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Data Centre Sustainability Regulation: The timeline that requires immediate action

Tue 14 Nov 2023

In this feature, Venessa Moffat, General Manager for Data Centers at QiO Technologies, explores the critical challenges and data centre sustainability regulation changes facing the industry in Europe and North America.

She underscores the importance of adhering to new European sustainability reporting standards and the impact they are poised to have on around 55,000 businesses across Europe, including data centre stakeholders.

Embracing new technologies and management practices to ensure compliance and drive innovation in the data centre industry is highlighted.

Venessa’s insights aim to guide the sector towards a more sustainable and efficient future.

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Data centre operators and enterprises are gearing up to meet the increasing demand for digital services. But the extent to which they can do so cost-effectively, efficiently and sustainably will have a major influence on their business future.

There will be many challenges along the way. The energy price spike of the past year has reminded us all that both planet and profits suffer when scarce resources are not used wisely.

Closely aligned to this is the pressing issue of increasing regulation. To meet targets set in the Paris Climate Agreement, countries are desperately trying to establish legislation to reduce net greenhouse gas emissions by 55% by 2030. This is a challenge for a sector that already accounts for between 1 and 2% of global emissions ahead of its further predicted growth.

These new European sustainability reporting standards require exacting transparency and measurement of efficiency, environmental impact, and resource use according to published international standards. This is estimated to impact around 55,000 businesses in Europe and potentially beyond, specifically including both data centre operators and enterprises that run their own data centres with an IT load of more than 500kW.

Even those not directly affected by new legislation need to be mindful of the trend towards more stringent reporting that is likely to catch up with them eventually.

In the past, the sector has been able to point to tangible action and innovation in meeting sustainability challenges through location choice, facility design, and efforts to better manage cooling. But these actions will no longer be sufficient moving forward.

In the new operating environment, the onus is now on operators to transform their approach to sustainability. This will mean implementing new management and reporting strategies. It will also mean exploring new technologies that will help them reduce cost, increase efficiency, and stay compliant.

Data Centre Sustainability Regulation in Europe

The complexity of new data centre regulations in Europe in particular means that data centres must move quickly to understand the shift in what they need to measure and why.

Corporate Sustainability Reporting Directive (CSRD)

From January 1 2024, data centres need to collect reporting data to comply with the EU’s Corporate Sustainability Reporting Directive (CSRD).

Until now, Power Usage Effectiveness (PUE) has been used as an inaccurate proxy for data centre efficiency. But while PUE has contributed to greater building efficiency, the scope for further optimisation has reached the point of minimal gain and completely failed to address the energy use by the IT equipment hosted within data centres, which is the root cause of energy use by data centres.

Future reporting requirements under CSRD will require more nuanced measurements covering nine areas of resource use and IT equipment. Two of these metrics – IT Equipment Energy Efficiency  (ITEEsv) and IT Equipment Utilisation  (ITEUsv) – are both key to future gains in efficiency and sustainability. In the future, operators will need to be able to measure and improve these key metrics.

Energy Efficiency Directive (EED)

Data centres also need to start tracking data for the EU’s new Energy Efficiency Directive (EED), with the first reporting deadline looming in May 2024.

Under the EED, data centres above 500kW need to report at least once a year on environmental performance connected to energy consumption, power utilisation, temperature, cooling efficiency ratios, water usage, heat utilisation, energy reuse, and use of renewable energy in line with CEN/CENELEC EN 50600-4 standards.

Data centres with a total rated energy input exceeding 1MW also need to recover their waste heat, or at least prove that they cannot.

Both sets of reporting for data centre regulation in Europe mean organisations need to monitor and manage performance of the whole IT stack in a way that has not been required before.

They will also need a watching brief for changes to directives. For example, the European Commission has said that it will use the data it collects in the first rounds of reporting to develop a revision of the EED by May 2025. This is likely to include a roadmap towards net zero emission data centres.

Self-regulation Superseded by New Regulations

Prior to the Paris Climate Agreement, the sector responded to the need for greater data centre regulation in Europe with some voluntary reporting vehicles, such as the The EU Code of Conduct for Data Centres (EU DC CoC) and the Climate Neutral Data Centre Pact (CNDCP) that operators could align to in order to show that they follow best practice and have a commitment to sustainability.

While both voluntary reporting vehicles still get a lot airtime, neither remain relevant.

The EU DC CoC has now been re-written in the form of a framework, which is auditable and certifiable against. This framework is now referenced as part of the Corporate Sustainability Reporting Directive (CSRD) reporting requirements.

CSRD and the EED, through the assessment framework, requires the use of EN 50600 / ISO 30134 KPIs. EN 50600 also includes what started out as the Green Grid Data Centre Maturity Model, which is now encapsulated within EN 50600-5-1 .

This all means that, whilst the sector tried to preempt any regulation from authorities, this effort has been superseded by the new regulation that is required by the European Commission.

Data Centre Sustainability Regulation in North America

Change to data centre regulation in America and Canada are also afoot, with many countries taking a close look at what is happening in Europe.

In the US, the Securities and Exchange Commission has issued a proposed rule that will standardise the way organisations make climate-related disclosures. The new rule is expected to take effect in 2024 and apply to 2023 reporting years. It is likely to include disclosures on climate governance, climate-related risks and impacts, and Scope 1, 2 and 3 greenhouse gas emissions that will define a new standard for data centre regulation in America.

In Canada, the Canadian Net-Zero Emissions Accountability Act and 2030 Emissions Reduction Plan mean that the country is committed to zero emissions by 2050. Each province has already implemented a carbon pricing policy, charging industrial companies and power generators with emissions over a baseline.

The impact of these measures means that data centres will need to find new ways to start tracking climate-related data to prepare for disclosures and find more sources of renewable energy.

The Way Forward for Data Centre Sustainability

As regulation expands, there are several practical challenges that the industry will need to overcome to fulfil ever growing demand and stay compliant.

Data centres are a system of systems. Each layer can have different control systems and different transport protocols tied to environmental systems such as power and cooling, outside temperature, water usage, and waste heat reuse. Currently, there is a lack of the systems thinking needed to model use cases and bring people, processes, and technology together to deliver on new reporting demands across the IT stack.

Departments like IT and facilities management functions are currently siloed, with no single ownership that is focused on issues like renewable energy and driving sustainability outcomes.

As we stand, many large data centre owners/operators are also still not all aware of their reporting requirements. When asked about this by QiO in 2023, 28% of operators admitted they do not currently report to any internationally recognised sustainability reporting standards.

To overcome these challenges, four things need to happen.

Urgent Understanding

Data centres need to understand the future requirements from both a performance and reporting point of view. And just as importantly, create an operating framework that will drive the improvements required.

Assign Responsibility

To drive this level of action, those that have not already done so need to appoint a Head of Sustainability or other senior person with specific responsibility for environmental performance improvement.

Such leaders will need to take full responsibility for understanding new reporting requirements, auditing the sustainability landscape, and identifying gaps that could see them fail to improve and comply with the wide range of new standardised metrics.

Break Down Silos

Data centres must work to foster a new culture of collaboration between departments that are currently siloed.

Today, responsibility for a data centre typically falls between two teams with conflicting agendas: a facilities or estates team responsible for managing the energy budget; and an IT team tasked with maintaining a high-performing, high-availability IT estate.

Heads of Sustainability are well placed to take ownership of a new collaborative arrangement, and should be backed with control of energy budgets that have traditionally been managed by facilities teams. Ideally, these should be zero-based budgets, with a requirement that initiatives pay back within a year in both financial and energy savings.

Harness Your Data Effectively

Data centres also need to progress quickly on a number of technical fronts in order to measure the right things and then identify, test, and iterate the improvements needed.

This task requires interrogating large amounts of data, modelling use cases, and then seeing how they perform in real life. But doing this across estates of 20,000+ servers, in different use case scenarios, and manually evaluating each server type and build is beyond the current capability and time-resources of data centre operators.

Reporting for CSRD and EED will be auditable, so it makes sense to use tools which provides consistency of process and information gathering without increasing the already heavy resource burden associated with existing reporting requirements.

Is AI the Answer to Approaching new Data Centre Sustainability Regulation?

This means there is an urgent need to evaluate new AI systems designed specifically for data centres. These are uniquely placed to help operators by producing real-time data on resource use and all other relevant factors required by the new standard at multiple levels, with particular focus directed towards the IT stack.

With urgency, operators need to understand the emerging ecosystem of sustainability tech suppliers that play in this space, how they fit together, and how they will help them to shift from ‘business as usual’ to data driven decision-making and automation. And by doing so, reduce costs and achieve compliance.

About the Author

Venessa Moffat is the General Manager for Data Centers at QiO Technologies, a sustainability AI business which helps asset-heavy and energy-intensive businesses deliver rapid reductions in GHG emissions and energy costs.

About the Data Centre Alliance

The Data Centre Alliance (DCA) is a not-for-profit UK trade association comprising of leaders and experts from across the data centre sector.

Through The DCA, organisations operating their own data centres and server rooms can access trusted information on the benefits of adopting best practice, learn more about the products and services available to them. This supports them as they strive to drive down operational costs and increase the efficiency of their IT assets in support of their business goals.

The DCA publish over 100 member authored articles a year with a different focus each month. Through the Media Partnership program; the trade associations combined audience of 120,000 subscribers provides an extremely cost effective platform. Insight can be shared by members and knowledge can be gained by customers from a trusted source.

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If you have insights, opinions, or expertise related to any aspect of the technology sector that you would like to share, we want to hear from you. Please contact our Editor, Stuart Crowley, at [email protected] to contribute to the ongoing dialogue in the tech community.


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