Introduction
In the ever-evolving landscape of technology and connectivity, data centers stand as the backbone of our interconnected world. They power the vast array of digital services and platforms that we rely on, from cloud computing to streaming services and much more. As their importance grows, so do the concerns and challenges surrounding their high energy consumption and environmental impact.
Decarbonizing data centers has emerged as a pressing challenge, particularly as digital computation demands from artificial intelligence and digital currencies explode. In this article, we cover trends in electricity demand of data centers, data center emissions sources and reduction opportunities, and the complexities associated with calculating and reporting data center emissions per the GHG Protocol.
Global Data Center Electricity Demand on a Steep Rise
Data centers are voracious consumers of energy, with current estimates suggesting they account for approximately 2% of global electricity consumption. Projections indicate that this figure could surge to 6.5%+ by 2030. On average data centers consume 100 to 200 times more electricity per square foot than conventional office spaces.
This substantial energy consumption underscores the imperative for data centers to adopt sustainable practices and enhance energy efficiency measures. Efforts to curtail energy consumption will not only decrease the environmental impact of data centers, but can also cumulatively save substantial operational costs.
Decarbonizing Data Centers
Data centers have made notable advancements in energy efficiency, especially with innovative cooling methods like immersion and direct-to-chip cooling. Despite these strides, the demand for computing power and electricity remains high. This presents a challenge: data centers must continue improving energy efficiency while also reducing their carbon footprint.
A common approach to reducing carbon emissions is through Renewable Energy Certificates (RECs), Energy Attribute Certificates (EACs), and Renewable Power Purchase Agreements (PPAs) with utilities. Recently, data centers have also begun investing directly in renewable energy projects and local energy generation capacity to actively contribute to energy sustainability. However, maintaining uninterrupted backup power, essential for 24/7 operations and energy reliability, typically requires adjacent fossil fuel generators and/or investments in battery storage systems.
Establishing Data Center Emission Boundaries following the GHG Protocol
Data centers are complex facilities designed to efficiently process, store, and distribute vast amounts of energy and data. They consist of several key components: servers, networking equipment, storage technologies, cabling and power infrastructure, cooling equipment, and physical security measures such as alarms and biometric scanners.
Considering all of this infrastructure and equipment that requires substantial energy and associated emissions, one of the fundamental aspects of emissions reporting for data centers is establishing clear operational boundaries. For colocated (“colo”) data centers, where multiple tenants exist, defining these boundaries can be complex. Below are some key questions and considerations to understand when establishing boundaries for GHG emissions inventories for colo data center operators and colo tenants:
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Operational Boundary: What does the colo data center landlord or vendor include or exclude in their own GHG emissions?
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Operational Control of IT Equipment: Do colo tenants have operational control over their information technology equipment, including servers, networking devices, and storage systems?
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Operational Control of Data Center Infrastructure: Does the data center landlord or vendor have operational control over infrastructure elements such as cooling systems, lighting, backup power, and power conditioning equipment?
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Ownership of Power Utility Contracts: Who owns the power utility contract for the data center? Is it the data center operator, the landlord, or individual tenants?
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Electricity Payment Structure: How is electricity usage billed within the colo data center environment? Do colo clients pay the vendor directly for electricity usage, or is it included in their overall service agreement?
Best Practices: Applying Operational Boundaries to a Colo Data Center
In practice and throughout our GHG accounting work with several global software companies with colocated data center contracts, we have noticed differing approaches to operational boundary definitions associated with GHG emissions accounting of scope 2: electricity. Importantly, the GHG Protocol’s Scope 2 Guidance, Section 5.2, p33-34, stipulates that “companies should avoid double counting the same emissions in multiple scopes within the same inventory. Furthermore, double counting the same emissions within the same scope by multiple companies should also be avoided.”
Typically, colocation customers hold various levels of ownership and control over their IT equipment located at third party data center colo locations, including managing operational aspects like power usage, virtual machine setups, and hardware utilization. Despite the existence of operational control across colo tenant IT equipment, many large data center vendors have clearly defined strategies to take ownership of the emissions reporting boundary of all data center energy use and report it as their own scope 2. For example, Equinix (NASDAQ: EQIX) & QTS (majority owned by Blackstone (NYSE: BX)), expansive data center operators with a combined network of 350+ global data center locations, report on both the energy and carbon impact of customers and the data center infrastructure load as scope 2. This allows their colo clients to claim the same emissions as scope 3. Alternatively, we have documented several other data center operators that report emissions from client IT equipment electricity as scope 3 (therefore, client’s scope 2 emissions).
Considering these different approaches, it is important for colo vendors and their clients to reach a consensus to avoid the double counting or under reporting of GHG emissions. The following figure (referenced from a BSR working paper in collaboration with the World Resources Institute) illustrates methodologies that help document and define boundaries between colo data center providers and their multi-tenant clients:
Conclusion
As technology continues its substantial integration into our daily lives, harnessing more and more computing power, it is important to understand the intricate challenges related to electricity supply, demand management, stability, reliability, and the pursuit of decarbonization associated with data processing. Moreover, direct stakeholders in data center operations and colo tenants should continue to prioritize transparency and standardization in defining, calculating, and disclosing GHG emissions to foster improved consistency in emissions boundaries across the marketplace.
About Full Scope Insights
Full Scope Insights (FSI) provides consulting and advisory solutions encompassing a range of disciplines, including financial consulting, sustainability, and brand strategy. Within our sustainability advisory practice, FSI provides fractional CSO (Chief Sustainability Officer) services, including implementing and managing fit-for-purpose, materiality-driven sustainability and ESG reporting programs for clients. Additionally, we specialize in developing transparent and cost-effective GHG accounting and reporting in close consideration of operational and organizational boundaries, materiality, relevance, and client data availability in compliance with the GHG Protocol reporting standard. Our team works collaboratively to collect and review client data sources, producing a robust, independent GHG emissions assessment that accurately reflects GHG emissions and helps unlock emissions reduction strategies through rich reporting to meet sustainability goals.