The IT industry has become a crucial component of our daily existence, encompassing everything from the gadgets we frequently use to the digital infrastructure that underpins our ecosystem. Nevertheless, the expansion of the IT industry has sparked worries about its ecological impact, especially regarding its emission of greenhouse gases. To comprehend the environmental impact of the IT sector, it is important to consider the three distinct scopes of emissions – Scope 1, 2, and 3. In this blog, we will explore the environmental impact of the IT sector, the different scopes of emissions, and the sustainable practices that IT companies can adopt to reduce their carbon footprint and contribute to a more sustainable future.
The forecasts estimate the Global Information Technology (IT) industry to be approximately 5.3 trillion U.S. dollars and predict that the industry will maintain a compound annual growth rate (CAGR) of 5% until 2024. The global information technology industry expects a significant contribution from Asia, accounting for 31%. As the industry experiences abundant growth, it can reduce its environmental impact by adopting sustainable practices and mitigating greenhouse gas (GHG) emissions while driving technological innovation and growth.
The Environmental Impact of the IT Sector: Understanding Scope 1, 2, and 3 Emissions and Adopting Sustainable Practices
Scope 1 emissions refer to direct greenhouse gas emissions within a company’s facilities or operations. These emissions are mainly generated from power consumption, cooling, and backup power systems. Power consumption by IT equipment, such as servers, storage devices, and networking equipment, leads to GHG emissions from power generation. Cooling systems that keep IT equipment at a safe temperature also contribute to Scope 1 emissions by using refrigerants with high global warming potential (GWP). Using backup power systems, such as diesel generators, is common in case of power outages. However, GHG emissions are released due to the combustion of diesel fuel, which adds to the Scope 1 emissions.
Scope 2 emissions refer to indirect emissions due to the consumption of purchased electricity, heat, or steam. Grid emissions from the generation of purchased electricity are a significant contributor to Scope 2 emissions. The emissions vary based on the energy mix used by the utility provider. The location of data centers is also a factor in determining the environmental impact of Scope 2 emissions. For example, data centers located in areas with a high percentage of renewable energy sources will have a lower environmental impact. Therefore, companies must ensure that their energy suppliers are generating power from renewable sources to reduce their Scope 2 emissions.
Scope 3 emissions refer to all other indirect emissions in a company’s value chain, including product manufacturing, supply chain, and end-of-life disposal. The production of IT devices such as servers, laptops, and smartphones is a significant source of Scope 3 emissions, as the extraction and processing of raw materials, transportation, and assembly all contribute to greenhouse gas (GHG) emissions. The supply chain for IT products, including transportation, packaging, and disposal of IT equipment at the end of its life cycle, also significantly contributes to Scope 3 emissions. Therefore, it becomes vital for companies to reduce their Scope 3 emissions by improving the sustainability of their supply chain, adopting circular economy practices, and ensuring the proper disposal of IT equipment.
Steps the IT industry can take to reduce its emissions across all three scopes:
Scope 1 Emissions:
- Improve energy efficiency: Data centers can reduce their energy consumption by implementing energy-efficient practices and technologies, such as virtualisation, power management, and cooling optimisation. They can also upgrade their equipment to newer, more energy-efficient models.
- Use renewable energy: Investing in on-site renewable energy generation, such as solar or wind power, can reduce the dependence on grid-based electricity and lower the carbon footprint of data centers.
- Implement green building practices: Data centers can incorporate sustainable building practices, such as using green materials and designing for energy efficiency, to reduce the environmental impact of their facilities.
- Adopt circular economy principles: The IT industry has the potential to create products that prioritise durability and reusability, minimise waste, and recycle materials wherever possible by adopting circular economy principles.
- Use low-carbon fuels: Data centers can switch to low-carbon fuels, such as hydrogen or biofuels, to power their facilities and reduce their carbon footprint.
- Carbon capture and storage: Data centers can invest in carbon capture and storage technologies, which capture and store carbon dioxide emissions from the air in a secure location.
- Collaborate with other industries: The IT industry can work with other industries, such as energy and transportation, to develop sustainable solutions that reduce emissions across multiple sectors.
Scope 2 Emissions:
- Purchase renewable energy credits: IT companies can purchase renewable energy credits to offset their electricity consumption and support the development of renewable energy sources.
- Adopting energy-efficient practices: Data centers can implement energy-efficient practices such as using energy-efficient hardware, optimizing cooling systems, and implementing virtualization to reduce energy consumption.
- Implementing Sustainable Web Design: Companies can track and report their Scope 2 emissions to identify areas for improvement and set sustainability targets. This can also increase transparency and accountability and demonstrate the company’s commitment to sustainability.
- Promoting remote work: Companies can track and report their Scope 2 emissions to identify areas for improvement and set sustainability targets. This can also increase transparency and accountability and demonstrate the company’s commitment to sustainability.
- Monitoring and reporting emissions: Companies can track and report their Scope 2 emissions to identify areas for improvement and set sustainability targets. This can also increase transparency and accountability and demonstrate the company’s commitment to sustainability.
However, as the need for renewable energy grows, more companies are seeking ways to reduce their carbon footprint by sourcing energy from renewable sources. The actual usage of renewable energy in the European energy market is still much lower than its potential. To address this gap, green energy certificates have been introduced to incentivize the production and consumption of renewable energy. The significant impact of the green energy disconnect is evident in Scope 2 emissions reporting. Countries like Norway, Iceland, and Switzerland, which have abundant renewable energy sources, have established, and maintained a primarily renewable power grid. They often produce a surplus of clean energy that they export as Guarantees of Origin (GOOs) to demonstrate renewable energy production. However, this has created a paradoxical situation regarding these countries’ green energy status. The export of GOOs has led to a green energy disconnect where countries that use renewable energy and sell many of their GOOs overseas may no longer consider their domestic renewable energy usage as “green.” This practice can confuse businesses operating in these countries, especially those that rely on green energy to power their operations, such as data centers. To qualify as operating on green energy, these data centers must purchase a comparable amount of GOOs to buy back the green attribute of the energy they consume. This is because, without the corresponding GOO, the consumed energy may no longer be deemed renewable or green under the rules of the European energy market.
Scope 3 Emissions:
- Reduce supply chain emissions: IT companies can work with their suppliers to reduce emissions associated with the production and transportation of IT equipment and materials.
- Promote sustainable IT disposal: IT companies can promote sustainable IT disposal practices and encourage customers to recycle or donate their old electronics.
- Offer cloud-based solutions: IT companies can offer cloud-based solutions to customers, reducing the need for on-site hardware and minimising data storage and management emissions.
How IT companies can offset their emissions:
- Carbon credits from registered projects: These standards provide a transparent and accountable mechanism for carbon credit issuance and retirement, which ensures that the environmental benefits of offset projects are real, measurable, and verifiable.
- Real, measurable, and verifiable benefits: These standards provide a transparent and accountable mechanism for carbon credit issuance and retirement, which ensures that the environmental benefits of offset projects are real, measurable, and verifiable.
- Looping back to public retirement statements: By using the transparency offered by the Gold Standard and Verra registries, IT companies can retire carbon credits in an accountable way by looping back to the public retirement statements. This confirms that the carbon credits have been retired and are no longer available for purchase or use.
- Avoiding double-counting: Retiring carbon credits ensures that the environmental benefits are not double-counted or overstated, which is important for maintaining the integrity of carbon markets.
- Contributing to sustainable practices: Purchasing carbon credits from registered projects that trusted standards have verified can help IT companies to offset their emissions and contribute to sustainable practices. This contributes to the overall reduction of greenhouse gas emissions, which is essential for mitigating the impacts of climate change.
Achieving sustainability goals in the IT sector with VNV Advisory’s carbon offsetting projects:
The IT sector increasingly recognises its role in mitigating the impact of greenhouse gas (GHG) emissions by reducing its carbon footprint and investing in sustainable practices. However, the sector faces unique challenges in achieving its sustainability goals, such as the complexity of carbon offsetting and the need for more transparency in the market. This is where VNV Advisory comes in. We at VNV Advisory specialise in helping companies navigate the complex landscape of carbon offsetting and sustainability and specifically understand the IT sector’s challenges. We offer various services, including directly retiring high-quality carbon credits for our clients within the Gold Standard and Verra registries. We can ensure that IT companies can be confident that their offset investments are making a real and measurable impact on the environment while also contributing to sustainable development in the communities where the offset projects are based.
By working with VNV Advisory, IT companies can benefit from expert guidance on identifying the most effective offset projects for their specific needs, managing the retirement process, and receiving transparent reporting on the environmental impact of their offset investments. This will help IT companies achieve sustainability goals and demonstrate their commitment to global climate action. In addition, we highlight the importance of considering and managing Scope 1, 2, and 3 emissions while investing in carbon offset projects. Contact us at [email protected] to discuss your offsetting needs from the projects, as we can make a real and measurable impact on the environment and contribute to sustainable development.