25 Jan 2022

Go for Green: Carbon emissions will be key factor in cloud purchasing by 2025

Go for Green is our regular check-in here at Spreckley, where we share all the most interesting and useful green technology and sustainability innovation news and trends.

This week, we explore Gartner’s prophecies for the data centre industry – and why every cloud may not have a green lining, as well as why Exxon Mobil’s late and lousy commitments to net-zero goals represents the worst of stakeholder capitalism that’s so prevalent in America.

In the most positive news of the week, BlackRock CEO Larry Fink’s yearly ‘Letter to CEO’s’ implores businesses to get serious about their environmental policies – and tells of the tantalising profits that could wait at the end of the green rainbow.

Carbon emissions will be a key factor in cloud purchasing by 2025

Computer Weekly reports that one of the world’s leading analyst firms has predicted that the carbon emissions of data centres will be a key consideration for anyone buying cloud space.

This is not a surprise, and matches the slow but inevitable crawl of all industries and consumers towards more environmentally conscious priorities, products, and production methods. However, cloud computing, or more accurately the datacentres that hold the data, are particularly difficult to transition to this green mindset – for several reasons.

Firstly, they require a lot of energy. According to lnternational Energy Agency, the data centres in the world use between 200-250 terawatt hours (TWh) – which would make it slightly more energy-intensive than South Africa, and slightly less than Indonesia and the UK.

Secondly, they are in incredibly high demand. The industry is expected to reach the $791.48 billion mark by the year 2028, as reported by Nasdaq– supercharged by the rapid digitisation journeys businesses have had to undertake, the increasing energy consumption of new technologies and existing industries, and still with billions of people soon to come online throughout the developing world.

Thirdly, they are only as green as the energy that powers them. Some datacentres have on-site renewable generation, such as solar panels or wind turbines, but generally they are plugged into the national grid. This means that the big tech companies, despite their net-zero aspirations, can only be as green as the nation’s energy policy.

It is not all bad news though – as they are getting considerably more energy-efficient. The International Energy Agency reports that data centres currently use about 1% of global electricity, and this share has hardly changed since 2010, despite internet traffic increasing by 15 times.

There are also ways they can become more efficient. In a 2016 report, the Lawrence Berkeley National Laboratory estimated that if 80% of servers in small US data centres were moved over to hyperscale facilities, it would result in a 25% reduction in energy consumption. Google reduced their energy bills by 40% by matching their power needs to the weather and consumer demand. In the future, we may see more energy-efficient methods of cooling, such as using more thermally-efficient materials, and building data centres in colder climates or even underwater.

However, at the moment, this may well be one technology that we can’t make perfectly green – and yet can’t live without. Although for some, this is still bad news. This growing demand for as green as possible computing may well spell disaster for cryptocurrencies– which require huge amounts of needless energy simply for the sake of their own creation.

Exxon, at last, sets net-zero goal

On the 18th January, as reported in the New York Times, Exxon Mobil announced that it would aim to eliminate net emissions from its operations by 2050. This statement has come unfashionably late – as it the last of the major energy companies to publicly commit to a net-zero goal; and its lack of detail or investment in truly renewable energies represents the worst of stakeholder capitalism that is rife in the USA.

Exxon plans to spend $15 billion over the next five years, or 14% of its estimated capital spending, on low-carbon efforts and emissions reductions. The aims to develop lower-carbon fuels, hydrogen, and carbon capture use and storage projects while lowering corporate-wide methane intensity by 80%.

Although no exact plans have emerged on what strategies or technologies will be invested in, by how much, and by when, what we know of the plan outlined is another example of the regressive and risky strategies of American energy companies.

European giants are spending billions on renewable energies, which may provide smaller profits (at least the initial, upfront investments), but are viable, safe technologies. However, on the other side of the Atlantic, the New York Times reports that the big players are focussing on miracles and moon-shot technologies such as nuclear fission and carbon capture; just to make sure they don’t upset their oil-intensive profits.

However, these new technologies are totally unknown quantities – with no markets, investors, or policies behind them. This makes it a risky bet; but as always, risky trumps smaller profits in their eyes – even if it is icecaps, ecosystems, and living conditions that they are risking.

BlackRock founder urges CEOs to Fink seriously ’bout sustainability

The good news this week comes from an unlikely place. On 17 January 2022, Larry Fink, the founder and chief executive of BlackRock, the world’s largest asset manager, published his annual Letter to CEOs. This year, as summarised in Lexology, Fink urged businesses to focus on sustainability, and stressed not just its importance but also the economic opportunities green technologies could bring.

In this letter, the ‘carrot’ was the amount of ESG funding available to the right companies – and that the next billion-dollar ‘unicorn’ startups would not be in grocery delivers or mobile banking, but in sustainability and green technologies. However, the ‘stick’, which was conveniently glossed-over by Fink, is more of an extinction than an investment opportunity.

Who knew the apocalypse provided such an incredible investment opportunity?