Carbon reduction brings financial benefits

For some time now, organisations deemed to be high consumers of energy, such as mining and refining, have had to adhere to laws around setting and achieving...

For some time now, organisations deemed to be high consumers of energy, such as mining and refining, have had to adhere to laws around setting and achieving energy usage targets. From 1 April 2010, however, less energy-intensive organisations will also have to start looking at lowering their carbon footprints.

All organisations in the UK that are affected by the new rules have been informed, and should be in the advanced stages of planning how best to achieve their energy reduction aims in the coming years. But Quocirca fears that many have been burying their heads in the sand on the matter, and have not done much beyond a few guesstimates and half-hearted plans based on a lack of real knowledge of what the new regulations mean.

Further, this is likely to be the thin end of the wedge, and Quocirca expects that more organisations will be drawn into the regulatory web as time goes on and the UK struggles to meet its self-imposed carbon reduction targets.

Carbon commitments explained

So, how does the system work, and how can you minimise your own risks - and even maximise the benefits of the new regulations?

The Carbon Reduction Commitment Energy Efficiency Scheme (commonly referred to as the CRC EES, or just CRC) affects around 5,000 low energy-intensive organisations that are heavy users of energy, but where that usage is not core to their business. Organisations likely to be caught in the net include large retail concerns, banking and the public sector, where the amount of energy used across a large dispersed set of properties is high overall.

The CRC works through each organisation, setting energy reduction targets and then reporting against them. Each organisation has to measure its usage of electricity, gas, oil and other fuels outside of transport usage and then calculate the equivalent weight of CO2 it equates to. Allowances for this output will have to be purchased through a central pool.

A league table of performance is then created, and at the end of each year credits will be awarded against an organisation's relative performance. Therefore, an organisation at the top of the table will gain repayments that can total more than has been paid for the allowances in the first place, while those at the bottom will receive repayments that are less than the amount paid out. The funds are recycled through the original payments, less the costs for running the scheme.

So, it is important to ensure that your organisation is in the upper half of the table, where it is likely that the organisation will make a profit on its carbon allowances, or at least have a neutral cost. Organisations in the bottom half will lose money.

Energy-efficient IT

For high energy-intensive organisations, the focus has been on core energy usage, such as raising the efficiency of smelters or using heat recycling. For low energy-intensive organisations, a major area of energy usage is in the IT platform. Quocirca believes this is an area where energy efficiencies can be vastly improved.

Quocirca research shows that the majority of Windows-based servers are running at under 10% utilisation. This is due to the need in the past to run one application per server because running multiple workloads on a single server generally led to issues, whether real or merely perceived. If resilience was provided through mirroring, the utilisation rates fell to under 5% - a massive waste of available resource, but one that was essentially hidden from the business.

Now, with virtualisation becoming mainstream, utilisation rates can be easily driven to 60% or more, even with mirroring being used for resilience. A 12-fold increase in resource utilisation should have a massive impact on energy used directly in powering servers, as fewer servers should be required. On top of this is the lower amount of energy required for cooling, and the smaller size a datacentre can be, so lowering peripheral energy usage in lighting and so on.

Further savings can be made through the use of newer, more energy-efficient servers and other hardware. This should only be done where existing kit has served its useful life, as the costs of replacement may outweigh any benefits gained.

Another way of lowering energy use is to move to a shared model, using cloud computing in a hybrid manner with some of the functionality provided by an internal datacentre and some provided by external providers. The majority of external providers are already well on the way to using highly virtualised platforms, and these are more than 80% utilised. A further positive - if one that is slightly missing the point of CRC - is that the energy used is counted against the hosting company, not yours.

Minimise financial risk

If you are caught in the CRC web this time around, then it is not too late to put plans in place for the short, medium and long term that will help you minimise the financial risk to your organisation. If you are not yet in the web, then there is little room for complacency. The UK has some of the most stringent carbon reduction targets on the planet, and the only way it can hope to meet them is to extend the reach of the CRC scheme beyond its current boundaries.

With IT such a large energy drain for many organisations, this has to be the focus for major wins. Those that do this well will undoubtedly be the ones who gain the largest prizes when it comes to refunds against the carbon allowances.

This was last published in January 2010



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