Does Cloud Computing Help or Harm the Environment?

Cloud computing involves storing data on internet-connected devices housed in remote data centers rather than on one's own personal digital device. Cloud computing has revolutionized the digital world by taking much of the data storage out of our phones and computers and putting it in a central location. This has made those digital devices more affordable, which in turn has led to more demand for data centers—and to increasing concerns about their environmental impact.

How Does Cloud Computing Work?

When the business world first entered the digital age, mainframe computers housed much of the operating power and data storage with a network of terminals used by individual employees, usually all working in the same building. In the 1980s, stand-alone personal computers were introduced with their own data storage. The rise of internet-based commerce in the 1990s led to larger and larger demand for data storage, with each company constructing its own in-house data center.

By reducing the need for each company to build its own data center, cloud computing reduced their cost of doing business, allowing Internet commerce to boom even more. Amazon introduced Amazon Web Services (AWS) in 2002, and Google and Microsoft followed within a decade. Cloud computing companies began housing not just data but software platforms like Microsoft's Office 365 and Google's Workspace. Today, cloud computing is a multi-billion dollar industry. Among the top three data providers, AWS, the market leader, earned Amazon $13.5 billion in 2020, while Google Cloud earned nearly $3 billion. Microsoft did not disclose its earnings from cloud computing.

Data centers require massive amounts of around-the-clock electricity to operate. In electricity grids run by fossil fuels—especially coal—data centers are significant contributors to global warming. But data centers can also help combat climate change.

The Environmental Pros and Cons

Compared to what they have replaced, data centers have actually lowered carbon emissions. According to one study, up to 95% of an individual company's energy consumption can be decreased by using cloud computing rather than constantly running their own computers, whether they are being used or not. The study's authors write: "Cloud computing can reduce carbon emissions by 30 to 90%." Sharing data in the cloud also makes many business practices such as supply chains more efficient, cutting down on energy consumption and waste, and thereby reducing their environmental impact.

Yet increasing business efficiency does not mean reducing business activity. Instead, the increasing use of data centers has led to, well, the increasing use of data centers. In 2018, data centers represented roughly 1% of electricity use worldwide—about 200 terawatt-hours (TWh) per year—and around 0.3% of global greenhouse gas emissions. (One terawatt hour equals 1 billion kilowatt-hours.) In the United States, that number is 70 TWh—more than a third of global consumption.

Overall, the information technology sector is responsible for roughly 2-4% of global greenhouse gas emissions—about the same as the aviation industry. Data centers' global electricity use is expected to increase to between 3% and 13% of global electricity by 2030. Without serious efforts to shift to clean energy sources, greenhouse gas emissions from data centers will increase at the same rate.

What Is Being Done?

Fortunately, getting data centers to rely on clean, renewable energy sources and use that energy more efficiently are far easier tasks than reducing the carbon footprint of the billions of digital storage devices that they've replaced. Here is where economic and environmental interests may overlap. Data center companies have every incentive to maximize the efficiency of their resources and reduce their cost. For that reason alone, the world's biggest data center companies—Amazon, Microsoft, and Google—have all begun implementing plans for their data centers to run on 100% carbon-free electricity.

Amazon claims to be the world's largest renewable energy purchaser, consistent with its goals of powering its company with 100% renewables by 2025 and to become carbon net-zero by 2040. Microsoft has pledged to be carbon negative by 2030 and to remove from the atmosphere all the carbon the company has ever emitted since it was founded in 1975. To achieve this, it plans on having all of its data centers running on 100 renewable energy by 2025.

And Google had already reached its 100% renewable energy target in 2018, though it did so in part by purchasing offsets to match those parts of its operations that still relied on fossil fuel electricity. By implementing load migration practices, Google has pledged that by 2030, all of the energy it uses will come from carbon-free sources.

To achieve these ends, large data centers have begun using high-efficiency cooling systems or locating them underwater to keep servers cool or in places where renewable energy from wind or solar is available, such as in a fjord above the Arctic circle. These projects are capital-intensive, even if they are cost-beneficial in the long run. Getting smaller data center providers with more limited capital to do the same is still a challenge. Government support, such as from the U.S. Department of Energy's Data Center Accelerator program, can help.

Data centers' primary task is to move electrons around, and renewable solar energy is the least expensive source of electrons in most parts of the world today. Other industries like steel and concrete manufacturing will have a difficult time decarbonizing their practices. Data centers have every incentive to do so. As with many climate issues, however, the key question is the pace of change.