EU Carbon Trading Chokes On Data Centre Diesels

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Peter Judge

Data centres burn almost no diesel, but the EU’s carbon trading scheme is taxing them by mistake, says Peter Judge

Data centres have back-up generators, and those generators generally burn diesel. This forms a small part of the emissions of a data centre, but it’s possible to get it out of proportion. This can be a sticking point for environmentalists – and apparently for government regulators too.

A couple of years back, campaigners in Quincy, Washington got concerned (and got the New York Times writing) about emissions from the back-up diesels of the data centres, run by Yahoo, Microsoft and others, that have become the prime business in that one-horse town (population 7,000).

diesel backup generator data centre © arnet117 ShutterstockDiesel dreams

Yes, those back-up generators emit particulates, but they are only there for backup, and the risk they create is utterly negligible compared with traffic deaths, or even homicide in the almost absurdly peaceful town of Quincy.

Now, it seems it’s the turn of regulators to get backup diesels wrong. It looks like European regulations are causing headaches for data centre operators here – but I’m pleased to see industry and regulators working together to sort out the issue out.

What follows comes largely from British industry body TechUK, and I’m grateful to Emma Fryer there, for her usual clear explanation of a pretty complex subject.

Emissions trading schemes (ETS) are designed to make it more costly to burn fuels and create emissions – thereby encouraging polluters to burn less. Europe’s ETS is a “cap and trade” scheme where organisations have to buy allowances in advance for their “scope 1 emissons” – ie for the actual fuel they burn on site. It’s designed for heavy industries which burn a lot of fuel, You would expect data centres to fall outside the ETS because they use electricity generated elsewhere (in the ETS language, that’s scope 2). … but you’d be wrong.

What data centres burn in their diesels is scope 1 all right. They don’t burn much, giving them a quick regular test run, and maybe using them for an hour or two if there’s a power outage.

But entry to the ETS isn’t about how much fuel you burn. It’s based on the capacity. If you have generator capacity of more than 7MW, you may well have to register, even if you never use it. Whether you register or not depends on the exact nature of your diesel generator, Fryer told TechWeek. 

Unintended consequences

This is where it gets screwy. Because you have a big set of generators, you have to register, but because you rarely use them, you don’t actually have to buy much in the way of allowances. And in any case carbon credits are actually pretty cheap.

So, data centres have to buy a few hundred pounds worth of allowances per site… and spend something like £10,000 registering for the scheme and administering it.

That’s a pretty hefty unintended consequence. How did it get that way? Fryer told us data centres are “collateral” or innocent bystanders. The ETS scheme was set up in this way to close some loopholes that had previously been exploited by “large and cynical operators with powerful and aggressive lobbies”.

It’s a European law, which should be implemented the same way in countries across Europe but, as with other regulations such as the WEEE electronic waste directive, there are differences in interpretation. So the tech industry – in this case TechUK – has to deal with Britain’s Department of Energy and Climate Change (DECC) as well as the EU’s machinery – both of which are trying to be helpful.

The problem will go before The European Commission’s Compliance Committee, and maybe some practical response can come out of this – perhaps allowing exemption for generators which are genuinely only for backup. 

Can anything be done about that discrepancy between the cost of the allowances and the admin cost? Let’s hope so.

A version of this article appeared on Green Data Center News.

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