Merril Lynch Launches Climate Change Solution

The latest consultancy company to announce a 'green' offering is Merrill Lynch ('one of the world's leading financial management and advisory companies'). The offering is supported by ICF International, a professional services organisation which already offers consulting services and technology solutions in the climate change, environment and other markets.

The service is called Merrill Lynch Green & Gold (I'm not sure why) and is aimed at companies that want to develop a carbon strategy before legislation forces them to. The idea is to pinpoint financial opportunities and to enhance brands in the light of current environmental concerns and 'to help companies identify potential win-win opportunities'. ICF will do the carbon emissions measuring and identify opportunities to improve energy efficiency.

This is the area where IT services companies need to be. By pitching it at the early adopters Merrill Lynch has a ready market that understands what's required and is prepared to commit. And it can make significant win-win proposals, which may not always be the case when legislation kicks in.

When are the IT services companies going to make moves like this? Some major players (IBM and er ...) are talking about what they can do, but few are being this pro-active in their market approach.

CRM for Solar Power

Following on from the previous blog about software for the green economy, here's another one that highlights completely new areas of opportunity.

Clean Power Finance is a San Francisco-based organisation who's mission is to make renewable energy as widely available as possible. The organisation has written some software (CFP Tools) to help solar energy suppliers manage their customer contacts and sales process. This is a web-based solution (which makes it potentially greener in the first place) that holds details of a variety of products, their electrical generating capabilities, tax incentives for installation, local utility electricity rates, proposal generation, finance tracking, etc.

It's not the only company to have software that helps with solar installation, but Clean Power Finance has struck a deal with Conergy, the German renewable energy solutions provider, that will see a co-branded version of CFP Tools delivered to Conergy's extensive network of solar integrators.

Maybe a small example, but you can see the potential for software like this in a range of areas to help make renewable energy decisions.

Autodesk Sustainable Materials Assistant

Autodesk has introduced a feature with its Inventor design software that helps the designer make better choices with environmental impact in mind, such as; does the design contain toxic materials, is it made from recyclable materials? It has a library that can hold the sustainability properties of materials and can even calculate the entire design's carbon footprint.

It's interesting because it demonstrates several things. Firstly, there will be a wide variety of add-ons like this to all sorts of applications from manufacturing to transport to retail. They will help companies assess the impact of all aspects of their operations and, ultimately, allow dynamic changes to those operations based on set criteria related to emissions, costs, impact of materials, etc. Secondly, it also demonstrates the fact that some industries are already ahead of the game. Manufacturing is on the front line, so will be taking action early. Thirdly, it also demonstrates how central the role of IT will be. IT is deeply embedded in manufacturing these days, so there won't be much 'greening' in the manufacturing sector without it.

Taking a Holistic View

Going back to Wednesday's post again, particularly the lack of standards in green data centres, I came across another press release which reinforces the fact that there are no easy green solutions and a holistic view really is essential.

Whilst much of the talk about how to make data centres more green relates to the cooling issue and how to make it more energy-efficient, there is another approach that Intel has adopted for a new Development Design Centre in Haifa, Israel. The LEED-certified facility uses a heat-recovery system to use the heat from the data centre to warm the rest of the building and generate hot water. So rather than try and be more efficient in reducing the heat they just use it elsewhere.

I've said before that turning a company green requires a holistic approach, particularly around energy savings. It's true to say that IT will play a significant part in most of what's required, but it's also true that the IT companies that try to help need to have a much broader view if they want to be able to provide effective advice. What to do about data centre heat is one small example.

IT companies, particularly consultancies and IT services suppliers will really need this broad expertise or will need to rely on close partnerships. At the moment most seem either not to see the need or to believe they know it all.

Green Grid and EPA Collaboration

After my comments on Wednesday it's good news to hear that The Green Grid has signed a Memorandum of Understanding (MOU) with the EPA.

The Green Grid is a consortium of information technology companies and professionals seeking to improve energy efficiency in data centers around the globe. Principal members include Dell, HP, IBM, Intel, Microsoft and Sun. The EPA is the US Environmental Protection Agency. The EPA's Energy Star ratings are a standard for IT products.

The two organisations will first look to make the EPA's computer facilities more energy efficient and then share the results with other government agencies and eventually out into the private sector.

Green Data Centre Survey

US company Digital Realty Trust, which describes itself as a leading owner and manager of corporate and Internet gateway data centres, has released the findings of surveys in the US and Europe of green trends in the data centre industry. The US survey headlines are:

- A total of 51% of companies have a green data centre strategy, down from 55% when the survey was conducted last year.

- Last year 75% referred to a lack of clear industry standards for green data centres. This year the figure is up to 82%. In the absence of any standards the majority look to the Leadership in Energy and Environmental Design (LEED) Green Building Rating System from the US Green Building Council for guidance. The Green Grid was also cited as providing some guidance.

- The better news was that of those who do have a strategy 82% (a similar figure to last year) have a holistic approach, i.e. including both IT hardware and the facilities in which they are housed.

In Europe the situation looks a little better:

- In all 60% of respondents had a green data centre strategy, with particular momentum in the UK, Germany, France, the Netherlands and Ireland.

- There was a similar view with regard to the holistic approach, including both IT equipment and facilities.

- There were similar concerns about standards, with respondents concerned about the lack of a clear leader among standards bodies.

- Being 'Green will become an essential selection criteria for vendors within the next two years for 70% of respondents.


There are a some interesting points here with implications beyond just the data centre. Firstly, Europe seems to be ahead of the US in its attention and concern about Green issues, which is no surprise given Europe's greater historic interest in the environment and current moves to regional and national legislation.

Secondly, standards are certainly a big issue across all environmental efforts. Unfortunately it's clear that a lot of corporations are holding back on actions to go green because of a lack of clear understanding of what should be done, how it can be measured, what targets to aim for, etc. In the IT area users have had their fingers burned before (e.g. Y2K) and don't want to jump too soon. Some IT services companies are being similarly cautious about encouraging their clients for fear of getting it wrong themselves. One can understand the caution, but climate change needs early action. Guidance is urgently needed but it will take time for de facto standards to emerge.

Thirdly, the fall off of US companies with a Green strategy (historic figures are not available for Europe) may well be due to this confusion about what to do, but is almost certainly also compounded by the 'credit crunch' which is having an impact on the US and European economies. At this time in the economic cycle companies are even less likely to take any action where the long-term benefit is less than certain.

Thin Client Contract

With much of the Green IT news revolving around which PC is the most environmentally friendly, it's good to see some news about the alternative approach; thin client. Enterprise Rent-A-Car, the US-based car hire company with operations in North America and Europe has announced that it will shortly complete a roll-out of a thin client terminals for its rental transaction system.

The company says that deploying the 45,000 terminals (connected to 743 terminal servers) will save nearly 1,000 pounds of CO2 emissions per branch office per year. There are 7,000 offices, so they estimate a saving of 6.5 million pounds per year in total.

The company quotes some comparisons I haven't seen before; thin client terminals use only 13.6 watt-hours of electricity (when active) compared with 77.1 for PCs (although whether the client figure includes the server energy element is not clear).

Enterprise is a member of The Green Grid, which is "dedicated to advancing energy efficiency in data centres and business computing ecosystems". HP helped develop the system.

HP gets Eco-Certified Transport

HP is the first company to receive approval from the U.S. EPA to have the SmartWay logo displayed on a selection of its consumer product packaging. The logo signifies Smartway compliance of its surface transportation network.

SmartWay is a voluntary partnership between the EPA and the US freight industry aimed at reducing CO2 emissions by 33 million tons a year by 2012, as well as lowering nitrogen oxide emissions and reducing particulate matter and air toxins. The initiative will apparently result in removing the equivalent of 12 million cars from the road.

In order to display the SmartWay logo, HP must certify its service transportation carrier network is using 100% SmartWay compliant carriers.

At the same time that the Smartway logo was announced the company also said that "In addition, HP is further reducing the environmental impact of the transport of its consumer notebook PCs, which are air shipped from China to consumers and retailers, with a pilot program using plastic shipping pallets".

Now at first sight you might think that this is a retrograde step - swapping bio-degradable wood for land-fill plastic, but in fact the theory is that it prevents de-forestation and in any case the plastic is 98% recyclable. (The only real question is what about the impact of transportation from China - notice the Smartway logo is for surface transport only).

Sun Eco Services Suite

Sun has introduced a portfolio of eco-related services designed to help customers optimise space, power and energy savings. The services run from initial assessment to monitoring and support and include the technical evaluation of data centre energy usage, cooling capacity, air distribution and other environmental factors.

The service has four parts. The basic assessment service is designed to maximize power and cooling efficiency in a specific group of hardware. The advanced version covers all the data centre components. The third element is a cooling efficiency service and there is also an optimisation service aimed at maintaining the gains made.

Stern gets Sterner

At the same time as various meetings and announcements were going on in the US and Paris, Nicholas Stern, who produced an influential report into the economics of climate change for the UK government, said in a speech that, if anything, his 2006 report was wrong - it under-estimated the problem.

Stern's view is that governments and business need to invest the equivalent of 1-2% of global GDP annually to 2050 in new technologies and efficiency measures or face climate change of catastrophic proportions.

It's hard to see if and when this will happen, but, by way of example, if we take the 1% figure and assume that IT will be a direct contributor to half of that, then that would mean around $65bn annual IT expenditure in the US, over 10% of current total IT spend (according to PAC figures). That's a huge amount of potential business and the later it is invested the higher the figure will be.

Politics and the Problem

You may have seen that President Bush made a speech a couple of days ago finally acknowledging the need for the US to limit greenhouse gas emissions (rather than just the ratio of emissions to economic output, which was the previous position). The new plan is to stop the growth of US greenhouse gas emissions by 2025.

Described by the President as "a major step forward in America's efforts to address climate change", the speech was roundly derided in Paris, where a meeting of major carbon-emitting countries is taking place.

The Paris Major Economies Meeting is part of a series of meetings set up in September 2007 by President Bush himself and led by the US. (This is nothing to do with the Kyoto-Bali-Copenhagen agreements led by the UN). It comprises 16 countries that account for 80% of greenhouse gas emissions. At the meeting the Bush speech was condemned (in no uncertain terms) as going nowhere near far enough. (The EU's plan is to cut emissions by 20% on 1990 levels by 2020).

But Bush will not be driving the US action on climate change for much longer and, indeed, much of the activity is working round him. This week also saw a meeting of US State Governors who have introduced their own laws to reduce greenhouse gas emissions - around 28 states have or are introducing legislation. They have been discussing the possibility of merging the various carbon trading markets in the US.

KPMG Helps Clients go Green

Yesterday KPMG announced its Global Green Initiative, aimed at reducing the organisation's carbon footprint by 25% (from 2007 levels) by 2010 through emission reduction schemes and the use of renewable energy.

KPMG International's Chairman said “KPMG’s Global Green Initiative is centered on three commitments. First, measuring, reducing and reporting KPMG’s carbon footprint; second, supporting environmental projects to help address the challenges of climate change within our wider commitment to our communities, and third, working with our employees, suppliers and clients to help them improve their climate change impacts".

It's the last of these that could end up being most important. KPMG provides audit, tax and advisory (i.e. business consulting) services to its clients. As a tax and audit company it is used to advising clients on compliance and what to do about it. Coming legislation around climate change will represent a big opportunity for the company to help clients meet the legislation.

This is the sort of area that IT services/consultancy companies need to be moving into, or at least partnering around. With the majority of emissions reductions being dependent on some IT element, the company at the top of the food chain that's advising clients on what they should do will have the best opportunity to gain from subsequent contracts.

At the moment the IT services companies I've spoken to seem very cautious, but they'll miss a trick if they don't get their foot in the door quickly.

Greening Data Centres - A short Term Solution

Last August US banking group Citi announced that, as part of its programme to cut greenhouse gas emissions by 10% by 2011, it was spending €170m on building a green data centre to provide IT services to its European operation. The new facility would use 25% less power and prevent 11,000 tons of CO2 entering the atmosphere every year.

It's not built yet, but the Frankfurt centre has already won awards. In December, Reuters quoted the Head of Citi Realty Services for EMEA, John Killey as saying "Citi's commitment to ensuring sustainability lies at the heart of all its major projects and the new EMEA data center is no different: From inception, through construction to operation, a rigorous, resource-efficient, balanced and holistic approach has been adopted that integrates sustainability without compromise to performance or reliability".

However, with the data centre to be completed soon, John Killey apparently (according to Silicon.com) told an audience in London last week, that electricity usage by IT equipment within Citi's data centres is continuing to increase by 12.5% a year.

So there you have it - it looks like the 25% energy savings the green data centre will make will be gone in a little over two years.

Of course it's not that simple, but it does reinforce the issues around greening IT. It is possible (and necessary) to make big cuts in energy use, but the general expansion in business use of IT means that the gains will be quickly eaten away. There is a lot more that needs doing at the hardware level to reduce power, but it is also clear that an in-house IT department can end up chasing its tail to reduce power use.

In the longer term it's using IT differently that will have the biggest impact. For example, on Monday Google announced the integration of Google Apps with Salesforce.com, making Google's web-based office applications, Gmail and Google Talk available inside Salesforce. It's another step towards cutting ties with desktop applications, which can be a much more energy-efficient way of working.

The European Union's View

Well it turns out that on the same day that we published 'The Meaning of Green IT', Viviane Reding, Member of the European Commission responsible for Information Society and Media was commenting on the role of ICT in tackling climate change.

She made three main points about the role of ICT, and I quote:

• 'Firstly, ICT can replace physical products and services with on-line services. This "dematerialisation" is seen not only in business but also in e-Government and e-Health'.
  
  
• 'Secondly, the ICT sector itself must clean up its own house. The carbon footprint of the ICT sector is small (estimated at 2% of global emissions) but it can be improved'.
  
  
• 'But the real gains will come from the potential offered by ICT as an enabler to reduce the other 98% of CO2 emissions'.

I'm not sure about the first of these. Clearly on-line services can be more energy efficient, but often the online service is an addition to what's being provided already so savings may not be significant.

The second point is the one where all the focus is at the moment, i.e. making IT itself greener through switching things off and all the activities around the data centre. (The 2% figure is often used - usually just for IT - but in developed countries the figure is undoubtedly higher and will vary by the structure of the economy - the more services-based the higher the proportion of energy used by ICT).

The third point is the one which I have been harping on about in this blog for some time. Conventional wisdom is that more than half of the energy savings that a company can make can only be done through the use of IT. This is where the focus needs to be. Of course address the easy, quick-return savings in the data centre, but don't waste too much time squeezing energy out of the IT department when it could be making much more significant gains elsewhere.

Anyway, In the ICT sector, the European Commission wants to 'explore voluntary agreements with industry to raise energy efficiency and to reach carbon neutrality well before 2020'.

Capgemini US Utilities Survey

Following on from my comments about industry sectors yesterday, Capgemini has carried out a survey of US utilities executives which reveals, as one would expect, that the top two issues are the environment and regulation.

Nearly all those asked said that the focus on the environment had increased last year. Concerns about regulation (which in themselves will reflect environmental concerns) were to do with the cost of compliance and also the additional costs of using renewable resources.

You can get a copy of the survey here - Platts/Capgemini Utilities Executive Study. This is a sector that's aware of the issues it faces and is going to need lots of help. I just wish Capgemini was more forthcoming about its own Green IT plans.

Green in Germany

Following up on my comments on Germany's Green heritage the other day, the country also has the oldest environmental labeling system in the world, under the name of Blue Angel. Introduced in 1977, it's administered by a government department and awarded to all-round environmentally-friendly products and services. HP, Dell and Fujitsu Siemens are among label holders. It is now starting to be superseded by the EU energy-efficiency labelling system, although the EU system doesn't cover computer equipment yet.

This focus on Green also means that the German government has an ambitious target for the reduction in greenhouse gas emissions, aiming for a 40% cut (on 1990 levels) by 2020, ahead of the 26-32% target of the UK (currently being set into legislation) and the 20% target for the EU as a whole. However, the target is helped by the fact that modernising much of the industry in the former East Germany means that 15-20% of that reduction has already been achieved.

The Meaning of Green IT

Those readers who have appreciated the news and comment on these pages might like to know that the blog accompanies a programme of reports and briefing papers under the collective title of The Green IT Report.

A briefing paper has just been published, entitled 'The Meaning of Green IT', which puts the various market issues and drivers in context for readers. It looks at why the issues are important, what the business implications are, where IT fits in and how Green IT will impact suppliers. Publications throughout the year will look at some of these aspects in more detail.

If you would like more information then give me a call or email (see the contact details opposite). Alternatively, call Shelly Wills on +44 (0)207 553 3965. Shelly is with PAC, who many of you will know as the leading European IT software and services analyst firm. The Green IT Report is available through PAC's information portal and PAC will be happy to help with any sales queries from new or existing customers.

Climate Change Risk by Industry Sector

I've mentioned before that there will be a different emphasis and degree of urgency between industry sectors when it comes to managing emissions. Some sectors, such as the oil and gas industry, are very aware of what's going on and are taking action, retail is subject to consumer demands, transport/logistics are going to face a lot of trouble ahead.

But KPMG has just released a report (Climate Changes Your Business) which puts some of this in context. It combines what it sees as the level of risk from climate change with the degree of preparedness and identifies the sectors that are particularly at danger. The sectors in this 'danger zone' include aviation, health care, tourism, transport, oil and gas and the financial services.

In fact it goes on to say that none of the 18 sectors it looked at were paying sufficient heed to increasing pressure from stakeholders and the potential impact from forthcoming legislation.

It strengthens my own view that IT services companies also need to look at these sectors, identify the best opportunities and align their efforts with the market. It's another area where it will be better to demonstrate vertical sector focus and expertise than trying to spreading capability too thinly.

Fujitsu Siemens - Record-Breaking Server

I seem to have spent a lot of time talking about HP and Dell recently, so I can put the record straight by reporting that Fujitsu-Siemens has announced the world's most energy-efficient industry-standard server. The SPECpower rating puts the company's Primergy TX 150 S6 (another memorable name!) in the leading position.

In fact I had an interesting meeting with the guys from Fujitsu Siemens yesterday. This is a company that has been ahead of the game in terms of making products environmentally friendly - it introduced its first Green PC back in 1993 and has tended to be ahead of any environmental legislation. It's not really surprising given that Germany, where the company is based, has had a very active Green movement (with significant political success) since the 1970s, creating an environment where investing in going Green has been more acceptable to corporate stakeholders.

Where the company seems to be losing out is in getting its message heard, which I guess is what yesterday's meeting was for.

Climate Savers Computer Initiative and the EPA

The Climate Savers Computing Initiative (CSCI) is a non-profit group of computer suppliers, users and others started by Google and Intel in 2007. It's IT industry members, who include Dell, EDS, Google, HP, Intel, Lenovo, Microsoft, AMD, eBay, Fujitsu, Hitachi, NEC, Sun Microsystems and EMC, have committed to producing energy-efficient products, whilst its corporate members commit to buying them.

The CSCI has announced that it has joined with the U.S. Environmental Protection Agency’s (EPA) ENERGY STAR program, which identifies energy efficient products, and together they will work on technical specifications as well as promoting the adoption of energy-efficient IT systems and the use of power management.

The agreement adds even more weight to the EPA's Energy Star ratings, which are setting the standard for IT products. The Energy Star ratings are also a component of the Electronic Products Environmental Assessment Tool (EPEAT™) which I mentioned in a previous post.

Sustainability Announcements from HP and Dell

HP published its FY07 Global Citizenship Report yesterday along with an announcement that it was publishing a list of its largest suppliers, accounting for more than 95% of HP's procurement expenditure worldwide. The company says that "the increased visibility will result in positive operational changes in supplier labour, health and safety, environmental and ethics practices", although it's not clear exactly how. It does say that its top suppliers must comply with the Electronic Industry Code of Conduct (EICC) and meet HP’s social and environmental responsibility expectations, which is good, but it doesn't give any further details about those 'top suppliers'.

HP and Dell seem to be locked into a 'who's the greenest' PR war at the moment, with HP the front runner. Dell hasn't given up, though. Yesterday it announced that its Texas HQ is now completely powered by wind-generated energy and landfill gas sources, part of its plan to make all its facilities carbon neutral by the end of the year.

I guess it's because these hardware companies are at the front-end of the industry, supplying huge numbers of resource-using, energy consuming products that they've been so pro-active in setting their own houses in order. It's great to see, though, and certainly sets an example to many software and IT services companies who are moving a lot more slowly.

EPA Sued over Lack of Action

Exactly a year ago the Bush administration in the US was taken to the Supreme Court over the Environmental Protection Agency's (EPA) lack of action over global warming. The court ruled that carbon dioxide is a pollutant and that the EPA should regulate it.

The ruling included the fact that the states had the right to sue the EPA for lack of action and they have now exercised that right. Yesterday a number of states and environmental groups (almost 30 in total) sued the agency in an attempt to make it comply with the court order.

Federal regulation moves one step nearer.

HP Takes the lead

HP has announced that it's personal workstation range has become the first in the category to achieve a 'Gold' rating using the Electronic Products Environmental Assessment Tool (EPEAT™), a measure of energy efficiency and recyclability. HP says it now has the largest number of EPEAT Gold registered products in the industry.

It's important because the EPEAT assessment is used as a purchasing criteria for the US government, the UK Cabinet Office is looking at it as a potential requirement and the EU is also apparently interested.

Biofuel Scam

As if to make my previous point about how fear, uncertainty and doubt (FUD) surrounds the green agenda, The Guardian newspaper in the UK today reported a scam involving the supply of biofuel in Europe.

It seems that in the US there is an agricultural subsidy for blending biodiesel. As a result, the fuel is being shipped from Europe to the US, mixed with a little local product to earn the subsidy, and then shipped back to Europe and sold at a price that undercuts local suppliers.

Firstly, the whole use of biofuel is somewhat suspect, because it increases the price of crops above what local markets can pay. There is also the danger of rain forests being cut down to grow biofuel, which rather defeats the object.

Secondly, both shipping and air transport are excluded from virtually all national and international greenhouse gas measurement (don't ask me why), so the carbon cost of shipping to the US and back is invisible to all concerned.

Thirdly, companies are innocently and with the best of intentions buying biofuel to reduce carbon emissions when the fuel may well end up generated as much or more CO2 than the fossil fuel equivalent.

So the methodology is suspect, no one is counting, the well-intentioned are being duped and someone is making a fast buck. It's no wonder there's a degree of caution in going green.

On the other hand it means that companies will be looking for trusted partners to help them and software and IT services players have a lot of experience in partnering with specialists and managing the sort of business transformation required.

Fear, Uncertainty and Doubt

I've mentioned in a previous blog that Green IT opportunity could be compared with Y2K, but without the end date. As many of you will know, Y2K produced unprecedented growth rates in the IT software and services markets.

However, in a meeting with another top 10 player last week I was also reminded that much of the expenditure at that time was based on fear of the unknown. As a result, the IT investments tended to be over the top and took a very long time to produce any return on investment (installing ERP being a good example).

This is a fear which will stalk the Green IT market in the next year or two. There is still a great deal that's unknown and uncertain about 'going green', e.g. forthcoming legislation, how to measure emissions (particularly supply chain issues), effective emissions reduction targets, how comparisons between companies will be made, carbon trading systems and costs, etc. As a result, some companies might delay action until it becomes clearer what should be done and how. The IT services player I was talking to also saw this as a reason not to jump on the green bandwagon and lead customers astray, but just promote solutions for greater business efficiency, which will often come with a green tinge.

I disagree with this approach, for two main reasons. Firstly, the IT market has come a long way since Y2K and IT is now much more closely integrated with business as a whole - companies are more cautious in their approach to IT investment. When they do adopt a green strategy it will be because of real pressure from customers, shareholders or legislation. Even if it's not that effective, shareholders and customers will want to see some action.

Secondly, IT services players need to point out the opportunities and lead the way. Much of the gains will be through innovative technology, or the innovative use of existing technology. A feedback I've received already is that customers want their IT suppliers to tell them what they should be doing. If you can't tell them they will go somewhere else.

Software and IT services (SITS) companies will have to tread a narrow path between offering green services and promising all the answers. Promising the earth (literally) but not delivering could well set back the market. What we do know is that we have to move quickly, so let's hope the uncertainty doesn't hold back actions.