When you think about how economic growth is bad for the environment, you might picture huge factories with stacks of chimneys spewing out black smoke. It is also easy to imagine the environmental impact of service sectors like e-commerce, where logistics and packaging ostensibly contribute to greenhouse gas emissions and waste generation. It is not easy, however, to perceive the impact of the software industry.

Some people might be surprised to learn that the information and communications technology (ICT) sector is expected to be responsible for 14% of the world's greenhouse gas (GHG) emissions by 2040, up from 1.5% in 2007.

Of course, the software has no carbon footprint; it is the energy required by hardware to host and compute that does. Most modern applications are being deployed over the cloud. The software industry's GHG emissions are then concentrated in power-hungry data centres.

Data centre facilities have thousands of electronic components, including servers, cooling equipment, power backup and generators, networking equipment, etc., which require a 24x7 power supply to keep the IT operations of a company running.

The environmental impact of this is huge – globally, data centres are estimated to use more than 200 terawatt hours each year, which is more than the annual energy consumption of some countries. With ever-increasing data consumption and growing technology penetration, electricity consumption by data centres globally is expected to reach 8% of global consumption by 2030.

India is currently lagging behind global levels of data centre capacity. It accounts for 14% of global internet users but only accounts for 6% of global data centre capacity. But the explosive growth in data consumption (15-fold in the past 5 years), a booming software industry that is increasingly adopting the cloud, and the call for data localization in the impending data protection regulations has paved the way for the evolutionary growth of the data centre industry in India.

Additionally, through a data centre policy at the central level (in the final stages of drafting) and 6 state-level dedicated data centre policies, the government is aiming to turbocharge the ecosystem. Owing to all these factors, the Indian data centre industry’s current IT load capacity of 800 MW is expected to double and reach 1700 MW by 2025. This expansion capacity is expected to involve investments of over $10 billion and take up an area of about 300 acres across the country. This could contribute significantly to India’s growing GHG emissions.

India does have the third most GHG emissions of any country, but it is leading the way for emerging economies to move toward net-zero GHG emissions by pushing hard for clean energy. In the past decade, India saw a 50-fold increase in installed solar power, which takes the total installed renewable capacity to 160 GW, including Wind, Hydel, and Biomass power generation.

The government has promised to increase this capacity to 500 GW by 2030. This is part of the plan to have net-zero carbon emissions by 2070. In the Union Budget 2022, the government allocated $2.5 billion for a Production Linked Incentive scheme for manufacturing solar PV modules. On the other hand, plans have been made by the private sector to invest $200 billion over the next few years.

Indian data centre companies are hence well placed to lead the evolution of sustainable data centres. It is still an evolving industry, and the legacy burdens are low. It is a good time for the industry to piggyback on the government's push for renewable energy and the corporates’ push for healthy ESG metrics, making it more likely for them to partner with sustainable data centre service providers. Most importantly, environmental sustainability is an imperative that impacts all of us. Everyone needs to step up, take responsibility, and work hard to make the future greener.

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Source: Invest India