Which of the following data centre approaches better helps your company demonstrate a smaller greenhouse gas (GHG - CO2 and CO2 equivalent) footprint?

1. Your business runs IT in house. Your own data centre is a textbook example of “lean and green” that also delivers 99.9999% availability. Extensive effort has gone into hardware selection, thermodynamic modelling of the building and data centre room air flows has ensured a finely tuned air conditioning system, and every effort is made to reduce the power demands of the servers and the supporting infrastructure. The data centre’s Power Usage Effectivenes (PUE) rating is 1.3, averaged over the year. With such a high focus on availability and reliability weekly tests are performed when the data centre is operated using the back up diesel generators as the power supply.
2. You entirely outsource the delivery of your IT services to a third party. Your service provider has done the bare minimum to ensure that the data centre runs efficiently, though they deliver 99.9999% availability the PUE rating is the wrong side of ‘2’. Servers are over-specified and power hungry, the lights burn all night and air conditioning blows a chilled gale down unshielded aisles that are crammed with old equipment.

Whilst option one deserves praise, from the point of view of minimising reported emissions this is actually a “no contest”. In fact, the eco-slacker outsourcer wins this comparison every time, just through the virtue of it being an outsourcer. This is not to suggest that outsourcers are in fact generally eco-slackers, but rather that it is irrelevant to your business’s greenhouse gas bottom line whether they are or are not.

A company that is embarking on the exercise of measuring its GHG footprint will generally either follow the ISO 14064 standard, or the Greenhouse Gas Protocol (GHGP). The ISO and GHGP standards actually are more alike than they are different, with the vocabulary used in defining what should be measured and what should not differing in wording rather than intent. In each case, the standard is concerned with defining the operational boundaries of measurement—what should be considered in scope and what should not.

The GHGP defines three general operational boundaries, which it refers to as “Scope 1”, “Scope 2” and “Scope 3”. Scope 1 activities are deemed as those that a business has direct control over in so far as the type and amount of fuel consumed to generate power. Scope 1 examples are fuel used in company owned vehicles, fuel burned in company owned generators (including the data centre’s back up generators), or in the manufacturing plant. Scope 2 activities are those where the business has indirect control over energy consumption, and where the electricity is purchased for the business’s own use. For example a business can choose an electricity supplier but can’t otherwise select the fuel burned in the chosen utility’s power station. Lastly Scope 3 defines “everything else”; the emissions resulting from energy production and consumption by activities such as business travel, non company owned employee vehicle use, and outsourced activities.

When conducting an audit of a company’s emissions, those that result from Scope 1 activities “must” be reported, Scope 2 activities “should” be reported, and Scope 3 activities are someone else’s problem to report on. So while you are running your own data centre the electricity consumed should be reported under Scope 2, while the fuel used by the back up generator must be reported as Scope 1. Meanwhile, through the simple exercise of outsourcing the data centre, all of the electricity and fuel usage by the data centre moves to the Scope 3 category, and the resulting emissions disappears off the GHG balance sheet and appears on someone else’s.

Such a sleight of hand does no favours toward the goal of reducing overall emissions: however, it is entirely within the bounds of acceptable emissions foot-printing and reporting. Indeed the logic behind the definition of these three scope categories is to ensure that emissions are not “double counted”—once by the direct emitter and again by the consumer of the emitter’s services.

This carving out of responsibility becomes more relevant to business operations in light of the UK government’s current wrangling over the details of the Climate Change Bill. While the Bill is yet to been seen in its final form, it is a harbinger of likely future emissions foot-printing and reporting requirements on businesses. As the Bill will force most companies to declare their annual carbon emissions as a part of efforts to drive down overall energy consumption there will be financially motivated reasons to weigh in lightly.

Interestingly, the outsourcer will find itself reporting its emissions under a mix of Scope 1 and Scope 2, with Scope 2 emissions dominating the mix. It is questionable, however, whether there will be significant contractual or commercial pressure to reduce emissions coming from the outsourcer’s client base, for the simple reason that the outsourcer’s emissions are an economic externality to the outsourcing party. In this eventuality the relative energy usage leanness of the data centre outsourcer has little meaningful traction in competitive terms.

What this will mean to the overall outsourcing mix is too early a race to call. Certainly, as it becomes more commonplace for businesses to conduct regular emissions audits, and as it becomes a mandated requirement for the audit results to be published, we will see pressure mounting to reduce the emissions attributable to the business. All other factors in a decision to outsource being equal, the opportunity to entirely carve off the emissions resulting from an energy intense operation like a major in-house data centre will likely be an attractive one.