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The next big cloud competition is the race to zero emissions

A person films a screen showing traffic data of Hangzhou city during a media tour of City Brain, an AI-powered traffic-management system by Alibaba Cloud, in Hangzhou, Zhejiang province, China April 10, 2018. Picture taken April 10, 2018. REUTERS/Stringer  ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY A THIRD PARTY. CHINA OUT. - RC12EBA1B010

An AI-powered traffic-management system in Hangzhou, Zhejiang province, China. Image: REUTERS

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Davos Agenda

This article is part of: Sustainable Development Impact Summit
  • The supply chain generates the majority of any company’s carbon emissions, which means smart organizations are looking outward as well as inward.
  • Cloud computing and data centres are responsible for the plurality of emissions for many tech companies, creating competition to provide cleaner cloud services.
  • The more savvy and transparent corporations get about their carbon footprint, the more pressure they’ll place on major cloud providers to accelerate the road to zero carbon.

Conventional wisdom holds that a business’s carbon footprint is generated within its own facilities and operations. The truth is that, if a company wants to cut emissions, it must focus on the real culprit – its supply chain. Today, experts understand that vendors generate the majority of any company’s emissions, which means smart organizations are looking outward as well as inward.

Have you read?

Cloud computing and data centres have become core global infrastructure – the roads and bridges of the internet economy. But they’ve also become a significant driver of carbon emissions, responsible for an estimated 1.8% of US electricity consumption and the plurality of emissions for many tech companies.

And as Amazon, Google, Microsoft and other cloud providers compete with each other on price, speed, security and, of late, AI offerings, energy efficiency has been just an operational concern – not a customer demand.

That’s about to undergo a change which will lead to a multi-trillion-dollar competition to provide cleaner cloud services.

Heads in the cloud

​​After all, the environment is becoming a major focus for corporate governance as we enter a critical decade for climate change. Regulators from around the world are beginning to demand that major corporations step up efforts to reduce emissions. This pressure for climate governance will be felt across supply chains – not least the cloud and data centre supply chain.

Simply put, the emissions of cloud providers are the emissions of the businesses that use them. Businesses can take a number of proactive steps to address these concerns, from the simple step of switching to data centres on lower carbon electricity grids to the more complex task of transitioning major parts of their business to a cleaner cloud service.

Cloud providers are aware of the pressure they’ll face from regulators and businesses, with the top three already setting goals to deploy renewable energy and reach net zero emissions. Google is working towards 24/7 clean power for its data centres; Amazon is shooting for 100% renewables by 2025; and Microsoft is leading the way on transparency for its cloud customers. But these targets are just the beginning. Corporate demand to meet aggressive carbon reduction goals will set off the next big cloud race: the race to zero carbon.

To be sure, cloud services are almost certainly more energy efficient than privately operated data centres, so companies that have moved from on-premise or self-operated data centres to any of the major cloud providers have already reduced their carbon footprint. In fact, the transition to cloud computing between 2021 and 2024 should prevent at least 629 million metric tons of CO2 from entering the atmosphere, according to market research company IDC. But this doesn’t mean that all cloud services are built equal and perfectly clean.

Start by knowing where you stand

The scale of cloud carbon emissions has long gone underreported. Until a few years ago, very few cloud customers had the means of measuring, understanding or managing their true contributions.

When counting cloud emissions, you have to take into account all particulars, like instance type, chip brand, cloud provider and geographic region. Companies should think about emissions in two categories: the “direct” emissions from the electricity necessary to operate a data centre, and the “indirect” emissions from manufacturing hardware and other operations to deliver cloud services.

Companies should start by getting a handle on emissions from their cloud provider in both categories. And cloud providers should make it easier by being transparent about their electricity grids and upstream emissions.

The race is on

The more savvy and transparent corporations get about their carbon footprint, the more pressure they’ll place on major cloud providers to accelerate the road to zero carbon.

This starts by deploying zero-carbon power for data electricity consumption. The top cloud providers have started down this road, but they’ve made uneven progress. Google has already matched 100% of its energy consumption with renewables, and is setting an even more ambitious target to get to “24/7 clean power”. Microsoft is slower on renewables deployment, but has set an admirable standard on transparency in disclosing emissions to cloud customers. Amazon is lagging its peers, working towards 100% renewable energy by 2025. In all cases, pressure from customers will drive the cloud providers to move faster.


What is the World Economic Forum’s Sustainable Development Impact summit?

The next chapter of the zero-carbon cloud will be indirect emissions: encouraging cloud companies to zero out the carbon of manufacturing and disposing of server hardware, and operating the rest of their cloud business. Microsoft is aiming for net zero on these emissions by 2030; Amazon by 2040; Google has not yet set a clear target. We need all companies to get to true net zero fast.

Just as cybersecurity and data privacy concerns have forced corporations to take ownership of their threat landscape and data liabilities, climate governance will change how the biggest businesses in the world select and use cloud services. There are trillions of dollars at stake as cloud providers rush to offer zero-carbon emissions, and the race has already begun.


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