When we think of terms like carbon footprint and greenhouse gasses, we often point fingers at sectors like agriculture, fossil fuels, and transportation. However, the IT industry, especially data centers, is now at the forefront of the urgent need for enhanced energy efficiency and a smaller carbon footprint.
In today’s digital era, data centers consume approximately 200 terawatt-hours (TWh) of electricity, or nearly 1% of global electricity demand, contributing to 0.3% of all global CO2 emissions (Kamiya, 2022). As the digital revolution and automation surge forward, the demand for greater IT compute capacity and more data centers is set to soar.
Consequently, innovative approaches are required to ensure sustainability and mitigate environmental impact. Data center operators, supported by the government’s laws and regulations, emerge as key drivers in paving the path towards a greener future for data centers.
Data Center Operators’ Drive Towards Greener Operations
The data center industry is continually evolving and striving to make operations more sustainable. Hence, operators recognize the importance of reducing their environmental footprint .
In Southeast Asia, the data center market size is expected to reach USD 12.34 billion by 2027, growing at a CAGR of 5.97% during 2022-2027 (Arizton Advisory & Intelligence, n.d.). One of the key drivers that will drive the data center market in the region is the sustainable initiatives by data center investors.
Southeast Asia has particular countries with high particulate matter and is considered more polluted than others, these include Singapore, Vietnam, Thailand, Myanmar, Cambodia, and Indonesia (Air Quality Life Index [AQLI], n.d.).
Vehicles, biomass burning, industrial plants, and coal power plants are the sources of intense seasonal air pollution for much of the region. However, most of the air pollution takes place due to the incomplete burning of fossil fuels which include coal, oil, and gasoline to produce energy for transportation or electricity (Deb, 2019).
Fossil fuels have long underpinned Southeast Asia’s power generation. An ample regional supply of coal, especially in Indonesia, and relatively low costs have led to coal having a prominent role in Southeast Asia’s power generation sector (Chen et al., 2021).
Despite Indonesia’s energy potential from solar, hydropower, geothermal, wind and other sources, only some 12% of them are tapped, according to the International Renewable Energy Agency. Nearly all energy demand is met by fossil fuels, with 60% coming from highly-polluting coal (Milko et al., 2023).
Climate change is coal’s most serious, long-term, global impact (Union of Concerned Scientists, 2019). Accordingly, data center service operators operating in Indonesia have taken significant measures to make their operations more sustainable so they would no longer contribute to the rising tide of environmental challenges.
According to Hendra Suryakusuma, Chairman of Indonesia Data Center Provider Organization (IDPRO), it is very important for them to run data centers in the most sustainable way as almost 100% of the data centers are being run by coal power plants up until now.
To make their operations sustainable, they have been implementing the basic foundation of the Internet of Things (IoT) in their data centers.
“We are already implementing the basic foundation of IoT, to have more visibility on the operation level. IoT combined with machine learning, they can now have predicted analysis, automated by this technology, and it will actually lower the PUE number which increases efficiency.”
The adoption of IoT as a foundation in data centers, combined with the integration of machine learning, has opened up new opportunities for advanced analytics, automation, and efficiency improvements in the industry.
The focus within IDPRO is on exploring and maximizing the potential of this technology combination to drive sustainable practices and enhance the overall performance of data centers.
However, Hendra stated that data center industry stakeholders and regulators are crucial in establishing supportive policies and incentives that facilitate the transition towards sustainable data center practices.
Government Regulations as Catalysts for Eco-Friendly Practices in Data Centers
Climate change centric initiatives and policies are progressively turning their gazing scrutiny to the effect of data centers, such as the Climate Neutral Data Center Pact, the EU Code of Conduct on Data Center Energy Efficiency, and China’s Three-Year Action Plan for the Development of New Data Centers.
Moreover, governments across the world have recognized the urgency of transitioning to more sustainable practices in the IT industry, leading them to introduce stringent laws and regulations. These measures act as catalysts, encouraging data center operators to adopt eco-friendly technologies and practices.
Government laws and regulations can take various forms, ranging from imposing energy efficiency standards to incentivizing the use of renewable energy sources. By establishing clear guidelines and targets, authorities set the stage for data centers to actively reduce their carbon footprint.
Hendra said “In North America, specifically in California State, there are tax incentives provided to data center facilities adopting renewable energy. These incentives serve as a motivating factor for companies to invest in sustainable practices and technologies. “
The issue of government endorsed incentives has long been advanced by data center companies to ease the financial burden of renovating existing facilities and that imposed by sustainability considerations such as use of alternative renewable energy that may be more expensive to implement
In the United States of America, the government provides for tax benefits for local data center builders (Gibbs, n.d.).
In Japan, the government has developed a USD 7.3bn initiative to innovate the industry and cut carbon emissions, including subsidies worth 50% of the building costs towards new zero carbon emissions data centers (England, 2020).
Moreover, in Indonesia’s neighboring country, Singapore, an Investment Allowance Scheme was employed by the Infocomm Development Authority of Singapore (IMDA) to assist data center operators in making their current data centers more energy efficient. Qualifying candidates will receive a 30 – 50 % discount on their fixed capital expenditures for upgrading their data centers.
Hendra also pointed out that progress can be observed in neighboring regions, specifically in Johor and Kuala Lumpur. This suggests that countries like Malaysia are making strides in terms of implementing sustainable practices in their data center operations through giving tax incentives for green initiatives (Von et al., 2022).
According to Hendra, Indonesia could benefit from studying and adopting similar approaches to promote sustainability in its own data center industry. However, government support and proper regulation is also preventing data centers from transitioning to renewable energy sources (Gomez, 2023).
The Political Hurdle in Supporting Sustainable Data Center Operations
In contrast to other national governments actively working towards transitioning to renewable energy for more sustainable data center operations, the government of Indonesia diverges by prioritizing the return on investments from coal power plants rather than promoting and supporting the adoption of renewable energy across sectors, including data centers.
The government lacks incentives, such as tax benefits or subsidies, for data centers that invest in renewable energy solutions which can discourage the adoption of sustainable practices. Incentives can provide financial support and make renewable energy more financially viable for data center operators, promoting the transition to cleaner energy sources.
Although data center operators in Indonesia have been implementing sustainability initiatives to their operations. Hendra stated that they have engaged with various government institutions in Indonesia to discuss the implementation of sustainable practices in data centers.
However, the talks have not yielded concrete results or clear guidance on how to proceed yet. But according to him “the regulators are the one that really play a very key role in this sustainability issue. “
By recognizing the urgency of addressing environmental concerns and aligning policies with sustainability goals, governments can drive the transformation of data centers into more efficient and eco-friendly entities.
This collaboration between data center operators and the government paves the way for a more sustainable future, where technological advancements go hand in hand with responsible environmental stewardship.
Together, they can shape a resilient and low-carbon IT infrastructure that meets the growing demands of the digital age while mitigating its ecological impact.
