The long, low,windowless buildings housing corporate data centers look like environmentally benign slabs of 21st Century capitalism. With no smokestacks puffing clouds of smog into the air or drain pipes dispensing muck into rivers, they don’t seem a ripe target for environmentalists.

But annual energy consumption from data centers in the U.S. exceeds that of 5.7 million American households, says a 2007 report from the Environmental Protection Agency (EPA). On a global scale, the energy used by data centers produces CO2 that exceeds that produced by all sources in Argentina, according to a 2008 McKinsey & Co. study.

While data centers function as homes for hundreds of computer servers, energy use from the facilities isn’t just an issue in the technology sector–banks, 911 dispatch systems and aerospace engineering sites, to name just a few, all require data centers to support digital activities.

No program currently regulates the energy consumption of data centers, or of any other facilities for that matter, but legislative stirrings indicate such rules may be on the horizon. The 2007 Energy Independence & Security Act initiated the movement by proposing a voluntary national information program on data center energy efficiency. Now, the American Clean Energy and Security bill, also known as the Waxman-Markey bill, puts a two-year deadline on rolling out the program.

Adding fuel to the energy-saving fire is the EPA’s September declaration that CO2, the primary byproduct of power plants, is a dangerous pollutant.

“As we start to look at what the footprint of a company is, the data centers themselves are really going to become an issue,” says Linda Benfield, chair of Foley & Lardner’s Environmental Regulation Practice. “It’s not something people foresaw 10 years ago. We’ve become paperless, but this has created an entirely new issue that we didn’t think would be there.”

Roundabout Release

Until recently, environmental groups targeting major sources of CO2 emissions focused on power plants. But in the past few years, focus has shifted to users as well as energy producers, says Adam Kahn, a partner at Foley Hoag.

Data centers, which are indirect emission sources, don’t usually produce CO2 onsite. But they suck power on many levels–from massive cooling structures that keep computer servers from overheating to the huge amount of energy they need to keep the servers buzzing
24 hours a day.

Along with the focus on indirect emission sources comes a pressure on companies to self-report their carbon footprint. “Socially responsible investors, nongovernmental entities and, at some level, eventually the regulators will look at the reports and say, ‘Are you doing what you’re supposed to be doing?’” Kahn says.

Google, for example, reports its operations are carbon neutral, and its corporate Web site provides detailed information about its energy use and efforts to offset its direct and indirect CO2 production.

“It’s a little bit of a competition to show that you’re reducing [carbon emissions],” he says. “What it means to reduce them depends a lot on whether you’re reducing total emissions or showing that you’re making more efficient use of electricity.”

Scoring a Star

One tactic to rein in data center energy use is the EPA’s proposal to apply the Energy Star rating system to data center efficiency. Consumers commonly find the small blue Energy Star stickers on appliances such as refrigerators or washing machines that meet the program’s efficiency guidelines. At press time, the EPA was still gathering information to help it develop the data center rating.

Energy Star ratings would help a company with a data center compare its center’s performance to those at other companies, as well as evaluate how efficiently its own specific facility operates compared to other buildings the corporation runs.

Though no Energy Star rating exists for data centers yet, in May the computer servers housed in data centers became subject to Energy Star specifications–one step toward creating a rating system for the facilities themselves. The EPA-drafted specifications set minimum efficiency standards for servers to qualify for the rating. Server manufacturers will need to report the entire range of energy the rated servers could use, depending on whether they’re idle or running at full steam. The EPA has pledged to develop and implement the second tier of more refined server specifications no later than October 2010.

From a consumer’s perspective, data center efficiency ratings won’t necessarily be helpful because several companies may use a single data center facility, Benfield says. But the data centers themselves will have to be very concerned about the standards if Congress passes federal legislation governing indirect emissions.

“If we’re going to do a cap-and-trade system, then we’re going to allocate carbon credits to specific industries and then require them to ratchet down their emissions over time,” Benfield says. “People haven’t looked at data centers as one of the larger consumers of those credits, but we need to look at where those emissions are really coming from.”

Pioneering Partnerships

Because the power companies that feed data centers would actually bear the brunt of buying carbon credits, companies with data centers will feel the cost of cap-and-trade through larger electric bills.

“There’s a big incentive for power companies and data centers to work together,” says David Cranston, chair of Greenberg Glusker Fields Claman & Machtinger’s environmental group. Such partnerships could be a win-win situation, saving both entities a lot of money, he says.

And the faster data centers act to reduce their energy consumption, the less likely it is government agencies will impose strict regulations of their own, Cranston says. He considers the Waxman-Markey bill’s stance on data centers a soft start to regulating them–but that could change if data centers don’t decrease power usage on their own.

“Companies should accelerate voluntary efforts to achieve energy efficiency,” he says. “Use the extra cost of potential regulatory compliance to motivate your engineers to come up with better, cheaper ways to do things.”

The upfront cost of moving data center operations offsite to a cooler climate that naturally chills servers, for example, could save big money in the long run if it prevents the EPA from implementing tough regulations. During the past two years, Yahoo! has built data centers in Washington state outfitted with next-wave cooling technology that uses frigid air sucked from outside along with chilled water to air condition the servers.

As Kahn says, “These things are so expensive to run anyway, there’s plenty of incentive to be efficient right now.”