When will regulators get serious on datacenter emissions reporting?

An end to greenwashing won't come without a fight

Updated Efforts to regulate datacenters are starting to stack up.

Over the past year we've seen an uptick in efforts to rein in datacenter emissions, water consumption, or simply standardize reporting. But, despite major cloud providers and hyperscalers' sincerest net-zero commitments, legislators want more transparency and even fines for companies that refuse to clean up their act when it's not financially convenient. And as you might expect, not everyone is happy about it.

Just last month a bill in Oregon that would have forced datacenters and cryptomining operations in the US state to cut emissions and transition to renewable energy or face fines died in committee after Amazon reportedly pushed back against the measures.

The bill, first introduced to the Oregon state legislature in January, was pulled in late March, with co-sponsor Pam Marsh (D-Ashland) telling local media "there had been sufficient confusion planted in the community about what it might do."

The allegation was that major datacenter operators in the region had planted a seed among local officials that if allowed the pass, the bill would put their ability to do business and by extension put jobs at risk.

While the proposed legislature failed to pass, it's hardly the first example of regulation mandating datacenter emissions reductions or other sustainability practices, and it certainly won't be the last. This year alone, we've seen numerous bills proposed that would regulate and even restrict the construction of datacenters.

Forcing the issue

In January, Virginia state legislators introduced bills designed to restrict development on new datacenters, particularly those in Prince William County, while another sought to bar operators from building facilities within a mile of national or state parts or other historically significant locations.

The bills are significant because northern Virginia has one of the highest concentrations of datacenters in the US. By some estimates the state is home to more than 300 consuming as much as 2.8GW of power. This has put intense pressure on local utilities tasked with supplying these facilities with power.

The situation has gotten so bad that in February datacenter operators reportedly approached the state Department of Environmental Quality for a waiver that would allow them to run generators during summer months in violation of Virginia's air quality standards.

Virginia DC operators aren't the only ones running into problems getting enough power to support their campuses. Prior to the Oregon bill's demise, Amazon said it would transition some of its Oregon datacenters to fuel cells, and not the hydrogen powered ones used in space flight. These fuel cells run on natural gas and produce, and like all fossil-fuels produce CO₂ as a byproduct, a move at odds with Amazon's stated sustainability goals, which include transitioning facilities to 100 percent renewable energy by 2025.

While Amazon pitched it as a way to power a small number of its operations in Oregon, it's by no means a small deployment. The company's initial plan calls for 75 megawatts of fuel cell capacity across three datacenters, and could be extended to include four additional sites in the future.

In a blog post last week, Amazon boasted that its operations in the state were already powered by at least 95 percent renewable energy, and it had signed agreements with local utilities to push that to 100 percent. However, the post made no reference to renewable energy credits (RECs), power purchase agreements, or other methodologies for offsetting carbon emissions in regions where green energy isn't readily available or adequate to support facilities with power demands measured in tens of megawatts. The Register asked Amazon for clarification and was told that the company may "purchase additional RECs to signal our support for renewable energy in the grids where we operate in line with the expected generation of the projects we have contracted."

Given the company's investments in natural gas fuel cells, it seems likely the company will rely on RECs to achieve these goals, though it's possible that company could transition to a "green hydrogen" supply in the future.

While Amazon has successfully dodged regulatory scrutiny in Oregon for now, it may not be long before it and other hyperscalers attract the attention of Federal regulators.

Last fall the White House Office of Science and Technology penned a report examining environmental impacts of these facilities. While the report focused primarily on cryptomining operations, investigators noted that US datacenters were roughly comparable in terms of power consumption. In fact, datacenters are likely to be a bigger target following Ethereum's move to proof of stake, which substantially reduced the power consumption of the popular cryptocurrency.

In the wake of the report, Senators Ed Markey (D-MA), Jeff Merkley (D-OR) and Bernie Sanders (D-VT) have introduced a bill calling for an interagency investigation into whether these facilities are in violation of the Clean Air Act.

Setting an example

Across the pond, the European Commission is in the process of reviewing [PDF] the Energy Efficiency Directive, which among other things would institute reporting requirements for all but the smallest datacenters.

The updated energy efficiency directive institutes reporting requirements on datacenters with equipment consuming 100 kilowatts or more. To put this in perspective, this translates to 16-17 racks operating at 6KW, but could be as few as 10 GPU nodes packed into a single rack.

How much water? How much power? It's confidential

Under the law, operators meeting this requirement would have to report several metrics including water and power consumption, data traffic and storage, as well as heat reuse.

While this may sound innocuous on its own, hyperscalers and cloud providers tend to be pretty secretive about these kinds of metrics.  We're told this is because it can offer competitors a glimpse into the infrastructure configurations involved. In the public cloud arena, any efficiency gain is a competitive advantage that can allow them to offer lower prices while maintaining margins.

These metrics will be aggregated and inform future mandates for emissions reductions or water consumption reductions. At the very least, the recast effectively sets a bar for environmental transparency, and should make it harder for cloud and hyperscale datacenter operators to greenwash their environmental impacts.

An end to greenwashing?

Perhaps the biggest benefit to datacenter regulation, particularly measures that would standardize reporting, is an opportunity to compare datacenter emissions and sustainability on an even playing field.

While nearly every major cloud provider and hyperscaler has announced some kind of sustainability effort as part of their annual environmental, social, governance (ESG) reporting, how each arrives at their emissions figures can vary wildly.

What's more, most of these companies rely on measures like RECs or power purchase agreements to offset the carbon emissions generated by their operations, which can obscure their impact on the climate.

Requiring datacenter operators to report their power consumption, emissions, and water consumption in a consistent way is the only way to hold them accountable and prevent them from moving the goalposts when their sustainability promises take a back seat to financial gain. ®

Updated to add

"A number of organizations, including Amazon, oppose HB2816 because the bill does not address the build-out of electric infrastructure that is needed to bring more clean energy to the grid," as Amazon spokesperson told us after publication.

"Building new renewable projects requires infrastructure investments in the grid and today there are hurdles in key areas like permitting and interconnection. Accelerating energy infrastructure permitting and interconnections for renewables like solar and wind would have a greater impact on reducing emissions, bringing more clean energy to the grid, and helping achieve our goal of accessing more clean energy in Oregon."

Amazon said it was happy to work with state officials, industry, and community leaders to further the course of renewable energy.