06 December 2013: techUK has scored a major win in the Autumn Statement by securing a Climate Change Agreement for Data Centres. This is on the back of a hard fought 3-year industry campaign led by techUK's Energy and Environment team.
Emma Fryer, Associate Director of Climate Change Programmes at techUK says: "We are delighted that the Chancellor has recognised the importance of technology with the introduction of a climate change agreement (CCA) for data centres. This comes after our sustained campaign to ask government to apply a more intelligent approach to improving energy efficiency without penalising growth in this important sector."
Today's announcement is significant because it is the first time that a CCA has been applied to a sector that does not deal with manufactured outputs. techUK has argued consistently that a CCA for data would be good for the environment and good for the economy. The Chancellor has recognised this today.
Data centres will now join over 50 other energy intensive sectors in the scheme, which has been running since around 2001. This arrangement provides a reduction in some carbon taxes for participants in exchange for meeting tough energy efficiency targets. These targets are sector-specific so they can be focused exactly where they can deliver the most benefit. To date, CCAs have delivered greater energy savings among participating sectors than conventional policy measures would have achieved.
Fryer argues; "Without a CCA we would have seen the UK become an increasingly unattractive location to operate data centres. The UK would have lost investment, expertise and capability to other countries at significant economic cost."
The UK has a globally important data centre sector that was until now under threat by poorly designed climate change policy. Taxes like the Carbon Reduction Commitment placed UK data centres at a disadvantage compared to operators in other countries and made the UK a less attractive location for inward investment.
Fryer continues; "This isn't a binary choice between carbon and growth. If policy tools are designed and implemented intelligently they can deliver carbon reductions whilst encouraging growth. In the Autumn Statement the Chancellor has recognised the contribution that technology makes to the economy and removed a barrier to growth and inward investment.
"Negotiating the Climate Change Agreement has been a long and tortuous process because CCAs were designed with manufacturing rather than digital services in mind, but we have successfully demonstrated that data centres are energy intensive and that they are vulnerable to overseas competition. In fact, data is the most mobile commodity on earth.
"A climate change agreement will encourage the right behaviour among data centre operators and drive the market away from a distributed IT model that is less energy efficient towards one in which computing activity is consolidated into efficient, purpose-built facilities. This CCA supports the whole migration to Cloud-based computing. By creating much needed stability and predictability it will also enable data centres and associated businesses to plan their long term investment and growth strategies."
People may not think that off-shoring data centre activity is much of an issue but that is because they underestimate the contribution that data centres make to the UK economy. Data centres are not just fancy sheds full of computing equipment. Data centres enable and power service economies in the way that heavy industry used to power manufacturing economies; they are the agents of growth for the knowledge economy. This is because a single data centre supports multiple layers of economic activity.