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Regulation, Regulation, Regulation: Data Centre Policies in the EU and UK

Fri 11 Aug 2023

In this feature, data centre expert John Booth explores the intricate web of data centre regulation and legislation.

As the backbone of today’s tech-driven world, data centres power the digital economy. But with great power comes great responsibility, with more attention on energy efficiency and sustainable practices than ever before.

John Booth examines the UK’s and EU’s approaches, offering a comprehensive look into why regulation matters and how it impacts the data centre sector.

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What is regulation and why does it matter for the data centre sector?

In the short guide to regulation published by the UK National Audit Office (NAO) in September 2017, Regulation is defined as being ‘used to protect and benefit people, businesses, and the environment, and to support economic growth’. Alternatively, legislation are the principles of public policy, which is implemented by regulations.

There are more than 90 regulatory bodies in the UK, with total expenditure in excess of £4 billion a year. They cover a wide range of areas, from education, healthcare and charities to transport, communications and the media, utilities and the environment.

The NAO states that regulation is one of the primary ways in which government can achieve its policy objectives. It is distinct from direct government provision of services because it relies on using incentives to drive behaviour change in individuals and organisations outside of government’s direct oversight.

“Regulation is primarily used to address market failures. The characteristics of some markets mean that, left to their own devices, they risk failing to produce behaviour or results in accordance with public interest (for example, clean air) or policy objectives,” writes the NAO.

The sentence ‘regulation is primarily used to address market failures’ is very powerful.

So, what are the ‘market failures’ that the data centre sector has failed to address, how are authorities taking steps to rectify these ‘failures’ via legislation, and what regulation can we expect?

Are we measuring and using energy efficiently?

The EU Code of Conduct for Data Centres (Energy Efficiency) known as EUCOC was developed in 2008 by the Department for Farming and Rural Affairs (DEFRA), the British Computer Society, Data Centre Specialist Group, and the EU Joint Research Center.

The EUCOC addresses data centre energy consumption forecasts that indicated total EU energy use would be near 104TWh annually in 2020, which would create problems for policy makers, operators and those paying the energy bills. The actual figure for 2020 was around 98TWh.

The problem is that this number only refers to commercial colocation operators and large data centres. The actual energy consumption of distributed IT (i.e. enterprise data centres, PoPs, mobile phone networks, etc.) is unrecorded and probably magnitudes higher.

As the EUCOC is voluntary, its data is unreliable and lacks wide representation. Only 165 organisations and just over 550 sites have signed up as participants to report their energy consumption on an annual basis.

Now with the war in Ukraine, which has impacted the cost of energy, the situation could now be described as acute.

We need to know how much energy is being consumed by data centres for a variety of reasons; the primary one being ‘are we using that energy efficiently?’. From my personal experience assessing data centres for energy efficiency, I would have to say no, we are not. Far too many operators have not implemented all of the best practices.

The EUCOC contains 160 best practices, which can be considered as a cultural and strategic change tool. But it is shame that many organisations fail to see its potential, and perhaps the EU has seen this as a ‘market failure’.

What more can we do?

Management guru Peter Drucker is quoted as saying ‘You can’t manage what you can’t measure’, which is a point of contention. Indeed, Simon Caulkin in 2008 said ‘what gets measured gets managed – even when it’s pointless to measure and manage it, and even if it harms the purpose of the organisation to do so’.

However, there is value in assessing the energy consumption of a data centre, but only if once measured, actions are taken to reduce it. This is an area of dark science, as many organisations do not know what they have in terms of IT equipment, applications, and the equipment to support the data centre.

In “Recalibrating global data center energy-use estimates”, an article published in Science in March 2020, its authors proposed three policy action areas:

  1. The promotion of energy efficiency benchmarks, reduction of PUE, and other energy reducing best practices
  2. Investment in new technologies
  3. (Most importantly) Greater public data and modelling capacities to understand and develop effective policy.

“National policy-makers should enact robust data collection and open data repository systems for data center energy use, in much the same way as has been done historically for other demand sectors,” said the article.

In 2013 when I took over the reviews of the EUCOC applications, a former colleague said to me that the EUCOC would eventually become a regulation, either as a standalone requirement or wrapped up in a larger piece of legislation. This has now come to pass.

EU legislation impacting data centres

There are three, possibly four, pieces of EU legislation that have a direct bearing on data centres.

The Taxonomy Climate Delegated Act (TCDA)

The Taxonomy Climate Delegated Act (TCDA) includes Assessment Framework for data centres. In essence, this is an update to the EUCOC. It relates to the provision of capital to build a data centre ‘sustainably’.

Providers of capital have to determine whether a new data centre project will comply with the revised best practice descriptions and may apply a cost premium to the cost of capital.

The Corporate Sustainability Reporting Directive (CSRD)

The Corporate Sustainability Reporting Directive (CSRD), that entered into force in January 2023, requires commercial data centres to provide energy and sustainability reporting data to their customers, and to report their own data if they qualify.

Energy Efficiency Directive

The Energy Efficiency Directive updated in 2023 specifically requires data centres over a yet to be determined size to report energy consumption data, the proportion of that energy that is derived from renewable energy, the amount (if any) of waste heat reuse, and their water consumption.

As of now, the Directive has not been published. Consultation is in progress.

As my colleague predicted 10 years ago, all of the above directives do indeed make reference to the EUCOC.

Corporate Sustainability Due Diligence Directive (CSDDD)

The aim of the Corporate Sustainability Due Diligence Directive (CSDDD) is to foster sustainable and responsible corporate behaviour, and to anchor human rights and environmental considerations in companies’ operations and corporate governance.

The new rules will ensure that businesses address adverse impacts of their actions, including in their value chains inside and outside Europe.

This could be a very interesting directive, especially in the context of the conflict minerals that are used in ICT equipment.

Data centre legislation in the UK

In the UK, there is very little direct data centre legislation or regulation.

What we do have is largely the result of other regulations in energy, environment, and others. These are primarily EU regulations that have been retained.

One such legislation is the EU Emissions Trading System (EU ETS), which was copied in its entirety to form the UK Emissions Trading Scheme (UK ETS). This refers to the use of generators in the data centre environment and only applies if you have a total generator capacity of over 6MW.

There is also the Climate Change Agreement for Data Centres, a voluntary scheme that offers discounts on the Climate Change Levy in return for energy efficiency savings calculated via targeted PUE reductions. But the agreement also has penalties in the form of the purchase of carbon offsets if PUE targets are not reached. To date, approximately 50% of organisations voluntarily enrolled in the scheme have had to buy carbon offsets, according to CCA data between January 2020 and December 2021.

It remains to be seen if EU legislation like the TCDA, CSRD, EED or CSDDD will leap the channel, but it could be possible that global data centre organisations with a presence in both the EU and UK may adopt the EU reporting requirements for use in the UK.

Prepare for the inevitable future of data centre regulation?

The Data Centre Sector has always been wary of any formal legislative activity, and has spent a great deal of time attempting – in my opinion – to postpone the inevitable. If you cite yourselves as the fourth utility, don’t be surprised when you are regulated like one!

If you have an opinion you’d like to contribute to Techerati, please contact our Editor (Stuart Crowley – [email protected]).

About the Author

John Booth is the Managing Director of Carbon3IT Ltd, an organisation that provides data centre support services such as ISO/IEC management standards, EU Code of Conduct for Data Centres (Energy Efficiency), energy efficiency and sustainability assessments, sustainability and energy efficiency consultancy as well as training services. Carbon3IT Ltd also provide Green IT consultancy.

John is the Chair of the Data Centre Alliance – Energy Efficiency SIG & Standards steering committee, the Vice Chair of the British Computer Society Green IT specialist group, and represents both organisations on the British Standards Institute TCT 7/3 Telecommunications, Installation requirements, Facilities & infrastructures Committee. He is also the Technical Director of the National Data Centre Academy, sits on the advisory board of the Sustainable Digital Infrastructure Alliance, and the iMasons Sustainability committee.

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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