Stealth Carbon 'efficiency' tax could close UK data centres

Almost half of the UK's data centre operators believe the UK's Carbon Reduction Commitment (CRC) efficiency scheme tax could drive UK data centre investment offshore, with one-third saying it would send UK data centres overseas as well.

The findings are from a survey of Britain's largest data centre operators by Datacenter Dynamics as part of a marketing initiative for its conference, Datacenter Dynamics London 2010.

Other findings were that 83 per cent of the respondents said they are concerned about the rising cost of purchasing carbon allowances and 81 per cent were concerned about the rising uncertainties surrounding the CRC scheme.

The scheme, according to the Department of Energy and Climate Change "has been designed to raise awareness in large organisations, especially at senior level, and encourage changes in behaviour and infrastructure."

We doubt it has been designed to export UK data centres and jobs offshore – but that might be its unintended consequence.

The government discarded a plan to rebate carbon credit fees paid by companies which were the best performers in reducing energy use and cutting which were the best performers in reducing energy use and cutting carbon emissions. Instead, in October's Comprehensive Spending Review, the Government announced that it would retain these fees paid for carbon credits which must be purchased from April 2011 by companies using 6,000MWH of power, turning the scheme into a stealth tax.

It means data centre operators and other big powers face rising power costs and costs for purchasing carbon credits, a double bite into their revenues.

It is ironic that cheap electricity, which galvanised the later stages of the industrial revolution and was helped by the creation of the national grid, the inspiration for utility-driven IT services in the cloud, should now be so expensive that it is driving UK-based data centre operations overseas to locations with lower power costs and no or lower carbon-emission reduction taxation.

The government bureaucrats don't realise that broadband communications mean it's just as feasible to operate your lights-out data centre in Dubai, Brazil, India or Malaysia as it is to operate it in London's Docklands. The stealth CRC tax is effectively a tax on UK data centre jobs as well as on the UK's data centres, and could well reduce the government's overall tax income.

The Datacenter Dynamics London conference on 9 and 10 November at the Lancaster London Hotel, W2, is running a number of sessions examining the implications and the impact of the carbon tax. ®