Intel Leads IT in Green Power Purchase

The US Environmental Protection Agency (EPA) issued a challenge in December 2006 to Fortune 500 companies to collectively purchase more than 5 billion kilowatt hours (KWH) of green power by the end of 2007. Yesterday they reported on the success of the challenge, with 53 companies purchasing more than 6 billion KWH annually.

The power is bought using renewable energy certificates (RECS), which, as I understand it, means that it effectively subsidises renewable energy which would not otherwise be price-competitive. It’s also a means whereby companies can achieve carbon offset.

Anyway, leading the rankings, just ahead of PepsiCo, is Intel, purchasing 1.3 billion KWH. These two buy twice as much green power as third-placed Wells Fargo. It’s also quite interesting to look further down the rankings; Cisco is the second-placed IT company, with a purchase of 374m KWH, whilst IBM purchases 110m, HP 50m, Dell 13m and Apple 9m.

Of course it would be more appropriate to compare companies related to their size, products and services, etc – I’ll try and cover this when I compare how Green IT companies are in a report due out in March.

When Disaster Strikes

In one of those press releases that doesn’t seem to have any news, EDS today put out a piece about its Global Services Network (GSN). All good stuff - The 50-node network is spread across 19 countries and connects more than 500 facilities worldwide. It is described as a one-of-a-kind, Multi-Protocol Layer Switching (MPLS) network.

It’s a reminder that as climate change inevitably gets a grip on the world’s weather there will be increased demand for disaster recovery services in places that were not previously thought of as vulnerable. Companies with data centres in what turns out to be a flood plain (and there are a few of those in the UK) or communications centres in the path of increasingly frequent hurricanes will be looking for insurance that their global business will survive if the worst happens.

Companies like EDS and IBM, with global facilities that can handle disruption on a large scale with relative ease, will benefit most as global corporations look for security, but there will be opportunities at all levels.

But I bet there are a few companies out there offering disaster recovery services that are wondering whether, just maybe, their back-up centres could be vulnerable ….

Walmart sets an example

Walmart (the owners of ASDA and one of the largest retailers in the world) may not be the first company that springs to mind when it comes to environmental awareness, but for a couple of years now it has been pushing global retailers to create social and environmental standards for suppliers. Last week it also said that “The company will also require all of its suppliers to meet specific environmental, social and quality standards and it will make compliance with those standards part of its contracts”.

Retailers are at the sharp end of environmental concerns, since customers can make their views felt very quickly. Marks and Spencer’s environment and climate strategy, called Plan A (because there is no Plan B) is a case in point. Whatever the merits of the plan (and I’m assured it is commendable) it will not be an entirely altruistic move by the retailer.

The retail sector’s concerns will be reflected in their attitude to IT suppliers, which in the UK primarily means IBM, Fujitsu Services, Accenture and Capita. With retail increasingly moving to outsourcing, these companies will need to be able to build in carbon reduction forecasts to future retail sector outsourcing contracts if they want to get the business.

EU Announces Climate Change Strategy

The European Commission has announced its plans to attack climate change. At the heart of the proposals is the already agreed plan to reduce greenhouse gas emissions by 20% (from the 1990 levels) by 2020 – a figure that could be increased to 30% with international agreement. Alongside that is the requirement for 20% of all energy use to be supplied by renewable sources, i.e. wind, solar, etc. Some of this is already done, with emissions down by 6% on the 1990 level and renewable energy running at 8.5% in Europe.

Binding national targets will be related to GDP, so the larger countries will have the biggest challenge. However, the less developed countries in central and eastern Europe will still have some leeway to increase emissions to catch up with western Europe levels of development.

One element of the proposals is to update the Emissions Trading System (ETS). From 2013 energy-intensive industries will have to pay for the right to emit greenhouse gases, rather than receiving free permits, as they do now. The power sector will be the first to have to pay for emissions, with others to follow.

The announcement seems to have received a generally favourable reception, although the proposal that 10% of renewables should be biofuel is controversial, but the overall package has yet to be approved by the 27 EU countries.

The announcements takes the European economies further along the path to carbon pricing and an industry sector focus. It is this clear financial incentive to reduce the carbon footprint that will concentrate minds over the next few years. Since virtually all parts of any company’s operations has an energy implication, a lot of thought will be going into where and how savings can be made.

This is all fertile ground for IT. Services companies need to be developing consulting offerings and industry solutions now. With demand likely to be more urgent in Europe, local IT services companies could gain a march over their global rivals, but from what I’ve seen so far the reverse is the case.

Patent Pals

IBM is leading a group of companies that have formed the Eco-Patent Commons to put environmentally useful patents into the public domain. The idea is to encourage others to use the patents in products and processes that will help protect the environment.

IBM and World Business Council for Sustainable Development (a CEO-led, global association of some 200 companies dealing with sustainable development) started the initiative and Nokia, and Sony and Pitney-Bowes have joined in. Apparently there are over 30 patents involved, with the vast majority from IBM.

Lets hope more companies sign up.

Data Centre Ahoy!

You may have seen the press reports at the end of last week about a US start-up company that plans to launch a fleet of ship-based data centres. A total of 50 are planned, with half based around the US coast and the rest in ports around the world.

These floating data centres will have very good green credentials. For a start they are ex-cargo ships which are being re-cycled for the purpose. Power from on-shore will be supplemented by the ships’ own bio-diesel run generators and sea water will be used to cool the air-conditioning units, with waste heat used to warm the ships’ accommodation.

Whatever you think of the idea (and whether it’s a real plan or just an opportunity for journalists to roll out their seafaring puns) it does demonstrate the potential impact of the green market. Innovative alternative solutions will emerge that offer green benefits to a market that is increasingly pressurised into reducing its carbon footprint. The innovators will not take over the market, but they will set the standards that the rest will have to match.

HP Reduces PC Power

Amongst the many announcements to come out of the Consumer Electronics Show in Las Vegas last week was that from HP committing to reduce the energy consumption of its desktop and notebook families by 25% (relative to 2005 levels) by 2010. The company plans to reach the goal by integrating more efficient power supplies, using lower-energy chipsets and other energy-saving technologies.

HP is a leading player in terms of the number of products listed in the Electronic Product Environmental Assessment Tool (EPEAT™). The US-based Green Electronics Council established EPEAT to help buyers compare PCs based on their environmental attributes. HP says it now has more than two dozen US PCs at either the Gold or Silver rating levels.

It’s all good stuff and highly commendable, but it’s hard to see how these sorts of product changes will achieve the longer-term global emission targets that are inevitable. There may well be some breakthrough technology round the corner, but the alternative argument, from the likes of Sun, is that a more radical solution is required.

House of Carbon

Had a good briefing from Steven Sams earlier today. He's IBM's VP for Site & Facilities Services and spent some time talking through Project Big Green, the company's initiative to reduce energy use in data centres. This is the 'low-hanging fruit' in the green IT sector because the energy reductions are significant and directly relate to cost savings so generally a no-brainer. IBM has, once again, taken an early lead in branding and marketing these new services, although the company is by no means alone.

Perhaps more interesting is the company's broader approach to green issues and opportunities, which currently runs under the label of 'House of Carbon'. The strategy is apparently being developed in the UK and there's limited information published, but there is a presentation on Leadsure's web site that shows the extent of IBM's thinking. It demonstrates the impact and opportunities of green IT, for those who still don't get it (which includes much of the IT analyst community - no one else signed up for today's IBM briefing). The House of Carbon presentation can be seen at Leadsure.

2008 - The Green Year?

The year has kicked off with a lot of pessimism about the impact of the 'credit crunch', the knock-on effect of the sub-prime mortgage debacle in the US. It does look increasingly like financial problems will shape the market in 2008, with a potential slowdown in IT investment all round, particularly led by the financial services sector.

But there was another event at the end of 2007 that will have a longer-term impact on the market. On December 15th more than 180 countries reached an agreement to start negotiations to replace the Kyoto protocol on climate change, which runs out in 2012. The two-year negotiation process will set new emissions targets for when Kyoto expires.

Brinkmanship from the US delegation almost scuppered the agreement - the US is now the only developed country not to have signed the Kyoto protocol (after Australia's new Prime Minister, Kevin Rudd, signed up as soon as he was elected in November). One of the main stumbling blocks was the fact that the EU wanted to include a specific level of reduction in emissions (25-40% below 1990 levels by 2020) and this got relegated to a suggestion in order to secure agreement.

But this is where the impact lies. There is increasingly a move to quantify targets for the reduction of greenhouse gas emissions and these are even being broken down by industry sector in order to reach the overall target. In the UK, for example, the government is planning to introduce climate change legislation with legally binding targets for a 26-32% reduction in CO2 emissions by 2020 and a 60% reduction by 2050.

So how will this impact the IT market? Well for a start IT companies will have to reach these targets themselves - this will put particular pressure on the IT services sector, which is increasingly responsible for all IT delivery. Legislation and regulation, shareholder demands and employee preferences will all put pressure on IT product and services suppliers to conform.
But this also represents significant opportunities. With all industry sectors looking to cut emissions the IT companies that can help most will have a competitive advantage. On the product side, expect to see a move to thin client technology as a means to reduce manufacturing and energy costs - an advantage for Sun, which has become a green evangelist. Similarly we will see an escalation in data centre consolidation. These are the areas where going green can be a win-win situation; low emissions = low energy use = lower cost.

It will get harder, though, with more radical market changes as customer demands increase and winners and losers emerge. The UK government is already building in carbon reduction targets to BPO contracts and commercial sector demands will follow. It will have an impact on outsourcing companies and offshore resources will come into focus. Those who stand to benefit most include providers of software as a service, which is set to get a significant boost as companies decide to do away with internal resources altogether. And IT suppliers with solutions that help customers monitor, manage and reduce carbon emissions throughout their businesses will be most in demand.

These are just a few of the impacts that climate change will have on the IT product and services market. It is the aim of The Green IT Report to cover these issues in more detail in a regular series of reports and briefing papers. Meanwhile, Green IT Review will give a more regular update on what's going on.