The case for going green

IBM’s massive facility in Colorado keeps energy costs and emissions down by using wind power and air cooling

As the corporate world comes under increasing pressure to do its bit in the fight against climate change, companies are being forced to rethink how they do business. The combination of legislative, financial and moral pressure is forcing companies to develop greener practices, and one manifestation of this is the trend towards more energy-efficient datacentres.

Current drivers for greener business practices include:

• Political and legal pressures, such as the mandatory requirements of legislation and government policy;

• Technological pressures, such as the contribution of IT equipment ­ – particularly datacentres –­ to carbon emissions, and the scope for greener technologies to help businesses and consumers to reduce their impact on the environment;

• Economic pressures, including the cost savings that green IT can drive and the competitive advantage of “being green”.
  

The new Companies Act 2006 has placed a duty on company directors to consider the environmental impact of their business. Environmental effect must now, by law, be a factor in the decision-making process for all businesses, which extends to choice of service provider. Making the decision purely on the financial business case would not be enough to discharge the director’s duty under the Companies Act. Directors should also consider the environmental impact of their decision along with the other matters set out in the Companies Act.

For the public sector, environmental concerns are now embedded in the procurement process. Different businesses will be affected in different ways by this. The internet has long been reliant on massive datacentres, and the advent of mature cloud computing services for business further extends this reliance. But one trend is colliding with another. As we process more data in these power-hungry IT factories, governments are trying to reduce the amount of energy businesses use.

As ever, such tension creates opportunity, in this case for datacentre operators. But to exploit that opportunity, operators need to be appraised of the key legislation and codes of practice.

The Carbon Reduction Commitment (CRC) Energy Efficiency Scheme

The CRC is a mandatory energy-saving and carbon emissions reduction scheme run by the Department for the Energy and Climate Change (Decc). It was created to help the government achieve targets in the Climate Change Act 2008, namely to reduce emissions of greenhouse gases by 34 per cent by 2020 and 80 per cent by 2050 against a 1990 baseline. The scheme is designed to change the behaviour of the most energy-intensive companies.

From April 2010, qualifying organisations –­ that is, any organisation that exceeded the threshold of 6,000MWh of half-hourly metered electricity during 2008 ­ – will have to report on their emissions for the year.

Then, from April 2011, CRC participants will have to buy CO2 allowances to cover the 2011/2012 period. Organisations can trade these allowances, by selling any surplus, or buying credits if they have a deficit. So businesses can gain financial benefit from lowering their emissions in addition to the benefit of cheaper energy bills. For example, recently a major university claimed to have made substantial energy savings as a result of virtualising its server estate.

From April 2013, the total credits available will be capped, and then reduced over time to drive down overall consumption.

Furthermore, Decc will publish the CRC Performance League Table every July after each scheme year, showing the best and worst performers based on their carbon emissions at the start of the scheme (in 2010) compared to emissions that year. This offers significant PR opportunities. Datacentre operators wishing to demonstrate to customers a commitment to the environment can adopt strategies to reduce electricity usage to boost their position in the “green league”. Those who do not, risk being “named and shamed” on the league table.

The draft Order introduced civil and criminal penalties for non-compliance with the CRC. There will be an immediate fine of £5,000 imposed for failure to register by the deadline ­ – 30 September 2010 ­ – and a further fine of £500 per working day for each subsequent working day of delay until the last working day of July –­ the next reporting deadline. Certain offences will also be publicised. Furthermore, falsification of evidence and knowingly or recklessly making false or misleading statements will be criminal offences.

European Data Centre Code of Conduct

The European Commission’s Code of Conduct on Data Centre Energy Efficiency (published late 2008) is a voluntary code to which organisations can sign up, committing them to implement some light-touch measures to reduce energy consumption.

The code’s stated aim is “to inform and stimulate datacentre operators and owners to reduce energy consumption in a cost-effective manner without hampering the mission-critical function of datacentres”.

The code aims to achieve this by “improving understanding of energy demand within the datacentre, raising awareness, and recommending energy-efficient best practice and targets”.

At the moment, organisations and service providers are not obliged to abide by the code and some industry analysts believe this lack of statutory commitment may lead to tougher legislation in the future, laying out minimum standards for mandatory compliance. However, it is worth reading the code for tips to reduce datacentre energy consumption, and signing up might improve your corporate image and give businesses ­ – particularly IT service providers – ­ an edge on the competition.

The Eco-design Directive for Energy-Using Products

The Eco-Design Directive for Energy Using Products is an EU directive that has been transposed into English law. It sets out a framework for manufacturers of certain energy-using products to design goods that reduce energy consumption and other negative environmental impacts.

The EC has established a working plan, setting out a list of product groups that will be considered as priorities for implementing the measures before 2011. One of these is “network, data processing and data storing equipment”. Currently, these products are under consultation and there are no directly binding measures in place. However, although datacentre operators do not manufacture these products, it would be wise, in light of the emerging trends and legislation, for operators to carefully consider the type of products they use to provide services.

Threat or opportunity?
There are many opportunities for early movers to get ahead of the competition by engaging with green datacentre issues. Being recognised as an energy-efficient business offering green products and services can send a clear message to customers that you are ahead of the competition.

You may also demonstrate that you can offer considerable energy cost savings to customers by providing energy-efficient technologies, which will bring utility bill savings and CRC credits in the future.

Company boards and IT directors are increasingly aware that implementing green IT strategies can result in efficiencies and cost savings. This is an essential area for businesses to retain a competitive and operational advantage. By investing time and money in understanding the business impacts of moving to a low-carbon economy, businesses will be able to adapt to the changing operating environment. Initiatives such as the CRC will encourage businesses to find more environmentally friendly systems.

The Sustainable Procurement Action Plan details the government’s commitment to embedding sustainability in its procurement practices. This has resulted in many government departments taking more environmental issues into account when assessing tenders. As a result, we are now seeing more public sector procurers selecting suppliers and solutions that assist them towards meeting their own sustainability targets.

Most businesses are now aware that energy-efficient working can improve their image and profile. Indeed, a failure to adopt green practices can easily result in a firm being named and shamed by the likes of Greenpeace, which publishes a corporate energy-efficiency league table.

In the increasingly unlikely event that a board remains unconvinced by the economic, legal and moral arguments for implementing green datacentre policies, the thought of being publicly pilloried by such a high-profile, media-savvy organisation as Greenpeace should be enough to make it rethink its position.

John Skelton is an IT specialist at international law firm Pinsent Masons

Read why Martin Atherton says that datacentre managers must take a holistic approach to implementing change