Jumpstarting your Data Center Decarbonization Journey

The global data center market is projected to reach nearly U.S. $326 billion by the end of 2023, according to analyst firm Statista, and grow to U.S. $438.7 billion by 2028. Exponential growth in artificial intelligence (AI) and the associated cloud computing requirements will be a crucial growth driver. But in achieving this growth, data centers will become significant energy consumers. The MIT Lincoln Lab cites forecasts that predict data centers could draw up to 21% of the world's electricity supply by 2030. In addition, as many more new data centers are built and commissioned, new challenges in establishing renewable energy sources and accompanying power transmission and distribution infrastructures will emerge.

Data center owners will be under increasing pressure to reduce their carbon footprint. This pressure comes from various stakeholders, including customers who are increasingly conscious of the environmental impact of their services, investors who consider sustainability in their decisions, and employees who may prefer to work for companies with a solid commitment to sustainability. Regulators will also implement much stricter environmental standards. In 2024, for example, the Security and Exchange Commission (SEC) is expected to require U.S. data centers to disclose greenhouse gas emissions and other climate-related risks. Additional new government mandates will likely require data centers to measure their carbon footprint and demonstrate how they plan to reduce it.

New architectures and technologies, like liquid cooling, will enable lower energy consumption for high-density deployments. Also, new AI-enabled cloud-based management, service, and analytics will help boost operational efficiency by rapidly adjusting data center operational parameters with high accuracy.

Although setting expectations to reduce carbon emissions seems to have become standard, execution to achieve quantified decarbonization targets can be a daunting task.

The successful transition to decarbonized data center operations requires a disciplined, long-term approach and a strategy based on three critical high-level best practices:

1. Recognize that carbon reduction is not a "check the box" project. Sustainable operations have become as ingrained into the business culture as the need to generate profits and build resilience.
2. A meaningful transition to a low-carbon data center requires the active participation of employees across all levels. The alignment must include executives, engineers, architects, operators, energy managers, facility managers, sustainability directors, supply chain management, and finance. By involving all parties up-front, prioritizing trade-offs becomes less disruptive further down the road.
3. Ultimate success requires an integrated plan across the data center ecosystem. Stakeholders must embrace the strategy, understand their role in the plan, and recognize the roles of business partners and suppliers.

Stakeholder collaboration a key to decarbonization progress

A critical success factor in transitioning to decarbonized operation involves high levels of stakeholder cooperation. A variety of approaches can be used to drive the proper collaboration. These include assessments that define issues important to stakeholders, impactful to the business, and financially significant, and exercises that evaluate and prioritize climate risks and opportunities. Tools like digital twins can serve as a means of collaborative design, implementation, and operation.

Readiness assessments can also help to identify gaps and barriers related to information and data management, policies, internal expertise, communications, and reporting. By aligning goals, timelines, and funding options among the various stakeholders, the odds of achieving sustainable decarbonization success increase exponentially.

Sustainability in data center business translates into renewables, resilience, efficiency, and green technologies. The ultimate goals are reducing operational carbon footprint, collectively achieving the science-based target of limiting global warming to 1.5 C by 2050, and extending decarbonization across the entire upstream and downstream data center value chain. Achieving this target will require a 50% reduction in emissions by 2030.

The investment community also requires accountability by evaluating the data center's sustainability impact. Investors now want to understand a data center's tangible, by-the-numbers climate-related risks and opportunities. What are a data center's current emissions? Has the data center evaluated and planned for physical and transitional climate risks? What is the data center owner's plan and roadmap for decreasing emissions over time? The data center's short and long-term carbon profile is a crucial indicator of whether investors continue to back the business.

There are also growing regulatory requirements driving action and planning. For example, California now mandates that companies of a specific size disclose their greenhouse gas (GHG) emissions as a condition for doing business in the state. The U.S. Securities and Exchange Commission (SEC) climate rules are likely to follow closely with ESG disclosure mandates that also require organizations to evaluate climate related risks and opportunities. In this new environment, it becomes everyone's responsibility to understand the data center's decarbonization plan.

How does accountability for achieving targets work within the data center industry? It's through energy-efficient operations, incorporating renewables to supply power, and encouraging carbon consciousness among end users and suppliers.

Critical steps for achieving success

The transition strategy to net zero begins with leadership commitment. “At Siemens we understand the challenge of balancing day-to-day business imperatives and critical operations with long-term goals for sustainability. While we take the lead in decarbonization with a firm commitment to become carbon neutral by 2030, we will utilize best practices learned in our sustainability journey to help our customers meet their individual decarbonization goals,” said Mike Zapata, Head of Data Centers, Americas, Siemens Smart Infrastructure.

In parallel with leadership commitment, the first step is understanding the data center's carbon footprint by baselining and benchmarking both the internal portfolio of operations and external peers. Identify the most energy-intensive sites, areas of highest energy use and energy spending within those sites, and which locations have the highest carbon emissions.  Collaborating with suppliers and customers can assist in developing a great strategy, and bolsters progress on future scope 3 emissions reduction initiatives. 

Once the leadership goals are understood and defined, those goals should be embedded at the portfolio and site levels. Site managers must identify opportunities for energy conservation and clean energy generation and any potential liabilities to operations.

The next step is to develop a site-level implementation plan that outlines actions, timelines, and responsibilities. Incorporate mechanisms for measuring local performance and tracking progress over time. Only then can corrective actions take place to avoid missing corporate sustainability targets. Measurements are vital for communicating progress to external stakeholders, including customers, investors, and regulators.

Decarbonization plan implementation should center on three critical areas:

• Procurement of clean energy – Depending upon the organization's size, energy procurement can be a site-level or enterprise-level decision. In the migration to clean energy, many organizations start with bridging strategies. These include renewable energy certificates. Now, there is also a transition to more credible sources of clean energy sourcing, like Power Purchase Agreements (PPA), so data centers can tie their sustainability claims to tangible decarbonization projects.
• Improved energy efficiency - Invest in energy-efficient technologies at current sites and consider incorporating energy efficiency into the design of new assets. Build decarbonization into the process while designing for green building certification. Think about establishing an internal price on carbon. For instance, factor carbon cost into corporate project evaluations to account for the avoided carbon costs resulting from direct or implicit costs. In addition, best practices such as thermal optimization can holistically improve data center cooling plant and white space efficiency. For data center operations, this represents a considerable reduction in energy consumption while increasing nominal cooling capacity and ensuring data center reliability.
• Onsite clean energy generation - Data center uptime is critical. Onsite generation can serve as an essential resource for maintaining business resilience. Solar generation, energy storage, and microgrids are all practical solutions that work today. Discover the marketplace enablers that will allow for cost-effective expansion in these areas. State and federal incentives and lower prices make investing in these technologies more cost-effective than ever before.

Today, data center owners can take explicit steps to reduce emissions while being fiscally responsible. Success in the transition to net zero requires a holistic and integrated approach. It involves commitment from leadership, site-specific actions, and a continuous improvement mindset. The time to jumpstart the transition to decarbonization is now. The harmful effects of global warming are increasing exponentially. Businesses avoiding transformation will face even higher transition costs in the immediate future and risk being left behind.

Stacy Mahler is Head of Sustainability (US) and Sean Metivier is Director of Energy and Sustainability Consulting for Siemens Smart Infrastructure. Contact Siemens to learn more.