Cloud Firms Turn to Green Power

Cloud-based networks are aptly named: The electricity they require results in clouds of greenhouse gases. This power consumption continues along the digital supply chain, as more energy is needed to maintain everything that relies on cloud services, including enterprise hybrid and multi-cloud, branch, and secure access service edge (SASE) environments.

Indeed, data centers – which basically power everything in cloud networks -- are said to account for 2% of all electricity used in the U.S. That’s about 70 billion kilowatt-hours of electricity annually. Factor in the electricity used by points of presence (PoPs) and edge nodes used in SASE implementations, and the numbers soar ever higher.

This is why companies offering cloud and data center services are making commitments to become climate-neutral, reducing their energy use to a level that ceases to affect the planet’s natural absorption of greenhouse gases. The idea is to get to a level low enough to keep Earth's climate change below 1.5 degrees Celsius, a goal that’s increasingly flying out of reach. Each company’s strategy depends on its current emission levels and use of renewable energy.

Why Companies Commit to Climate Neutrality

Companies worldwide are touting good environmental standards for a number of reasons. The commitment pleases conscientious customers and investors, as part of a growing movement known as Environmental, Social, and Governance (ESG), which has become a major force in the investment world.

The publicity frames the company as a participant in righting wrongs and bettering humanity. Measures to remain carbon neutral are a bit of insurance against future litigation. They can also accrue significant operating savings from the use of efficient and clean energy sources.

How Companies Commit to Climate Neutrality

Many of the leading data center suppliers, including the ones serving the hyperscale cloud providers, have committed to becoming climate neutral based on specifications set by a group named the Science Based Target initiative (SBTi). This international group, which bases its criteria for becoming climate-neutral on data supported by the Paris Agreement, charges from $1,000 to $4,950 to evaluate each company’s targets and establish a contractual commitment that includes items like informing stakeholders and being tracked through a given timeframe.

For example, data center colocation and interconnection provider Equinix (Nasdaq: EQIX) has committed to become carbon neutral by 2030. To achieve this, Equinix plans to reduce its Scope 1 and Scope 2 greenhouse gas (GHG) emissions (those emissions stemming directly or indirectly from using electricity, steam, heating, and cooling) 50% by 2030 from levels recorded in 2019 (the “base year”).

Equinix also has committed to being 100% reliant on renewable energy by 2030, as opposed to 87% reliant in 2019. The company also will require that 66% of its suppliers’ emissions be reduced through commitments by the responsible companies no later than 2025.

To help make all this happen, Equinix has issued $3.7 billion in so-called green bonds, which are designed to fund environmentally sustainable projects related to green buildings; efficient use of energy and water; better ways to dispose of technical waste, including outdated equipment; and clean transportation.

Who’s Committed -- and Who Isn’t

Equinix isn’t alone in its commitment to SBTi. Archrival Digital Realty (NYSE: DLR) has also committed to specific targets that will allow it to reach emission levels commensurate with pre-industrial levels by 2030. Other companies that offer cloud or data center services have also joined SBTi, including Apple (Nasdaq: AAPL), Microsoft (Nasdaq: MSFT), and Verizon (NYSE: VZ).

Notably, Equinix and Digital have not been joined in SBTi by rivals Coresite (NYSE: COR), CyrusOne (NYSE: CONE), Cyxtera, or QTS Realty Trust (NYSE: QTS). Other notable cloud players are also absent, including Alphabet (Nasdaq: GOOGL), Alibaba (NYSE: BABA), Cloudflare (NYSE: NET), IBM (NYSE: IBM), and Oracle (NYSE: ORCL), to name just a few.

Lack of membership in SBTi doesn’t mean companies aren’t committed to carbon neutrality, though. In China, the Ant Group, which handles mobile payments for Alibaba, aims to go carbon neutral by 2030. IBM also has committed to going carbon neutral by 2030. Oracle has vowed to power all of its operations with renewable energy by 2025.

Cloudflare's Green Certifications

One company that hasn't joined SBTi, Cloudflare, nevertheless has launched an aggressive plan to not only reduce its carbon emissions but to light the way to a "zero-emissions Internet" by, in part, canceling out the carbon emissions it historically used by 2025. In a recent press release, the company stated:

"The Internet is responsible for approximately 1 billion tons of greenhouse gas emissions per year—roughly comparable to the annual CO2 emissions of the entire aviation industry worldwide. Now any Internet property on Cloudflare’s network—which today already consists of 17 percent of the web—will automatically reduce emissions and seamlessly contribute to a greener, more sustainable world."

Cloudflare will award certificates to customers that opt to build Web pages on their Cloudflare Pages platform, which uses renewable energy sources. And others can choose to route their traffic through data centers using renewable energy.

Green SASE from Cato

Some companies that rely on data center suppliers can ride those suppliers’ coattails to carbon neutrality. This is the position of SASE service provider Cato Networks. But Cato also says it can help the low-carbon cause by reducing the appliances required to create a SASE environment. “[T]he way Cato chose to simplify IT is also contributing to the reduction of IT infrastructure carbon footprint,” the vendor states on a dedicated carbon footprint page. “[B]ecause the Cato architecture is built on cloud-first principles, new capabilities are deployed in the cloud and new appliances are avoided at the location. [And the] power used in many datacenters Cato uses comes from renewable sources, so centralizing infrastructure in the cloud has virtually no carbon footprint at all.”

Well, maybe a bit of a footprint remains, considering that leading data center and interconnection suppliers on which Cato apparently relies still have big plans to go green. But Cato’s position reflects its realization that climate friendliness has become a serious consideration for its SASE customers worldwide.

More to Come on This

The examples above are just a hint of the energy (pun intended) that tech firms are throwing behind going green. For most, it's not all hype. As world governments move to reduce emissions, no tech firm wants to be left relying on services that are dwindling in availability and/or increasing in price.

Bottom line? For cloud players, carbon neutrality has become a necessary strategy. Hopefully, 2030 won't come too late.