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As data centers seek to reduce emissions and improve their environmental reporting, the PWR-20 is an essential starting point.
Data centers form the backbone of our digital lives. As global demand for digital services expands, this backbone grows—and so do the carbon footprints of data centers.
To measure and ideally reduce their footprints, data centers can refer to the Greenhouse Gas (GHG) Protocol: a global, standardized set of frameworks to measure and manage GHG emissions from public and private sector operations.
Using the GHG Protocol as a guide, data centers have an opportunity to report their emissions with greater precision and transparency, and ideally use this information to minimize their environmental impact.
Within the last decade, however, the migration to cloud vendors and colocation providers has made it considerably more difficult to calculate emissions from data centers, which face growing pressures to “count their carbon.” Similarly, cloud vendors are under pressure to provide enough data for their customers to calculate emissions, or perform those calculations on behalf of their customers.
To understand how data centers can improve their carbon accounting (and reduce their emissions), we’ll outline the three categories or “scopes” of the GHG Protocol. When combined with a zero-carbon energy source like nuclear power, these scopes can guide data centers toward cleaner energy practices—and, fittingly, cleaner, clearer data on their emissions.
The GHG Protocol is the world’s most widely used set of accounting standards for GHG emissions. The Protocol covers emissions from seven GHGs: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PCFs), sulfur hexafluoride (SF6) and nitrogen trifluoride (NF3).
To fully understand the relationship between data centers and decarbonization goals, we need more precise measurement and reporting of these emissions, journeying from data source to data center. The GHG Protocol aims to document this journey using comprehensive, standardized, and globally accessible frameworks.
By outlining the following three “scopes” of emissions, the protocol enables companies (and even entire countries) to measure and manage GHGs in both the private and public sectors.
These emissions can be linked directly to activities from sources that the reporting entity owns and controls. In a data center, Scope 1 emissions could include electricity for cooling, running IT equipment, and other daily operations.
Indirect emissions from the generation of purchased energy.
Scope 2 emissions come from the consumption of purchased electricity, heat, or steam. Data centers often categorize Scope 2 as emissions from purchased electricity and district heating for their facilities, and potentially stationary combustion from leased sites.
All other indirect emissions from activities along the value chain, both upstream and downstream.
Scope 3 refers to all other indirect emissions from various activities along the value chain. In a data center, Scope 3 emissions may come from the extraction and production of materials and fuels, transportation in vehicles not owned by the organization, waste disposal, and any other GHG-intensive activity not covered by Scope 2.
To further clarify these scopes, the GHG Protocol distinguishes between direct and indirect emissions. Direct emissions come from sources “owned or controlled by the reporting entity.” Indirect emissions come from sources owned or controlled by another entity but are ultimately a “consequence of the activities” of the reporting entity.
The answer to this question varies by country as well as the size of the data center, energy consumption, and its emissions targets or goals.
While the GHG Protocol is not a law or mandate, this guideline (and specifically the language of Scopes 1, 2, and 3) shapes many governments' legislation and recommendations for data centers and other large GHG emitters.
The Corporate Sustainability Reporting Directive (CSRD) entered into force in January 2023, replacing and modernizing the requirements of the EU Directive on Non-Financial Reporting (2014/95/EU).
The CSRD requires all large companies and all listed companies to publish information related to “environmental matters'' and will require Scope 3 reporting by 2024. Overall, this directive sets a higher standard for sustainability reporting, using “sustainability” in reference to environmental, social (including human rights), and governance factors.
The Streamlined Energy and Carbon Reporting (SECR) requires large, unquoted companies that have consumed more than 40,000 kilowatt-hours of energy in the UK to report their annual carbon and energy information. Additionally, all quoted companies in the UK must report on their global energy use and GHG emissions.
Under the SECR, Scope 3 emissions reporting is currently voluntary.
The Greenhouse Gas Reporting Program (GHGRP) requires annual reports of emissions from “large GHG emission sources, fuel and industrial gas suppliers, and CO2 injection sites.” The GHGRP program requires businesses to report direct emissions at the individual facility level (Scope 1) and indirect emissions from upstream suppliers (Scope 3).
However, newly proposed changes by the Securities and Exchange Commission (SEC) would require companies with $25 million in assets or more to report their carbon emissions: Scopes 1 and 2, and Scope 3 “if material” (that is, measurable and relevant to report) or if the company’s emissions target or goal addresses Scope 3 emissions.
While the materiality of Scope 3 emissions can be subjective, the SEC defines material emissions as those with “a substantial likelihood that a reasonable investor would consider them important when making an investment or voting decision.”
Among data centers and other organizations that meet their national requirements for GHG reporting, disclosure of Scopes 1 and 2 emissions is often mandated, while Scope 3 emissions tend to be reported only voluntarily.
However, rather than simply overlooking Scope 3 reporting, a growing number of industry leaders encourage data centers to start tracking Scope 3 emissions now, even as they wait for national legislation on GHG emissions to evolve, be refined, or simply take effect.
Of the three categories established by the GHG Protocol, Scope 3 emissions may present the most significant opportunity for data centers and other carbon-intensive facilities to reduce their GHG emissions.
Beyond the obvious environmental benefits, tracking and reducing Scope 3 emissions would benefit data centers in the following ways:
For many data centers, “green” initiatives and sustainability targets may soon become fiscal imperatives. S&P Global reports that under regulatory pressure, data centers will need to meet new technical standards to reduce their energy usage and carbon emissions—even as the global economy digitizes, and the demand for data-related energy continues to grow.
To significantly reduce emissions across all three scopes, data centers must turn toward cleaner energy sources. The cleanest option available? Nuclear energy.
As a zero-carbon, baseload power source, nuclear energy supplied by small modular reactors (SMRs) offers several benefits:
1. Reliable and Continuous Power Supply
SMRs provide always-on, reliable, baseload nuclear power, which is crucial for the uninterrupted operation of data centers.
2. Energy Independence
Sourcing electricity from SMRs enhances energy independence, making data centers less susceptible to grid failures, blackouts, or fluctuations.
3. Predictable and Stable Energy Costs
Data center customers would partner with the SMR developer via a long-term power purchase agreement (PPA), which offers price predictability of electricity.
4. Control Over Scope 2 Emissions
Because disclosure of Scope 2 emissions is often mandated, it is important for data centers to look for a clean electricity option that suits their heavy energy needs.
5. Scalability and Customization:
SMRs are designed to be modular and scalable, meaning these facilities can scale to meet the growing energy demands of data centers.
As opposed to purchasing power from the utility and relying solely on the grid, which is often unpredictable in terms of both pricing and energy sourcing, the data center can establish a direct connection via Last Energy’s PWR-20—a 20 megawatt hour (MW) modular microreactor. Last Energy customers purchase nuclear power via virtual power purchase agreements (VPPAs) or private wire PPAs, both of which resolve time-matched Scope 2 emissions tracking.
Paired with efficiency gains (which reduce Scope 1 emissions) and more stringent tracking of Scope 3 emissions, the PWR-20 supports both decarbonization and the ability to better report carbon emissions.
Overall, sourcing energy from the PWR-20 supports data centers’ sustainability goals, which align with the desires of governments, financial markets, and corporate clients to invest in zero-carbon energy.
Even with technologies like the PWR-20 and guidance from the GHG Protocol, the cloud is a persistent and growing dilemma for data centers. When data centers outsource their IT workloads to the cloud, they do not directly generate emissions under Scope 1 nor purchase energy under Scope 2.
As a result, their emissions move to Scope 3 and are aggregated into the global carbon reporting by the largest cloud vendors. These technicalities effectively “hide” carbon in the cloud, making it difficult to assess the true environmental impact of outsourcing workloads to cloud data centers.
With more control over their Scope 2 emissions, however, data centers can more easily obtain the required data for mandatory GHG emissions reporting, while developing standardized processes for Scope 3 emissions tracking.
As more data centers navigate the shift to the cloud and to third-party options to measure their carbon footprints, nuclear technologies like the PWR-20 facilitate the transition to clean energy and more accurate, consistent environmental reporting.
This process will take time, but it needs to start now—especially as data centers and the overarching cloud expand in size and energy consumption.
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