Australian data centre sustainability regulation has no set targets for emissions reduction

Data centres are responsible for an increasing share of greenhouse gas emissions, but current regulations lack the teeth to enforce sustainability targets.

While current regulations around data centre sustainability require data centres to report on energy consumption, regulatory frameworks fall short of holding businesses, including data centres to account.

According to Ilona Millar, head of Baker McKenzie’s Global Climate Practice, “At the moment, we have regulation around reporting, but we don't have targets for emissions intensity reduction… I don't think the Australian regulatory framework is really at a point where it's putting those expectations on businesses across any sector. So, I don't think that's something that is unique to data centres.”

Millar says, that as the majority of data centre emissions fall under the scope two bracket of the National Greenhouse and Energy Reporting Scheme, they are not subject to the safeguard mechanism baselines of scope one emitters and are therefore not subject to the carbon credit unit penalty for exceeding this baseline.

This comes despite data centres being responsible for two per cent of the world’s global carbon footprint, a level that is expected to rise in the coming years.

According to Tiny Haynes, Senior Director and Analyst at Gartner, scope one emissions are the result of a process such as generating electricity while scope two represent carbon emissions indirectly generated from purchased electricity.

“The approach around scope two emissions is very much around recognising that someone else's scope one will be your scope two… so the greenhouse gas emissions associated with the energy production are picked up upstream with the electricity generators,” says Millar.

However, despite the lack of regulation, data centre providers are choosing to enter into corporate Power Purchase Agreements (PPAs) to support renewable energy projects and to demonstrate their commitment to emissions reduction.

“Typically, a data centre will be drawing from the electricity network and the grid, and in that respect the electricity may be coming from any variety of sources that are in the grid,” says Millar.

“What you typically see is, companies will look to enter into renewable power purchase agreements, so that they are essentially sourcing renewable energy. Even though the powering of the centre might come from a variety of sources, they then look to the renewable energy power purchase agreement, to demonstrate that they're committed to achieving less intensive generation.”

Meanwhile, Millar says that the world, particularly Europe, is moving towards mandatory disclosures around climate change risks as well as the expectation for companies to report on their targets for emission reductions.

Europe’s Climate Neutral Data Centre Pact brings together industry bodies and key data centre operators, setting targets to improve energy efficiency and increase the use of clean energy.

“We see indicative targets of looking for signatories to the pact to be using 75 per cent of renewable energy by 2025. And 100 per cent of renewable energy by 2030. You also see targets in respect of water conservation, and also improving the circular economy through repairing, reusing and recycling equipment within their operations.”

The pact affects some large operators in the Australian market, including Equinix, who is a signatory, says Millar.

Credit: The video was produced by Josh Lundberg and Matthew Ryan.