Coal Is Fueling China’s Data Center Boom

China’s data center sector is heating up. “The rapidly growing market is largely driven by data-intensive industries such as cloud computing, an industry that the government has marked for rapid development as it ramps up the country’s artificial intelligence (AI) capabilities” reports TechNode, a news source dedicated solely to Chinese technology sector reporting. “China is aiming to close the AI technology gap with the US by 2030.”

As the world’s second-largest economy races to catch up with the United States in key cutting-edge technological industries such as Artificial Intelligence, its data center industry (the sector that uses networks of computer servers to host China’s massive swaths of data such as emails, photos, videos, and more) must also keep up with the ever-increasing demand for data storage. A fast-growing sector in an economy the size of China’s will surely send ripples through other sectors, and in the case of data centers this translates to a massive surge in electricity consumption for the Chinese data center industry over the next five years.

According to a new study conducted by environmental activism and advocacy group Greenpeace in conjunction with the North China Electric Power University, electricity consumption in this sector is projected to increase by a whopping 66 percent over the next half-decade. “By 2023, the sector is projected to consume 267 TWh of electricity, more than Australia’s total 2018 electricity consumption,” writes Greenpeace in a press release published alongside the study. The abstract goes on to point out that “China’s data center industry is currently powered 73% by coal.”

Due to these stark statistics, the researchers from Greenpeace outlined three different strategies that the industry could take in order to increase their use of renewable energies: “by building or investing in renewable projects, procuring clean power directly from renewable energy generators, and purchasing green power certificates.” Additionally, in response to the concern about China’s rising energy consumption and corresponding carbon footprint, Greenpeace East Asia climate and energy campaigner Ye Ruiqi said, “Power market reforms and rapid growth in wind and solar power have created unprecedented opportunities for China’s internet giants to procure clean energy. The data center sector can and should play a leading role in China’s energy transition from heavy reliance on coal to renewable energy.” Related: Yergin: Expect Extreme Volatility In Oil Markets

With this in mind, the Greenpeace study looked into two different scenarios for the projection of China’s carbon emissions in the next four years, from 2019 to 2023. One takes a more conservative approach, assuming that the Chinese data center industry’s renewable energy intake will remain constant, at their current rate of 23 percent. In this more pessimistic (but perhaps more realistic) scenario, carbon dioxide emissions from this growing sector alone are expected to climb to 163 metric tons by 2023. 

Taking a more optimistic view, by assuming that the sector will take advantage of the aforementioned advances in wind and solar power and thus increase the amount of renewables in the data center industry’s energy mix to 30 percent, the sector will be able to cut the amount of emissions by 16 metric tons in the same timeline. The Greenpeace press release puts this in more tangible terms by pointing out that while 16 metric tons of savings may seem like a trivial amount as compared to the 147 that will still be emitted the data center sector even in the most optimistic projections, 16 metric tonnes is equivalent to approximately 10 million round-trip transatlantic flights --nothing to scoff at. 

TechNode points out that the Chinese government is already trying to move away from coal, reporting that “China’s top economic planning body established targets for renewable energy, increasing the share of non-fossil fuel energy to 20% by 2030.” If this is true, that means that in reality the data center sector’s emissions over the next five years will land somewhere between the two Greenpeace projections.

By Haley Zaremba for Oilprice.com

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