5 min read

Cloud providers’ net zero claims are not enough: here is why companies should act to reduce their cloud emissions

Cloud emissions are notoriously opaque, but it is everyone's responsibility to reduce them.
Melodie Michel
How can companies reduce cloud emissions?
Photo by C Dustin on Unsplash

Cloud emissions are notoriously opaque – yet they are likely to rise as companies resort more than ever to tech solutions to achieve their climate and sustainability goals. How can companies reduce cloud emissions in this context?

If you listen to the top cloud providers, migrating IT services to the cloud is almost a sustainability decision rather than a business one. According to Microsoft, it can result in a 98% carbon footprint reduction for IT services. And yet, people working in this space regularly raise the alarm on the hidden emissions of cloud computing.

“In many cases, this isn't accurate. It’s only true if you're moving from a very, very dirty data centre, that's very, very old. Most organisations’ data centres are already hyper efficient and running on green energy,” said Adam Turner, Head of Digital Sustainability at the UK Department of Environment, Food and Rural Affairs (Defra).

Speaking to CSO Futures, he recalled asking the government’s cloud providers to provide a breakdown of emissions back in 2018 in a bid to reduce cloud emissions, and being met with a resounding “no”. Five years later, partly thanks to this government pressure, all three cloud hyperscalers (Microsoft Azure, Google Cloud and Amazon Web Services or AWS) offer clients information about their footprint – though data quality and granularity remain insufficient.

Cloud emissions and renewable energy

On top of the disparity in emissions disclosures from the main players, transparency is also hindered by bold net zero claims that make customers feel like cloud emissions are not something they need to worry about.

“The challenge is that the industry as a whole will be saying, ‘don't worry about it, we're getting greener, we're using green energy’. And the reality is that unfortunately, due to lack of transparency from those suppliers, in many cases, the figures aren't necessarily as accurate as they should be,” added Turner.

Salesforce is a famous example: the company declared it had achieved net zero residual emissions in 2021 and proudly sells “Net Zero Cloud” solutions. But a closer look at its climate strategy reveals that it is not aligned with the Science-Based Targets Initiative (SBTi) and relies heavily on carbon offsets and renewable energy certificates to assert carbon neutrality – while absolute emissions are actually going up.

Market-based vs location-based renewable energy

The GHG Protocol allows companies to report Scope 2 emissions using both location-based and market-based methods.

The first (location-based) refers to the average emissions intensity of the local grids that deliver electricity needs. It is reduced when grids become greener or when companies add renewable energy capacity on site, such as rooftop solar panels.

The second (market-based) derives emission factors from contractual instruments, including power purchase agreements and guarantees of origin. Under the market-based method, companies can claim emission reductions by purchasing renewable energy certificates for kilowatts of green electricity that may have been produced in a completely different location.

For more on this topic, read CSO Futures’ article about what is changing in Scope 2 reporting.

“Amazon, Google and Microsoft are the biggest purchasers of renewable energy certificates in the world and have been for a long time. If you take any one of the cloud providers, what you'd see on their website is, ‘by 2025, all our data centres will be 100% renewably powered, which is five years ahead of target’. So if you're a busy CSO and you read that, you would think, ‘okay, this is green, or it's going to be green soon’. But there is a nuance between market-based claims and location-based claims,” said John Ridd, Founder and CEO of cloud emissions accounting company Greenpixie.

In other words, when these companies say they are running on 100% renewable energy, what they mean is that they have bought enough renewable energy certificates to compensate for their entire energy use – even though their data centres may run on fossil fuel energy. That’s not to say they are not working to switch their electricity supply to renewable providers: technology companies are the largest corporate buyers of renewable energy through power purchase agreements (PPAs). But they are still a ways away from running on 100% renewable energy.

Reduce cloud emissions beyond energy use

Additionally, the carbon emissions from cloud usage are not exclusively derived from energy use. According to Ridd, data centres’ location-based grid emissions make up about 20% to 30% of the overall carbon footprint of cloud services.

These can already be difficult to calculate because of the lack of geographic granularity in national emissions factors: cloud providers may use annual average footprint information from the national grid where their data centres are located, but energy sources vary widely from region to region.

But the other 70% to 80% of emissions are even more difficult to measure, as they relate to the cloud provider’s own Scope 3 supply chain emissions: the metals and materials and manufacturing needed to produce servers and data centres.

“We're now at a place where customers are getting some data but data quality is nowhere near where it needs to be. And the primary reason for that is lack of Scope 3 data, and lack of carbon data relating directly to the services,” said Turner.

Greenpixie uses the ledgers cloud providers keep for billing purposes to extract detailed information about clients’ usage and their associated emissions: from exact server location to type of hardware, length of computation and time of day.

In Ridd’s experience, for the most digitised companies, cloud emissions can represent tens of percent of their Scope 3 footprint – which often makes up the wide majority of emissions.

What CSOs can do to reduce cloud emissions

While the lack of transparency around cloud emissions may seem discouraging, Greenpixie’s example proves that there is data available to calculate that specific footprint. And once it is measured, it can be reduced in different ways – mostly through software engineer behaviour changes.

“What this looks like in reality is a software engineer behind their laptop moving their computation from a server in a high carbon intensity area like Australia, to a lower-carbon geography like Sweden. That would be one example of how you can really reduce your emissions and electricity being used. And when you couple that with, realising that you don't need to use so many servers, you're starting to save that metal that's coming out of the ground and maximise the service you're renting in the cloud. Then you really start to understand that it is worth the attention,” Ridd told CSO Futures.

Software engineers may take some convincing to change habits, but clear data and behaviour incentives should help. As for getting the C-suite on board, the potential cost savings that come from these adjustments are an enticing selling point, he added.

But it is also crucial that companies continue to place pressure on their cloud and other digital solutions providers to present more accurate and granular data – not least to understand the impact of the tech solutions they are deploying to reduce their carbon footprint elsewhere.

Turner explained: “Digital data and tech is being used as THE key enabler to meeting all of the other targets that CSOs will have on their plate. So tech is fairly unique in that while we're reducing all of the other targets, tech’s footprint is increasing. It's important for CSOs to recognise that and put pressure on their suppliers to give them accurate data.”