COVID-19 is causing immense human and economic suffering, but one surprise is its positive impact on the environment. The world’s digital infrastructure providers need to act fast to both capitalize on this and make it stick.
On the surface the environmental news is good. The world will consume 6% less energy this year – equivalent to losing the entire demand of India. Internet usage is at an all time high, supporting home workers around the world with few signs of capacity strain or bottlenecks. This pushes up the data processing and transmission overhead of course, but a video conference uses only a few percent of the energy of a face-to-face meeting. And all the signs are that remote working will be a big part of the new normal post-COVID.
In addition to reduced transport emissions there are some tentative indications that the economic impact is opening politicians’ and investors’ eyes to a slower but greener future, where environmental, social and healthcare policy align to support a low-carbon recovery.
Beware the Bounceback
Could the COVID-19 crisis trigger a step change in carbon emissions? The answer is a resounding maybe.
If you delve a bit deeper than the pictures of smog-free cities, it’s clear that despite the nose-dive in transport emissions, overall CO2 reductions have not been that dramatic. In New York, for instance, the streets and skies emptied but emissions only went down by 20%. Cars and planes can be parked en masse, and widespread oil consumption for power generation or manufacturing carries on regardless. And even the drop in emissions we are seeing may not be enough to reach the Paris targets. Assuming that emissions fall more than 5% in 2020 – the greatest annual reduction on record – this is still short of the 7.6% decline needed every year over the next decade to stop global temperatures from rising more than 1.5 degrees Celsius.
Then there’s the bounceback. Some forecasts predict we will see an economic bounceback across the second half of the year that brings with it a return to more or less previous emission levels. This may be a bit optimistic, but even if it comes later, the bounceback will make the CO2 drop during COVID-19 look like a momentary blip.
Time for Change
This crisis shows once and for all that personal behaviour isn’t going to fix the carbon emission problem. We need a systemic change in how energy is generated and transmitted; technological solutions that allow the economy to operate at something close to 100% with 5%-8% annual reductions going forward. Reliance on coal, oil and gas needs to be pushed back, particularly in major developing markets like India and China, and (this is where we come in) the leading industries of the ‘new normal’ – networks, storage, clouds, data centers, exchanges, equipment manufacturers – need to show the way by eliminating fossil fuels as far as possible from their business models.
Why Us? Five Reasons
Here are five reasons why data centers and their tenants and partners should redouble their efforts in this area to rescue something good and lasting from the current crisis:
1. There’s plenty of capital
Unlike other sectors, digital infrastructure is thriving, growing and investable. As traditional spend (real estate, travel) shrinks, budgets are shifting towards IT and interconnected infrastructure. Continued build-outs to the edge will enable home-working (supported by dense network rollouts for IoT and AI) to become richer and more rewarding. There is also more capital available for sustainable initiatives, with a doubling in Environmental, Social and Governance (ESG) investments year-on-year – that’s $12.2 billion in the first four months of this year alone.
2. We know we can do it
The green grid is growing and our capital and recurring revenue can accelerate this process. On the data center front Iron Mountain Data Centers have been powered by 100% renewables since 2017, driving a 52% reduction in greenhouse gas emission across the group from its 2016 baseline, and reaching the Group emission reduction target six years early. This makes it one of a handful of businesses worldwide in line with Paris Climate Accord targets. The company’s complete commitment to renewables also enabled it to launch its pioneering Green Power Pass (GPP) last year to share those renewable energy benefits with customers like Akamai and Goldman Sachs at the same time as helping other data center businesses to follow the same path by switching entirely to renewables. “The trick is to do it all in one go and move now, not later,” says Kevin Hagen, Vice President ESG Strategy at Iron Mountain. “Half measures are not financially efficient.”
3. We have the scale
Google is now the largest corporate buyer of renewable energy in the world, and in September 2019 it increased its renewable energy portfolio by 40 % through power purchase agreements with utilities around the world. Microsoft has made great strides too. Amazon (the largest user) not so much. The Renewable Energy Buyers Alliance (REBA) membership reported purchases of over 7 GW in renewables in the US alone in 2019, and 50% of those were first time buyers. The data centers of the world account for around 1% of global final demand for electricity, and networks account for slightly more. Power purchases are big enough to change the supply chain structure and drive demand, creating spin-off price per unit benefits for other sectors and encouraging new buying habits.
4. The tech is ripe
From better design and build to faster and smarter data, Machine Learning and AI, there has never been a better toolkit for highly efficient and disaster-proof infrastructure. Software-defined networks and data centers can quickly become mainstream with the right investment. Energy and environmental management using Machine Learning is already driving efficiency up and overhead down. By sharing and standardizing these advances we can relocate the Smart Hands in the home offices of our customers, adding value and versatility to our infrastructure in the process.
5. We don’t want to be the bad guys
The flipside of the expansion in digital infrastructure is that we have new and larger responsibilities. We must be very wary that our expansion is not accompanied with unacceptable emission levels making us the ‘new polluters’. When the tipping point of migration from legacy to cloud data centers is reached and growth continues from a more efficient baseline, consumption will start to reflect infrastructure growth more accurately. Infrastructure providers need to be firmly on the environmental high ground by then.
So let’s not allow this unexpected window of opportunity to close. We should embrace the change and come together remotely – data centers, networks, cloud providers – to create a united digital infrastructure front with shared targets that meet the Paris Climate Accord targets. We should engage with customers, partners, policy makers and regulators to ensure that we and other sectors are supported in our efforts. We should reward and learn from success and share our best practice and technology freely to achieve these goals. Let’s push the data infrastructure sector to the forefront of the new energy revolution.