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Summary:

It’s easy to see how coal plant owners and oil companies would pay extra when there’s a price put on carbon emissions. But industries that use a significant amounts of electricity will also be greatly affected, and in particular data center operators.

It’s easy to see how coal plant owners and oil companies would pay extra when there’s a price put on carbon emissions. But industries that use a significant amounts of electricity will also be greatly affected, and in particular data center operators. Just how much? According to Jonathan Koomey, Project Scientist at Lawrence Berkeley National Laboratory and Stanford, speaking at the Uptime Institute Symposium this week, if there is a carbon price of $19 per ton under a cap and trade system, a 130,000 square foot data center that was powered by a coal-sourced utility could have to pay an additional $5 million a year (via Data Center Knowledge).

Considering an average 125,000 foot data center could cost around $10 million a year to operate, a price on carbon created by emissions reductions legislation, like the U.K.’s Carbon Reduction Commitment, could potentially double the operating cost. According to estimates from a report from MIT and Carnegie Mellon, Google spends about $38 million annually on electricity for data centers, Microsoft, $36 million per year, Rackspace $12 million, and Akamai $10 million.

It’s not just the giant Internet companies that will be affected. But any organization that uses computing power. Bill Arnaud, former Chief Research Officer for CANARIE Inc. Canada’s Advanced Internet Development Organization, has estimated that under a cap and trade system where carbon trades at $20 per metric ton, an average university that has its computing facilities powered by coal would have to pay $7 million per year. A California university (which requires less coal power) would add on $1.76 million per year for its computing facilities, according to Arnaud.

While it’s uncertain how data centers would be included under a U.S. cap and trade system, the U.K.’s CRC legislation has already stopped people from building data centers in the U.K. according to Mike Manos, the Vice President of Service Operations at Nokia.

A price on carbon will also be particularly disruptive for data center operators because they don’t seem to see it coming. As Nokia’s Manos said at the event, “As an industry, we are ill-prepared for this.” To hear more on data centers and cloud computing check out our Structure conference on June 23 and 24 in San Francisco.

For more research on data centers and energy use check out GigaOM Pro (subscription required):

Is Software the Key to Green Data Centers?


Report: Green Data Center Design Strategies


HP: For Green Data Centers, Have a Cow

Image courtesy of midom’s photostream.

  1. Well, $10 million per year seems like nothing for giant of the Google kind. Data centres usually can’t run away to China or India, so they present potential juicy prey for the regulators. On the other hand – I believe IT sectors has far the best GDP/emissions ratio of all industries, so we should be careful with restrictions.

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  2. Susan Kraemer Saturday, May 22, 2010

    But a 130,000 square foot roof like in your example will support enough solar power at much lower cost than just paying $5 million every year to keep destroying the planet with coal.

    They’d be wrecking their own pocketbook as well. Only the most stubborn would want to pay so much more to stick with dirty power.

    In any case, K-L as it stands now only hits 75,000 tons a yr emitters – only coal plants, no other businesses.

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  3. [...] which is part of the GigaOm empire, estimates What A Price on Carbon Would Cost Data Center Operators (May [...]

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