Data Centre Industry to Benefit from Carbon Tax Break

Data centre operators in the UK are about to benefit from a carbon tax break, providing huge savings that can in turn be passed onto customers.

In July, the new Climate Change Agreement (CCA) for Data Centres comes into effect, meaning the amount of carbon tax that operators are liable to pay is much reduced, provided the industry delivers measureable energy efficiencies.

The CCA scheme has been in place since 2001 and allows certain industries to commit to tough energy efficiency targets that also ensure they can remain competitive in a global market. This is the first time such an agreement has been applied to the technology sector.

To get a carbon tax break, a data centre provider has to reduce its Power Usage Effectiveness (PUE) by 15 per cent by 2020 from a 2011 baseline – without increasing IT power consumption.

This marks a distinct change to the previous system, where data centre providers would have been required to pay a levy on the amount of energy they consumed, rather than how efficient they were.

This is particularly relevant to VIRTUS Data Centres, as we pride ourselves on the energy efficient services we offer. Under the current regime we’re required to pay the same amount as an inefficient, outdated data centre – running fewer servers, but using the same amount of energy. Under the new Climate Change arrangement we’ll benefit from a substantial drop in tax payments, which will not only help us to drive down our own costs, but also pass these cost savings on to our customers.

While the Climate Change Agreement is viewed as a well overdue recognition of our sector by the government, it is worth pointing out that the scheme only applies directly to the data centre industry – not to large users who may be operating their own data centre.

This is particularly important and will be a key driver in the increasing data centre outsourcing and cloud computing trends we’re currently seeing.