Understanding better the impacts of emerging industries and businesses resulting from response measures to mitigate climate change, with a view to maximizing their positive effects and minimizing their negative ones. [1]

This second part of our blog keeps presenting a list of emerging technologies, industries and businesses. Many of them are part of the new technology landscape, highlighting the interactions,dynamics between climate adaptation, technologies and regulatory environment.

Everywhere, tax administrations are data-intensive players, supporting national efforts towards the UN Sustainable Development Goals, and national climate action plans. New industrial and service sectors and concepts are growing both from technological revolutions and from the need to adapt to the rapidly evolving climate crisis that is manifesting itself with increasing speed. Among the new terms presented here, some are already widespread, others are very recent. The purpose is to encourage our readers to learn more about these topics, since the tax authorities, as part of the regulatory state framework, play a major role in shaping sustainable new technologies in the framework of governability.

Business and work procedures

-Big data and augmented analytics (use of artificial intelligence to help people analyze data), this is part of the artificial intelligence revolution: Transformational shift driven by AI and big data

–Remote working, working from home and flexibility. From a 2024 study, working remotely became preponderant during the pandemic, also in most Tax administration offices. But today in 2024, 48% of employees in the USA keep working remotely and 62% of employees expect their employers will allow them to work remotely at least part-time moving forward.[2]

-Next level automation and virtualization (allows industrial organizations to improve the speed, accuracy, and reliability of their operations, while also reducing the need for human labor.)

–Mass personalization is about offering products and services at scale, but each uniquely tailored to our needs; micro-moments are the opportunities to respond to customer needs at an exact time when they need them.

–Crowdfunding: Using internet to find financing from a large number of people acting as small sponsors, donors or investors. Its tax treatment varies according to the nature of the funding.

–Cybersecurity and cyber resilience: Ability to prepare for, respond to, and recover from cyber threats.

–Datafication: Datafication process (Data used to update risk profile development and business, models, Banking: Data used to establish trustworthiness and likelihood of a person paying back a loan, HHRR:  Data used to identify e.g. employees risk-taking profiles or data replacing personality tests…It emphasize the Digital trust: The confidence users have that people, technology and processes can create a secure digital world. Tax administrations are increasingly relying on data management to facilitate compliance by all taxpayers.

–Nearshoring: business strategy that involves outsourcing business processes or functions to countries that are close to the home country or region. It can include moving production closer to the final consumer or recruiting employees from a neighboring country to complete services. Widely and successfully developed in Mexico, in regard to the products and services exported to the USA.

Insurance and reinsurance

Insurance claims from natural disasters cost insurers US$95bn in 2023 in the USA alone. Many US insurance companies in areas prone to disasters have increased rates or, in some cases, even left the areas at risk. Authorities in coastal countries can help by providing tax relief to insurance companies or allowing them to adjust their rates according to the climate resiliency of the projects that they cover.

Are insurance companies updating their risk model rules quickly enough to capture the changing dynamics of climate change? Insurance companies need to price risk adequately to reflect how much to charge.[3]

Insurers, and even more the reinsurance groups, are becoming aware that quantifying the climate risks by areas is a huge challenge and now an extremely significant driver of losses for their portfolios.  On the other hands, insurers can reduce risks by using supporting initiatives that can help mitigate the impacts of climate change. Since May 2024, The United Nations’ Insurance Industry Initiative on Climate Risk and Disaster Resilience (IICRR) is a global effort that brings together insurers, governments, and other stakeholders to share knowledge, coordinate efforts, and develop innovative solutions to address climate-related risks. [4]

Robotics and automation

– Robots and Cobots, business processes automation, Robotic processes automation. Cobots are collaborative robots designed to collaborate with humans, and generally more cost-effective than industrial robots

–Voices interfaces and chatbots:  Computer programs that use artificial intelligence and deep learning to allow humans to interact with computers.

–Machine co-creativity, also known as augmented design which is a collaborative design process using artificial intelligence to create products. This type of process can enhance current products and minimize manufacturing costs.

ICT and internet

Deep learning: Method in artificial intelligence that teaches computers to process data in a way that it inspired by the human brain.

Quantum computing and next generation computing: Use of quantum mechanics to solve complex problems faster than on classical computers, greatly increasing computing powers.

Natural language processing: the ability of a computer program to understand human language as it is spoken or written.

Internet of Things (IoT) – and the rise of smart devices. These are devices, such as home appliances that can connect to the internet or a local network and collect and share data with each other. They are designed to improve people´s daily lives.

Distributed infrastructure: network of interconnected servers and data centers that support digital services. It is often considered the backbone of modern technology and is crucial for the functioning of many industries, including cloud computing, data centers, and digital transformation.

Cloud and edge computing: While cloud computing is the delivery of computing service over the internet (the cloud), edge computing consists in storing and processing data close to their place of creation.

Computer vision and facial recognition: Way of identifying or confirming individuals’ identity by using images of their face.

Digital twins: Virtual representation of an object or system designed to reflect a physical object accurately. It spans the object’s lifecycle and updates from real-time data, use simulation, machine learning and reasoning to help make decisions.

Digitally extended realities: Combining computing system to create a “digital twin world” that can interact with the physical world. For example, Virtual reality headsets can create a high level of immersion, useful for gaming, simulations and training.

Biotechnologies, bio revolution

Genomics and gene editing: Technologies that give scientists the ability to change an organism’s DNA.

Genomics: The study of an organism’s DNA sequences, including genes, their function and evolution. This also includes the computational analysis of the big data that is generated as a result. Genomics is different from genetics, which focuses more on how traits are passed from one generation to the next.

Physics and chemistry

Nanotechnology and materials science,

Nanomaterials (Nanomaterials are usually considered to be materials with at least one external dimension that measures 100 nanometres or less or with internal structures measuring 100 nm or less. They may be in the form of particles, tubes, rods or fibres)

Biofuels and algae biofuel seaweed fuel or seaweed oil, bioelectric batteries using microalgae.

Energy

Energy transition: Shift towards clean energy sources such as solar, wind and hydroelectric power: In 2023, 30% of the world’s electricity came from renewable sources, which is better than 20% in the past decade, but still much too slow.

Renewable sources are: Solar, wind (offshore and onshore), grid innovation (Canada). Hydrogen – electrolysers, fuel cells, methane pyrolysis.

Nature-based solutions (NBS): Cultivate or restore forests, peatlands, mangroves and kelp forests. Nature-based solutions address societal challenges through actions to protect, sustainably manage and restore natural and modified ecosystems, while benefiting people and nature. [5]

Superconductors: The role of superconductors in a sustainable technology is crucial, since they play a promising role in loss-less energy transportation as well as storage, which are important to efficiently utilize the power from renewable energy sources.

 Transportation

Autonomous vehicles: Vehicle that can drive themselves in “autopilot” without human intervention, or with a human driver producing reduced input.

Batteries and energy storage – electric vehicle batteries, long-duration energy storage is critical in driving down solar and electric vehicles energy costs.

Drones and unmanned aerial vehicles: For monitoring ecosystems and borders, tree-planting and data collection systems, drones and UAV play a critical role in climate mitigation and adaptation.

Conclusion

As the World Economic Forum states, the environmental pressures of climate change are one of the main drivers of the rapid technological changes around us, and these changes cannot be ignored by state regulatory systems. Tax administrations are at the forefront of these challenges to governance and state priorities in all nations.  It is imperative to keep up with these transformations as best we can.

[1] https://unfccc.int/documents/632556

[2] https://www.intuition.com/remote-working-statistics-you-need-to-know-in-2024/

[3] https://www.guycarp.com/insights/2023/06/managing-climate-change-physical-risk-in-east-asia.html

[4] https://pacific.un.org/en/267537-what-reinsurers-can-do-climate-adaptation-and-resilience

[5] https://networknature.eu/

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