential for the user needs. To deal with the latter type of multifunctionality, the practitioners give two recommendations: (1) choosing a functional unit based on a bundle of functions or (2) including only the primary function and partitioning (allocating) material flows between the primary functions (Lindfors, Christiansen et al., 1995; Guinée, Goree et al., 2002, p469). However, although practical in some cases, the recommendations sometimes create complications. The first recommendation of setting a functional unit (FU) based on a bundle of functions may in some cases lead to complex and impractical constructs, which will limit the range of the alternatives suitable for comparison. Including several parameters in the description of the FU will also require extending system boundaries, which automatically increases data requirements. However, system boundary extension is often necessary, especially when omitting or including some functions in an alternative system is likely to change consumer behaviour. This issue often arises when comparing multifunctional products, which in the eyes of the users have composite functions. The second recommendation of partitioning (allocating) material flows between the primary and secondary functions will be particularly difficult if no 63


causal relationship exists between the between the primary and the auxiliary functions. In this case, any allocation method used will add to the degree of subjectivity and uncertainty of the end result. A partitioning of the linked functions may also be technically possible, but the result is seen as incomparable to the joint functions.

4.3.2 Duality of “function” and “utility” Almost any product system, along with a set of physical functions, also provides a number of other less tangible functions, which combined comprises a total unit of product service. The intangible functions may play a decisive role in defining consumption patterns, which is typical in cases where consumer perceptions and experiences are involved. Here it is only a combination of many attributes, which define the usefulness of the total function provided. For instance, sending a hand-written letter to your mother by post versus sending an e-mail are two equivalent alternatives of the same physical function of “delivering information” and from this perspective they are comparable as close substitutes. However, the additional attributes, such as delivery speed in case of e-mail and a “personal touch” in case of the letter, are different and the alternatives can be viewed as incomparable. In this example, the physical function delivered by alternative products are the same but the total consumer utility is different. This duality calls for a distinction between the physical function and the utility. The former refers to tangible physical services, e.g. sending a message of 100 words. The latter denotes the sum of both tangible and intangible services associated with the consumption of a particular product/service system, e.g. sending a message of 100 words in digital form with instant delivery to the final user. Therefore, utility describes both the quantitative (i.e. what and how much) and the qualitative (i.e. how, when, where, etc.) attributes of the function provided. When comparing radically different computing concepts, such as those discussed in Chapter 3, a practitioner faces the ambiguity of distinguishing between functions and utilities provided. Both systems deliver the same function outputs and, in most cases, even the applications used are virtually the same. Therefore, functionally the systems are close substitutes and are comparable in the LCA context. However, the systems deliver different total utilities from an organisational perspective. A decentralised system gives a company a sense of better control over its IT infrastructure but demands frequent updates. Conversely, a centralised system allows accessing the latest technology, reduces upfront investment costs, saves maintenance time and 64


shifts all risks of ownership to a service provider. On the negative side however, it is highly dependable on network reliability and requires additional infrastructure to reduce the risk of costly interruptions. Expanding system boundaries to include all the functions can reduce the functional differences. In this case, a number of additional elements should be added to the boundaries. For example, installing some redundancy in system “B” to provide service reliability equivalent to system “A”. The boundaries should be extended until the systems become close substitutes.

4.3.3 Setting functional unit for IT functions Setting the functional unit in this case is problematic, because the two computing alternatives are multifunctional systems performing several tasks. When specifying their primary function, it is difficult to go beyond some generic formulation such as “to handle information”, “satisfy average office needs” or “provide office IT support”. A more thorough description of the functions would be impractical, since it would require a detail account of a variety of IT services such as amount of processed documents, number of e-mails sent etc. A functional unit based on systems’ technical parameters would also be impractical, because in each system they are very different. The parameters for system “A” could be processor speed, memory size, data storage capacity etc. Whereas the parameters for system “B” could be reliability, information transfer speed, data security etc. One option is to relate the FU to a workplace for a time period, e.g. “IT support for X workplaces during Y years”, which requires an assumption that the number of workplaces will not be affected by the choice of system. The FU could also be more widely formulated and relate to the entire company e.g. “IT needs of the company satisfied for Y years”. The reference flows for the inventory part will then be based on observations from each system either for one workplace or the entire company over a period of time. Since the functional unit has to be quantifiable, the next question is which measure should we use to measure the function (utility) delivered by the two systems? Quantifying the abstract function “IT needs of the company” is not an easy task. Companies rarely measure the usefulness of their IT infrastructure by the amount of data processed or number of pages printed, because it is not the

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purpose of using IT in the first place. The majority of companies believe that IT increases their productivity.39 Therefore, we can say that the purpose of using IT is to increase work productivity by raising the efficiency of information management. The extent to which this purpose is fulfilled relates to consumer utility. Economic theory suggests that the consumer’s perceived utility always has a certain value and is equivalent to consumer willingness to pay (WTP) or willingness to accept (WTA), which in turn can be expressed by a monetary value. However, determining the monetary values is problematic, due to the disparity between the expressed and the revealed WTP/WTA often found in empiric studies.40 When a functional unit is used for comparison of goods that are close substitutes, i.e. goods where the cross price elasticity is high, the consumer’s surplus will be relatively low, and thus the price will be a good approximation of consumer utility. The degree to which a price reflects consumer utility, depends on the size of consumer surplus (CS), which is the difference between the consumer’s WTP/WTA and the actual price paid. In developed market conditions,41 consumer surplus should be closer to the equilibrium price, which consequently should be a close approximation of consumer utility. High consumer surplus will increase demand and eventually the supply will adjust the market prices to maximise the surplus of service providers. Maximising CS is the same as maximising utility. Price will be another limiting factor for selecting expensive alternatives. A “utility-maximising” consumer will search for al-

39

There is a considerable debate about the role of IT in productivity growth (Solow, 1987). The validity of the existing quantitative estimates on allegedly significant productivity changes induced by IT applications is contested on methodological issues of econometrics by many authors (David, 1990; Griliches, 1991; Brynjolfsson, 1993; Attewell, 1994; Griliches, 1994; Loveman, 1994; Gordon, 1996; Stiroh, 1998; David, 1999; Brynjolfsson, 2000; Gunnarsson, 2000; Huber, 2000; Lee & Barua, 2000; Oliner & Sichel, 2000; Laitner, 2002).

40

The terms “expressed” and “revealed” are terms used in the economic theory. The former refers to information provided by a person, who knows that he/she does not necessary have to pay/accept an amount of money. The later refers to actual amounts of money paid/received.

41

A “developed market” in this case has the characteristics of a “competitive market” as well as an oligopoly market. A competitive market has a large number of buyers and sellers, where no single buyer or seller is able to influence the price or any other aspect of the market. An oligopoly market, on the other hand, is dominated by a small number of large firms, selling either identical or differentiated products. In both these markets the cross price elasticities are quite high.

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ternatives with the lowest prices that can satisfy the need and will accept only the alternative delivering the highest CS. A weak point in using a monetary functional unit is uncertainty about the consumer surplus.

4.4 Reflections Compared to many other products, the environmental assessments of electronics are particularly limited by data quality and the proprietary nature of data. Electronics are amongst the most complex products, which contain a multitude of complex semiconductor components and are produced in global production chains. Both the products and the manufacturing processes are very dynamic and a large part of the environmental data is outdated. Data problems force environmental analysts to make a number of assumptions and approximations, which often compromise the results of environmental product assessments. One of the typical problems is that in many cases missing product-specific data is substituted by industrial averages or best case study data, which are often very different from reality. Another problem is system cut-offs practiced by LCA practitioners in cases where data is not available or where the excluded life cycle parts are considered insignificant. The author believes that some of semiconductor life cycle stages, such as upstream manufacturing of high-grade specialty chemicals, are particularly important for overall product environmental impacts. Unfortunately due to the lack of data, most of the existing studies exclude these stages or are forced to perform estimates based on inadequate data, such as data on technical grade materials. Different data collection techniques are being used to overcome data problems. The bottom-up approaches practiced in process-LCAs allow for the in-depth analysis of specific products. These assessments are data-intensive, time-consuming and are not always able to include adequate system boundaries. The top-down approaches practiced in the environmental input-output assessments offer a possibility to consider wider system boundaries but, on the other hand, produce generic results that are not always applicable for decisions regarding optimisation of specific products or processes. The most promising are the hybrid-LCA approaches, which represent a synergy between process- and input-output LCAs. It allows maintaining a high 67


degree of product-specificity and considers wider system boundaries than process LCA. The method is especially effective in environmental assessments of electronic products, since it can potentially include upstream life cycle stages and avoid high level of data aggregation in other life cycle stages. Assessment methods based on the parametric data collection approach are particularly useful for environmental studies of the production of electronic components. This approach can cope with a high variety of semiconductor manufacturing processes and is less product-dependent than other approaches. Assessing the environmental impacts of product systems such as computer networks in organisations is even more challenging than analysing individual electronic products or product components. The analysis requires the consideration of the combined effect of all system components including enduse equipment and infrastructure elements. That is, analysing life cycle system boundaries that span beyond the boundaries of one product. A comparative analysis of conceptually different product systems, such as centralised and decentralised computing architectures, faces a dilemma of adequacy of comparison. Services delivered by the systems can be considered as equivalent only from a functional perspective. From the utility perspective, the comparison becomes complicated since it is difficult to set an adequate functional unit, choose equivalent alternatives for comparison and set system boundaries. The closest approximation of utility delivered by a product or service is willingness to pay, which suggests that a functional unit could be based on a monetary measure of function. The difficulty is in reducing the ambiguity of measuring consumer surplus and placing a monetary metric on an amount of utility delivered. In fact, this challenge is characteristic to analysis on any case of product to service substitution.

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CHAPTER

FIVE 5. Business case of servicising computers 5.1 The ASP business model The replacement of centralised mainframe computing by affordable PCs in the 1980s came at the expense of rapid hardware obsolescence and the mounting ownership costs of IT utilities. With the growing computerisation of workplaces, equipment depreciation and maintenance became serious cost items in the budgets of many companies. Furthermore, as computers become more and more integrated into daily routines, breakdowns of IT systems translated into ever-higher costs. During the 1990s, the proliferation of computer networks created opportunities for a number of organisations to reconsider the value of server-based computing and centrally managed computing environments as cost-saving factors. This led to the development of a new business model, in which third party service companies offered outsourced centralised management of different IT utilities such as data storage and application hosting. The broad term for these businesses is Application Service Provider (ASP) – a business model pioneered in the late 1990s by start-ups such as US Internetworking, Corio, Interliant, Breakaway, FutureLink and Telecomputing. Since then, the business has been evolving rapidly. Estimates on the global size of ASP market are scarce and vary widely from $3 to $12 billion. Nevertheless, all analysts indicate rather high annual aggregated market growth rates of 75-200%. 42 An Application Service Provider could be defined as an organisation, which in return for payment offers access and use of Internet-based applications according to a business one-to-many model (Figure 5-1). ASPs have a distinctive pricing model, which is mainly based on the intensity of service use (total time of use, data space, number of applications etc.). In other words,

42

Based on different quotations from reports of Forester Research, Gartner Group and IDC Data Quest.

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the core business idea is that customers should pay only for the resources they use, which facilitates the idea of optimal investment and is the main selling point in this business model. In this, ASPs are a practical example of the concept of “functional economy”, which promotes business relationships based on function and amount of service provided rather than the number of products sold to the final consumers. Independent Software Vendor

Standard software packages

(ISV) Software Software

Application Service Provider

(ASP) Purchase or license fee

Data center

Standard or customized services Service Level Agreement (SLA)

Clients

Servers

…

…

Software

Maintenance

Service fee according to SLA

Figure 5-1. Simplified model of ASP services. The service solutions include access to applications, data storage and backup, automatic anti-virus updates, regular service maintenance as well as related services such as access to the Internet. Typically, the range and the extent of provider services are determined by the user’s needs and formulated as a Service Level Agreement (SLA), which includes service accessibility times, data safety quarantines, network security measures, etc. (Cherry Tree & Co., 1999). The full range of IT utility outsourcing (ASP services) comprises a broad spectrum of solutions, operating models and delivery choices. Wainewright (1999) distinguished three generic types, which are, in increasing order of complexity: web-top applications, subscription services and application service hosting. The latter is close to what is commonly called ASP. Web-top services are the simplest form of outsourcing. They are characterised as “mainly data space offerings”, which are usually delivered for free or for a small fee. Examples include free e-mail (e.g. Yahoo, Hotmail), file and document storage services, website and e-commerce site builders that are typically accessed through low-security public networks, which do not usually facilitate an instantaneous “on-a-click” interaction with the users and can hardly be functionally equivalent to applications installed locally on users computers. The main customers of such services are typically private people who can sign up online using a credit card and begin using the service immediately, normally without signing a long-term contract with a provider. 70


The subscription outsourcing model is used for the provision of more complex application services, e.g. taking existing software products from an enterprise and offering them as outsourced applications on a long-term contract basis. Therefore, there are typically no standard solutions and the business is built on one-to-one relationships. The value added from ASP is the adjustment of applications to the customer’s requirements by purchasing the necessary software and hardware and maintaining it at top performance. Thus, customers benefit from avoiding upfront investments into hardware and skilled personnel (Wainewright, 1999). The main characteristics of subscription type of services and the total application service provision are summarised in Table 5-1. Table 5-1. Characteristics of application outsourcing. Type of outsourcing: Hardware (server) owner: Application(s) location: Services provided: Type of applications: Type of application service: Typical contract duration: Dominant pricing model:

Subscription service (Application maintenance) Client or Provider Client or Provider On- or off-site Client-proprietary or packaged One-to-one (unique) Long-term Fixed (flat rate)

Application Service Provider (ASP) Provider Provider Off-site Packaged One-to-many (standardised) Flexible, based on Service Level Agreement Based on usage

Adapted from: Klemenhagen (1999), Wainwright (1999), Bennet (2000).

Application service hosting (i.e. ASP) is the most complex group of services. In many ways they resemble the subscription outsourcing model. The main difference is that ASP applications are typically pre-packaged to enable the “one-to-many” business logic and reach economies of scale able to cover high up-front investment for the complex IT resources on the providers’ side. ASPs can include virtually any, even the most “mission-critical”, IT application such as e.g. enterprise resource planning (ERP), financial accounting or outbound e-commerce. These applications include a broad range of information systems and processes that may integrate all the IT resources of an entire enterprise. Thus, they require high accessibility, system robustness, fast response times and high levels of data security. 71


5.2 The supply side of the story Literature provides many examples of the economic benefits from shifting towards outsourced applications and ASP services. At the same time, the ASP computing concept has not been widely implemented. Therefore, this research focused on exploring the experiences in different organisations from adopting ASP and SBC solutions and the conditions for success. This section provides a summary of research findings presented in Paper II (“Software Renting - Better Business, Better Environment: The Case of Application Service Provider”) and Paper V (“The feasibility of adopting server-based computing in commercial and residential sectors.”). Paper II was written in the early stages of the research and consists more of an exploratory nature, discussing both the business and environmental sides of the ASP model. The paper should be viewed as a background study for the issues explored in the later papers (Paper V). Most of the empirical material in Paper V was based on information collected from interviews with organisations providing or using ASP services. The summaries of the research findings in the following sections are divided into a “supply side story”, which discusses ASP from the provider’s side, and a “demand side story” that summarises the main findings from ASP users in Sweden. The latter section also explores the applicability of the ASP concept in providing computing services for residential users. There are many selling points used by the ASP industry. One of the main benefits is the reduction of the total cost of ownership (TCO) of IT hardware and software. TCO comprises a number of items, not all of which are accounted for in companies’ balance sheets. The most visible items are upfront capital investments into IT hardware and software licenses, network administration and maintenance personnel and different support service agreements with third party service providers. Most companies typically estimate their IT costs from inventory purchasing books and IT staff costs. However, some costs are not always clearly visible in the balance sheets: the cost of employee productivity changes, system start-up time and lost time due to system breakdowns etc. (Deloitte Consulting, 1999). Internal estimates of IT expenditures per workplace in different organisations vary significantly, even among those performing the same types of activities and having similar computing needs (Mateyaschuk, 1999).

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Application service providers claim to be able to reduce TCO by centralised application management and automatic software upgrading aimed at avoiding a large part of upfront investments. Hardware costs in the owned IT utilities usually comprise only 15% of the total cost while the remaining 85% are associated with running expenses, that is costs of personnel required to develop or acquire, maintain and update applications and to provide continuing technical support (Tolly Group, 2000). Data from US Internetworking (2001), the largest ASP provider, showed that a traditional implementation of enterprise resource planning application in a large company using its own staff resources can cost up to $40,000 per month and last up to 2 years, while an ASP service could deploy it for total of $60,000 over a 3 month period (Plepys, 2002b). According to Penta Consulting (2004), up-front investments could be 90% lower and monthly costs per user 30% lower for an outsourced IT system when compared to an owned system. In the course of 3 years, this equals approximately 40% overall savings. According to Booth (2000), a typical mid-size company with 50 end-users could generally count on saving about 45% of the total 3-year running costs when moving to an ASP solution. These limited examples are not representative for all companies, but they suffice as an indication of the TCO reduction potential offered by the ASP concept. In Paper II, the author provides a theoretical model of ICT cost dynamics in the traditional (hardware ownership based) and the ASP service-based computing systems. The author observed the well-known nature of periodic hardware updates and visualised why sub-optimal investments are made by most organisations, which decide to own IT utilities (Figure 5-2). A typical organisation usually assesses its optimal computing needs and establishes a profile of absolute minimum hardware performance requirements. Given the rapid depreciation rate of hardware related investment, companies are often trying to artificially prolong the lifetime of equipment by acquiring hardware with some degree of over-quality. The curve in Figure 5-2 (a) represents the relationship between hardware performance levels and its corresponding price (investment for a company). The dotted line represents the established minimum performance requirement level. The optimal investment is at the intersection of the two. The decision to buy over-quality hardware is a trade-off with higher investment, which eventually costs pmax minus popt to the company. Immediately after hardware purchase the hardware starts depreciating, but the investment remains effective for some time (t0 – t1) until hardware performance no longer satisfies the increased demand and a new investment into upgrades or new equipment is required. In the long run, this process becomes periodic. See Figure 5-2 (b). The shaded area 73


in the chart represents the amount of inefficient IT investment that can be avoided in an ASP arrangement. (a)

System performance, q Optimal performance level perceived by the company

Overquality

Over-performance accepted by the company to “buy” time

(Investment, p)--(Performance quality, q)

(b)

st

st

nd

1 upgrade

1 investment

2 upg.

pmax Investment depreciation curve

OK

popt

Not acceptable

Amount of sub-optimal investment

Investment, p

0

popt

pmax

t0

Time t1

t2

Figure 5-2. Hardware depreciation and sub-optimal investments.43 It could be argued that in the logic of the ASP business model, the entire up-front investment into a company’s hardware is inefficient and could be avoided through leasing or renting solutions provided by an ASP firm. Besides the obvious advantage of avoiding large upfront investments associated with purchasing an in-house IT system, ASP clients can better predict their budget spending on IT since the costs are known in advance. In addition, there could be tax advantages since the entire IT cost in an ASP arrangement could be expensed rather than written off over time (Sound Consulting, 2000). This has proved to be especially attractive for companies with high IT costs as none of 150 surveyed companies (UK mainly) with an IT expenditure of less than £20,000 were found using ASP services (Bennett, 2000, p68). In addition to the reduction of direct total costs of ownership, the ASP industry lists a number of other business benefits for their potential clients. The most frequently mentioned drivers for ASP adoption are compiled in Table 5-2. Besides a reduction of up-front investments, ASP users can find benefits in freeing internal human resources needed for IT support and focusing on their core business. ASP services can also provide constant access to the latest technology with minimum costs and time for implementation (Wainewright, 1999). Small and middle-size enterprises often cannot afford to own the latest technology and/or employ an experienced IT staff to maintain it, but they could better afford ASP services on a need basis. ASP providers are typically more experienced in data security, more prepared for

43

74

Source: (Plepys, 2001b, 2002b)


disaster recovery than most of small companies and often offer full transfer of application ownership risks (McCleary, 2000). ASP providers can also minimise application deployment time and ensure stabile performance of a new system from the start. Deployment time (and thus faster time-tomarket) is another important issue for many companies, especially those which have neither an established IT system nor the staff that would have experience in maintaining it (Cherry Tree & Co., 1999). Surveys have shown that this is often regarded as one of the most important aspects for many companies when deciding on outsourcing their IT utilities (Bennett, 2000). Table 5-2. Drivers for ASP adoption as claimed by the ASP industry. Economic drivers of ASP

Strategic business drivers of ASP

Technical aspects enabling ASP

•

Lower total cost • Focus of core • Penetration of of ownership competences Internet • Pay-as-you-go • Instant access to • Shrinking costs principle best technology of bandwidth capacity • Predictable IT • Better control spending over who access • Increased variety what data and of Internet ac• Improved work applications cess modes (user efficiency mobility) • Increased data se• Faster applicacurity • Browsers suption deployment porting graphic • Shortage of IT • High cost of IT user interface staff staff • Transfer of application ownership risk to provider Sources: (Klemenhagen, 1999; Wainewright, 1999; Bennett, 2000; McCleary, 2000)

5.3 The demand side of the story The examples demonstrating positive sides of the ASP concept led to the question why, in spite of all economic and other business benefits listed by the ASP proponents, has the concept so far been implemented on such a relatively small scale? For example, according to a study of the International Data Corporation (IDC) only 10% of companies in Nordic countries were totally willing to adopt the ASP model at the end of the 1990s (Peltonen, 2000). Bennet’s (2000) survey of UK companies’ willingness to use ASP, (a sample of 150), showed that in 2000 only 6.5% of companies were already using, 16% were considering and 45% “would consider” using ASP 75


(Bennett, 2000, p71). Therefore, it was considered important to also explore the barriers for wider acceptance of the concept. The author conducted an empiric study presented in Paper V exploring the barriers and success factors for a wider acceptance of the concept.. This section will overview and comment on the most important findings of that study. Besides ASP applicability in the commercial sector, the author also discusses the possibilities of implementing the ASP concept in the private consumer sector.

5.3.1 Experiences from B2B applications of ASP Unfortunately, there is much less literature on the barriers of ASP adoption than on ASP benefits. The stated concerns about the ASP model vary depending on the type of business. Falkowski (2002) and Kancheva (2002) list a number of drawbacks perceived by ASP clients. At the time of ASP introduction, customers were mainly worried about data security and service availability issues. Later, when a number of ASP start-ups disappeared from the market, the concerns shifted to the long-term viability of services and the provider’s reliability. Other concerns included possible integration problems, customisation issues, possible loss of control and contractual obligations. Interestingly, in spite of a nearly 10-year-long history, many analysts still perceive ASP services as being immature, (Falkowski, 2002), with service providers still in the process of studying the market, clients and necessary technologies (Kancheva, 2002). In some instances, especially when public networks are used, ASP firms are reluctant to guarantee high rates of service availability, which depends on other actors, such as providers of telecom infrastructure (Cherry-Tree&Co., 1999). Data security concerns are probably still the largest barrier for potential ASP clients. According to Datamonitor, the largest group of all ASP concerns (typically up to 25%) are related to network security (Falkowski, 2002). However, service providers claim that data security is actually higher in outsourced solutions, since communication channels are usually encrypted and professionals following international standards handle data.44,45 Thus, the

44

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Author’s interviews with Swedish representatives of IT-Genesis AB, Telecomputing AB, Sun Microsystems and Hewlett Packard.


data is maintained more safely by ASP rather than by the clients themselves. Nevertheless, many existing or potential ASP clients have a stereotype that data safety can be best controlled in-house rather than by an external provider. To overcome data safety concerns, it is not uncommon for ASP firms to advertise that their data storage facilities are situated in secure locations with duplicated storage.46 To complement the finding from the literature, the author has interviewed a number of organisations using the ASP concept (Plepys, 2004b). The most important factor for choosing the centralised computing model in virtually all of the interviews was the intended reduction of the total costs of ownership (TCO). The largest contributor to TCO was not the cost of hardware (typically estimated at 20-30%), but the cost of maintenance and administration. The interviewees generally shared the opinion that system planning, design, start-up, maintenance, management and support activities tend to be more expensive in architectures with multiple hardware platforms and operating systems and with a high variety of software packages. This conclusion was made from the observation that centralised application management systems worked best in organisations with rather uniform user needs and a limited range of centrally provided applications. The ease of maintenance and flexibility in adjusting the spectrum of provided applications and scaling the overall system capacity, were other frequently mentioned issues in support of the ASP model and server-based computing. A large part of the interviewed organisations were using PCs converted into server terminals and only a few had real thin client solutions. Replacing PCs with thin clients often proved difficult since many organisations already had computers in place with some rest-value remaining.47 Thus, the existing PC base often acts as a “technology lock-in” preventing a shift to thin client computing. IT managers often find it difficult to justify scrapping the existing hardware with rest depreciation value. Many organisations with a longer history of owning an IT system retire their computers gradually. Surveys show that on average 20-30% of machines are likely to need

45

Personal communication (spring, 2002) MRs Sheila Lugenbuehl, Research Committee, International ASP Industries Association.

46

This was stressed a few times during the two meetings the author had with a representative of Telecomputing AB.

47

Personal communication. Mr. Thomas Nesterud, IT manager, Jämtlands Läns Landsting. Tel: +46-(0)63-14 75 77. Interview: 2004/05/03.

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replacing in any given year in a typical organisation (QNB Intelligence, 2003, p14), although some organisations with more stagnant IT requirements (e.g. schools) may have lower rates.48 Since a large part of server-based computing benefits are linked to the economies of scale, some organisations could be too small to have a sufficient “critical mass” of thin clients to reach significant TCO reductions. Some interviewees were unfamiliar with the thin client hardware and were insecure about shifting to completely new equipment. As a result, they preferred retaining old hardware and adopting it for SBC use with the option to return to decentralised PC systems in case SBC does not match their expectations. Thin clients proved to be the best solution in cases where sophisticated graphics-intensive applications are not used. Thin clients and old computers converted into server terminals proved to be useful in organisations such as schools and universities, where thin clients were used for a large-scale user base and independent solutions with fully featured PCs were employed for marginal cases where graphics-intensive applications were absolutely necessary.49 Although the interviews conducted by the author do not allow for statistical analysis, it was helpful to compare the information from the interviews with the results of some large surveys that explored users’ perception about usefulness of ASP. QNB survey, for example, showed that 40% of IT managers could justify a genuine need for disconnected working only for 10% of their workforce (QNB, 2003, p11). User acceptance of reduced possibilities to install additional software whenever needed without big formalities was indeed often indicated as an important issue for successful transition to SBC (Plepys, 2004b). Some users also complained about the practicalities of mobile working and the performance of applications. It is, however, likely that such complaints are rarely justifiable because the majority of users were not very mobile, especially those working with administrative routines.

48

Personal communication. Mrs. Eriksson, Annelie, IT project coordinator, Hallstahammar Municipality. Interview: 2003/02/27

49

These were, for example, found in schools of Hallstahammar municipality, Technical Faculty of Linköping University, Swedish University of Agricultural Sciences (SLU) in Alnarp and Danish Technical University.

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None of the interviewed companies mentioned IT cost reduction above 30%, although ASP marketing materials often quote higher TCO savings. This generally corresponds to the results of the QNB survey, where 60% of the respondents answered that their reduction of TCO in the adopted SBC solutions was less than 30% (QNB, 2003, p15). Interestingly, none of the interviewed organisations, which chose to physically outsource all applications and data to a service provider, mentioned any concerns regarding data integrity. The conditions of the contractual agreements seem to be a sufficient guarantee for data integrity. However, it is hard to generalise outside Sweden, which has elaborate (though not always successfully enforced) data protection laws. Another interesting observation was that the interviewees often mentioned cost in both a positive and negative sense. Some organisations indicated clear reduction of TCO, while others were unsure about it. However, the latter responses were from interviewees whose positions in the organisations may have prevented them from having a better picture about TCO. For example, the majority of these employees were dealing with more technical, rather than managerial or financial issues of their IT infrastructures (Plepys, 2004b). Nevertheless, similar observations were made in Bennet’s (2000) survey, which, as she explained, suggested that organisations do not seem to have a uniform understanding of what financial implications the use of an ASP might bring. This is likely to be one of the most important factors for a wider uptake of the concept. Among the criteria for selecting an ASP service, Bennet (2000) identified five that were the most important for the sample companies: (1) terms of service level agreement, (2) reputation and references, (3) price of service, (4) scope of resources, (5) flexibility of contract. The same criteria, except for the scope of resources, was mentioned frequently in the interviews conducted by the author (Plepys, 2004b). The terms of service level agreement and the reputation (and size) of an ASP provider seemed to be the most important criteria. These responses are likely to be influenced by the negative experiences of some customers, such as when their service providers or hardware suppliers went out of business or were perceived as being too small to be considered as a reliable partner. This is illustrated by the case of Sundsvall municipality (Plepys, 2004b). The results generally showed that server-centric computing is predominantly used for larger solutions with a more or less uniform user base and a limited variety of service offers. The main driver for shifting to SBC is the expected 79


reduction of TCO, which in the best cases was not above 30% when compared to the centralised systems. The largest savings are achieved in economies of scale when radical shift from personal computers to server client hardware, such as thin clients, takes place. This is natural, since the main TCO item is the maintenance cost, which is significantly lower in client solutions with minimal variety of hardware on the user side. However, the maximum level of potential savings is not always attainable for many organisations, which are hindered by technology lock-in and general fear of radical shift to unfamiliar hardware architectures given that control over ICT utilities is being outsourced to a third party provider.

5.3.2 ASP applicability in the B2C sector Part of the author’s research focused on whether ASP solutions would be applicable in the residential sector. No literature was found addressing this market segment. The author collected primary material from interviews with potential ASP providers and conducted a survey targeting about 8,000 private consumers exposing them to hypothetical scenarios with different combinations of IT services. Interviews with the ASP companies indicated that they did not yet see the B2C market as being economically feasible. The main barriers were believed to be structural – making contract with individual users with highly diverse application requirements does not allow utilising the one-to-many business models (that is, reaching economies of scale), which are traditionally used in the B2B area. In the B2C sector, each user is a customer with individual requirements and just one or two computers. Reaching the economies of scale in this market segment implies a much broader variety of customer base and results in very different costs for the service providers. Facing the high economic uncertainty, none of the interviewed companies saw themselves as the main initiators of new service offers for private consumers leaving this role to other actors, such as telecom providers, hardware retailers or housing companies. Some companies speculated that there could be business opportunities in the area of entertainment services, such as video-on-demand and gaming. However, at the moment such services face tough competition from the makers of electronic equipment as well as technical challenges, such as insuf-

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ficient bandwidth on the “last mile” to the users.50 Furthermore, the interviewees generally shared the opinion that a large section of their potential clients in the entertainment business preferred having much more flexibility in using multimedia and software resources. An ASP service would significantly undermine the users ability to install unlicensed media, which is practiced among certain consumer groups. Other interesting information was provided by the survey of private consumers. The survey returned around 900 answers, most of which were validated for a further statistical analysis. Results of the survey are summarised in the second part of Paper III and the most important issues are discussed below. The combination of services in the hypothetical scenarios included hardware leasing, software outsourcing and renting of data storage space and asked the consumers to rank the most attractive service options. The survey firstly made it clear that SBC/ASP concepts are largely unknown to residential consumers, who initially heard about it from the introductory letter of the survey. However, some interesting messages were extracted from the responses to scenario questions. They indicated that the most successful services would include a software rental component and that the least popular would be data outsourcing solutions (Figure 5-3). W hich of the service option w ould you think of renting?

SP, SW SP, PC SW, PC PC SP, SW, PC SP, SW SP SW Don't know

Willingness to pay for services. (791 valid answers in total) 40%

0% SW - software only PC - hardware only SP - data space only (or their combinations)

2% 4% 6%

350

36,7%

35% 30% 25%

290 20,4%

Typical average monthly fee for Internet connection

29,7%

300 250

235

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5%

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161 9,4%

100

74 3,3%

50 26 0,6% 5

kr. kr. kr. kr.

0 Don't know

Figure 5-3. Frequency of preferences for Figure 5-4. Frequency of different ranges different service packages in the scenarios. of consumer willingness-to-pay for ASP services.

50

Personal communication (2002/05/03) Mr. Nicklas Thorén, Genesis-IT, Umeå, Sweden. T: +46-(0)920 2727 00.

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Most of the respondents felt a strong affiliation with their hardware and especially with personal data. The latter was especially clear from frequent concerns about trusting personal data to a service provider. In general, the scenarios did not seem to offer sufficient added value that would help to overcome many of the psychological barriers of an average consumer. At the same time, correlation analysis demonstrated that a minority of people using home computers for work and study-related purposes were less concerned with data outsourcing and preferred the convenience of having data access from anywhere. It has been realised that private consumers have a different perception about their TCO compared to organisations, especially in relation to setting a monetary value on hardware maintenance time. The analysis of consumer willingness to pay (WTP) showed an unreasonably low valuation of SBC services – often lower than the current costs of an Internet connection without additional services, except for e-mail and web hosting (Figure 5-4). This could be attributable to a poor understanding of SBC benefits and linked to limitations of the scenario approach in explaining the concept with a sufficient level of detail. The conclusion is that commercial and residential ASP applications face different challenges. The success in adopting the concept largely depends on technology choice, scale of implementation and flexibility in providing applications, degree of user acceptance and the nature of contractual agreements with the providers. Servicing IT services for residential users can be facilitated by making costs and service content more transparent, so that consumers can more clearly see the real costs of hardware ownership and make more informed judgements about the economic benefits provided by alternative systems. Service solutions will be able to compete with traditional systems only if they offer additional consumer advantages. Overcoming the structural barriers is important and requires cooperation between relevant stakeholders. The framework of Product Service Systems could be useful in designing private consumer-oriented services (Mont, 2002a). The framework suggests that in order to successfully deliver a service, which is economically viable and has environmental advantages, one needs to adjust product design, create adequate infrastructure, provide competitive service content and organize networks of appropriate actors. The latter seems to be particularly missing in the current arrangement of ASP services.

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CHAPTER

SIX 6. Conclusions Consumption growth and short product lifespan are today the major factors contributing to the increasing absolute environmental impacts from the electronics sector. Rapid innovation rates have resulted in short technology cycles, which force consumers to discard electronics long before the limits of their physical lifetime. Furthermore, many discarded products allow features that were never utilised or rarely used by the average consumer, which results in sub-optimal consumption and entails unnecessary environmental impacts along the product life cycle. Therefore, a more balanced consumption of product functionality is desirable. The concept of product servicising - focusing on final services delivered by a product rather than the product per se - is a useful paradigm for addressing the environmental impacts of electronics.

6.1 Addressing research questions The main goal of the thesis was to explore the environmental effectiveness of servicising solutions for electronic products. The thesis explored a typical example of servicising: selling computer functionality rather than hardware, which is practiced in emerging business models such as Application Service Provider (ASP) services. The main focus of analysis was the environmental implications of the shared use of IT resources utilised through the concept of server-based computing (SBC). In the course of the exploration, three research questions were addressed. 1. What are the environmental effects of substituting traditional computing systems based on owned personal computers with outsourced computing services? The existing examples show that SBC systems deliver computer services that are functionally equivalent to the traditional decentralised (PC-based) systems. At the same time, SBC solutions demand less performance requirements for end-user hardware, which lowers user dependency on technology change, reduces the rate of equipment obsolescence and allows the use of 83


less complex electronic products with fewer hardware components. Consequently, the most significant environmental benefits stem (1) from the potential to extend product lifetime¸ (2) the possibility to use simpler hardware with a lower amount of silicon components and (3) the reduction of total electricity consumption of the entire computing system. The collected empiric material shows that SBC systems allow the extension of hardware lifetimes by at least 2 times in most types of end-user equipment and even longer in thin client applications, which implies a proportional reduction in the amount of post-consumer waste. However, this applies mainly to end-user hardware while the lifetime of servers and other network components of network infrastructure are at best similar to decentralised systems. Due to the higher intensity of use and economic considerations related to equipment warranty periods, the lifespan of SBC servers could be even shorter. However, considering the amount of post consumer waste this is a minor factor since far greater savings are possible on the user side. The extension of product lifespan is the largest in cases of streamlined hardware where most of computing power is located on servers. The latter applies to thin client systems, which are the least dependent on technology change. The potential is smaller in cases of network computers and outdated PCs where some applications are executed locally. The possibility of using streamlined hardware such as thin clients, further reduces the amount of post-consumer waste. Thin client hardware generally contains 4-5 times lower amounts of embedded materials compared to personal computers. In extreme cases, the figure is up to 20-30 times. However, the environmental implications of the end-of-life stages are uncertain and depend on waste management solutions such as disassembly, reuse and recycling. For example, due to economic reasons the recycling rates of thin clients could be significantly lower than PCs. Centralising and sharing computing power in computer networks also allows reducing the functionality of individual products without affecting the functionality of the entire system. The functionality is closely linked to the amount and complexity of embedded silicon components, which are significant in determining environmental impacts in the manufacturing stages. The production of streamlined user hardware such as thin clients, which contain fewer and less complex integrated circuits, is associated with lower environmental impacts than stand-alone personal computers. 84


The author argues that by centralising and sharing computing power, SBC systems allow a more rational utilisation of product functionality with fewer silicon resources. Depending on equipment choice, the amount of memoryand processor-related silicon in thin clients can be 2-3 times lower than in PC architectures without a significant increase in silicon resources in the server-side hardware. Except for those linked to the consumption of electricity, there are strong indications that the manufacturing of semiconductor components is responsible for most of the product lifecycle related environmental impacts. A two-fold reduction of energy consumption by user equipment is possible in SBC systems, especially in cases of streamlined hardware configurations such as thin clients, which run on slower processors and have no moving parts. The conversion of outdated PCs into server clients does not result in energy savings and in this respect could be a worse alternative than using modern (sometimes more energy efficient) hardware instead. An important finding is that more intensive use of server’s computing power does not result in significant increases of electricity consumption. The author did not find clear evidence of a link between data traffic and energy consumption by the network infrastructure. In any case, the amount of data traffic is significantly lower in thin client architectures compared to decentralised systems or SBC systems built on network computers. The overall conclusion is that a factor 2 rate of improvement of product life cycle related environmental impacts is feasible in outsourced computing systems. Nevertheless, there could be large variations depending on system design (the degree of outsourcing) and the choice of equipment on the user side. The largest threat for extending the lifetime of electronic products including SBC architectures (although to a lesser extent) is technology development pathways. Increasing software complexity and the growing amounts of multi-media rich web content puts ever-increasing pressure for hardware performance and network capacity accelerating hardware obsolescence in both types of computing systems. 2. How can the challenges in the environmental assessments of electronics products and services be dealt with in future studies? Assessing the environmental impacts of electronics faces a number of challenges. Most of them are related to a significant lack of life cycle inventory data, which is due to the proprietary nature of data, the variety and complexity of products and production processes, the global character of the elec85


tronics sector and overall technology dynamics. In addition, understanding of the environmental impacts of the multitude of substances released along the life cycle of electronic products is still rather poor. The methodological challenges of the existing assessment methods are also linked to data problems. The major limitation of process-LCAs is unavoidable system cut-offs and for input-output LCAs – high levels of data aggregation. The strong sides of the two methods, that are the specificity of process-LCAs and the completeness of system boundaries in the input-output approaches, can be combined in hybrid assessment methods. These have proved to be particularly useful for assessments of electronic and semiconductor products, which need to consider wide system boundaries and take into account aspects specific to a particular product. Dealing with the big variety of production processes, parametric assessment methods are promising assessment tools that are particularly useful in finding improvement possibilities and alternative manufacturing technologies. Besides the need for improving the overall quality of life cycle assessments of electronic products, the author argues that particular attention must be paid to assessing those life cycle stages, which so far have been typically left unaccounted for in existing environmental studies. These include the production of high-grade input materials for semiconductor fabrication, the life cycles of capital buildings and manufacturing tools and other auxiliary processes, such as outsourced production processes and the transport of materials throughout the supply chains. There are indications that these parts of product life cycle system may have environmental impacts in the same order as component fabrication processes. The most important are likely to be the upstream processes of high-grade materials. Assessing the environmental effects of servicising computing services may also face some methodological challenges, such as choosing an appropriate functional unit and setting system boundaries. The shift from product-based to service-based solutions in computing systems creates an ambiguity when defining and measuring the amount of function delivered. This could be especially difficult when looking at alternative solutions from the perspective of total utility. Setting a utility-based functional unit could be difficult, since physical parameters on alternative systems may not be adequate for describing and measuring the utility delivered to final users. In this, a functional unit expressed in monetary terms could be the most appropriate solution.

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3. What are the factors for the success of business models providing servicised IT solutions? A number of issues determine a wider applicability of outsourced IT services in society. The overall success of servicised computing solutions depends on the design of the system by service providers (quality), service attractiveness for clients and the level of reduction of the environmental impact as compared to product-based solutions. One of the most important factors is the overall quality of servicised IT solutions, such as those offered in ASP services. However, these systems are still immature. Cooperation between different actors, such as infrastructure providers, hardware manufacturers and software developers, could minimise entry barriers, improve service quality and provide more value-added in comparison to product-based consumption models. Another important factor is the low awareness of potential consumers about the economic benefits of IT outsourcing. Many organisations do not have a complete understanding about their total IT ownership costs and cannot see the full spectrum of the economic benefits. A better understanding of positive environmental implications from shifting to outsourced IT solutions may also facilitate the popularisation of server-centric computing. However, the role of environmental factors is far lower than economic and performance quality related issues. ASP applications proved to work best in organisations with rather uniform computing environments with a low variation of applications and computing platforms. Organisations with dynamic computing needs are likely to gain the most from servicing-based solutions, because these are better suited for rapid deployment and flexible scaling. Outsourcing IT utilities to service providers makes the best economic sense in large-scale applications and when the shift to SBC solutions is rapid. This implies that incremental changes leading to an increased variety of computing environments (and thus maintenance costs) are avoided. So far, servicising IT utilities has mainly been applied in non-residential sectors. The private consumer market does not show sufficient demand for viable business solutions to emerge. The main barriers are almost total unfamiliarity with this form of IT ownership as well as concerns related to data safety and privacy issues. While the commercial sector seems to be overcoming these issues, private consumers still need time to familiarise with the services and 87


overcome mental barriers. The success of IT servicising in this sector will depend on the providers’ ability to raise interest among potential consumers by offering more added value than in traditional consumption models. However, as in the business sector, ASP services are not a universal solution for every customer. Some users may not benefit from outsourcing, especially those who are mobile and have special computing needs. Interesting opportunities for a wider application of servicised IT solutions exist in the area of wireless computer network and handheld electronic products. Increasing convergence of computing and communication features into one product, such as third generation mobile telephones, may offer new possibilities of replacing product-based consumption by different service solutions. Overall, it could be argued that the concept of servicising is still rather new for most consumers in the residential sector. The evidence of this is that the variety of servicing solutions is much wider in commercial sectors than in the residential sector. Apart from a limited number of cases, such as car sharing and washing services, there are no wide spread servicising examples in this sector. A wider applicability of the concept will be possible if service providers are able to offer more value than in product ownership-based arrangements. As was clear from the ASP case, economic aspects are among many others influencing the shift to function-based consumption. Successful examples of outsourced IT services proved to offer higher quality functions to the end users, which in some cases could be more important than lower costs. The concept of servicising has proven to be instrumental for economically viable business models, which can bring environmental improvements if designed properly.

6.2 Future research A number of interesting questions in connection to this thesis remain to be addressed in further research. The author proposes a few, which were considered to be the most important and worthy of attention. One of the issues identified in this research requiring further exploration is the significance of the environmental impacts related to the upstream life cycle stages of electronics. Current results of life cycle assessments suggest that most semiconductor-related environmental impacts take place during the manufacturing of integrated circuits. However, increasing material purity requirements may imply that the centre of environmental aspects is gradually shifting to upstream production stages. So far, there is no clear answer to 88


what extent and for what materials this is most significant. A better understanding of these issues would help electronics manufacturers to optimise product design and improve production processes and assist in prioritising the efforts for environmental improvements involving new actors in the supply chains of electronics. Another interesting research area is ICT’s impact on productivity changes. Many companies have high expectations from this technology and try to maintain their competitive advantage and improve work productivity by having the most up-to-date ICT infrastructure. This can explain why so many investments are being made in computing systems accepting the high total costs of ownership. However, there is little consensus on how much these investments are actually paying back in terms of economic growth and environmental improvements. Some analysts argue that placing a lot of emphasis on owning IT infrastructure may not deliver the expected returns on capital investments, which is an interesting argument for outsourcing IT infrastructure and buying only the final IT services. For this reason, a better understanding how different forms of providing product functions deliver total utility is important for promoting service-based solutions. Finally, assessing the broader environmental and/or social effects stemming from the application of electronic products in other sectors was not the purpose of this research. However, understanding these system effects is important. Information and communication technologies (ICT) are becoming more and more integrated in today’s systems of production and consumption. In a way, ICT can be seen as an “economic lubricant” increasing economic productivity and reducing production costs and prices of different commodities and services. These are positive aspects, which unfortunately often lead to rebound effects of increased consumption that in some cases can result in negative environmental implications far greater that those associated with the life cycle of electronic products. Furthermore, ICT is changing people’s lifestyles. For instance, tele-work facilitates urban sprawl as people can afford living longer distances from their workplaces and ecommerce extends the markets and influences the composition of the consumer basket. Although these macro rebound effects are thought to be significantly larger than the direct effects on the micro-level, they are extremely difficult to quantify and need further research. Studying the transformational effects of ICT is conducive to understanding the less tangible rebound effects through behaviour and lifestyles changes, which are strong determinants of consumption patterns and volumes in many other economic sectors. 89

Environmental Implications of Product Servicising - Definitions

Abbreviations AEC

Annual Energy Consumption

ASP

Application Service Provider

B2B

Business-to-Business sector

B2C

Business-to-Consumer sector

CPU

Central Processing Unit or microprocessor.

CRT

Cathode-Ray Tube

DRAM

Dynamic Random Access Memory.

EOL

End-of-Life

ERP

Enterprise Resource Planning

FU

Functional Unit

HVAC

Heat Ventilation and Air Conditioning system

I/O-LCA

Input-Output Life Cycle Assessment

IC

Integrated Circuit

ICT

Information and Communication Technology

ISP

Internet Service Provider

ITRS

International Technology Roadmap for Semiconductors

LCA

Lice Cycle Assessment

LCD

Liquid Crystal Display

LCI

Life Cycle Inventory

MB

Megabyte, equal to 1,024 kilobytes (kB) or 1,048,576 bytes (B).

Mb

Megabit – the smallest unit of memory. 8 bits make up 1 byte.

MTBF

Mean Time Between Failures – a measure of reliability of electronic equipment or component. Usually measured in hours.

NC

Network Computer

PC

Personal Computer

PFCs

Perfluorocompounds

P-LCA

Process Life Cycle Assessment

PWB

Printed Wire Board

RAM

Random Access Memory

SBC

Server-Based Computing

TC

Thin Client

UPW

Ultra-Pure Water

109


Definitions Chip/die

A small part of a semiconductor wafer that contains a single complete device or circuit. See also die.

Discrete semiconductor

A single semiconductor device, such as a transistor or diode. Not an integrated circuit.

Dopant

An element introduced into the semiconductor material in very small concentrations to give it a required electrical characteristic.

Feature size

The width of a feature on a semiconductor device. Usually the smallest width.

Impurity

An element accidentally introduced into the semiconductor material. Usually unwanted.

Integrated circuit (IC)

A circuit formed on a single piece of silicon and consisting of interconnected active and passive components.

Mask

A quartz substrate patterned for a required circuitry.

Mask layer

A layer of circuitry pattern on a wafer. Each wafer pass through a lithography step creates one layer of components.

Passive component

An electrical device like a resistor or capacitor, which does not switch or amplify an electronic signal.

Photolithography

A process of developing circuitry patterns on a wafer. Resembles development of pictures in photography: the wafer is coated with a photoresist, then the pattern is exposed to UV-light though a mask (reticle). Photoresist is hardened and either the exposed or unexposed area is removed by etching in a chemical solution.

Photoresist

A light sensitive material coated onto the wafer surface to assit patterning a desired circuitry layer.

Semiconductor

A material (e.g. silicon, germanium) with dual electrical properties – neither an insulator (in its pure form) or a conductor (when doped with an impurity).

Circuit fabrication

A part of chip manufacturing, where all semiconductor components are fabricated on the wafer.

Silicon

A semiconductor material. The most widely used of all semiconductor materials.

110

Environmental Implications of Product Servicising – Appendix A

Appendix A. Tables Table A - 1. Total electricity consumption in semiconductor facilities per area of processed wafer. Year ´83

kWh/cm2wafer 3.10 ‡

Wafer size, mm 100

´84 ´88 ´93 ´94

3.26 ‡ 1.86 ‡ 1,33 ‡ 1.64 ‡ 1.53‡

200 150 150 150

´94 ´95

0.96* 1.44* 1.41‡

150 n.a.

´97 ´97 ´97

0.51* 0.9‡ 1.4 ‡; 1.77 ‡

150 150 200

´9698 ´98 ´9399 ´99 ´00 ´00 ´01 ´01-02 ´02 ´02 ´02 ´03 ´03 ´05 ´08 ´12

0.8-1.6*; 1.15‡ 1.56* 1.52 ‡

n.a. 200 200

1.35* 1.23* 1.19* 1.98* 0.5-0.7‡ 1.84* 5.07 3.42 5.17 1.79 0.4-0.5 e 0.3-0.4 e 0.62 e

200 200 300 300 300 300 100 200 100 200 n.a. n.a. n.a.

Source Anonymous fabs, U.S. Dept. of Commerce and Dataquest Anonymous fabs (US EPA, in: Williamson (1998)) Anonymous fabs (MCC, 1993); US UEPA (1998) SEMATECH, 16 US fabs, in: ST Microelectronics (1998) Company specific (ST Microelectronics, 1998) Japanese fabs (Williams, Ayres et al., 2002); U.S. Dept. of Commerce Average company-wide (STMicroelectronics, 1998) (SEMATECH, 1997)/US EPA, in: (Williamson, 1998) SEMATECH, in: Mallela et al. (2002); 14 anonymous fabs Average of all Taiwanese fabs (TSIA, 2003) Industry average (U.S. Census Bureau, 1999), in: (Williams, Ayres et al., 2002) Average of all fabs in Taiwan (TSIA, 2003) Average for all UMC’s fabs in Taiwan (UMC, 2002) Best case reported (SEMATECH, 2002) Average for all UMC’s fabs in Taiwan (UMC, 2002) Company specific. Personal communication, Mr. Gerit Götz, [email protected] Best case estimate (SEMATECH, 2002) Best case estimate (SEMATECH, 1997)

Notes: ‡ – average industry data; * – facility-specific data; e – future estimate.

111


Table A - 2. Water consumption per total wafer area. Year ´93 ´96 ´96 ´97 ´97 ´97 ´98 ´98 ´98 ´98 ´99 ´99 ´00 ´00 ´00 ´00 ´01 ´02 ´02 ´03 ´03 ´03 ´05 ´05 ´11 ´05 ´14

112

Litres/cm2 wa- Wafer Source fer size, mm 25.9 200 Anonymous company (MCC, 1993) 6.2; 27.9; 200 Anonymous companies (SEMATECH, 1997) 18.6 96.0 100 Anonymous company (Fitzpatrick, 1996) 5.0; 29.0 200 Anonymous companies (DeGenova & Shadman, 1997) 12.9; 17.6 200 Best cases reported (SEMATECH, 1997) 17; 18 200 Anonymous companies (Van Zant, 1997) 19.9 200 Average for all Taiwanese fabs (TSIA, 2003) 5.9; 14.7; 20.5 150 5.9; 8.8; 12.9; 200 Anonymous companies (Peters, 1998) 20.5; 21.1; 29.3 11.7; 12.3; 13.5; 300 15.3; 23.5; 23.5 8.1 200 Average for all Taiwanese fabs (TSIA, 2003) 7.6; 13.5 200 Industry average (SEMATECH, 1999b) 7.6 200 Average for all Taiwanese fabs (TSIA, 2003) 5.9 200 Best case estimate (SEMATECH, 1999a) 14.5; 17.6 200 Anonymous companies (Maag, Boning et al., 2000) 6.0 ; 24.0; 18.0 300 Anonymous companies (Mendicino, Dietrich et al., 2001) 5.9; 8.0 300 Best cases reported (SEMATECH, 2002) 9.3 100 28.7 200 Company specific. Personal communication, Mr. Gerit 9.3 100 Götz, [email protected] 9.4 200 5; 7 300 Best case estimate (SEMATECH, 2002) 2.4; 3.5 300 7.9; 7.9 300 Best case estimate (SEMATECH, 1997) 5.2 300 2.9 300 Best case estimate (Chiarello, 2001) 1.2 300



Table A - 3. Generic profile of user hardware in system “A”. Technical specifications of personal computers and monitors. # of units

Measured power (W) On/Sleep/Off

2.00 GHz; 512 kB cache; 256 MB RAM; 60 GB HDD; CD/DVD; Matrox G200 AGP graphics; 100 MBps network card

60

80/n.a./14

15’’ super-TFT; 1024x768/ 60 Hz

57

42/3.2/≈1

Brand

Key parameters

Desktop PCs: Intel Pentium 4 Northwood LCD monitors: NEC MultiSync 1510 CRT monitors: Nokia 447Xi

3

17" (visible 15.7’’), 1280x1024 / 80 Hz

95/≈1/≈1

Lifetime (years)

Weight (kg)

3-4

22

5-6

14.5

5-6

7.8

Operation: 220 days/yr On: 1760 h Off: 7000 h On: 1320 h Sleep:440 h Off: 7000 h

Table A- 1. Generic profile of user hardware in system “B”. Technical specifications of thin clients. Key parameters: Typical power consumption:51 Product weight and lifetime:52 Quantity: Note:

Basic user: Transmeta t5500 733MHz Crusoe processor, 64MB DRAM, no flash memory

Advanced user: Transmeta t5700 1GHz Crusoe processor, 256 MB DRAM, 256 MB flash memory On, stand-by/idle: 20.4W; Off: 3W On, stand-by/idle: 20.4W; Off: 3W 1.39 kg; lifetime 6-8 years. 1.39 kg; lifetime 6-8 years. 48 12 Specifications of monitors are the same as in system “A”

51

Specifications provided by Hewlett-Packard (2003). Internet URL: http://www2.hp.se/includes/library/19321.pdf. Accessed: 2004-06-01.

52

The lifetime is suggested by the manufacturer. The actual lifetime depends on the dynamics of user needs.

113



Table A - 4. Server side hardware inventory in system “A”. Description

# of units

Power consumption

Server - IBM xSeries 342-5RX: 1.23 GHz (P3), 1.5 GB RAM; 18 GB HDD (3 units); dual processor, dual power supply

3

Server - IBM xSeries 345-31X: 2.4 GHz (Xenon), 2.5 GB RAM; 36 GB HDD (3 units); dual processor, dual power supply

1

Storage controller (server) – IBM FAStT200 HA: 256 MB RAM

1

Hard Disks - RAID level 5, not mirrored; 74 GB HDD (13 units)

1

Uninterrupted power supply - APC Smart-UPS 3000 RMB

2

Assumed HVAC efficiency: 60%. Assumed HVAC cooling time: 30%. Assumed HVAC heating: none.

Fibre channel switch - 3Com 8-port single power supply

2

Total server el.: 12.5 MWh/yr.

Server rack - IBM Netfinity Rack 42u

1

Total HVAC el.: 6.3 MWh/yr.

Console switch - NetBAY 2x8

1

Power duplication unit - NetBAY Rack PDU

1

114

Total rated power (max.): 2.85 kW. Observed server load factor: 40%. Observed server time: 24 h x 365 days Max HVAC power dissipation: 9,750 BTU/h.



Table A - 5. Server-side hardware inventory in system “B”. System component

#

Rated power*

Comment

Load factor

Server – HP ProLiant DL380R03: 3.2 GHz; 1MB L3 cache, 533 MHz buss; 1GB RAM, dual CPU and power supply

2

390 W

File & application sharing

50%**

Server (mail) – HP ProLiant DL380 G2: 2.8 GHz; 512kB L2 cache; 288 RAM, dual CPU and power supply

1

230 W

Mail server

Redundant processor fan set- HP DL380 G3

1

40 W

3 fans/set

100%

Console switch - NetBAY 4x32

1

unspecified

-

-

Storage controller - Smart Array 641

2

80 W

-

100%

Uninterrupted power supply (unspecified)

2

Total power

-

100%

Memory - 2GBt PC2100 Registered ECC SDRAM (2x1GB)

2

2W / GB

6 GB total

100%

Memory - 1GBt PC2100 Registered ECC SDRAM (2x512MB)

2

2W / GB

3 GB total

100%

Hard disks - 36 GB Ultra3 SCSI @ RAID1 HDD, 10,000 rpm

8

18 W

Mail

100%


2

22 W

Applications

100%


8

22 W

User data

100%

Notes: * Power ratings calculated using Active Answers Power Calculator for HP’s Proliant DL380 G3 servers. Internet URL: http://h30099.www3.hp.com/configurator/calc/DL380G3.xls. Accessed: 2004-05-08. ** Based on (Roth, Goldstein et al., 2002). *** Ibid. Assumed higher load factor due to higher server load.

115

70% ***

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ton, DC: Office of Air and Radiation, United States Environmental Protection Agency. Wainewright, P. (1999). Interliant: ASP fusion for the enterprise. ASP cases tudies. London: Farleit Ltd. 22 pgs. Van Zant, P. (1997). Microchip Processing (3rd ed.). New York: McGrawHill. Weidema, B. P. (2003). Matching bottom-up and top-down for verification and integration of LCI databases. Paper presented at the International Workshop on LCI-Quality, October 20-21, 2003, Karlsruhe, Germany. Welford, R. J., Young, C. W., & Ytterhus, B. E. (1998). Towards Sustainable Production and Consumption: A Conceptual Framework for the Service Sector. Eco-Management and Auditing, 5(1), pp. 38-56. White, A. L., Stoughton, M., & Feng, L. (1999). Servicizing: The quiet transition to extended product responsibility. [Online]. Available: http://www.tellus.org. Williams, E. (2003a). Environmental impacts in the production of personal computers. In Kuehr, R. & Williams, E. (Eds.), Computers and the Environment: Understanding and Managing their Impacts (Vol. 14, pp. 285). Dordrecht, Boston, London.: Kluwer Academic Publishers. Williams, E. (2003b). Forecasting Material and Economic Flows in the Global Production Chain for Silicon. Technological Forecasting and Social Change, 70(4), pp. 341-357. Williams, E. (2004). Revisiting energy used to manufacture a desktop computer: hybrid analysis combining process and economic input-output methods. Paper presented at the 2004 IEEE International Symposium on Electronics and the Environment, Proceedings of, May 10-13, 2004, Scottsdale, AZ, USA. Williams, E. D. (2000). Global Production Chains and Sustainability: The case of high-purity silicon and its applications in IT and renewable energy. Tokyo: The United Nations University. 102 pgs. Williams, E. D., Ayres, R. U., & Heller, M. (2002). The 1.7 Kilogram Microchip: Energy and Material Use in the Production of Semiconductor Devices. Environmental Science and Technology, 36(24), pp. 5504 -5510. Williamson, M. C. (1998). Energy Efficiency in Semiconductor Manufacturing: A Tool for Cost Savings and Pollution Prevention. Semiconductor Fabtech Editions, 8, pp. 77-82. Wilson, R. A., Yao, A. M., McManus, J., Terrence,, & Shadman, F. (2004). Comparative Analysis of the Manufacturing and Consumer Use Phase of Two Generations of Semiconductors. Paper presented at the 2004 IEEE In107


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Environmental Implications of Product Servicising – Appendix B

Appendix B. Selected papers The following articles and conference papers are included in the thesis: Paper I:

Plepys, A. (2002). “The grey side of ICT.” Environmental Impact Assessment Review. Vol. 22, issue 5, pgs. 509-523.

Paper II:

Plepys, A. (2002). “Software Renting - Better Business, Better Environment: The Case of Application Service Providing (ASP)”. Proceedings of the 2004 International Symposium on Electronics and the Environment (ISEE), San Francisco, CA, USA. Institute of Electrical and Electronics Engineers (IEEE), pgs. 53-60.

Paper III: Plepys, A. (2004). “Substituting computers for services - potential to reduce ICT's environmental footprint.” Proceedings of Electronics Goes Green 2004+: Driving Forces for Future Electronics, Berlin, Fraunhofer Institute, Germany. Paper IV: Plepys, A. (2004). “The environmental impacts of electronics. Going beyond the walls of semiconductor fabs.” Proceedings of the 2004 International Symposium on Electronics and the Environment (ISEE), Scottsdale, AZ, USA. Institute of Electrical and Electronics Engineers (IEEE), pgs. 159-164. Paper V:

Plepys, A. (2004). “The feasibility of adopting server-based computing in commercial and residential sectors.” (An abbreviated version of the paper is submitted to IEEE Internet Computing).

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PAPER I Plepys, A. (2002). “The grey side of ICT.” Environmental Impact Assessment Review. Vol. 22, issue 5, pgs. 509-523.

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Environmental Impact Assessment Review 22 (2002) 509 – 523 www.elsevier.com/locate/eiar

The grey side of ICT Andrius Plepys * The International Institute of Industrial Environmental Economics, Lund University, P.O. Box 196, Tegnersplatsen 4, SE-221 00 Lund, Sweden

Abstract The information and communication technologies (ICTs) have a profound impact on economy and environment. The performance improvements in ICT leads to increased consumption of ICT products and services, which has numerous environmental implications on different levels. The author points to the analogy between the rebound effects in the energy sector and the growth effects in ICT. A multilevel taxonomy of rebound effects is taken from the energy economics literature in order to structure the discussion on the environmental implications of increasing use of ICT products and applications. The author distinguishes two levels of environmental impacts from ICT: first, related to the life cycle of ICT hardware and second, related to the way the ICT applications are being used. By presenting examples from different literature, the paper illustrates the complexity of the environmental impacts and stresses the decisive role of human behaviour in determining their significance. The issues presented in the paper are highly relevant to any decisionmakers, who are placing large expectations on ICT and who needs to be aware about its potential environmental implications in the complex socioeconomic system of today. Huge investments are being made into the sector with large expectations for economic growth and environmental improvements, but neglecting the issue of rebound effect causes a risk of misallocation of funds. Having more information on effects and causes will allow decisionmakers to optimise future development with a balance between economic growth and environmental quality. D 2002 Elsevier Science Inc. All rights reserved. Keywords: Information and communication technologies; Consumption; Rebound effect; Environmental impact

*

Tel.: +46-46-222-0200; fax: +46-46-222-0230. E-mail address: [email protected] (A. Plepys).

0195-9255/02/$ – see front matter D 2002 Elsevier Science Inc. All rights reserved. PII: S 0 1 9 5 - 9 2 5 5 ( 0 2 ) 0 0 0 2 5 - 2

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A. Plepys / Environmental Impact Assessment Review 22 (2002) 509–523

1. Introduction In all times, the economic growth is continuously fuelled by organisational and technical innovations that ensure resource, labour, and capital productivity improvements. The general-purpose technologies, such as steam engines, electricity, or telegraphs always had strong economic and lifestyle impacts. Today, a similar role is played by information and communication technologies (ICTs). A large part of economic growth is attributed to their innovative applications in manufacturing and service sectors. It is expected that ICTs are capable of delinking the economic growth from environmental degradation primarily due to their potential to increase productivity and create value-added in the form of manipulating ideas and information rather than energy and materials (Romm, 2000; Romm et al., 1999). The ICT role in reaching the goals of a more sustainable development is especially an interesting topic for discussion. However, it is difficult to identify and measure what the environmental effects of the productivity improvements induced by ICT are. Evidence from the energy sector shows that a more efficient use of natural resources does not always reduce their absolute consumption. A more energy-efficient equipment reduces manufacturing costs and, consequently, the final price of a unit of product or service, which in turn increases demand. The phenomenon, called rebound effect, is well known to energy economists (Khazzoom, 1980; Brookes, 1990; Berkhout et al., 2000; Binswanger, 2000). As the ICT is thought to have a profound effect on all sectors of the economy, it is important to discuss its implications to the vision of sustainable development. At present, we still know too little about the relation of ICT to the environment. However, the technology has a number of potential risks and uncertainties that we need to understand when placing high expectations on ICT. Drawing a parallel between the rebound effects in the energy sector and ICT helps discussing the environmental implications of the growing ICT use.

2. The framework for discussion Traditionally, the term rebound effect refers to an effective increase in the consumption of an energy service after its price decreases due to higher efficiency of the production of the service. If technological progress makes certain equipment more energy efficient, less energy is needed to produce the same amount of products or services, thus the cost per unit of production falls, which leads to increased demand for the product or the service.


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The first comprehensive analysis of the rebound effects was performed by energy economists of the late 1970s.1 The majority of these studies focused on energy consumption for heating and transportation in a single-service model, which largely neglected the substitution effects among various services. Later research expanded the definition of rebound effect by focusing on multiservice models, which allowed to better understand full implications of rebound effects (Binswanger, 2000). Greening et al. (2000) performed a comprehensive literature review of the rebound effects from energy efficiency improvements and suggested a four-tier taxonomy of rebound effects. The framework goes beyond the boundaries of a single-service model and is useful for a more comprehensive discussion of the consumption phenomena in complex systems. As the effects of ICT are crosssectoral, this framework is useful to structure the discussion around ICT and consumption. Following Khazzoom’s definition of rebound effects, Greening et al. (2000) first limited the direct rebound effects to the microlevel calling them direct or pure price effects. These effects occur as a consequence of increased energy efficiency, which reduces the price of energy utilities by decreasing the amount of fuel needed to produce a commodity and, consequently, decreases its final price. The decrease of price if no other changes take place (ceteris paribus) will increase the demand for such a commodity, whether product or service. The direct effects for consumers could be further decomposed to substitution and income effects (Greening et al., 2000). A consumer will not increase the use of the ‘‘bargain’’ commodity indefinitely, but until the limits of satiation or budgetary tradeoffs with other expenditures. The consumption level will be also limited by other factors, such as consumer’s time budget or behavioural constraints (e.g., social norms, fashion or effort level, see Schneider et al., 2001). This aspect is important to remember for the further discussion on ICT and consumption. Since the consumption increase (attributable to direct or price effects) can be limited by several factors, there could be room for second-order consumption effects due to increased real income of consumers. As the energy efficiency improvements reduce the production and consumption costs of a given commodity, this may increase the demand for other commodities (Greening et al., 2000). The third type of rebound effects is referred as economy-wide effects, following the economic theory on price and quantity readjustments across economy sectors in a nonstatic situation. The argument of the economy-wide effects builds on the interrelationship of prices and outputs of goods and resources in different markets, which form a unique equilibrium state (Greening et al., 2000).

1

A broad spectrum of articles discussing the issues of rebound effects can be found in The Energy Journal and Energy Policy magazine and especially the articles of Daniel Khazzoom and Leonard Brookes.

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The prices of such commodities as energy do affect the price equilibriums of other commodities across multiple sectors of the economy. Energy price determines the cost structure of many commodities and is, therefore, a very important determinant of supply– demand equilibriums for virtually all products and services across the economy. As the secondary effects increase the demand for other commodities, their prices should increase. However, provided that the other commodities are highly energy dependent, the energy efficiency improvements will reduce the production costs and the final prices of such commodities. The new market equilibrium will depend on both factors. The fourth type of rebound effects, referred as transformational effects in Greening’s framework, relate less to the price mechanism and more to the changes of consumer preferences, altered social institutions, and organisation of production. This type of the effects is the most obscure and abstract and, as Greening et al. (2000) acknowledge, the extension of the rebound effect definition to include transformational effects is ‘‘conceptually possible, but not analytically practical as both theory and empiric data are lacking’’ (p. 399). The following section will present a parallel between Greening’s rebound effect taxonomy and the ICT sector. This will be followed by a discussion of implications the ICT-induced changes to the environment.

3. ICT and similarities to rebound effects For a few decades, the spectacular performance improvements of electronics have followed the exponential growth rate suggested by Gordon Moore.2 The advancements went hand in hand with a cost reduction per circuit element, which resulted in rapid reduction of prices making the ICT hardware affordable for a wide range of consumers. Today, the prices have become almost constant. However, the performance of ICT products is still improving exponentially, so that we can buy more functionality for the same price. 3.1. Direct and secondary effects (microlevel) Higher hardware affordability combined with the growing network connectivity and falling communication costs increased ICT application in virtually every sector providing new business opportunities and means of competition. High expectations have been placed on ICT by businesses and private consumers, which for decades prompted growing investments into the sector. A positive feedback loop emerged—growing expectations ensured more investments. More funds became available for R&D resulting in rapid technology innovation,

2 Moore—the founder of Intel—in 1964 made the still-valid prediction, that microchip performance per cost unit will double every 18 months.


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improvements of IT products, emergence of new services, and again even more expectations. The result was constant (habitual) demand for ICT innovations and evershortening technology cycles. The increased depreciation rates of electronics today are forcing early ‘‘retirement’’ of ICT products and render the hardware investment burdensome. This is especially evident in the most dynamic consumer products such as computers and mobile telephones. The phenomenon of receiving more performance for the same price has an analogy with the direct rebound effects in the energy sector. The performance improvements of ICT equipment allow us in the output to receive more user utility without additional investments. The growing output reduced the per-unit cost of ICT user utility and increased its demand. The performance of computers is highly dependent on technical parameters, such as processor speed, storage capacity, multifunctionality, etc., which determine the possibilities for new applications. The falling costs per performance unit increased the cost –utility ratio and made computers more valuable to substitute for other commodities as well as increased their use in new applications. The effect is increased energy and material consumption in ICT hardware in total. The secondary rebound effects, as formulated by Greening et al. (2000), of ICT performance improvements are not likely to occur. Almost constant prices for equipment and incomplete saturation of ICT product consumption will hardly shift consumer income spending for other commodities. Instead, the higher order rebound effects, similar to the economy-wide and transformational effects in energy sector on the macrolevel, are likely to be significant. 3.2. Macrolevel effects Any general-purpose technology has proved to have economy-wide impacts equivalent to those of the energy sector. The ICTs do play the role of generalpurpose technologies due to their strong influence on production efficiency and the final costs of many products and services. If computers are becoming more productive, the cost of producing those products and services that are strongly dependent on ICT falls and their consumption increases. In the sense of generating economic value, computers have a similarity to an energy utility. The parallel is not unreasonable. Many scholars attribute a large part of the recent economic growth to the successful application of ICT, as it facilitates reorganising management processes, creating new business models, improving resource planning, coordinating design, production operations, marketing and sales, and finally, changing our life styles.3 In this way, the ICT has a role of

3

In fact, the ICT role in economic productivity improvements is debated by many scholars (see, e.g., Gunnarsson, 2000; Oliner, 1994; Jorgenson, 1995; Brynjolfsson, 1996, 1997). However, the debate is beyond the scope of this paper.

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economic lubricant that is increasing economic productivity and reducing production costs and prices of all commodities. The effect could be seen as an economy-wide rebound effect similar to the one from the energy sector. The official statistics in the United States, indeed, indicated a decoupling between the GDP-measured economic growth and energy consumption. For example, some reports predict that the U.S. ICT sector will grow by 4.0% annually (other sectors only by 2.2%), while its energy intensity will be reduced by 0.92% (EIA, 1999). In the United States, during 1996 –1999 the energy intensity per GDP unit declined by 3.4% compared to the decline of 2.6% during the oil crisis. More surprising, the decline of the late 1990s occurred without any significant price signals or policy initiatives (Laitner, 2000; USDC, 2000). Some researchers accredit the major part of this trend to the ICT sector and the structural changes caused by the sector. A number of studies indicate that while the economic growth contributes to growing energy consumption, the much less energy intensive ICT sector can reduce or reverse this trend (EIA, 1999; Romm et al., 1999; Laitner et al., 2001). One argument is that a large part of added value is created by ICT applications that manipulate ideas and information rather than energy and materials. Another argument is that the ICT sector raised productivity in other sectors of economy by improving efficiency of product manufacturing and design. A rather large body of literature discusses the structural changes induced by the explosive growth of the digital economy (Kovacs, 1999; Brynjolfsson and Hitt, 2000; Koomey, 2000). Therefore, it is relevant to discuss the economy-wide effects of ICT in the context of Greening’s framework. If the ICT applications indeed improve the manufacturing productivity, the prices of different commodities throughout the economy will undergo numerous and complex adjustments (Greening et al., 2000, p. 397), which will be hard to attribute accurately to the ICT. Therefore, measuring the economy-wide effects of ICT will likely be very difficult, as this depends on the success of establishing cause – effect links between ICT and other sectors. The growing consumption of ICT products and services and their economywide effects are associated with complex environmental impacts, which can be positive, negative, or neutral. As in the energy sector, the environmental impacts from these effects can be considerably larger than direct impacts of increased consumption of ICT products and services. The discussion on what the role is of ICT and, particularly, Internet for sustainability is still going on and will hardly reach any definite conclusion, as the environmental impacts of the new technologies will depend on how they are used. Not only estimating the magnitude, but also even predicting the economywide effects of ICT is at least as difficult as in the energy sector. The transformational effects of ICT are especially difficult to analyse, because, as Greening et al. (2000) noted for energy sector, no comprehensive theory or sufficient empiric data exist today (p. 399). It is difficult to predict in what ways the ICT influences consumer behaviour, changes organisational arrangements,


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and institutional structures, because the changes are very dynamic and the systems are highly complex. Consequently, it is uncertain how these structural alterations will translate into production costs and consumption patterns of products and services. However, the concept of transformational effects is useful for the future analysis of the less tangible ICT effects on behaviour and lifestyles, which are strong determinants of consumption volumes and patterns. 3.2.1. The direct environmental effects Both the growing volume of ICT equipment and its increased use for different applications have significant environmental implications. One part of environmental impacts derives directly from the life cycle of ICT products. The other part originates from the use of ICT products and services, enhancing or substituting traditional processes or creating new ones. Therefore, when discussing the environmental impacts of ICT, it is useful to frame them into both the life cycle and the system’s perspectives. 3.3. Resource extraction and manufacturing The manufacturing of electronic products starts with resource extraction, which is surprisingly highly material and energy intensive. The advancements in semiconductor technologies continuously require the use of new compounds based on a number of rare elements, which are responsible for particularly large material displacement and generation of huge quantities of mining waste. Using the MIPS method the Wuppertal Institute (Germany) has shown that a golden ring has an ecological backpack of material intensity equivalent to 10 tons (Grote, 1997). The ‘‘backpacks’’ of many rare elements, which are commonly used in electronic circuits, are also large (e.g., germanium, gallium, arsenic, indium, tantalum, etc.). The total material intensity along the life cycle of a personal computer can be as large as 16 – 19 metric tons, of which just 0.1% is the computer’s mass (Grote, 1996; Mallay, 1998; Hilty et al., 2000). The manufacturing of semiconductors, printed wiring boards, and cathode ray tubes requires large amounts of often toxic materials. According to the 1995 data from Silicon Valley Toxics Coalition (SVTC, 2000), the production of a 6-in. silicon wafer requires 8.6 m3 deionised water, 9 kg hazardous chemicals, and 285 kW h electricity. The production of a 8-in. chip used for Pentium CPUs requires 11.44 m3 of deionised water, 120.8 m3 of bulk gases, 12 kg chemicals, and produces 0.82 m3 hazardous gases, 14 m3 waste water, and 4 kg hazardous waste (Anzovin, 2000). 3.4. User phase A study performed for a generic personal computer using life cycle assessment (LCA) methodology found that the user phase has the largest environmental impacts for impact categories that are strongly related to fossil fuels (IPU/AC,

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1998). A study using the ecological footprint methodology for personal computers produced similar results. The total footprint of the analysed PC was close to 1800 m2, while the footprint of the energy use turned out to be 1000 times larger than the footprint of resource consumption from the rest of the life cycle (Frey and Harrison, 2000). The development of faster communication lines is likely to contribute to the demand of faster computers, which is likely to increase energy consumption (Kelly, 1999). In addition, computer networks require more of other powerdemanding equipment, such as servers, amplifiers, routers, filters, storage devices, and communication lines. Fiberglass technology has higher eco-efficiency than copper: 1 ton of copper can be replaced by 25 kg of fiberoptic cable, which can be produced with only 5% of the energy needed to produce the copper wire. However, the speed at which the optic fibers are laid in the world is faster than the speed of sound (National Geographic, December 2001), which per year amounts to 10 million km—enough to encircle the Earth 250 times. Additional energy is also required for climate control of the network facilities (Hilty et al., 2000). Putting this new infrastructure in place involves sizeable construction activities, and their environmental impacts may occur to be substantial. The complex ICT infrastructure requires a reliable power supply, as fast computers do not tolerate power cut-offs even at a fraction of a second. This forces dot-com companies to install huge systems of batteries, flywheels, magnetic superconductors, UPS, and back-up generators, which adds to the environmental costs of ICT. The energy consumption by ICT is likely to remain significant. Besides the growth of the shear number of equipment, this is linked to several behavioural factors, such as:

the power management functions of computers are underutilised (Kawamoto et al., 2001); growing access to broadband networks encourages heavy downloads of audio – visual information, so users are likely to leave computers on during nights or weekends pursuing lower rates and larger network bandwidth; increased connectivity requires more and more computers to stay on-line operating 24 hours a day, etc. Better understanding of the behavioural factors requires a substantial observation effort and estimating their impacts is a difficult task. Knowing the energy consumption trends of the Internet is however, a highly relevant issue for policymakers. Firstly, a number of countries experience power shortages and satisfying marginal power peaks comes at a high economic and environmental cost. Secondly, the Kyoto process requires a reconsideration of national energy policies to allow for challenging commitments. Several attempts to calculate and predict the ‘‘energy bill of Internet’’ have been made in different countries. However, the outcomes vary substantially.


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A Swiss study found the connection power of data banks to be between 20 and 40 MW and predicted that by 2020 the energy consumption in Swiss households will increase by a third due to the growing use of digital equipment (Aebischer and Huser, 2000). Another, heavily debated, study estimated that in 1999 the Internet equipment consumed roughly 8% of the total electricity in the United States, with a prediction to grow to 50% within a decade (Mills, 2000; Mills and Huber, 1999). It stated that in the United States it takes 1 kg of coal to produce enough energy to send 5 MBt of data over Internet. The study concluded that the efficiency improvements in electronics would not outpace the growth in their numbers and will result in increased absolute energy consumption. The results were heavily criticised by a number of peers suggesting that the estimate should be reduced by at least 88% (Koomey, 2000; Koomey et al., 1999).4 The correction was valid, since Mills and Huber overestimated initial power requirements of Internet hardware by more than a factor 10. However, even the corrected numbers do not look optimistic knowing that the Internet traffic doubles every 6 months (Roberts and Crump, 2001). So it seems that the seemingly straightforward calculations of direct ICT energy consumption are not easy and can be inconclusive. Even more difficult is to account the higher order ICT effects on energy and material consumption, which occur through the ICT-induced changes in production and consumption throughout the economy. 3.4.1. End-of-life phase The negative environmental effects of growing consumption of electronic hardware are most visible in the end-of-life stage. During the 1990s, a number of studies have been looking into end-of-life management of electronic waste and particularly computers. According to some estimates, there are 14 –20 million computers scrapped yearly, around 10 – 15% of them reused or recycled, 15% end up in landfills and the rest are stockpiled by users (Goldberg, 1998). According to a model developed at Carnegie Mellon University, in the United States alone, which has a 15% market growth rate and 30% of worldwide computer sales, nearly 150 million computers will be recycled and 55 million landfilled in 2005 (Matthews et al., 1997). Electronic waste is the most obvious environmental problem and the infrastructure to manage it properly is still poorly developed. The recycling and reuse of postconsumer electronics is technically problematic, is not feasible economically, or simply lacks an appropriate physical infrastructure, which will require huge investments to build.

4 The debate among Koomey, Laitner, and Mills is well reflected by U.S. National Lawrence Berkeley Laboratories: http://enduse.lbl.gov/projects/infotech.html.

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Policy intervention is often needed where the market fails to address environmental problems. Today, we can already see some interesting policy initiatives on national and international levels that aim to make producer responsible for collecting and safely disposing its products in the end-of-life. The Swedish Ordinance on Waste Electronic Equipment and the draft EU Directive on Waste Electric and Electronic Equipment are such examples. If properly designed and implemented, these policies can eventually affect product design and induce innovative business approaches that could be less material- (and product) intensive.

4. The structural environmental effects In order to structure the discussion around the transformational effects of ICT on the environment, it is necessary to look at both ecological and social dimensions. The positive ecological dimension rests on ICT’s potential to deliver greener products, optimise the ways of their delivery, and increase consumption efficiency through dematerialisation, e-substitution, green marketing, ecological product life optimisation, etc. (Reisch, 2001). The environmental potential offered by the ecological dimension will be fully utilised only under an optimised social dimension, which deals with the behavioural issues of consumption. For instance, Internet is a powerful marketing channel, which is able to target specific consumer groups, affect perceptions and lifestyles, and lure them into a trap of ‘‘illusion of control’’ over consumption (Reisch, 2001). Thus, ICT can easily become a powerful engine of consumerism. On the positive side, Internet can facilitate consumer education and empowerment and promote more sustainable lifestyles. A few examples of environmentally adverse behavioural changes that compromised the ecological dimension of ICT are presented below. Office paper. The experience of the past decades showed that contrary to most expectations, the ICT did not create the ‘‘paperless office,’’ but the actual paper consumption has increased several times with the advent of desktop publishing. For instance, the increase in the United States between 1960 and 1997 was fivefold (EIA, 2002). Predictions show that the world paper demand will grow by 30% to the year 2010 reaching over 420 million tons (Jaakko Po¨yry Group, 2001). Digital media. The environmentally positive substitution effect of the digital media depends on the intensity of its use. A Swiss study compared three ways of delivering information through TV, newspaper, and Internet (Reichart and Hischier, 2001). With the Swiss electricity mix the environmental impacts from receiving the same amount of news through Internet and TV would be equivalent to a newspaper after 20 and 85 minutes, respectively. The Internet impact is even bigger if a user decides to print the news (around 70 –80% of all PCs are sold together with a printer, (Hilty et al., 2000)). ICT and trade. E-commerce is the area where ICT is dramatically changing the way we buy goods and services. The ‘‘one-click-shopping’’ makes it extremely


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easy to find, compare, and buy products and services. The Internet becomes a perfect ‘‘frictionless market,’’ where information is abundant, where buyers and sellers across the world can reach close-to-zero transaction costs. The perfect market conditions push competition even further, which facilitates reducing commodity prices and increasing their demand. In 2001, the global e-commerce sales were estimated at $1 trillion and represented just 6% of the total retail (Baker, 2000). However, they are expected to reach $8.5 trillion in 2005 with business-to-business part of e-commerce representing 75 –85% of the world’s total e-commerce revenue (Cohen, 2001). E-commerce has a great environmental potential to optimise transport logistics, reduce overproduction, manufacturing waste, warehousing space, etc. The just-in-time delivery system adopted by Toyota allowed reducing material inventories and warehouse space by 28% and 37%, respectively (Romm et al., 1999). U.S. firms were able to cut logistics expenditures in half by introducing ICT in their purchasing systems—during 1960– 1996 the expenditures dropped from 20% to 10.5% of the GDP (Downey, 2000). At the same time, on-line orders tend to accelerate the delivery of goods, leading to increase in courier, express, and parcel services. It also changes the structure of shipped freight towards smaller units, thus leading to increased packaging (Fichter, 2001). E-purchases can be highly customised, which requires nonstandard size packaging and reduces the efficiency of vehicle load volume. The environmental effect of e-commerce will depend on how well it is optimised for specific conditions. Studies show that environmental savings depend on several parameters, such as the load rate of vehicles and delivery distance. A Swedish study of household shopping showed that the environmental savings are reached if one e-commerce delivery replaces 3.5 traditional shopping trips, if more that 25 orders are delivered at a time, and if travel distance is longer than 50 km (Jo¨nson et al., 1999). Studies on e-shopping of books showed that the environmental impacts from e-commerce could be equal or smaller than those of traditional retail. For example, selling 1 million dollars worth of bestseller books in U.S. metropolitan areas required 28 – 33 TJ of energy for traditional retail and 30 TJ for e-commerce (Matthews and Hendrickson, 2001). A similar study from Japan also concluded that traditional retail has less environmental impacts in dense urban areas (Williams and Tagami, 2001). In these calculations, as the population density decreases, e-commerce (especially with large order sizes) saves energy, because courier services become more energy efficient under such conditions. The studies indicate that some key parameters such as shipping distances, return rates, population density, and shopping allocations have a decisive role for the environmental impacts of e-commerce. Human behaviour has a very important role in determining these parameters, since it is the consumer who decides on order sizes, supplier locations, product returns, and delivery time. The impact of the digital marketplace on the environment is thus uncertain. Ecommerce has a great potential to cut the shopping related travel, but the routines

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leading to the present environmental effects are deeply rooted in consumer behaviour. Unfortunately, the two most dominant criteria for purchasing decisions are price and delivery time and only a few consumers consider environmental implications. Impulsive e-shoppers often choose overnight door-to-door deliveries, which have large fuel intensities. Virtual mobility—really virtual? Increased computer connectivity changes the way we work. A growing number of people and companies choose to work on a distance at least some days in a week. This allows reducing the need of office space and daily commuting, saving energy, and reducing transport congestion. However, along with the environmental opportunities comes a number of threats. For example, distance work may gradually induce a further stretch of suburban areas, increasing driving distances, and virtual meetings facilitate more long-distance business connections and may lead to an increase in a number of face-to-face meetings. Working at home does save the energy for office heating, but additional energy is required for home offices. A study performed in 1997 by the Swiss Federal Office of Energy reported a 30% household energy increase if one household member was working at home (Aebischer and Huser, 2000). Even though working from home is regarded as less stressful, there is a threat of longer working hours (due to e.g., distractions or time used for other activities), which eventually leads to the discussion about the impact on the quality of life. 4.1. Consumption and the impact of time budget Time budget along with commodity prices, satiation, and income levels determines the levels of consumption. Studies on time-related rebound effects show that timesaving services can increase energy consumption (Jalas, 2000). The time issue is highly relevant for discussing the ICT effects on consumption. The introduction of ICT has likely increased labour productivity, contributed to growing personal income, but hardly reduced our working hours. Higher incomes and the timesaving effect of e-commerce are contributing to increased consumption. However, in the household sector a larger timesaving potential exists. Time slots can be created by e-commerce, e-banking, and many other ICT on-line services. To determine the time effects we need to study by what activities do we substitute the potential time windows. It is, however, very hard to predict the impact of time rebounds, since it depends on human behaviour, and high quality statistics are needed for this purpose.

5. Concluding remarks When discussing the causes of environmental implications of the introduction of ICT products and services, it is useful to use the analogy with the rebound


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effects in energy sector. Especially interesting is to place the ICT effects in a multilevel framework and discuss them in the perspective of economy-wide and transformational effects. Clearly, the ICT has a potential to decouple economic growth from environmental degradation. However, without considering potential rebound effects of increased ICT consumption, the environmental implications can quickly become detrimental. The environmental impacts of ICT largely depend on how the ICT applications perform when human behaviour becomes a very important factor. The society should not be too optimistic about the positive role of ICT in economy without accounting ICT’s environmental impacts. The direct and especially higher order impacts have to be better understood and accounted for when making strategic decisions related to ICT. Therefore, the issue of potential rebound effects attributable to ICT is worthy of attention from policy-makers. Huge investments are being made into the sector with large expectations for economic growth and environmental improvements, but neglecting the issue of rebound effects causes a risk of misallocation of funds. Having more information on effects and causes will allow decision-makers to optimise future development with a balance between economic growth and environmental quality. New policies that do not hinder innovation, but endorse technologies that most effectively promote sustainable economic growth are needed. Right priorities for environmental protection have to be set to enable optimal allocation of resources. Dematerialisation is one of the most effective strategies, and its potential can be particularly well utilised in the ICT sector where new business approaches relying on less material product and service systems are relatively easy to emerge.

References Aebischer B, Huser A. Networking in private households: impacts on electricity consumption. Bern, Switzerland: Swiss Federal Office of Energy, Electricity Research Programme; 2000. p. 55. Anzovin S. The green PC revisited. ComputerUser.com, 1997. Baker L. How green is e-commerce? Tidepool 2000. Berkhout P, Muskens HG, Jos C, Velthuijsen JW. Defining the rebound effect. Energy Policy 2000;28(6 – 7):425 – 32. Binswanger M. Technological progress and sustainable development: what about the rebound effect? Paper presented at the ESEE Conference 2000, Vienna, 2000. Brookes LG. Energy efficiency and economic fallacies. Energy Policy. 1990;783 – 5 (March). Brynjolfsson E, Hitt L. Computing productivity: firm-level evidence. An updated version of 1997 article. Cambridge, MA: MIT, Sloan School of Management; Philadelphia, PA: University of Pennsylvania, Wharton School; 2000. p. 46. Cohen N. The environmental impacts of e-commerce. Sustainability and the information society. 15th International Symposium Informatics for Environmental Protection, Zurich 2001. Marburg: Metropolis Verlag; 2001. Downey M. Workshop on implications of the new digital economy on transportation: developing research and data needs. Washington (DC): National Academy of Sciences; Washington (DC): U.S. Department of Transportation, Office of Public Affairs; 2000.

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Environmental Investigation Agency (EIA). Annual energy outlook 2000. Washington (DC): U.S. Department of Energy; 1999. Environmental Investigation Agency (EIA). Forecasts: consumption—the driving force. Washington DC, USA: EIA, London, UK, 2002 (Available at: http://www.eia_international.org/campaigns/ Forests/Regulation/consump.html). Fichter K. Sustainable business strategies in the Internet economy. Sustainability and the information society. 15th International Symposium Informatics for Environmental Protection, Zurich 2001. Marburg: Metropolis Verlag; 2001. p. 109 – 18. Frey SD, Harrison DJ. Environmental assessment of electronic products using LCA and ecological footprint. Joint International Congress and Exhibition. Electronics Goes Green 2000, Berlin, Germany, 2000. Goldberg C. Where do computers go when they die? Technology Circuits. New York Times of the Web, 1998. (Available at: http://www.ce.cmu.edu/Green Design/comprec/nytimes98/12die.html). Greening LA, Greene DL, Difiglio C. Energy efficiency and consumption—the rebound effect—a survey. Energy Policy 2000;28(6/7):389 – 401. ¨ kobilanz des PC. Comput Tech 1996;10: Grote A. Punktgenau. Schweizer Studie pra¨zisiert die O 102 – 4. Grote AMJ. Schwergewicht. Comput Tech 1997;5:170. Hilty LM, Ruddy T, Schultless D. Resource intensity and dematerialisation potential of information society technologies. Solothurn: Solothurn University of Applied Sciences North-Western Switzerland and the authors; January 2000. p. 12. IPU/AC. LCA report: EU eco-label for personal computers. Lyngby: Institute of Product Development, Technical University of Denmark; USA: Atlantic Consulting; 1998. p. 72. Jaakko Po¨yry Group. Title not available, 2001. (Available at: http://www.poyry.com/en/download. html). Accessed November 12, 2001. Jalas M. A time-use approach on the materials intensity of consumption. Helsinki: Helsinki School of Economics and Business Administration, Department of Management; 2000. p. 29. Jo¨nson G, Orremo F, Wallin C, Ringsberg K. IT, mat and miljo¨. En miljo¨konsekvensanalys av elektronisk handel med dagligvaror. Stockholm: Naturva˚rdsverket. Institutionen fo¨r Designvetenskaper, Fo¨rpackningslogistik/Lunds Tekniska Ho¨gskola; 1999. p. 102. Kawamoto K, Koomey J, Nordman B, Brown RE, Piette MA, Meier AK. Electricity used by office equipment and network equipment in U.S.: detailed report and appendices. Berkeley (CA): Energy Analysis Department, Environmental Energy Technologies Division, Ernest Orlando Lawrence Berkeley National Laboratory, University of California; 2001. p. 50. Kelly H. Information technology and the environment: choices and opportunities released. iMP Mag 1999. Khazzoom JD. Economic implications of mandated efficiency standards for household appliances. Energy J 1980;1(4):21 – 40. Koomey JG. Rebuttal to testimony on ‘‘Kyoto and the Internet: The Energy Implications of the Digital Economy’’. Berkeley (CA): Energy Analysis Department, Environmental Energy Technologies Division, Ernest Orlando Lawrence Berkeley National Laboratory, University of California; 2000. p. 27. Koomey G, Kawamoto JK, Nordman B, Piette MA, Brown RE. Initial comments on ‘‘The Internet Begins with Coal’’. Memorandum LBNL-44698. Berkeley (CA): Ernest Orlando Lawrence, Berkeley National Laboratory, Energy Analysis Department; 1999. p. 9. Kovacs CM. Environmental benefits from the dematerialization of services case study: digital publishing screening life cycle assessment on two alternative services for scientific information provision. European Postgraduate Course in Environmental Management 1998/1999. Amsterdam: University of Amsterdam, IVAM Environmental Research; 1999. p. 45. Laitner JA. The information and communication technology revolution: can it be good for both the economy and the climate? Washington (DC): U.S. Environmental Protection Agency, Office of Atmospheric Programs; 2000. p. 7.


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Laitner JA, Koomey JG, Worrell E, Gumerman E. Re-estimating the Annual Energy Outlook 2000 forecast using updated assumptions about the Internet economy. Presented at Allied Social Science Association Meeting, Society of Government Economists Session.New Orleans, LA: American Economics Association; 2001. p. 11. Mallay J. Ein einfacher PC mit Bildschirm verbraucht 19 Tonnen Ressourcen. Telepolis aktuell; 1998. Matthews HS, Hendrickson C. Economic and environmental implications of online retailing in the United States. Sustainability and the information society. 15th International Symposium Informatics for Environmental Protection, Zurich 2001. Marburg: Metropolis Verlag; 2001. p. 65 – 72. Matthews HS, McMichael FC, Hendrickson ChT, Hart DJ. Disposition and end-of-life options for personal computers. Pittsburgh (PA): Carnegie Mellon University; 1997. p. 18. Mills MP. Forget oil. It’s the century of the electron. Wall Street J 2000. Mills MP, Huber PW. Dig more coal—the PCs are coming. Forbes Mag 2000. Reichart I, Hischier R. Environmental impact of electronic and print media: television, Internet newspaper and printed daily newspaper. Sustainability and the information society. 15th International Symposium Informatics for Environmental Protection, Zurich 2001.Marburg: Metropolis Verlag; 2001. p. 91 – 8. Reisch LA. The Internet and sustainable consumption: perspectives on a Janus face. J Consum Policy 2001;24:251 – 86. Roberts LG, Crump C. US Internet IP traffic growth. San Jose, CA, USA: Caspian Networks Inc., 2001 (Available at: http://www.caspiannetworks.com/library/presentations/traffic/Internet-Traffic081301.ppt). Romm J. Statement before the Subcommittee on National Economic Growth, Natural Resources, and Regulatory Affairs of the Committee on Government Reform, United States House of Representatives. Washington (DC): Centre of Energy and Climatic Solutions; 2000. Romm J, Rosenfield A, Hermann S. The Internet economy and global warming. Washington (DC): Centre for Energy and Climate Solutions/Global Environment and Technology Foundation; 1999. Schneider F, Hinterberger F, Mesicek R, Luks F. Eco-info-society: strategies for an ecological information society. Sustainability and the information society. 15th International Symposium Informatics for Environmental Protection, Zurich. Marburg: Metropolis Verlag; 2001. p. 831 – 8. Silicon Valley Toxics Coalition (SVTC). Water use and other materials and wastes associated with semiconductor production. San Jose, CA, USA: SVTC; 2000. U.S. Department of Commerce (USDC). Digital economy 2000. Washington (DC): U.S. Department of Commerce, Economics and Statistics Administration, 2000, 2000. p. 71. Williams E, Tagami T. Energy analysis of e-commerce and conventional retail distribution of books in Japan. Sustainability and the information society. 15th International Symposium Informatics for Environmental Protection, Zurich 2001. Marburg: Metropolis Verlag; 2001. p. 73 – 80.

Andrius Plepys is a research associate and a PhD candidate at the International Institute for Industrial Environmental Economics at Lund University in Sweden. Andrius holds an MSc in electric engineering and an MSc in environmental management and policy. Currently, he is engaged into a multidisciplinary research dealing with the strategic environmental management issues in ICT sector. The researcher attempts applying the Product Service Systems (PSS) framework and exploring different scenarios of environmental IT product servicing.


PAPER II Plepys, A. (2002). “Software Renting - Better Business, Better Environment: The Case of Application Service Providing (ASP)”. Proceedings of the 2004 International Symposium on Electronics and the Environment (ISEE), San Francisco, CA, USA. Institute of Electrical and Electronics Engineers (IEEE), pgs. 53-60.

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Proceedings of the 2002 IEEE International Symposium on Electronics and the Environment, San Francisco, CA, USA. Institute of Electrical and Electronics Engineers (IEEE).

Software Renting – Better Business, Better Environment. The case of Application Service Providing Andrius Plepys research associate, MSc Environmental Mgt Policy ; MSc Civil Eng. International Institute for Industrial Environmental Economics at Lund University1 [email protected] The ICT sector experienced enormous resource and performance improvements during the last decade. Today there are around 550 million computers operating worldwide and 10% of them are connected to the Internet [1]. Even though the size and weight of ICT hardware has reduced dramatically, its growing total volume has considerably increased the absolute resource consumption and generation of toxic waste, which is raising environmental concerns in many countries. At the same time the ICT sector has enormous potential to reduce its resource consumption by creating added value with little or no natural resource involvement, the sector is a fertile ground for creating dematerialised service systems.

Abstract The author analyses the business model of Application Service Provider (ASP) as a less material intensive alternative to traditional computing – a promising example of ICT sector dematerialisation. The article compares the ASP vs. traditional computing models from environmental and business perspectives. The ASP service model has a potential to provide both economic and environmental benefits. By using the results from the available life cycle studies on personal computers the author conducts a rough analysis of the environmental gains from using the ASP model. The key environmental benefits derive from using a “lighter” hardware such as thin clients and the possibilities to extend its lifetime. The conclusions show that there are several groups of barriers: technical, cultural, knowledge, economic and legal barriers that can be addressed by different actors. Companies can overcome some of those barriers, but the issues of property and privacy right protection; anti-trust legislation, standardisation and infrastructure development have to be addressed by government. ASP stakeholders can find it interesting to identify and exploit the potential environmental benefits of ICT outsourcing

One of promising business models based on servicizing of ICT products is renting computing resources on-line. A good example of it can be Application Service Provider (ASP) services based on application and data hosting. It questions the relevance of placing ever-greater computation and storage demands locally on individual computers and offers systems, where users are connected to a powerful host with high performance characteristics. Such systems allow replacement of traditional computer by using simplified computers with limited technical capabilities that are compensated by a powerful host. The author has found many indications that ASP computing has several financial and business advantages. This paper provides a new perspective about on the environmental relevance of the ASP services emphasising their potential for reducing resource consumption while satisfying consumer needs. The relevance and advantages of such systems are becoming more evident along with Internet infrastructure improvements and growing environmental concerns about the toxicity of electronic waste and poor management of its growing volume. However, ASP services are gaining momentum rather slowly. This paper will analyse a few critical points for such slow development with an insight introduction factors that needed to be kept in mind when developing similar services.

Keywords: IT outsourcing, environmental benefits, energy efficiency, lifetime extension. Introduction The rapidly growing Information and Communication Technology (ICT) sector poses several threats to sustainable development - large amounts of natural resources are involved in the life cycle of ICT products and hazardous wastes are generated. The technology development has improved product performance as well as fuelled their consumption with potential rebound effects. In this light the strategies for sector dematerialisation are vital to improve its resource efficiency.

1

P.O.Box 196, Tegnersplatsen 4, SE-221 00 Lund, Sweden. Tel.: +46-46-222 02 00 (222 02 26 direct). Fax.: +46-46-222 02 30

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The ASP model There are several synonymous definitions of Application Service Provider (ASP) services can be used (e.g. application outsourcing, hosted applications, network applications, network service provision, etc.). An ASP is essentially a remote on-line service providing computing power and renting software and data storage space. A client accesses an ASP host and runs available applications over a communication line. A typical (“pure-play”) ASP provider hosts software and/or data in a centralised data centre and delivers applications to many users over a network in return for payment (Figure 1). Often an ASP provider also rents its own hardware to customers and provides technical support and maintenance. The remote computing technology can be traced back to the very early days of computer era when the ICT architectures were built on mainframes and terminals. Throughout the decades we evidenced rapid decentralisation trend fuelled by the birth of cheap PCs and increased variety of software. The reduction of computer prices has not come cheap for the users. The rapid ICT development forces us to frequently upgrade both software and hardware in order to stay of the top of the “technology wave”. In addition, the growing complexity of ICT architectures demands highly skilled maintenance personnel and continuous retaining of employees. Hiring the ICT staff and retaining personnel becomes a substantial cost burden for business, who’s core competences and business activities are not IT-related. Facing these problems private companies and public organisations turn to ICT outsourcing. At this point the ASP business model emerged in US pioneered by US Internetworking, Breakaway Solutions, Corio and others, who offered on-line computing services on contractual basis. Today the ASP businesses though still rather small compared to other ICT sectors are growing rapidly. For example, IDC projects that the overall hosted application market will grow from $150 million to $16 billion during 1999-2003 [2], Gartner Group and Dataquest anticipates the growth from $2.7 billion to $22.7 billion [3] and Forrester Inc. from $1 billion to $21 billion during 1997-2001. The large differences in the base ranges of the estimates can be probably explained by different accounting methodologies, however, it gives an idea about the size of the ASP sector. Similar growth rate prognoses apply for all industrialised countries and especially those having highest computerisation rates, such as North America, Nordic countries and Japan. For example, in 2000 the Nordic ASP market was $300 million and its yearly growth rate reached 140% [4]. What is also characteristic that the ASP market is still very volatile and according to some estimates up to 60% of today’s ASPs are going to disappear from the market in 1-2 years [5, 6]. The ASP will most likely be popular among small and medium enterprises, which generally are short of resources for investments into their own ICT utilities. The private con-

sumers may also find the service beneficial. To become successful the ASP services need to become flexible enough to provide sufficient entertainment services for the private users, since the bulk of the of computer use in households is related to entertainment (games, music, Internet surfing). Today the market is still supply-driven and its future will depend on the success of early-adopting ASP users and the effectiveness of ASP marketing. Traditional vs. ASP computing To illustrate the economic benefits of using ASP, let’s image a scenario where a company needs to make a decision on the concept of its ICT infrastructure. There are two distinct concepts: for a typical office work the company can have either invest into its own computing system or outsource (hire) ICT services from an ASP company. To satisfy its ICT needs the company needs to consider several criteria for the ICT utilities, such as: functional quality, data security, ergonomics and service reliability. In addition, if a company is concerned about its environmental image it will most likely have a policy on green purchasing and goals for waste minimisation and energy savings. The choice of a ICT concept will be optimal if a company will satisfy its needs at minimum cots while balancing all the criteria. The case of PC If the company decides to own the ICT infrastructure the total ownership costs will include an up-front investment, ICT staff, maintenance and employee training, down-time, future upgrades and lost time and work efficiency during the transition time. According to some estimated a typical office place in such case will cost between $5,000 and $10,000 per year including the upfront investment [5, 6]. The company will have to not only make a large upfront investment and be also prepared for new expenses within 3-5 years when the need for upgrading the system will come. In addition, the company needs to assign reserve budget for the contingencies and maintenance costs. An optimal investment is the one that provides sufficient ICT quality for minimum cost. In many cases, however, companies assess their optimal equipment quality level corresponding to an investment popt but invest slightly more (pmore in Figure 2, A) in order to prolong the lifetime of the hardware. However, the pmore investment is sub-optimal as it buys overquality hardware for the time t0-t1. On the longer run the company will repeat such investments when the technical performance of the ICT infrastructure will no longer correspond to the business requirements (Figure 2, B). From the environmental perspective the investment is not optimal either, which will be discussed below. The case of ASP Now let’s look at the case when the company decides to outsource its ICT utilities to an ASP firm. The choice fulfilling

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the needs of the company will be optimal at lowest cost at long-term. In this case the company can use either its own legacy computers or rent the stripped-down version of PCs (e.g. socalled thin clients or network computers) from an ASP. The later is configured only with essential elements, such as memory, processors and network communication interfaces. The on-site computing power in this case is limited, but an ASP provides computing power and space for data storage. In this case the up-front investment can be optimised only for essential applications at a required performance level, which implies that the investment is lower than buying an "over-quality" ICT system based on PCs. Besides, the company knows in advance what part of its budget must be assigned for the ICT utilities, which is pre-set by the contractual agreement with the ASP firm. The company has also lower expenses for its ICT personnel. The system remains "thin" in terms of the client applications and hardware that are tailored the company needs. In this scenario the over-investment is avoided. The company does not need to invest into hardware upgrades, since the ASP assumes the responsibility of keeping up with the technology development. This means that the company can better plan its cash flows, by periodically updating its contract with the ASP. By avoiding over- and underinvestments the company distributes its financial resources more efficiently and is able to save resources for its core business. The ASP benefits A number of ASP benefits could be seen from the above examples (Table 1). First of all, the ASP can help companies to cope with the growing variety and complexity of ICT technologies, which increasingly require large investments and skilled personnel – the resources that are taken away from the core company businesses. The companies using ASP have access to the latest technologies, which are professionally selected by ASP providers and upgraded when needed. The best selling arguments for companies to “go ASP” are reduction of Total Costs of Ownership (TCO) of ICT infrastructure and better predictability of costs. The TCO include of capital investment, employee training, start-up, maintenance and downtime costs. Centralised application management and automatic software upgrading in an ASP service reduce the costs substantially. Analysts estimate that thin clients reduce annual cost of desktop computing from 35% [7] to 57% [8] over a typical networked PC. Even at the lowest estimate of 35% and a typical annual cost of US$9,000 for operating and managing a networked PC the savings amount US$3,150 per year [9]. Thin clients based system units are 5-10 times more energy efficient than traditional desktop computer [10], which also adds to the total savings.

The risk of application ownership in terms of start-up period, potential downtime, maintenance and support tasks are transferred to ASP service providers. According to US Internetworking, which is the largest player in ASP sector, a traditional implementation of an enterprise resource planning application can cost up to $40,000 a month and last up to 2 years, while an ASP service can deploy it for total $60,000 over a 3 month period [11]. Shorter time-to-market is another major attraction of the ASP. This is especially attractive for smaller companies that grow rapidly and lack infrastructure and internal resources to run sophisticated applications inhouse. ASP users can also find benefits in freeing internal human resources needed for ICT support and focusing on their core business. Meanwhile ASP provides constant access to latest technology with minimum costs and time for implementation. There is a lack of highly trained ICT personnel in today’s tight job market. Companies often have extra costs for hiring and keeping the personnel, which can be a big barrier for smaller enterprises. ASP enterprises are also highly specialised in data security, back-up and disaster recover issues. By outsourcing utilities such as ICT services the companies can better focus on their core competences and core business areas. Therefore, valuable time and human resources can be saved giving companies a competitive advantage. ICT professionals are volatile and highly expensive human resource. Retaining them in a company is costly and only large corporations can afford top specialists to maintain their ICT utilities. Some companies might find advantages in preservation of existing investments in legacy computers as ASP set up does not have high technical requirements for on-site equipment, except for the communication infrastructure [12]. The ASP firms claim to increase data security and systems’ reliability for those companies, which do not have enough resources to maintain high levels of data security and information safety. The greater security can be achieved by data replication to multiple data centres, robust crash recovery systems, more sophisticated data backup systems and special insurance services. The leading ASP companies offer information usage tracking and provide auditing capabilities to ensure that authorised users access the data. Barriers for ASP In spite of the ASP benefits, it is still a relatively small number of companies, which have moved away from traditional computing in favour of ASP. According to a 2000 study of International Data Corporation (IDC) only 10% of companies are willing to adapt ASP model and 20% were neutral [4]. What are the limiting factors that hinder further ASP penetration into businesses? The business model of ASP services is still immature. The service providers are still in the process of learning the market, their clients and necessary technologies. Technical failure to provide a 100% access time to a service is often prohibitive for ASP subscribers [13]. In some instances ASP 55

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firms are reluctant to guarantee the reliable connectivity since it is often outside their influence depending on other actors such as telecom infrastructure providers. At the same time the service quality is still developing, since it depends not only on 100% availability, but also on the expertise of the providers. While many ASP firms guarantee a 99.99% (less then an hour down-time per year) level of service availability and time-to-market down to 60-90 days, the problem-solving competence is often on a comparatively low level. Security is probably the largest barrier for many on-line services including ASP. Companies are still reluctant to put sensitive information in the hands of third parties fearing the risk of unauthorised access. Many potential ASP clients have a stereotype that data safety can be best controlled inhouse rather than by external host.2 The recent examples of large software corporations like Microsoft, being threatened by a hacker attacks, do not contribute to creating a secure image of on-line businesses. Environmental dimensions of ASP services Since the ASP systems can be built on legacy hardware or thin clients that do on require frequent upgrading, there is a potential for prolonging the life time ICT infrastructure as well as energy savings (especially in case of thin clients). From the life cycle perspective the extended hardware lifetime also contributes to reduction in resource consumption and waste generation. Unfortunately the relatively young ASP service does not provide sufficient empirical data to reflect user stage related issues well enough. There are just a handful of cases when companies or public organisation have used thin clients for more than 3-5 years. However, the limited cases of long thin client usage do indicate prolonged lifetime of hardware. For example, the ICT department of Finnish Border Customs has implemented thin client systems in 1992 for about 2000 terminals based UNIX OS. According to the department, the lifetime of the hardware increased from 3-4 years (for PCbased system) to 9-10 years (for the thin client based system). Over the 10-year period only the monitors were upgraded. In addition, the organisation reduced its ICT staff from 30 to 12 persons.3

2

3

Much of this concern is more attitude-related rather than an experienced fact. For example, Electrolux has signed an ASP contract with GenesisIT in Sweden to provide on-line support for point-of-sale applications where Genesis-IT guarantees 99.7% up-time including communication failures. The service agreement covers hardware, software and technical support. Genesis-IT also guarantees that any broken hardware is changed on the next working day.

Personal communication (2002-02-21). Karri Suvella. ITdirector, Finnish Border Customs central office. Tel.: +358-9-614 28 54.

Given the lack of empiric data about the environmental side of ASP systems we can still have an insight using indirect data from available research studies. The studies that use Life Cycle Assessment (LCA) methodology provide a good overview of the entire life cycle of products and services and environmental implications in each life cycle stage. Energy consumption Electronic products have largest environmental impacts in global warming, resource depletion, toxic poisoning and human health impact categories. According to the results from many LCA studies on electronic products, the user stage has the highest impact for global warming, which is especially typical for ICT products with relatively high energy consumption, such as computers and network infrastructure. An LCA study, performed in 1998 for EU eco-labelling scheme of desktop computers, showed that from all analysed impact categories are in the user stage and that they are almost totally related to energy consumption [14].4 The other most energy intensive stages were material production and manufacturing stages (Table 2). Two components - system units and monitors - of analysed PC had most of environmental impacts. Normalised contributions to all analysed impact categories were approximately 40% and 57% and the contributions to different kinds of waste were 45% and 55% respectively (Table 3). The dominance of user stage impacts could be explained by large energy consumption during the use stage, which causes most of environmental impacts due to the use of fossil fuels for electricity production. The impacts were also large because the study used an average European energy mix were the share of cleaner fuels is relatively small. With the use of greener energy sources, the total environmental impacts will be significantly lower and the share of environmental impacts from material production and manufacturing stages will increase. The ASP service allows using a simpler hardware based on thin clients or network computers with significantly lower energy consumption, as it does not need hard disks, highspeed processors and cooling fans. Therefore, the environmental impacts and waste generation associated with energy use will be lower. The ASP systems based on thin client are 3-6 times more energy efficient compared to the PC systems. A typical PC today consumes about 100W in active mode, while a typical thin client consumes 15-30W (Table 4). If we take the Finnish example, the lifetime of the system unit is extended 2-3 times. Taking a worse case scenario (upper ranges of the estimates), the energy saving for system unit in case of thin clients is up to 85%.

4

The analysed impact categories were global warming, acidification, eutrophication and photochemical ozone (IPU & Atlantic Consulting, 1998).

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Furthermore, thin clients often come pre-packaged with flat screen monitors. Since the replacement of cathode ray tube (CRT) monitors with flat screens becomes more and more economically viable, even more energy savings are possible in the use stage. The reduction can be four-fold, since average power consumption of flat screen and CRT monitors is 25W and 100W respectively [15]. The issue of energy consumption by remote computing is not without controversy though. The Internet infrastructure may large energy consumer (including servers, routers, filters, communication lines, climate control and additional space heating). The controversial study preformed by Mills (2000) stated that it takes 1kg of coal to produce enough energy to send 5MBt of data over the Internet. The statements were refuted by Lawrens Berkeley National Laboratory researchers in USA sparking a heated debate.5 The calculations presented by the LBNL indicated that Mills estimations have to be reduced at least by 88% [16]. However, it seems that in spite of this correction, the increased data traffic required in ASP computing models can significantly increase energy related environmental impacts in the use stage knowing the growth rate of data traffic during remote computing. Another aspect is the potential reduction of environmental impacts from material production and manufacturing stages of the thin clients. Some sources indicate that it takes around 285 kWh to produce a 6-inch microchip and the energy consumption increases along with the complexity of integrated circuits, such as high-speed processors and large volume memory chips [17]. In this sense the use of thin clients in ASP systems contributes to energy savings in manufacturing stages as their architecture is based on less advanced electronic circuits. While no studies have been found available on energy consumption in production stages of thin clients and flat screen monitors, there might be potential energy savings in resource extraction, because of the significantly smaller weight of thin clients and flat screens. The toxicity of these products entering the post-consumer stage is yet an uncertainty though Material consumption Looking on resource consumption data from the LCA results for PCs, the material production and manufacturing stages are the most resource intensive for most of materials excluding the energy carriers that are mostly consumed in the use stage [14]. The production of a single 8-inch wafer used for Pentium CPU chips requires about 11 m3 of deionised water, 120 m3 of bulk gases and 12 kg different chemicals producing 0.8 m3 of hazardous gases, 14 m3 wastewater and 4 kg hazardous waste [18]. Component manufacturing requires

5

The issue is well reflected in the website of Lawrence Berkeley Laboratories http://enduse.lbl.gov/projects/infotech.html

huge amounts of water in circuit photolithography processes - up to 75m3 of water is consumed to produce one PC [14, 19]. This resource consumption is likely to increase with the growing level of circuit integration for high-performance circuits. The ASP systems using thin clients can reduce these impacts, since the hardware is much lighter and is based on less advance electronics. An average weight of thin client and a typical desktop computer is 3kg and 25kg respectively, and the production of less advanced circuits generates less bulk waste in material production and component manufacturing stages. However, there are still many uncertainties about the total material and energy consumption in ASP systems, since the impacts of additional communication infrastructure are poorly researched. For example, more materials may be required for communication lines and more energy might be used for running powerful external servers, which must provide 24-hour access 7 days per week. More research is needed in this area to have a more certain statement. An LCA study comparing traditional computing and ASP systems would help clarifying the uncertainties. Post-consumer waste The negative environmental effects of electronics are most visible in the end-of-life stage. The technology development induces forced retirement of electronic products after just a few years and many countries perceive electronic waste as the most serious environmental problem, since its safe disposal is highly problematic. The recycling and reuse of postconsumer electronics is often not economically feasible and lacks appropriate infrastructure, which will require huge material investments to build. Today’s design of ICT product, growing volumes of postconsumer waste, underdeveloped recycling infrastructure makes the electronic waste difficult to manage. There are 1420 million computers retired yearly and that 75% of them are simply stockpiled by the former users. Only around 10-15% of these computers are re-used of recycled and 15% end up in landfills [20]. In US alone, which has 30% of worldwide computer sales and a 15% growth rate of the market, nearly 150 million computers will be recycled and 55 million landfilled in 2005 [19]. The recycling of used PCs can potentially reduce their environmental impacts in all impact categories. Today only a fraction of all discarded computers are recycled and the bulk of recycling is in the form of energy recovery from plastic parts. According to the IPU (1998) study, the credits gained in recycling stage correspond less than 1% of total environmental impacts in all impact categories.6 Besides, the incineration generates toxic pollutants. The material recovery rate is also extremely low. The recycling rate for most of the ma-

6

IPU & Atlantic Consulting, 1998. See table 4-A, pg. 32.

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terials accounted in the IPU (1998) study is not more than 0.1%.6 Therefore, increasing recycling will not significantly reduce the total impacts and it is highly unlikely that recycling will become an economically viable option in the nearest future without a major change in computer design. In this sense the remote computing using ASP services based on thin clients or legacy computers reduces environmental impacts in the end-of-life stage. Two issues are most obvious to consider. First, there are fewer materials bound in thin client systems, which reduces the volume of postconsumer waste. Second, the possibility of using legacy computers allows extension of their lifetime. The low need for physical upgrades can potentially extend the lifetime of thin client systems too. An uncertainty though exists about the level of toxicity of components used in thin clients. Potential for improvements Applying the results from available LCA studies, some conclusions can be made about the areas, where the largest improvements of environmental impacts may occur when using ASP instead of traditional computing systems. According to the improvement assessment done by IPU (1998), the extension of lifetime of a system unit from 3 to 6 years would lead to 10-15% improvements in all analysed impact categories, and 15-50% cut in resource consumption for all resources except for the energy carriers, which are primarily consumed during the use stage.7 The Finnish example of ASP use shows a realistic extension of the lifetime up to 10 years, so improvements in a similar range or higher could be expected. The reduction of energy consumption by system unit and monitor can also have a sizable reduction of environmental impacts in all impact categories. In the IPU (1998) model of alternative design options only by changing power management settings allowed reduction of process energy consumption of 10% and 20% for system unit and monitor respectively.8 The use of thin clients instead of traditional computers allow up to 70% energy savings in use stage, because of their low power consumption, which is roughly 2-5 times lower compared to the desktop PC analysed by IPU, 1998 (Table 3). The reduction of resource consumption in the ASP computing model is difficult to estimate and no empiric evidence had been found. Material savings are obvious looking at the weight reduction of thin clients (Table 2), however, the total resource consumption by ICT infrastructure has to be accounted too. Uncertainties At a first glance the ASP computing does save resources by extending the lifetime of user hardware. However, the environmental impacts of the entire life cycle (especially in the

7 8

IPU & Atlantic Consulting, 1998. See section 5.2.2, pg. 43.

ASP systems based of thin clients) are uncertain. High network connectivity may increase energy consumption to run the network infrastructure. Besides, building the infrastructure (optic and copper lines, routers, filters and servers) is also associated with environmental impacts. Even though a few (sometimes contradicting) studies on network energy consumption are available ([21], [22], [23], [24]), more research is needed in this area, especially on Internet and material consumption. The total environmental impact over the entire life cycle of such “lighter” computing systems is uncertain. Unfortunately, no studies have that compared the traditional and thin-client system from life cycle perspective could be found at this time. However, the extension of product lifetime is seen as the major environmental benefit. Even though no empiric data of life cycle impacts of thin client systems have been found, the rough analysis of the scenarios based on the information provided by the IPU (1998) study indicate that certain environmental improvements are likely to occur in the second scenario. For example: using thin clients would allow an up to 70% energy savings during use stage for system units. This improvement would lead to a reduction of environmental impacts in almost all impact categories at a similar scale. Extending use-time by factor 2 in the ASP systems based on legacy computers would lead to improvements of 10-15% for all environmental impact categories and 15-50% for all resources except the energy carriers. However, it must be acknowledged that this exercise still bear high degree of uncertainty and the total environmental impact of ASP systems is still largely uncertain. Role of other actors Research community has an important role to play in order to better understand the environmental benefits of the ASP systems. A better knowledge should be built on the life cycle impacts from ICT products and their use. As the ICT sector is rapidly penetrating into all sectors of economy, the priority should be given to systems’ oriented research. Since a large part of the environmental impacts depend on how the information technologies are being used, research conducting behavioural studies is of crucial importance too. Developing methodologies to assess the environmental impacts from product-service systems should be promoted to assist the industry in designing new business models and making investment decisions. Government can also play an important role in creating more favourable market conditions for the ASP services. Several areas are important, such as further development of ICT infrastructure, liberalisation of telecommunication markets, adoption of consumer protection and environmental product policies. By liberalising the telecommunication markets the government can effectively promote competition and reduce service prices. Governments can assist creating higher consumer and business confidence by a stronger enforcement of privacy rights and copyright protection. Governments can also contribute to the confidence building by showing an

IPU & Atlantic Consulting, 1998. See sections 5.2.1 and 5.2.3, pg. 42.

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example of using application renting (ASP) services for their own activities. Conclusions There are many indications that application-renting services, such as ASP, can bring economic savings and competitive advantages to companies. At the same time the ASP systems, if properly designed, may have large potential reducing environmental impacts compared to traditional computing systems. A rough analysis based on available environmental life cycle studies indicates that theoretically there is a potential to reduce environmental impacts in some life cycle stages of the product/service chain. It seems that the major environmental benefits are in the area of resource conservation: • the use of ASP services reduces energy consumption in the use stage in certain design architectures, e.g. systems based on thin client technology; • the ASP services have a potential to extend the lifetime of physical products implying material conservation in all life cycle stages. In spite of their lucrative benefits, the ASP services are taking off rather slowly due to mistrust among its potential users related to service security and consumer protection. The problems relevant to ASP services are similar to those of ebusiness and electronic data transmission, e.g. data security, technology standardisation, privacy and copyright protection, which have to be addressed by national and international legislation. Government can play an important role to assist the development of environmentally advantageous ICT services by creating favourable market conditions. The enabling factors for ASP services are abundant. The telecom markets are getting liberalised in many countries, which reduces the prices for communication services. The ICT infrastructure development improves Internet penetration among businesses and private users. In such conditions the ASP market will likely to take off faster when the users will be protected against a misuse of their business and private information. A policy “safety net” must be built around all on-line services, which will facilitate creating healthier business conditions and allow demand-driven ASP markets to emerge. To ensure that the improvements in one part of the service system are not on the expense of increased environmental impacts in the other parts, the assessment methodologies have to be designed with the life cycle perspective in mind and target the entire product-service chain. The life cycle assessment (LCA) could be used as a tool for such assessments, though one must be aware that it implies high costs, requires a lot of time and is open for a criticism for high degree of subjectivity. Other methodologies, such as material flow accounting or ecological footprint analysis could complement the LCA.

References 1. BWTM, Monitoring Informationswirtschaft. 2001, Institute for Information Economcis, Infratest Burke GmbH & Co. Bundesministerium für Wirtschaft und Technologie, München, February 2001. 2. Keegan, P., The Death of Software? 1999. 3. Mateyaschuk, J., Leave the Apps to Us! -- ASPs Offer Benefits Through Economies of Scale. 1999, Information Week. 4. Peltonen, E., Application Services Providers Market and Trends in Sweden 1999 - 2004. 2000, IDC, Nordic A/S. 5. Gartner, C., J., Sanity Check on the ASP Opportunity. 2001. 6. Elerud, F., T. Gustafsson, and M. Jusufagic, ASP Framtidens IT-drift? Ett strategiskt perspektiv (ASP - The Future Drive of IT? A strategic perspective), in Ekonomihögskolan, Företagsekonomiska Institutionen. 2001, Lund University: Lund. p. 94. 7. Gartner, Microsoft Terminal Server Edition and Thin-Client Computing. 1998, Gartner Group. p. 1112. 8. Zona Research, Desktop Clients: A Cost of Ownership Study. 1996. p. 5. 9. Gartner, Research Note. 1998, Gartner Group. p. 2. 10. WYSE, Wyse Winterm Thin Clients Contribute to Engery Savings Plan for Contra Costa County in California. 2001, Wyse Technology Inc. 11. US Interworking, Business value: case studies. 2001, US Interworking Inc. 12. ASP Industry Consortium, ASP Buyers Guide. 2000, The ASP Industry Consortium. 13. Cherry-Tree&Co., Application Service Providers (ASP). Spotlight report. 1999, Cherry Tree&Co. 14. IPU & Atlantic Consulting, LCA Report: EU Ecolabel for Personal Computers. 1998, Institute of Product Development, Technical University of Denmark; Atlantic Consulting, USA: Lyngby, London. p. 72. 15. UPIC, PC Power Database. 2001, UK Environmental Product Information Consortium. 16. Koomey, J.G., Rebuttal to Testimony on ‘Kyoto and the Internet: The Energy Implications of the Digital Economy’. 2000, Energy Analysis Department, Environmental Energy Technologies Division, Lawrence Berkeley National Laboratory, University of California, USA: Berkeley. p. 27. 17. SVTC, Water Use and other Materials and Wastes Associated with Semiconductor Production. 2000, Silicon Valley Toxics Coalition (SVTC), USA. 18. Anzovin, S., The Green PC Revisited. 1997, ComputerUser.com. 59

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19.

20.

21.

22.

Matthews, H.S., et al., Disposition and End-of-Life Options for Personal Computers. 1997, Carnegie Mellon University: Pittsburgh. p. 18. Goldberg, C., Where Do Computers Go When They Die? 1998, Technology Circuits. New York Times of the Web. Koomey, J., Estimating electricity use associated with the Internet: A cautionary tale. 2000, Lawrence Berkeley National Laboratory. Kawamoto, K., et al., Electricity Used by Office Equipment and Network Equipment in the U.S.: Detailed Report and Appendixes. 2000, University of California, Lawrence Berkeley National Labora-

23.

24.

60 0-7803-7214-X/02/$10.00 © 2002 IEEE

tory, Environmental Energy Technologies Division, Energy Analysis Department: Berkeley. Mills, M.P., Testimony of Mark P. Mills on "Kyoto and the Internet: The Energy Implications of the Digital Economy" before the Subcommittee on National Economic Growth, Natural Resources, and Regulatory Affairs, U.S. House of Representatives. 2000, The Greening Earth Society; The Competitive Enterprise Institute; Mills-McCarthy & Associates, Inc. Langrock, T., et al., eds. Japan & Germany: International Climate Policy & the IT-sector. Wuppertal Spezial 19. 2001, Wuppertal Institute for Climate, Environment and Energy: Wuppertal. 189.


Appendixes Rented or licensed software

Software Vendor

Application Services Service Provider

(ISV)

(ASP)

Rental payment

Rentalpurchase revenue

Clients

Figure 1. Value-added and financial flows in an ASP system. Investment depreciation, p

(A)

(Investment, p)--(Performance quality, q)

(B)

1st upgrade

1st investment

...

pmore

pmore Accepted range of overperformance and overinvestment

popt

popt

t1

t0

t1

t0

Time

t2

Time

Figure 2. A) computer market value over time, B) periodic investments needed on a longer run.

Table 1. Drivers and enabling factors of ASP business [13] Business drivers • Minimise total ownership cost • Smaller upfront investment • Predictability and control over costs • More focus on own core businesses Improved efficiency of internal ICT staff •

• • • •

Faster time-to-market (faster application de• ployment) Pressure from competitors practicing ICT outsourc- • ing

Technical drivers Shortage of skilled labour Utilisation of best technologies High quality of application expertise offered Changing technology, growing complexity Accessibility of the latest technology Transfer of risk of application crash

• • • • • •

Enabling factors Internet penetration Declining connection cost and growing accessibility Applications for client-server set-up Enabling e-services and e-business Global outsourcing trends Growing competition, need of deeper focus on business area

Table 2. Normalised environmental impact potentials and waste for PC and packaging. Environmental categories

impact Unit*

Material production

Manufacturing

Distribution

Use

Disposal

Recycling credit

Total

Global warming

mPE

1.99

5.10

0.0367

17.1

0.853

-0.206

24.9

Acidification

mPE

1.30

2.44

0.0277

11.1

0.133

-0.0941

14.9

Nutrient enrichment

mPE

0.372

0.621

0.0183

1.84

0.0194

-0.0244

2.85

Photochemical ozone

mPE

0.199

0.477

0.0216

2.05

0.0933

-0.0223

2.82

Waste categories

Unit

Material production

Manufacturing

Distribution

Use

Disposal

Recycling credit

Total

Bulk waste

mPE

0.853

6.63

0.000887

22.8

4.46

-0.102

34.7

Hazardous waste

mPE

19.5

34.3

2.73E-11

98.3

2.70

-2.67

152

Radioactive waste

mPE

0.657

10.4

3.08E-08

63.3

0.0536

-0.0747

74.3

Slag and ashes

mPE

0.460

1.96

0.000770

10.6

2.39

-0.0594

15.4

* - The unit of the normalised impact potentials is person equivalent, PE (IPU & Atlantic Consulting, 1998). Source: IPU & Atlantic Consulting, 1998, Tables 4-D, 4-E.

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Table 3. Environmental impacts and waste for PC by element. Global warming

Acidification

Nutrient enrichment

Photochemical (high NOx)

Average

Control unit

38%

40%

40%

41%

40%

Keyboard

1%

1%

2%

1%

1%

Monitor

58%

57%

57%

55%

57%

Packaging

3%

1%

1%

3%

2%

Total

100%

100%

100%

100%

Waste categories

Bulk waste

Hazardous waste

Radioactive waste

Slag and ashes

Average

Control unit

43%

49%

41%

39%

43%

Keyboard

1%

1%

0%

1%

1%

Monitor

54%

51%

59%

60%

56%

Packaging

2%

0%

0%

0%

1%

Total

100%

100%

100%

100%

Environmental pact categories

im-

Source: IPU, 1998, Tables 4-Y, 4-Z Table 4. Some technical specifications typical thin clients. Model/Type

NetVista 2200 1

NetVista 2800 1

MaxTerm 5030 2

MaxTerm 5140 2

Winterm 3200LE3

Net Terminal 5004

Power

16 W

27 W

7W

30 W

15 W

n.a.

Weight

2.3 kg

5.7 kg

2.2 kg

2.2 kg

3.5 kg

3.0 kg

Memory, MBt

32 SDRAM

64 SDRAM

32 SDRAM

64 SDRAM

n.a.

16 standard

Price, US$

550

850

n.a.

n.a.

400

n.a.

Sources: 1

IBM, {2001-08-22} http://www.pc.ibm.com/us/netvista/thinclient.html

2

Max Speed Ltd. {2001-08-22} http://www.maxspeed.com/Products/maxster230spec.htm

3

WSYE Inc. {2001-08-22} http://www.wyse.com/products/what_is/savings.htm

4

Boundles Inc. {2001-08-22}. http://www.boundless.com/Text_Terminals/NetTerminal/

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PAPER III Plepys, A. (2004). “Substituting computers for services - potential to reduce ICT's environmental footprint.” Proceedings of Electronics Goes Green 2004+: Driving Forces for Future Electronics, Berlin, Fraunhofer Institute, Germany.

149

Proceedings of Electronics Goes Green 2004+. September 4-6, 2004. Berlin, Fraunhofer Institute, Germany.

Substituting computers for services – potential to reduce ICT’s environmental footprint Andrius Plepys†* †

The International Institute for Industrial Environmental Economics at Lund University, Sweden. *Corresponding author: [email protected]. T: +46-46-222 02 00; F: +46-46-222 02 30;

Abstract Reducing environmental lifecycle impacts of computers is possible by shifting to server-based computing (SBC) architectures, where much of computing power resides on servers and is being shared by several users. These systems allow reducing performance demands for the user side equipment, which allows prolonging the lifetime of outdated computers or using streamlined equipment, such as thin clients. Compared to PCs the latter run of slower processors and have much lower amount memory, which results in fewer silicon components resources and has positive environmental implications along the lifecycle of user hardware. This paper presents results of a comparative study of a traditional decentralised PC-based system and an alternative server-based computing (SBC) system. The latter was modelled to deliver functionality equivalent to the traditional system, so that both solutions could be compared on a one-to-one basis. The study evaluates product lifespan, energy consumption in user stage, product design and its environmental implications in manufacturing.

Introduction Consumption of IT products has been growing steadily raising increasing concerns in society over its environmental impacts. Over the last six years, total worldwide PC shipments have doubled from 90 to 189 million (Gartner estimates). The growing consumption negates relative resource efficiency improvements in semiconductor manful facilities, so that global environmental impacts of electronics are still increasing. Environmental impacts of IT products have been demonstrated by a number of lifecycle assessment studies [1-8], all of which indicated significant source intensities of semiconductor manufacturing. While certain improvements have taken place (e.g. water and energy efficiency have been increasing by 5-7% per year [9, 10]), consumption of semiconductors is increasing by 10-15% per year [17]. This suggests, that technological solutions can reduce environmental implications only to a certain degree and addressing consumption is crucial. The concept of product servicing holds a promise to change consumption patterns by delivering product utility with reduced dependence on physical products. This is especially promising for IT utilities due to their digital nature and largely immaterial value. Today, some companies choose to outsource their IT utilities to service providers (also called ASPs, short for Application Service Provider), who on contractual basis offer access to centralised IT resources. Most of these solutions are built on highly centralised server-based computing (SBC) systems with limited computing capabilities on the user side, which are compensated on the provider’s side. The economic benefits of SBC

systems and APS services are known and have been discussed in various contexts [11, 12]. At the same time, the SBC solutions minimise the need for hardware upgrades and effectively allow prolonging the lifespan of equipment, all of which makes them interesting from the environmental perspective. The objective of this paper is to address the environmental implications of shifting from the traditional (PC-based) to SBC systems. The article will present the results of a comparative study, which focused on energy consumption, waste generation and different manufacturing related issues.

The approach The system currently installed at author’s institution (further – system “A”) was taken as a baseline. Here PC users retain all computing power are use common file sharing and printing resources on the servers. In the alternative was modelled sever-based system (further – system “B”), where most of the computing resources are concentrated on the server side. This system was modelled to deliver a performance equivalent to system A. The hardware was selected accordingly, referring to equipment manufacturer specification and experiences from practicing users of SBC systems. The study focused on evaluating total silicon content, product lifespan and energy consumption in use. Silicon content is a good indicator for environmental loads of electronics manufacturing. The data was largely collected from on manufacturers’ product specifications and author’s estimates based on relevant literature. The amount of silicon was quan-


tified to the best degree possible taking into consideration major contributors, such as CPUs and memory modules. Implications from disregarding other siliconrich components are discussed in the text. Data on resource use in manufacturing were extracted from various LCA studies, but it was insufficient for a detailed material flow inventory. It was assumed that production-related environmental loadings of the two systems are proportional to the amount of silicon. However, it was acknowledged that this assumption might lead to significant uncertainties. The most important assessment challenges are addressed in the discussion part and systems’ specifications are presented below.

Evaluation

System A—60 PC users of typical office software with some applications installed on servers and run on user hardware. Typical hardware of the user side: 2 GHz Pentium, 256MB RAM (+256MB extra for 20% advanced users), 60GB HDD, CD drive, multimedia and network cards and 95% of monitors are LCD-based. The hardware runs 8 h/d, 220 d/y, with 2 h/d in low-power mode (meetings, lunches, etc.). This profile, except for the large share of LCD screens, is believed to be typical for most of the modern office environments [13]. Server hardware consists of four IBM xSeries servers with a total of 7GB RAM. Out of the 800GB of available storage only 25% are actually used being partitioned on 25 physical disks.1

Overall energy consumption was lower in system “B” (30% less) with about the same consumption on the server side (Table 1). Although the results are based on many assumptions, it is believed that a more precise measurement-based energy audit would not dramatically change the results.

System B—designed for Windows Server 2003 OS and RDP/ICA protocols and sized for 60 physical users and 100 user accounts.2 User hardware is based on 2 types of Hewlett-Packard thin clients compatible with Java-enabled applications and multimedia-rich web content. There are three servers based on HP Proliant platform (2 application servers and 1 mail server with dual processors). The amount of memory, processor speed and storage space are sized for the number of users, types of applications and the number of simultaneous sessions. Memory needs are calculated based on recommendations from practitioners and equipment manufacturers’. Server OS requires 256MB/server, plus 40-50MB for each logged user simultaneously running 3-4 applications.3 The total amount of RAM on the servers is estimated at 6GB. The hard disk storage space is configured with RAID1 architecture considering the actual needs in the existing system.4

1 Full specifications and the extended version of the paper are available on http://hem.bredband.net/andple/asp.pdf. 2 A larger user base than in system “A” was chosen for a more realistic estimate, assuming that the system handles the accounts of temporary users as well as users leaving the organisation. 3 On-line thin client practitioners’ forum. Internet URL: http//www.workthin.com/tshw.htm. Accessed 2004-05-29. 4 See full paper version: http://hem.bredband.net/andple/asp.pdf.

Energy consumption. Energy measurements for system “A” servers were not possible for practical reasons and were conducted only for user PCs. Energy use by the servers was estimated multiplying rated power by a load factor, which for entry-level and mid-range servers is typically 25-50% [14]. Following recommendations from practitioners (5,6), the upper load of 50% was assumed for both systems. Power consumption by HVAC system was estimated assuming 60% efficiency and 30% of days when cooling is needed (additional heating not required).7

Sensitivity analysis showed that most important components for energy use are peripheral component interconnects (PCI) slots and hard disks (HDDs). While the storage space in “B” was sized conservatively, the space in “A” was significantly oversized and is distributed on a large number of disks each consuming about 20W. Adequate sizing and partitioning HDD spindles would allow energy savings, although at a trade off between the number of physical disks and data security. Table 1. Energy consumption estimates (MWh/year). Server side8 (+HVAC)

User side

Total

System A

12.5

(6.3)

18.4

37.2

System B

10.1

(5.1)

8.0

23.3

Lifetime and electronic waste. The lifetime of IT hardware is one of the important parameters determining the rate of e-waste generation and life cycle impacts. The typical observed lifespan for PCs in system “A” was 3-4 years for PCs and 3 years for the servers. Judging from interviews with SBC users, the lifespan of thin clients is 6-8 years. The estimated lifetime of monitors was in the order of 56 years for both systems. 9 Both the longer lifetime and the low weight of TCs contribute to reducing the amount of end-of-life (EOL) waste entering waste management system. 5 Communication with. Dr.Bryan Finn, Swedish University of Agricultural Sciences. [email protected]. (2003-10-16) 6 Communication with Mr. Burje Lindh, Sun Microsystems, Göteborg, Sweden. [email protected]. (2003-10-16) 7 Communication with Mrs. Ronit Pasternak. Product manager. ChipPC, Israel. [email protected]. (2004-05-05). 8 Calculated using IBM xSeries Configurator v.2.17a and HP Proliant Server Calculator. Internet URL: http://h71019.www7.hp. com/ActiveAnswers/Render/1,1027,2858-6-100-225-1,00.htm. 9 Interviews with thin client users in Denmark and Sweden.


Although the average weight of a PC is 10-15 kg w/o monitors and 1-3 kg for a stand-alone TC, the actual amount of waste going to final deposition requires a separate investigation, since material recycling rates for PCs could be higher. The relatively large amounts of bulk metals (steel in chassis and casings, copper and aluminium in wiring) could make PCs more attractive for recyclers. Thin clients, on the other hand, may be less profitable to recycle, since most of metals are embedded in small parts and the largest part is plastic casing. In addition, amount of precious metals is also lower in TCs, which have fewer electronic components and expansion slots. Reuse possibilities may also be limited, since TCs are often based on specialised electronics. At this point no conclusive evidence has been found regarding the overall environmental impacts of the post-consumer stage and a further investigation is needed. The only clear benefit is using thin clients or extending the lifetime of outdated PCs allows avoiding environmental impacts associated with equipment manufacturing. Energy savings of thin clients the use phase are also obvious.

considered to be insignificant and left unaccounted. Other silicon-rich devices, such as memory, graphic and network controllers, were left unaccounted due to the lack of data. However, contribution of these components to total silicon area is significant. A teardown analysis has shown that the total silicon area in Toshiba’s Portege notebook is 22 cm2, while silicon embedded in processor is 1.3 cm2 and memory 4.3 cm2, which is 25% of all silicon [18]. The unaccounted silicon could be estimated from price information, since more that half of product costs are attributable to integrated circuits and there is a strong correlation between component price and the area of embedded silicon (Figure 1).

Amount of silicon. The environmental loads of semiconductor manufacturing are strongly correlated with total area of embedded silicon [1, 3, 5, 15, 16]. For this reason the evaluation estimated the amount of silicon in components in both systems (Table 2), where system “B” proved to be less demanding, which is mainly due to low silicon-intensity of user hardware.

Figure 1. Breakdown example of product cost and price-to-silicon correlation (based on data from [18]).

Component price, $

35 Num ber of entries: 60 Correlation coeficient: 0.946

30 25 20 15 10 5

Com ponent silicon area

0 0

0,05

0,1

0,15

0,2

0,25

0,3

Given the lack of data, only the largest silicon-based components, such as microprocessors and memory, were accounted for. Data on processor related silicon are based on manufacturers’ specifications. Silicon area embedded in memory components was estimated on the basis of prevailing cell densities and dominant technology nodes at the time of production. The average SDRAM memory density around 2001-02 produced with 0.13 µm technology at was assumed to be 4 Mbit/mm2 [17:156].

The price of mainstream TCs is about half the price of an average desktop PC. Assuming that the amount of silicon will scale down proportionally, the silicon area of the unaccounted components in TCs is about two times smaller than in PCs. Furthermore, according to author’s estimates, the total PWB area in TCs is about 2-3 times smaller than in PCs.10 Assuming that partition of silicon area in TCs between MPU and RAM and the other components is similar to the notebook example (30/70), the unaccounted silicon area in all thin clients of the system “B” is about 360 cm2 and in all system “B” PCs – about 700 cm2. This is not an unreasonable assumption, because TCs and PCs many similar functional components, such as graphic, memory and network card controllers.

In this comparison, differences of silicon area embedded in discrete components (transistors, diodes) were

Semiconductor manufacturing loads. Based on silicon area, semiconductor manufacturing related

Table 2. Estimated silicon area embedded in processors and RAM of the two systems

System “B”

System “A”

Hardware

CPU parameters

Generic desktop Intel P4 (Northwood) 2.0GHz, L1/L2 PC cache: 20/512kB IBM server 342 Intel (Tualatin) 1.4GHz, L1/L2/L3 cache: 5RX 32/256kB/?kB IBM server 345 Intel Xeon MP (Gallatin) 2.4GHz, L1/L2/L3 31X cache: 20/512kB/1MB HP thin client Transmeta (Crusoe) 0.7GHz, L1/L2 T5500 cache: 128/512kB HP thin client Transmeta (Crusoe) 1GHz, L1/L2 cache: T5700 128/512kB HP ProLiant Intel Xeon DP (Prestonia) 3.2GHz, 512kB DL380R03 L2 cache; 1MB L3 cache;

CPU die, mm2

Ref.

Units

RAM, MB

146

Intel

48 basic 12 adv.

48 x 25 12 x 512

79

(1 )

3

181

(1 )

1

55

1

()

48 basic

48 x 64

55

(1 )

12 adv.

12 x 256

237 (with cache)

(1 )

3

6,000 (total)

10

7,000 (total)

Total silicon, cm2 All users

316

All serv148 ers

All users

464

156 270

All serv114 ers

Based on reviewing of four different brands and seven different models of mid-range thin clients.


4,0

2

2

2

2

environmental loadings could be calculated. In our case, the eventual differences between the two systems will be proportional to the amount of silicon. Energy and water consumption is perhaps the most available data, being monitored on the sectoral level by the industry. SEMATECH for example, issues regular updates roadmaps for semiconductor industry (ITRS), where figures energy and water consumption are included for best-case practices. These, however, may differ from the typical industrial averages by 2-4 times11 (Figure 2). For example, typical energy intensity on a facility level is today in the area of 1.5 and not 0.5 kWh/cm2 [1,7,19]. Water consumption differs in the same order of magnitude with typical use of 2030 l/cm2 [9]. Ene rgy consum ption, kWh/cm 2 A vera ge Fa b s pec if ic IT RS 1 997 IT RS 1 999 - 02 IT RS 2 003

3,0

2,0 z

1,0

2012

2007

2002

1997

1992

1987

1982

0,0

Figure 2. Resource use in semiconductor facilities [10].

The most obscure is information about chemical consumption, which relates to proprietary issues. In best cases the data are available largely in aggregated form following reporting requirements, such as Toxic Release Inventory in the U.S., which demands reporting chemical releases by impact category and not by substance. Furthermore, the available data are often outdated, since rapid semiconductor sector dynamics renders it obsolete before a comprehensive LCA database can be collected. Data from different sources on aggregated use of chemicals show great variation. Williams et al., for example, observed that in different studies total chemical consumption ranges from 9 to 610 g/cm2 and from 1.2 to 160 g/cm2 for emissions [1], which is a difference in two orders of magnitude.

Discussion Assessment approaches. Evaluations based on silicon area do not take into consideration the specifics of product design and manufacturing technologies, and result in only rough estimates of environmental loadings from semiconductor manufacturing. Depending on complexity, products are produced with different number of mask layers and metal interconnects and, thus, the number of process steps used. Furthermore, total production yields depend on production defect 11 Communication with. Mrs. Cynthia Murphy, Texas University, TX, USA. (2004-05-11).

densities and wafer/die geometries. Technology node (i.e. smallest feature size) determines material purity requirements and facility ventilation standards and consequently – energy consumption. However, accounting for these aspects demands large amount of detailed product- and manufacturing-specific data, which is typically outdated or highly proprietary. The amount of specific data could be reduced using different assessment methods, such as economic input-output analysis or a hybrid LCA. The main differences here are data origin (and level of aggregation) and the extent of system boundaries. The intention of traditional process LCAs is generating product-specific results, but the lack of data demands selective choice of system boundaries. Hence, although the results can be product-specific, they may not necessarily be accurate, because of the system cut-offs, and due to the fact that in the absence of product-specific data LCA practitioners any way resolve to aggregated data. The environmental input-output analysis, on the other hand, allows including very wide system boundaries, but uses highly aggregated data reflecting industrial averages, which results in generic results not necessarily applicable to a specific product. These differences generate significant variations in results. For example, life cycle energy consumption of a personal computer estimated using I/O approach can be 2-3 times higher than the result of process LCA [20, 21]. To what degree this I/O estimate applies to the specific product is hard to say. However, this does not mean that more accurate results can be produced by process LCAs, which, besides leaving large parts of product life cycle unaccounted, depend on data quality. For example, LCA estimates on total energy consumption for manufacturing a desktop PC with CRT monitor in to widely quoted studies range from 0.2GJ [15, p.16] to 3.6GJ [22]. The large difference is likely due to different data quality, since both estimates used similar system boundaries (e.g. excluded upstream manufacturing processes). The significance of unaccounted life cycle stages can be illustrated by a more recent example. An LCA study found that up to 18GJ of non-use related energy are consumed over the life cycle of a CRT monitor [2:250]. The study used wide system boundaries including upstream manufacturing processes, product maintenance, repair and final disposition stages, which could explain the two orders of magnitude difference with the previous two examples. The strong sides of process LCA and I/O analysis are currently attempted to combine in the so-called hybrid LCA approach [23]. The method relies of product-specific data where it is available and using the I/O approach includes the life cycle stages, such


as upstream processes, capital good and services, which typically left unaccounted in process LCAs. For example, estimated total energy consumption to produce a desktop computer with a CRT monitor was 3.1 GJ when using the process LCA [24:66], while a combined approach resulted in 7.3GJ [4]. An alternative approach tested by researchers at Texas University is based on parametric descriptions on basic manufacturing unit operations, which in the end is perhaps less data-intensive and to a large degree can be product-specific. The idea is to organise inventory data collection around unit operations, which could provide “typical” mass and energy flows for each manufacturing process [25, 26]. The method builds on establishing parametric relationships between material flows and process and/or equipment characteristics, such as reaction time, temperature, pressure, flow rates, etc., and generates a database of process modules used in a majority of semiconductor manufacturing lines. Counting the number of total process steps for and obtaining average material consumption for a given process, is then possible to calculate total materials flows in manufacturing a particular product. The method, although still laborious, may require less time than any of the “bottom-up” LCA approaches and produce more accurate results than the “top-down” or facility level approaches. Parametric relationships between process characteristics and resource flows in unit operation modules are also less dynamic than product-specific changes in overall manufacturing “recipes” (i.e. sequence of processes and materials), so they can be combined and repeated as building blocks for a particular product.12 The approach also allows accounting to differences in manufacturing processes of specific products, where the choice of process technology has huge impact on resource efficiency. Water consumption differences, for example, in single-wafer spin processing, spray tool and wet bench tool can be in two orders of magnitude [27]. Differences in material consumption depending on unit process have also been shown in Murphy et al. [26]: Process\Material

49% HF H2SO4 HCl H2O2 NH4O4 UPW IPA

Wet bench, cm3

6

110

23

57

16

21 325

Spray cleaning, cm3

3

71

20

95

22

38

0

Product complexity. An interesting issue is how the environmental loadings depend on product complexity. Clearly, feature density has an impact through material purity requirements as well as HVAC standards. New product generations typically have higher component densities, more mask layers and more metal in-

terconnect levels.13 As it has been shown in some studies, these parameters influence resource consumption in product manufacturing. For instance, comparing a 6- and a 8-metal layer microprocessor (MPU) Murphy at al. found that for the latter energy consumption is higher in several key fabrication processes, e.g. etching one additional metal layer adds about 20% of total manufacturing energy [25:5380]. If this is a universal observation, then for our study it implies that production of MPUs for thin clients is less energy intensive, because these have processors with 5 Copper interconnect layers, while the PCs have MPUs with 6 Aluminium layers. The same could be the case for other semiconductor components. Unfortunately, this example cannot be a basis for any far-reaching conclusions, since other studies indicate that manufacturing new generation products does not necessarily imply higher environmental loadings. Intel, for example, found that a new generation MPU with more metal layers requires less material inputs and generates fewer emissions, except for chemical waste [28]. An independent study at the Fraunhofer Institute in Germany also found that newer products have lower manufacturing energy intensity. Primary energy consumption for manufacturing a PC in 1999 was estimated at 1.8 GJ (incl. final assembly and transportation of supplies) and about 10% less for a PC produced in 2003 [3]. These are potentially interesting findings, which could show changes in environmental loads in relation to technology development. Understanding the relationship between product functionality and its environmental footprint requires more results from environmental assessments of different generation products. There is a general trend of electronics becoming “heavier” in terms of processing power and memory resources as more functional features are being packed into products. For example, reports from Portelligent have shown that as circuit integration grew, the average amount of silicon in GSM phones between 1995-2000 was decreasing steadily from 3.2cm2 to less than 2.6cm2. However, the addition of new features threatens to reverse this trend. For example, Sharp J-SH04 GSM phone with colour screen, camera and wireless modem now contains 3.9cm2 silicon.14 New features are also being added to thin clients, which are designed with ever-faster processors and more memory to be able to work with media-rich applications. Falling prices of components, such as mini hard disks, make them in13

12

Ibid.

IC Knowledge Inc. provide a useful overview of semiconductor trends. URL: http://www.icknowledge.com/trends/trends.html. 14 Portelligent (2004). Semiconductor Content in Cellular Phones. URL: http://www.portelligent.com/newsletter/010604.asp.


creasingly attractive option for thin clients, which may change from a very simple scaled down devices to full-featured hardware. Since the growth rate of thin client worldwide shipments are predicted to grow by over 20% per year jumping from 1.5 million in 2003 to 3.4 million units in 2007 (IDC, 2003), the environmental benefits of having “lighter” computing alternative can be quickly eroded.

generate more product-specific assessments. These could allow maintaining product specificity and reduce data intensity using generic unit process inventories.

References 1. 2.

Conclusions The alternative computing systems, such as SBC, provide similar functionality as decentralised PC networks and reduce environmental loadings via more efficient utilisation of product functionality. For computing systems it implies that equivalent product utility can be extracted from products with lower amount of electronic components. The evaluation of environmental aspects showed that annual energy consumption in a centralised system could be lower by more than one-third, if users shift to simplified hardware, such as thin clients. Most of energy savings are on the user side, but it reasonable to conclude that having the bulk of computing resources concentrated on a server would not result in any significant energy increases on the server side hardware. The lifetime of user hardware in the centralised systems is at least two times longer. Due to the lower material content in thin clients, the amount of post-consumer waste is lower more than twice. However, the eventual amount of waste going to final deposition is unclear, because of potentially lower recyclability of thin clients compared to personal computers. The study showed that the alternative system, while delivering equivalent computing function, could have much lower silicon content. The total silicon area in the alternative analysed system was about half of the traditional PC architecture. Assuming that the impacts depend only on the total amount of silicon, the environmental impacts of thin client based architecture would be proportionally lower. This conclusion is based on assumption that manufacturing processes, component complexity and circuit integration levels in both systems are the same. In reality, however, this may not be the case, as, for example, the same amount of memory in different products can have different densities and thus different amount of silicon area. Therefore, disregarding the differences in product designs and process technologies are likely to generate highly inaccurate estimates.

3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.

14.

15. 16. 17. 18. 19. 20. 21. 22.

23. 24.

25.

Taking into account product specifics in most cases is not possible due to the lack of data. Finding way to reduce data dependency is important and here aggregate approaches, such as I/O analysis and semiaggregate hybrid LCA are promising tools. Parametric data collection methods are also interesting for the possibility to create generic process databases and

26. 27. 28.

Williams E., Ayres R., Hellerm M. (2002) Env. Science & Technology. 36(24): p. 5504 -5510. Socolof M., et al., Desktop Computer Displays: A Life-Cycle Assessment. Volume 1. 2001, University of Tennessee. Schischke K., et al. (2003). In: 11th LCA Case Studies Symposium. 2003. Lausanne,. Williams E. (2004). Proceedings of IEEE International Symposium on Electronics & the Environment, Scottsdale, USA. DeGenova J., Shadman F. (1997). Environmental Progress. 16(4): p. 263-267. SVTC, Material Use & Wastes Associated with Semiconductor Production. 2000, Silicon Valley Toxics Coalition, USA. Taiariol, F., et al., (2001). Proceedings of IEEE International Symposium on Electronics & the Environment. Socolof M., et al. (2000) Proceedings of IEEE International Symposium on Electronics & the Environment. SEMATECH (2003). International Technology Roadmap for Semiconductors: 2003 edition. Plepys A. (2004). Proceedings of IEEE International Symposium on Electronics & the Environment, Scottsdale, USA. Plepys A. (2001). Proceedings International Society for Industrial Ecology. Inaugural Meeting. Leiden, Netherlands. Plepys A. (2002). Proceedings of IEEE International Symposium on Electronics & the Environment, San Francisco. NAEEEP, Appliance Standby Power Consumption: Store Survey 2002 -Executive Summary. 2002, National Appliance and Equipment Energy Efficiency Program, Australia. p. 13. Roth K., et al. (2002). Energy Consumption by Office & Telecomm Equipment in Commercial Buildings (Vol 1). US National Office of Building Equipment: Cambridge. MCC (1993). Environmental Consciousness: A Strategic Competitiveness Issue for Electronics & Computer Industry. Schischke K., et al. (2001) IEEE International Symposium on Electronics & the Environment, Denver, USA. SIA (2003). The SIA 2003-2006 Worldwide Semiconductor Forecast, Semiconductor Industry Association. 2003. Portelligent (2000). Toshiba Portege 7010TC: performance and design analysis. Report #120-991020-1d. Ayres R., et al. (2003). Is the US Economy Dematerialising? Main indicators and drivers. INSEAD, France. Della-Croce F. (2001). 13th Discussion Forum on Life Cycle Assessmrent. Lausanne, Switzerland. Loerincik Y., et al. (2002). Proceedings Going Green. CARE Innovation. Austria. Atlantic/IPU (1998). LCA Report: EU Eco-label for Personal Computers. Atlantic Consulting, USA; Institute of Product Development, Technical University of Denmark. Suh, S. and G. Huppes (2002). International Journal of Life Cycle Assessment, 2002. 7(3): p. 134-140. Williams E. (2003). In: Computers and the Environment: Understanding and Managing their Impacts. R. Kuehr and E. Williams (eds.). Kluwer Academic Publishers. Murphy C., et al. (2003). Environmental Science and Technology. 37(23): p. 5373-5382. Murphy C., et al. (2003). Proceedings of IEEE International Symposium on Electronics & the Environment. Kruwinus, H. and H. Oyrer, (2000). Semiconductor Fabtech.com. Issue 12: p. 299-3001. Wilson R., et al. (2004). IEEE International Symposium on Electronics & the Environment, Scottsdale, USA.


PAPER IV Plepys, A. (2004). “The environmental impacts of electronics. Going beyond the walls of semiconductor fabs.” Proceedings of the 2004 International Symposium on Electronics and the Environment (ISEE), Scottsdale, AZ, USA. Institute of Electrical and Electronics Engineers (IEEE), pgs. 159-164.

157

Proceedings of the 2004 IEEE International Symposium on Electronics and the Environment, Scottsdale, AZ, USA. Institute of Electrical and Electronics Engineers (IEEE).

The environmental impacts of electronics: going beyond the walls of semiconductor fabs Andrius Plepys International Institute for Industrial Environmental Economics at Lund University, Sweden [email protected] The emerging general attention to sustainable development has stimulated a number of environmental studies in the semiconductor sector. The focus of research has been evolving from workers’ health and safety to pollution prevention, waste management and resource consumption issues. Addressing the total environmental impacts of electronics requires a life cycle perspective. Today, a number of life cycle assessment (LCA) studies are being conducted focusing on individual semiconductor components [1-4], specific electronic products [5-8] and infrastructure systems [9-11]. A considerable attention has been given to mapping resource intensities in semiconductor fabrication facilities. The total resource consumption in semiconductor manufacturing is still growing due to high demand for electronics. However, manufacturing processes seem to become more efficient (at least in terms of water and energy consumption Figure 1), which is remarkable, given the increased complexity of semiconductors fabricated in an increasing number of circuit layers. 4,0

Energy consumption, kWh/cm2 Average Fab specific Best estimate Best estimate

3,0

INTRODUCTION

1

1,0

159

2007

2002

1997

1992

1987

0,0

Water consumption trends, l/cm2

60

100 m m tool 150 m m tool 200 m m tool 300 m m tool ITRS estim ates Other estim ates

50 40 30 20 10

2004

2001

1998

1995

0

Figure 1. Resource intensities in semiconductor facilities.2 Source: A. Plepys (2003). “Resource efficiency in semiconductor manufacturing” (unpublished).

2

World Semiconductor Trade Statistics (2003). Internet: http://www.wsts.org/press.html. Accessed: 2003-11-07.

0-7803-8250-1/04/$20.00 © 2004 IEEE.

2,0

1982

Semiconductor manufacturing sector has become one of the most dynamic economic sectors in the world. Rapid technology innovation facilitates a ten-fold price reduction per semiconductor components every five years sustaining virtually constant cost-performance ratio. With the average annual growth of 15 % its global revenue is approaching $200 billion.1 Growing circuit complexity and increasing miniaturisation are the main characteristics of the semiconductor sector inducing a number of technical trends, such as increased number of circuit layers, higher clock rates, system-on-chip designs, increasing die sizes, etc. Most of these trends have a negative impact on production yields as manufacturing becomes more sensitive to particle contamination. In response, manufacturers are forced to adopt new process tools, shift to larger diameter wafers, increase material purity and raise clean room standards. The tolerable concentrations of particles and especially metals in process materials have been falling rapidly from the parts per million (ppm) levels in the 1950-60s to sub-parts per billion (ppb) today. In addition to the need to maintain ultrapure environments, this has substantially increased the costs of semiconductor manufacturing and gave a strong incentive to chip manufacturers to concentrate on material efficiency.

1992

I.

2007

Abstract—technological innovation has improved resource efficiency in semiconductor manufacturing industry per product unit. However, it is not clear what are the implications in other production stages, such as chemical production. Most of the existing LCA studies do not include chemical manufacturing into their system boundaries, which leads to incomplete picture of semiconductor life cycle related environmental impacts. The increasing material purity requirements may contribute to shifting the centre of manufacturing-related environmental impacts from semiconductor fabrication to raw material production stages in the semiconductor manufacturing chain. The article points to insufficient knowledge of environmental impacts from manufacturing of ultra-pure chemicals used in semiconductor fabrication. The problem is illustrated on the example of energy intensities in wet chemicals and silicon manufacturing. The paper criticises the feasibility of using material price as a proxy for its manufacturing energy intensity and suggest a simplified framework for collecting process related energy data. The author suggests that by mapping the purity levels of chemicals and focusing on materials consumed in large volumes it is possible to reduce data collection efforts and improve the existing energy estimates. Keywords-semiconductor chemicals; energy intensity; chemical grade; life cycle assessment.

The water chart provides water intensities for different wafer diameters, but does not specify data type. The opposite is in the energy chart.

Proceedings of the 2004 IEEE International Symposium on Electronics and the Environment, Scottsdale, AZ, USA. Institute of Electrical and Electronics Engineers (IEEE).

Mining

4.6 kg/kg-Si

Silicon metal (m-Si)

Chlorosilanes

$0.017/kg $1.7/kg 0.126 13 kWh/kg(SiO2) kWh/kg(MG-Si)

…

$3/kg 250-300 kWh/kg(p-Si)

?

4.25 kg/kg-Si

1.8 kg/kg-Si

1 kg-Si

Plysilicon (p-Si)

Silicon ingots

Sliced wafers

$50/kg

$1,500/kg 220 kWh/kg(Si)

Figure 2. Yield and energy intensity of wafer manufacturing chain. 3

Taking average yields and energy intensities, the conversion of raw silica (SiO2) into 1 kg of wafers requires about 20 kg of silica and at least 2 MWh. At the same time the value per 1 kg of material increases from $0.017 for SiO2 to $1,500 for sliced and polished wafers (Figure 2). Combined with the large energy demand the production of silicon is one of the critical processes determining the life cycle environmental profile of semiconductors.

II. THE UPSTREAM ENVIRONMENTAL LOADS Semiconductor manufacturing seems to be the most energy intensive stage in the life cycle of some electronic components. In the case of a microchip, for example, it can demand up to three times more energy than the use stage [1]. Semiconductor facilities use very pure materials, such as silicon, wet chemicals, gasses and deionised (DI) water. Manufacturing of most of these materials is highly energy intensive, but the degree of understanding about energy consumption varies from material to material. The energy intensity of DI water production is well known, since it is based on established technologies, runs on a large scale and often takes place on-site semiconductor facilities. In intensity of manufacturing high-grade chemicals and other materials, the issue is much less explored. The only exception is silicon production chain, where energy demand has received a considerable attention in a number of semiconductor- [12, 15] and photovoltaic-related studies [4, 13, 16].

B. The case of wet chemicals Compared to water and silicon, the energy intensity of gases and chemicals is much less explored. This is could perhaps be due to a much greater variety of products and production technologies and relatively low data availability. However, chemical industry is a large energy consumer, which in the USA alone stands for about 20 % of total energy use and greenhouse gas emissions [18]. To illustrate the developments and data gaps in the area of semiconductor chemicals we will further discuss the case of wet chemicals. Organic chemicals, such as ethylene and nitrogen products, constitutes the largest and inorganic – the second largest shares of the total energy consumption in the chemical sector. It is the latter, which constitute the bulk of high-purity wet chemicals used by the semiconductor industry. Although the share of these chemicals in energy consumption of all inorganics is less than 1 %, their production volume increases by about 8 % year [19] and especially high growth rate is expected in the hyperpure chemical sector [20]. Semiconductor chemicals are produced in a number of standard purity grades, such as EG, VLSI, ULSI, SLSI and XLSI.4 The requirements for chemical purity have been increasing rapidly and today they reach parts per trillion levels (Figure 3). In addition, the number of contamination control parameters increased from less than 10 to more than 50, which is important from the production cost and the energy point of view [20].

A. The case of silicon To satisfy the purity requirements of chip manufacturing, polysilicon, which is the raw material of silicon wafers, undergoes extensive purification. During the process its quality increases from metallurgical grade (MG-Si, 98 %-pure) to electronic (EG-Si,

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