Cap and Trade Impact on Data Centers

Cap and trade is a relatively new threat to data centers. However, the concept is not new; having been around for decades.

The US Environmental Protection Agency (EPA) has a website dedicated to their programs.

The cap and trade concept is pretty simple. Emissions from a facility are given a “cap” or maximum allowed. Surplus credits can be traded to facilities exceeding their cap; hence the “trade”. Interestingly, this creates a market opportunity for trading credits. For data centers, it puts a spotlight on the type, and therefore cost of energy. Green or clean energy sources are preferred, but cost more per kWh.

The question is not whether increased data center efficiency is needed. It most definitely is needed! The question is how to incentivize data centers to get more efficient. Cap and trade could be viewed as a “big stick” approach. Some local power utilities offer rebate programs. But they are often hard to leverage and not offered in many areas. One incentive-based approach to drive data center efficiency has been proposed by Data Center Pulse (DCP).

Ideally, data centers will see the need to become as efficient as possible without the need for the big stick. Incentive-based programs can help provide a catalyst to data center efficiency without the pressure of a program such as cap and trade.

1 comment

  1. I think Adam Smith put it best in the “Theory of Moral Sentiments”, essentially organizations are more likely to implement changes that have a direct positive effect on their own bottom line. Cap and Trade works well in industries that produce one or more new products that replace one or more existing products, with current technology, we are essentially replacing many existing systems with one new system. We are finally seeing the maturation and mainstream adoption of virtualization platforms in all segments of the enterprise, which by definition will reduce the footprint of may datacenters. This combined with the constant improvement of hardware capability should ensure that most enterprises will be able to grow their virtual infrastructure almost indefinitely without also significantly growing their space, electrical, and HVAC needs. Given the widespread adoption of the technology, and the indisputable economic factors at play, I would expect this process to run its course over perhaps a single, or at worst, two equipment replacement cycles.

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