IT departments ill-prepared for carbon reduction scheme

CRC is adding to the pressure on firms to move to more energy-efficient storage

Last week, the deadline passed for businesses and public sector bodies to register for the government's Carbon Reduction Commitment (CRC) scheme.

But while IT has an important role to play in reducing organisations’ carbon emissions, analysts have warned that the sector is not prepared for the legislation, which will punish those who do not decrease their fuel consumption.

According to the Environment Agency, datacentres account for a quarter of the IT sector’s emissions, and could therefore potentially face large increases in running costs due to the CRC. However, research conducted within the IT sector shows businesses have not yet considered the possibility of increased data storage costs.

Under the rules of the CRC, organisations that use more than 6,000MWh of electricity a year – the equivalent to an annual electricity bill of about £500,000 – must sign up to the scheme. Although qualification for the CRC is based on electricity consumption, once in the scheme, companies will have to measure and report on emissions from their electricity, gas and static fuel use.

Participants will have to purchase allowances for each tonne of CO2 they emit and the total revenue from this will then be redistributed among the participants, with each receiving a bonus or a penalty, depending on how effectively they reduce emissions.

The scheme came into effect in April this year, with qualifying firms given until 30 September to sign up. The first allowances will go on sale in April 2011. The fact that many businesses missed the Environment Agency’s September deadline to sign up to the scheme, with others still unsure as to whether they even qualify for it, is an indicator of how ill-prepared the industry is for the legislation.

Gartner analyst Simon Mingay said that for the next two years at least, CRC is unlikely to be a significant driver in causing IT organisations to cut down their emissions. He said if IT departments try to improve their energy efficiency, it will be because of increasing costs of electricity rather than the threat of a CRC financial penalty

Mingay said he believed the most influence the CRC will have on enterprises today will be through its performance league tables that will rate and compare the participants’ carbon reduction efforts, and potentially enhance a business’s reputation in the eyes of its customers, suppliers, business partners and investors.

All Gartner’s research in this area to date indicates that most organisations have not considered introducing different methods of data storage to become more energy efficient, Mingay said.

However, he warned that with datacentre running costs showing every sign of continuing to rise, businesses should address carbon risk in all new datacentre service contracts they sign to avoid running into difficulties down the line.