IT industry warns CRC could drive carbon-intensive datacentres offshore

IT industry experts are calling on the UK government to amend the imminent Carbon Reduction Commitment (CRC) energy efficiency scheme, warning that it will force participants to outsource energy-intensive IT infrastructure to offshore operators, which could drive up overall emissions from the sector.

The legislation comes into effect in April and will apply to about 5,000 large UK public and private sector organisations that consume more than 6,000MWh of electricity per year. As a result, many of the UK's larger datacentres will be covered by the scheme and will be required to report on their energy use and attempt to improve their efficiency or face financial penalties.

The cap-and-trade scheme is intended to provide organisations with financial incentives to cut their carbon emissions by imposing financial penalties on those organisations that at least curb their energy use, and providing bonuses to those that successfully reduce energy use.

But according to Liam Newcombe, secretary of the British Computer Society's datacentre specialist group, one of the legislation's key flaws is that participants only purchase carbon credits under the scheme based on their own levels of in-house carbon emissions, not those generated by outsourcing providers on their behalf.

As a result, he is concerned that organisations will be provided with a " perverse incentive" to outsource their IT infrastructure, potentially to overseas operators, to avoid additional charges imposed by the CRC. "I'm already aware of a couple of organisations that are very interested in managing their CRC league table positions by outsourcing their IT assets," Newcombe said.

Such tactics could prompt accusations of "carbon laundering", but Newcombe predicted that firms could adopt a "slow and more creeping" approach, designed to avoid any suggestion that they are deliberately outsourcing their emissions to third parties.

For example, he said he expects to see participants increasingly install new or upgraded equipment into co-location or other third-party facilities rather than run them in-house, with a view to quietly massaging emission figures to demonstrate year-on-year improvements in emission reductions.

"Even if you're trying to play the game straight, you won't be able to do it because you can't report the CRC performance of your co-location sites," he warned. "So even if you're trying to be honest, you're forced into an obscure game of carbon management accounting."

The only real winners in this scenario will be the outsourcers and vendors selling carbon accounting software and services, Newcombe added.

Meanwhile, efficient and successful service providers that manage to grow their customer base could well end up being penalised under the initiative.