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.

Tim Crawford is ranked as one of the Top 100 Most Influential Chief Information Technology Officers (#4), Top 100 Most Social CIOs (#7), Top 20 People Most Retweeted by IT Leaders (#5) and Top 100 Cloud Experts and Influencers. Tim is a strategic CIO & advisor that works with large global enterprise organizations across a number of industries including financial services, healthcare, major airlines and high-tech. Tim’s work differentiates and catapults organizations in transformative ways through the use of technology as a strategic lever. Tim takes a provocative, but pragmatic approach to the intersection of business and technology. Tim is an internationally renowned CIO thought leader including Digital Transformation, Cloud Computing, Data Analytics and Internet of Things (IoT). Tim has served as CIO and other senior IT roles with global organizations such as Konica Minolta/ All Covered, Stanford University, Knight-Ridder, Philips Electronics and National Semiconductor. Tim is also the host of the CIO In The Know (CIOitk) podcast. CIOitk is a weekly podcast that interviews CIOs on the top issues facing CIOs today. Tim holds an MBA in International Business with Honors from Golden Gate University Ageno School of Business and a Bachelor of Science degree in Computer Information Systems from Golden Gate University.

1 comment on “Cap and Trade Impact on Data Centers

  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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