IT versus global climate change

With a carbon cap-and-trade system on the horizon and the effects of climate change being felt, IT has a chance to shine

Embracing a green-technology strategy not only leaves you feeling warm and fuzzy, but signifies a smart business move: It translates to cutting costly waste, from electricity to paper to gasoline, and can result in more efficient business processes. Naturally (no pun intended), the environmental implications of embracing green IT are well worth considering. For example, green tech can help combat global climate change, which, if left unstopped, could have devastating effects on the planet and, in turn, the economy. At the same time, green technology offers opportunities for IT organizations to once again come up with solutions to pressing problems.

For starters, businesses should start taking notice of their greenhouse gas emissions and carbon footprint for the simple (or perhaps not so simple) reason that a carbon cap-and-trade system will almost certainly go into effect here in the United States in the not-too-distant future. Both John McCain and Barack Obama advocated such a system during the presidential campaign. Now, Obama presumes in his 2010 budget proposal that by 2012, there would be a nationwide cap on CO2 emissions. The vision is to reduce said emissions to 14 percent below 2005 levels by 2020 and to 83 percent below 2005 levels by 2050.

Under such a system, businesses would face limits on how much CO2 they could emit. Those caps could come in the form of permits, where each permit would equal, say, a ton of CO2. Companies that are able to produce fewer emissions than they're allowed would be able to sell their extra permits to companies that can't keep their emissions within bounds.

In this scenario, companies will need to do two things: measure their carbon footprints and reduce their emissions. In both cases, IT will play an integral role.

Carbon calculators

In terms of measurement, we've already witnesses companies, including Rackspace, Microsoft, and Ilog, cranking out carbon-measurement tools, though I doubt their offerings are currently sufficient to deliver comprehensive carbon measurements that organizations would require to comply with future legislation. A cap-and-trade system opens the door for more companies such as IBM and startup Greenstone, which offer more sophisticated software and consulting services for measuring carbon emissions.

Measuring CO2 emissions is but the first step. More importantly, companies need to reduce those GHGs. Here, IT organizations have already started delivering solutions in the form of products, both hardware and software, that can help companies cut energy and fuel consumption throughout their organization. The list is exhaustive, from software that powers down PCs at night to more energy-efficient hardware to business intelligence software that helps plan more efficient driving routes to telepresence products that reduce the need to travel.

[ Learn more about approaches to reducing costly waste at your company by reading "Greening the enterprise from top to bottom" and "The ROI of green IT." ]

It's worth emphasizing that these IT solutions aimed at reducing emissions can also be cost-savers, which could be particularly important when a cap-and-trade system takes effect. A recently released report from the George C. Marshall Institute predicts that a cap-and-trade system could result in electricity prices jumping 5 to 15 percent by 2015, natural gas prices up 12 to 50 percent, and gasoline prices up 9 to 145 percent. If these predictions are indeed accurate, companies will have all the more incentive to conserve.

Resource madness

I expect the prospect of a cap-and-trade system will cause more than a couple of CEOs to roll their eyes as they contemplate the hassles associated with complying with new, complex legislation. But consider, for a moment, just some of the business risks associated with ignoring the threat of global climate change.

For example, a recent report [PDF] released by Ceres and the Pacific Institute warns that global climate change is exacerbating water scarcity problems around the world.

"Already, China, India, and the western U.S. are seeing growth limited by reduced water supplies from shrinking glaciers and melting snowcaps that sustain key rivers. Meanwhile, agricultural and power plant production have been cut back due to more frequent and more intense heat waves and droughts in large parts of Australia, California, and the southeast U.S.," according to the reporting organizations.

What does that mean for the IT industry or companies that rely on IT? First, it means less available electric power, which makes the power crisis we're facing all the more dire: "Drought-induced water shortages have already caused power plant shutdowns in Europe, Brazil, and the southeast U.S. that led to price spikes and reduced economic growth. The power industry depends heavily on water and accounts for a staggering 39 percent of freshwater withdrawals in the U.S."

Second, a water shortage has a profound impact on the silicon-chip industry, the cost of which could trickle up the supply chain. According to the report, "eleven of the world's 14 largest semiconductor factories are in the Asia-Pacific region, where water scarcity risks are especially severe. IT firms require vast amounts of ultra clean water; Intel and Texas Instruments alone used 11 billion gallons to make silicon chips in 2007. A water-related shutdown at a fabrication facility operated by these firms could result in $100 to $200 million in missed revenue during a quarter, or $0.02 or $0.04 per share."

[ Businesses, including IT companies, have other reasons for concern over the GHG emissions and global climate change, such as the threat of litigation. Learn more by reading "C02 spewer? See you in court!" ]

The bottom line here is that we're finally witnessing greater acknowledgment and acceptance in the political and business worlds that global climate change is indeed a threat and that more steps need to be taken to combat it. Yes, a cap-and-trade system will yield headaches. Companies will likely have to make some investments up front to measure and reduce their emissions. There are payoffs, though: Conservation leads to savings in the long run (efficiency can yield dividends) -- and preserving the planet is a nice bonus.