COP26 reveals both challenges and opportunities for data center industry
The world’s political and climate leaders wrapped up the COP26 conference in Glasgow, Scotland, in November 2021, forging agreements on key pillars that strengthen ambitions to collectively combat climate change in meaningful ways. While the ultimate impact of those actions remains an unknown, as does the effect COP26 will have specifically on the data center industry, one thing is certain – changes will come.
Notably, “After six years of strenuous negotiations, pending items that prevented the full implementation of the Paris Agreement on carbon markets and transparency have finally been approved,” the UN reported. The agreement on the “Paris Rulebook” regulates the technical details of the Paris Agreement, and the conclusion makes this historic accord fully functional. More than 190 countries agreed to it, after discussions about carbon markets, timelines for emissions reductions and guidelines on transparency.
“The package adopted today is a global compromise that reflects a delicate balance between the interests and aspirations of nearly the 200 Parties to the core instruments on the international regime that governs global efforts against climate change,” the UN said after COP26’s conclusion.
The true test of COP26 now begins with delivering on what has been promised. The next 18 months could be crucial, as countries work out how to keep the world aligned with reducing the earth’s temperature by 1.5 degrees Celsius, a task that means cutting global emissions by at least 45% by 2030. Each country must now review its climate pledge – National Determined Contributions – and ensure they align in achieving the 1.5-degre temperature reduction goal.
The EU has committed to a greater emissions reduction target by 2030 through its Fit for 55 initiative, which forms part of the European Green deal. It aims to cut emissions by 55% by 2030, while the European Green Deal aims to have Europe climate neutral by 2050.
The final COP26 agreement explicitly mentions the need to move away from coal power and subsidies for fossil fuel for the first time. High-income countries had wanted a total phase-out of coal; low- to middle-income countries forced a compromise, pointing out that in many parts of the world, alternative energy sources do not yet exist. India and China upset other nations represented at COP26 by insisting on rewording from “phase-out” to “phase-down” – an 11th hour addition countries felt forced to agree to.
Another crucial question concerns the impact of net-zero commitments. This phrase is now commonly used as an indication of commitment to decarbonization. But there’s no agreed definition or measure of net-zero. Without this, it is impossible to know if net-zero pledges will stop global warming.
In 2020, CyrusOne pledged to have net-zero carbon emissions by 2040, as detailed in our newly published 2021 Sustainability Report. In this commitment, we include both the carbon emissions from our support infrastructure (cooling, lighting, power handling, etc.) and emissions from our customers’ IT equipment (servers). And we will continue to evaluate how we will draw down our carbon emissions as we grow as a company.
At present, we believe the number of zero commitments is likely to outpace the ability of the market to adapt quickly – demand is likely to increase faster than supply for the near future. Companies further along in their sustainability journeys will have an advantage during the transitional economy by mitigating risk and getting preferred pricing. We are gratified to see companies trying to transition from the pledge stage to establishing detailed plans on how to execute net-zero strategies.
CyrusOne is also investigating how the emission targets affect the data center industry in hopes of gaining full understanding, so we can implement strategies that will lead the industry in developing and implementing sustainable practices.
While it remains too early to determine how each country will tackle and implement greenhouse gas emissions reductions, the next year will reveal a lot. Certainly, countries will need to invest more in renewable energy. Existing technologies can comfortably reach a 50% cut in emissions. But reaching a net-zero target by 2050 will require more development and deployment of new technologies. CyrusOne is monitoring a number of different technologies, including fuel cells. However, there is not yet one technology that is commercially scalable at present.
CyrusOne remains committed to renewable energy in the EU, and the U.S. is catching up rapidly. In June 2021, we announced we achieved 100% renewable energy across our full European portfolio, nine years ahead of the 2030 target outlined in the self-regulatory Climate Neutral Data Center Pact, of which CyrusOne is a founding member. We expect renewable energy will become more widely available as governments invest heavily in this sector. Renewable energy pricing should cost less than fossil fuel-generated power over time, as taxes for carbon emission increase.
CyrusOne also expects:
- Waste heat to district heating will become part of planning applications
- A drive toward zero-carbon construction.
- More reporting of sustainability indices and more transparency
- Individual countries within the EU may decide to implement regulations that could directly affect the datacenter industry, but we will have to wait and see as to what they may be but as it stands the industry is aligning to the EU Green Deal.
While COP26’s direct impact on our industry remains unclear, we will continue to focus on our sustainability mission and do our part to ensure a better future.