Leadership Insights: Climate Change and IT

Transcript

Mike Vizard: Hey, guys. Welcome to the latest Digital CxO video podcast. We’re here with Steven Carlini, who is the vice president of Innovation and Data Center for Schneider Electric. Steven, welcome to the show.

Steven Carlini: Thanks for having me, Mike. It’s great to be here.

Mike Vizard: There is of course a lot of understandable concern about climate change, and whether you believe it or not, there’s a lot of financial incentives being applied one way or the other. So I think companies are gonna have to respond.

What is your sense of where does climate change and IT intersect? Do we need to start measuring all these carbon emissions from each datacenter? And what’s involved in that kind of effort at a time when we’re using more IT than ever?

Steven Carlini: Those are some great questions. Let me just start by saying that at Schneider Electric we take sustainability very seriously. We were just named the most sustainable company in the world by Corporate Knights for 2021. We have committed to decarbonize our operations by 2030, and our extended supply chain decarbonized, the whole ecosystem, by 2040.

So we like to think of ourselves as the doctor and the patient. For the last 15 years, we’ve been developing solutions to lower our carbon footprint overall. So we’ve taken what we’ve learned over the last 15 years and we’ve turned it into a business. So Schneider Electric has recently just started an entire sustainability division, focused on lowering the carbon footprint and improving the sustainability of our customers and partners.

So the million dollar question in the IT industry is: what’s going with sustainability? Is it still a buzzword? Are companies taking it seriously?

Like you asked, yes, there is an intersection. We believe that based on our business and what we’ve been being able to deliver to our customers, is purchasing decisions are being made with sustainability as a major factor. So as a supplier, if you look at Schneider as a supplier, we supply datacenter solutions. Decisions are being made by the purchasers that are looking for their suppliers to have a very green and sustainable profile.

So they are making the decisions based on that. It’s starting to come up in the conversations much, much earlier. So at Schneider, as a supplier, they are asking us for things like, “How green are your solutions?”

We have things in place. We have a Green Premium program in place, where we design our products to be very, very circular and high efficiency, use recycled content, use recyclable packaging, which is actually a huge driver. So from that perspective, yes, they are asking us for these things.

Our products do also come with a product environmental profile sheet. We call them PEP sheets. So with the PEP sheets, they give you an indication of the circular content, the efficiency, how recyclable it is, everything you need to know about the recyclability of the product.

Mike Vizard: Do you think that more workloads are gonna shift to the cloud because of sustainability concerns? Because one of the things you hear from the cloud service provider folks all the time is that their energy footprint is more efficient than it would be if you did it yourself. So will that force a shift?

Steven Carlini: It’s a great point. A lot of the larger IT companies and a lot of the cloud providers have a head start in their sustainability journey. Maybe of them have been doing it for well over a decade. It is something that a lot of the customers are looking at, and we’re working with a lot of the larger Internet giants. Not only have they made carbon commitments, they’ve also recently made commitments on waste, a waste profile, going to zero waste.

A couple of them have even made commitments to be water-positive. Water-positive is an interesting concept because at that point you’re generating water.

So how are you generating water? Well, there’s two ways. You can aggregate rainwater from a rainy area or you can get it from desalination. So desalination is taking seawater and taking the salt content out of it.

You do this with a couple of different methods. You boil the water, and as it turns to steam you reclaim it as freshwater or potable water. Or you can use reverse osmosis, basically running the seawater through high-pressure filters. Both of those processes are hugely energy-intensive.

So to answer your question, yes, the Internet giants are an avenue if you’re looking to decarbonize and you’re putting a carbon strategy in place, and you have a high carbon output or a high water output or high waste and you want to streamline your operations. It is a vector that you could pursue.

Mike Vizard: Do you think that I can get to some level of sustainability that will be acceptable with my existing datacenters? Do I rip and replace them? Do I add water or do I have to go through this whole motion? Or should I just go looking for a new datacenter and build it from scratch?

Steven Carlini: Well, those are great questions. That’s why we have services that are better designed to look at where you are right now, doing an analysis of your operations, of your datacenter operations. Look for areas where you could improve. Make recommendations on whether you should, whether it’s cost-effective to replace what you have.

It could be that you’re operating – we have some data center operators that come to us, and they’re running hugely inefficient operations because their capacity is much greater than their IT usage. So there is certainly some low-hanging fruit in a lot of these data centers, in most cases, where you could quickly adapt. Or it’s a case where it could be a newer datacenter, where they’re running very, very efficiently, and sometimes they may just need to add some kind of management software and evaluate their operations.

So one of the things we do is we have some software, datacenter infrastructure management software. But we also have what’s called resource advisor software, where we could take the output out of their software systems, like a DCIM system, and pour that into our resource advisor system. That will give you the output of how it’s performing.

Now once we get the data, we could use it to benchmark that data against best-in-class and see how it measures up. We can also look at areas for improvement. It could be their cooling operations may be the problem. It could be some of their power systems are oversized. It could be too much redundancy, and maybe it would make sense to eliminate some of the redundancy.

So that’s one of the things. We can come in and there’s expertise that we have from doing this for many, many years. So it’s different for every customer.

Mike Vizard: It’s also becoming something of an economic equation, because there are these carbon credits and offsets and all this other stuff that people are trying to figure out. Is the economics of that worthwhile, or is it simply just a matter of there’s a lot of pressure coming from the end customers of all of these organizations, and they just wanted to say, “Hey, you’re being more responsible to the climate, but you don’t really need to get into the math of that level of detail,” or are we really gonna get into how much is IT driving for a carbon credit, as it were?

Steven Carlini: That’s a great question. It’s true that there’s different ways to decarbonize, and one of the ways to decarbonize is through carbon credits. Essentially, you’re funding the generation or the production of renewable supply with these carbon credits. So you’re using the carbon, but you’re funding the renewable supply somewhere. So it’s a net zero.

So it all depends on the price that your company puts on carbon. So it’s called the carbon price, and it’s a price that you use for making investments. You have to offset improvements that you can make versus purchasing these carbon credits or these offsets.

So it is a vehicle because there is, in some cases, renewable supply that’s available, that you could purchase. It’s funny. We talk about it like it’s more expensive, but there are countries where renewable supply is actually lower cost than fossil fuel-based electric supply.

So again, it’s an equation where you have to run the numbers. How do you value your carbon footprint and your carbon price? Should you be using these credits? Or would it be more cost effective to make improvements to your operations, to have them run more efficiently?

Mike Vizard: There are some folks that believe we’re gonna digitize more processes in the next ten years than we have in all four decades previously, and that’s a lot of workloads that are running on compute somewhere. Do you think that digital CXOs are gonna have to have a bigger conversation about how much carbon is being generated by these platforms and a bigger analysis, and that is gonna result in a lot of reports being generated by IT people, but there’s gonna be a bigger decision at the top of the food chain?

Steven Carlini: That’s where a lot of the discussions are originating, at the top of the food chain. I mean most of the datacenter managers and IT managers we talk to, you know, it’s not their first priority to decarbonize, but it is definitely the priority for a lot of CEOs these days.

We just did a report and it took us a couple of years. We just published it. It’s called Digital Economy and Climate Impact, where we looked at the entire IT sector and we looked at the growth of the IT sector. It’s growing from an energy perspective. So this report looks at a bottom-up from energy and also carbon.

So the IT sector energy use is actually growing at about five percent a year, and by 2030 it’s gonna be 3,200 terawatt hours. So it’s quite substantial. It’s about five percent of all electric demand, but it’s growing to eight. But we’re also noticing something that’s quite dramatic, a 50 percent reduction in carbon intensities for datacenters and telco industries.

So you talked about the credits and some of the efficiencies that datacenters are going under. So even though the electric demand is growing, the carbon intensity of the datacenter is actually going down. The entire industry right now is about – of all of the carbon emissions, it’s about 3.4 percent, and that includes datacenter and the telco industries. So by 2030, because of the offsets and because of the increased efficiencies, it’s gonna go down to 2.6 percent.

So the question is: is this sustainable? Can you keep offsetting? Can you keep reducing? The answer to that is no, but there are improvements that you can make as more and more renewable generation comes online. A lot of these datacenter operators are bringing some renewable supply closer or even on-premise. So it’s an industry that’s really kind of advanced in the use of renewable supply.

When you look at the carbon footprint, there’s Scope 1, which is how much greenhouse gas you actually emit from your operations. In datacenters, that’s really not a big component. There’s emergency generators that could be diesel generators, and when you test those or when you utilize those in an emergency they give off some greenhouse gas.

Then Scope 2, which is a much bigger portion, is the greenhouse gas that’s associated with the electric supply. So by switching all of that or as much of that as possible to renewables, you really limit the greenhouse gas for a datacenter operation.

Mike Vizard: So it sounds like I should be focused on a couple of things. One is maybe getting rid of the old IT gear faster because it generates more carbon. Then I should also think about what are the renewable energy sources that I’m using to drive that IT platform. Is there anything else that people should be looking at as they get prepared for this? Because they do have some time yet, but their window is starting to close, right.

Steven Carlini: It is starting to close. We just published a paper called The 2030 Imperative: A Race against Time. We published that a couple of weeks ago. It basically says that we really need to get started now, if we’re gonna make the 1.5 degree C threshold. So there isn’t too much time to waste.

But we believe that there’s really five key components to a holistic environmental datacenter sustainability strategy. The first one is setting a strategy, being able to measure where you are, and to set a strategy for improvement. Where do you want to be? What are your goals?

The second is implementing efficient data center designs. So like you said, ripping out some of the older IT equipment or older physical infrastructure equipment that really wasn’t operating as efficiently, is resulting in more carbon being generated.

The third thing is driving efficiency in operations, so running your datacenters at higher capacity, also using software, like I said before, to look for areas of improvement, benchmarking against other datacenters. So overall, using software and services to make your operations as efficient as possible.

The fourth one is what we talked about, buying renewable energy with the offsets or credits or power purchase agreements.

The last one is decarbonizing the supply chain. The supply chain for datacenters is something that’s called Scope 3, and Scope 3 emissions could be a large part of the total carbon footprint. So working with your suppliers, understanding the carbon footprint of the IT that you’re installing, looking at the entire value chain. So it’s not only the emissions that you’re generating or from the use of electricity that you’re using. It’s also the carbon footprint of the devices that you’re installing, so the whole value chain.

Mike Vizard: All right. You heard it here first, folks. We’re late. People are counting on us. You think you’ve got time, but if you add it all up and you start working backwards, you’re gonna find you’re behind the curve.

Steven, thanks for being on the show.

Steven Carlini: Thanks for having me. That was a pleasure. Thank you.

Mike Vizard: And back to you guys.