Tuesday, 1 July 2014

Driving Energy Efficiency with a new Climate Change Agreement

Written by Andrew Baker
Associate Director, Energy & Sustainability Consulting, Global Corporate Services

Today, July 1st 2014, marks the launch of the data centre Climate Change Agreement (CCA) which ultimately should see carbon tax liabilities associated with electricity reduced for the industry.

This is a new piece of energy and sustainability legislation, which has taken years of lobbying to pass through the Department of Energy and Climate Change (DECC). It’s significant as data centres use large amounts of electricity given their role as a facility to house computer systems and associated ICT components, on behalf of companies. In essence, participation in a CCA will require each data centre to work towards legally binding energy efficiency targets over the period of the agreement and thus contribute to the overall objective of the CCA, which  is to improve the energy performance of the data centre sector as a whole. The first agreement is immediately effective and will run until 2020 with a target of a 15% reduction.

There are currently over 50 CCAs in operation, with this being the first for data centres.  The primary benefit of the legislation will fall on colocation data centres (a type of data centre where power equipment, space, and bandwidth are available for rent) which will see carbon tax liabilities associated with electricity reduced significantly.

Those who participate in the new CCA will see a 90% reduction in their Climate Change Levy (a green tax included in energy supplies) and a full reduction in carbon tax under the CRC Energy Efficiency Scheme. In order to reap these benefits, data centre operators need to register their interest with techUK.

One benefit of the legislation is that the targets that are imposed will be data centre specific, meaning that the sector can continue to grow alongside demand, while ensuring a strong incentive is in place to improve the energy efficiency of the sector. Furthermore, the legislation sees data centres become monitored by the government and therefore recognised in their own right as an asset type that requires suitable energy regulation.

This is encouraging as the new CCA illustrates that the legislative landscape in the UK is evolving to allow energy intensive sectors to be competitive internationally.  This ensures data centre operators will be incentivised to take vital steps to improve the energy performance of their assets, which is a positive step for all associated parties.

For more information please email techuk@cclevy.com

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