LONDON, United Kingdom — [Editor's Note: This article originally appeared on BusinessGreen.com, and is used with permission.]
IT industry experts are calling on the UK government to amend the imminent Carbon Reduction Commitment (CRC) energy efficiency scheme, warning that it will force participants to outsource energy-intensive IT infrastructure to offshore operators, which could drive up overall emissions from the sector.
The legislation comes into effect in April and will apply to about 5,000 large UK public and private sector organizations that consume more than 6,000MWh of electricity per year. As a result, many of the UK's larger data centers will be covered by the scheme and will be required to report on their energy use and attempt to improve their efficiency or face financial penalties.
The cap-and-trade scheme is intended to provide organizations with financial incentives to cut their carbon emissions by imposing financial penalties on those organizations that at least curb their energy use, and providing bonuses to those that successfully reduce energy use.
But according to Liam Newcombe, secretary of the British Computer Society's data center specialist group, one of the legislation's key flaws is that participants only purchase carbon credits under the scheme based on their own levels of in-house carbon emissions, not those generated by outsourcing providers on their behalf.
As a result, he is concerned that organizations will be provided with a " perverse incentive" to outsource their IT infrastructure, potentially to overseas operators, to avoid additional charges imposed by the CRC. "I'm already aware of a couple of organizations that are very interested in managing their CRC league table positions by outsourcing their IT assets," Newcombe said.
Such tactics could prompt accusations of "carbon laundering", but Newcombe predicted that firms could adopt a "slow and more creeping" approach, designed to avoid any suggestion that they are deliberately outsourcing their emissions to third parties.
For example, he said he expects to see participants increasingly install new or upgraded equipment into co-location or other third-party facilities rather than run them in-house, with a view to quietly massaging emission figures to demonstrate year-on-year improvements in emission reductions.
"Even if you're trying to play the game straight, you won't be able to do it because you can't report the CRC performance of your co-location sites," he warned. "So even if you're trying to be honest, you're forced into an obscure game of carbon management accounting."
The only real winners in this scenario will be the outsourcers and vendors selling carbon accounting software and services, Newcombe added.
Meanwhile, efficient and successful service providers that manage to grow their customer base could well end up being penalised under the initiative.
Newcombe observed that the more customer service providers take on, the more IT equipment they need to install and the higher their energy consumption/carbon emission rates become. "An organisation providing an efficient service could fall down the league tables because its net emissions have risen, while an inefficient supplier that has lost customers would rise," he explained. "So you could see a situation where the good providers end up subsidizing the bad ones."
A worrying by-product of this scenario could be an increase in the number of IT services being provided by offshore companies, as firms attempt to simply offload energy-intensive operations into jurisdictions not covered by the CRC.
Newcombe warned that this migration could result in a net increase in carbon emissions as countries in the developing world that provide IT services, such as India, routinely have more carbon-intensive energy infrastructure than the UK.
Brian Murray, a principal consultant at IT services provider Morse, agreed that the CRC could provide firms with incentives to move their IT operations offshore and as a result it poses "a serious threat to UK businesses and could even have little, no or possible negative effects on global emissions."
Any increases in offshoring activity would inevitably cost the UK economy money in terms of lost business, lost IT jobs and lost funds that could have been generated under the CRC mechanism, he added.
He urged the government to "make amendments that take into account these potential risks", warning that otherwise the CRC could simply "move the problem from one place to another."
His fears were echoed by Newcombe, who warned that "we effectively offshored embodied carbon in manufacturing by moving it to China, India and the like and now, under this short-sighted legislation, people will choose to outsource inshore carbon too."