Data puts Ireland at the centre of climate crisis

Data Centre
Image: Stockfresh

Billy MacInnes ponders the Green impact of facilities located here for tax and legal reasons

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18 August 2021 | 0

Ireland is famous for many things: the history, landscape, music, culture, towns and cities, people, bars, whiskey and Guinness. To name a few. Let’s not forget Paddy’s Day.

It’s also very closely associated with the colour green, no wonder it was often called The Emerald Isle. There’s no doubting that Ireland is very green. There is green everywhere.

It helps that the climate actively encourages Ireland to be green with all that rain to water the grass. But the climate also plays a big part in helping the rapid growth of a new species to the island, the data centre.

 

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While the arrival of the data centre has, for the most part, been greeted with enthusiasm on the island for its potential to attract investment and create jobs and further opportunities for people living here, some have raised concerns about the possible consequences this invasive species could have on the environment.

According to the latest Host In Ireland Report, there are 70 operational data centres in Ireland with a total of 900MW of connected power capacity. It notes that construction investment in data centres in Ireland was €7 billion between 2010 and 2020. A sign of how fast the data centre trend is accelerating is clear from the fact there will be another €7 billion invested by 2025 – of which €1.33 billion will be spent this year and €1.5 billion in 2022 and 2023.

Sounds great, doesn’t it? But such a large increase in data centres is likely to have a very profound – and potentially disproportionate – effect on Ireland’s electricity and water supply. As EirGrid noted in its 2019 Transmission Forecast Statement, if all applicants being processed for data centres were to connect, “the data centre load would equate to approximately 28% of the current all-island system peak demand”.

The report added: “The potential connection of data centre demand on the scale discussed is equivalent to decades of historical natural demand growth. This will have an impact on the all island system demand forecast and generation capacity adequacy.”

Just in case people might have missed the point, EirGrid Group’s 2020 annual report states there could be a rise of anywhere up to 50% in electricity demand “due to increased economic growth and the expansion of many large energy users, including data centres”. It cautions that, even in its “median demand scenario, the demand for power from large energy users could make up a quarter of all demand in Ireland by 2029”. Based on the median forecast, it admits that “Ireland may not have enough electricity to meet demand from 2026 onwards”.

This also has serious implications for the government’s climate plan. EirGrid admits that “reaching our renewable energy targets will be hugely challenging and a major part of the overall response to meeting our targets will require a significant increase (more than 33%) in the generation of electricity, much of this to cater for the large energy users and also the electrification of heating and transport”.

So what should Ireland do about it? Obviously it needs to meet the targets it has set for renewable energy and emissions whatever happens. This is clearly going to be a challenge.

Polluter pays

One thing that might be worth looking at more closely is the nature of those data centres and who they serve. Yes, they may be based in Ireland, for a number of reasons, but the vast majority of them serve businesses and users across Europe. What does that mean? The energy they use may come from Ireland and they may emit carbon here too but these are energy and carbon costs that have been displaced from the places in Europe that they cater to and serve. What if there was a way of recognising that and agreeing with other countries in Europe to accept their share of those emissions?

In some ways, there are similarities to the discussions and debates taking place over Ireland’s low corporation tax regime. The favourable tax system here allows businesses to circumvent the taxation rates they would be expected to pay in the countries in Europe where the bulk of their business is transacted. Most of those countries want to put an end to that and make it harder for Ireland to help companies avoid paying taxation on the transactions they make in other European states.

The irony is that it suits European countries if Ireland takes their share of the electricity demand and carbon emissions for data centres that serve their populaces and businesses. But from Ireland’s perspective, it would help our climate and renewable targets if the burden associated from hosting data centres that serve other European countries could be assigned to those countries.

It doesn’t take a genius to point out that this is diametrically opposite to the approach Ireland takes on taxation. Nor to acknowledge the role that Ireland’s very favourable corporation tax regime probably played in helping to attract and persuade so many companies to set up data centres here in the first place. If you were being facetious, you might even call it a circular economy.


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