Yes, the title of this article is a bit facetious: carbon (the element) isn’t going anywhere. But attitudes about it (in particular, about emission compounds like carbon dioxide) may be changing. But what could that mean for the data center industry?
Popular ideologies and concepts are a bit like market bubbles: everybody (meaning a large segment of the population) jumps on the bandwagon, inflating the bubble, until some series of events causes the bubble to burst. “Carbon” is one of those concepts: carbon dioxide gained a sour reputation in the wake of growing concern about climate change (once labeled “global warming,” a term that seems to have fallen out of popular parlance). Sentiment against carbon emissions became so strong (at least in media and political circles) that severe regulations curbing such emissions seemed to be guaranteed.
Perhaps the most popular idea in this regard was a carbon trading scheme, whereby companies would each be assigned a certain number of “credits” that permitted some given amount of emissions (a “cap”—hence the name “cap and trade” for this type of scheme). Those companies that exceeded their allotment would be required to purchase additional credits from companies that were more frugal and had credits to spare. A carbon credit trading market—similar to the stock market—would then handle trading. And, of course, somewhere in the system would be a tax.
The goal of such a system would be to reduce emissions and increase energy efficiency. Such a scheme is currently in place in Europe under the European Union Emission Trading Scheme. But the ongoing economic difficulties in Europe and much of the rest of the western world have overshadowed enthusiasm for such schemes. In particular, proposals for a cap-and-trade system in the U.S. seem all but dead on arrival, as opponents claim that they would place an even greater burden on an already struggling economy.
In addition, questions seem to be rising with greater frequency regarding climate change, and particularly its causes. Numerous scandals revolving around fudged climate data are just one indication that problems are brewing. Furthermore, “climate science” is not as scientific as some proponents might claim: the climate is a tremendously complex system, and computer models (let alone those who create those models) do not understand all the factors that influence the weather.
All this is not to question the need for environmental stewardship: clearly, there is a need (both aesthetic and practical) to protect the world in which we live. But the recent obsession with carbon—which may well be based on fallacious assumptions about how destructive carbon dioxide really is—may simply be giving environmental stewardship a bad name. The best approach is a balanced one that considers both the environment and energy consumers.
The U.K.’s CRC: Bust?
The U.K.’s Carbon Reduction Commitment (CRC) was originally intended to be a carbon trading scheme similar to the EU’s Emission Trading Scheme. But according to DatacenterDynamics (“The taxing issues in London today”), “The government had announced its Carbon Reduction Commitment (CRC)—first meant to be a complicated ranking, measuring and carbon-charging solution—would now be a simple tax.” According to the official CRC website, “Organisations required to participate must monitor their energy use and purchase allowances, for each tonne of CO2 they emit that falls within the scheme. The more CO2 an organisation emits that fall within the scheme, the more allowances it must purchase. This will provide a direct incentive for organisations to reduce their energy use emissions.” Since data centers are energy hogs, companies that run them will be directly affected by these regulations. The precise reasons for the CRC failing to implement the planned-for cap-and-trade scheme are not clear, but regardless of the rationale, the U.K. government is still getting its share: more tax money.
In light of the growing fiscal (government) crisis in Europe, this change could be a way to avoid the hassles and problems of a trading scheme (such as that implemented by the EU) while still bringing in more money to a government struggling against growing debt (the U.K.’s current public debt is around 76% of the nation’s GDP according to the CIA’s World Factbook). Ostensibly, the CRC is still about increasing efficiency and reducing carbon emissions, but the momentum seems to have shifted away from growing support for a complex regulatory system.
This is not to say that tomorrow all interest in climate change will be abandoned. But this change, along with a virtual abandonment of the idea in the U.S., could signal the beginning of a shift away from either the notion of government regulation of carbon emissions or, perhaps more broadly, less credence in the concept of anthropogenic (manmade) global climate change.
The Waiting Is the Hardest Part
DatacenterDynamics notes in the above-mentioned article that “there are very few occasions when an industry breathes a sigh of relief because of a new tax. But after a year of debate, confusion and sitting on the fence, the UK data center industry did exactly that.” A similar problem—recently resolved in the U.K.—troubles the U.S. data center industry as well: what will the government do?
Because the future of regulations regarding carbon emissions is up in the air, data centers in the U.S. are unsure what to expect. If a costly tax is to be imposed on these emissions, as has been done in the U.K., then data center operators will likely wish to begin energy efficiency improvements sooner rather than later. But such improvements could turn out to be expensive, and the potential return on the investment will depend in large part on the requirements of potential regulations (the return on investment may be significantly less if no regulations are enacted, even though overall efficiency is increased).
Given that a major election year in the U.S. (2012) has almost arrived, companies will likely get no better sense about new regulations for some time. Given the current precarious position of the economy, which is teetering on the edge of a second recession, the federal government is unlikely to add new taxes and regulations in this area—at least until after the election. Even then, however, the failure of “green jobs” and “clean energy” to catch on as an economic driver likely means little popular support for more environmental regulations. Furthermore, controversies surrounding climate change data have brought the entire matter of the danger of carbon emissions into question. (Granted, climate change proponents like to say that “the science is settled”; but why do they keep having to repeat themselves if that’s the case?)
The change in the U.K.’s CRC from a complicated cap-and-trade scheme to a simpler tax seems to be rather benign, but it may signal a change in attitudes regarding climate change and concomitant government regulations. Currently, the data center industry in the U.S. is in a state of uncertainty, as the future of such regulations is in doubt. Because data centers consume so much energy—and because energy is such a large portion of data center budgets—carbon emission regulation could be a tremendous blow to the industry. Despite the uncertainty, however, some signs seem to indicate that the climate change bubble may be bursting. How long this process would take, however, is uncertain, and the federal government may institute regulations and/or a tax anyway.