Will Cloudflare’s Zero-Carbon Pledge Make a Real Impact?

Its commitment to 100% renewable energy operations and removing historic emissions is laudable, but complex challenges limit its ambitions compared to hyperscalers’.

Data Center Knowledge

August 9, 2021

5 Min Read
Cloudflare headquarters in San Francisco
Cloudflare headquarters in San FranciscoSmith Collection/Gado/Getty Images

Cloudflare, which helps companies run faster, more secure web services and also provides cloud and edge computing services, recently announced an ambitious commitment to help power an internet with zero carbon emissions. It pledged to operate its vast, interconnected global network with 100 percent renewable energy – and to remove all carbon its network will have emitted since its founding by 2025.

This is a step in the right direction, but it’s unclear how meaningful Cloudflare’s efforts will be in accelerating change towards zero-carbon grids, industry experts say. Its goals are not in line with the recent announcement by Microsoft that it would power all its offices and data centers around the world with carbon-free energy 100 percent of the time by 2030. Google, which made a similar pledge in September 2020, says it is making progress on its goal to operate entirely on 24/7 carbon-free energy by 2030. The “24/7 carbon-free” energy goals require matching the purchase of zero-carbon energy with consumption on the same grid, on an hourly-load basis. By contrast, Cloudflare’s aim to operate on “100% renewable energy'' means matching its total global annual electricity use, which means some amount of hours in some amount of locations will result in carbon emissions.

It's important to keep in mind that Cloudflare’s infrastructure and business are vastly different from the hyperscalers’, not to mention the amount of resources Google and Microsoft have at their disposal.

EACs' Effectiveness in Getting to Zero Carbon Varies

Cloudflare’s commitment relies heavily on purchasing Energy Attribute Certificates (RECs in North America, Guarantees of Origin in Europe, I-RECs in a growing number of countries in Asia, Africa, the Middle East, and Latin America). Each EAC represents proof that 1 MWh of renewable energy has been produced and added to the grid. Cloudflare purchases certificates to match its network’s energy usage — it doesn’t have any direct power purchase agreements (PPAs), which guarantee physical delivery of electricity on the local grid, the kind hyperscalers are able to negotiate and leverage to achieve their zero-carbon goals.

“We would love to be doing this directly off of renewable energy, but our network is in 250 cities in 100 countries, so the scale is enormous,” says Cloudflare CTO John Graham-Cumming. “When we can buy directly, we will.”

He adds that Cloudflare’s renewable energy claims are based on standards established by the RE100, Climate Disclosure Project, and The Climate Group, and that certificates are a powerful tool for the company “when we are often buying power from data centers, one step removed from the power supply.”

The impact of renewable energy certificates varies widely, says Gary Cook, global climate campaigns director at Stand.Earth, who previously spent a decade working on data center energy issues at Greenpeace. “While RECs are necessary, they are also low-cost, so it is easy to claim what’s already on the grid,” he explains. “But how are their data centers buying energy? What is their energy mix?”

RECs That Spur New Zero-Carbon Energy Projects Make a Difference

Hyperscalers such as Google and Microsoft own and operate many of their own data center facilities and run their applications in those facilities at scale, so they can negotiate directly with utilities, says Tim Hughes, VP of strategy at Stack Infrastructure, a wholesale data center developer that leases facilities to hyperscalers. Cloudflare, he says, is “doing the best they can with the scale and constraints they have, with a massively-distributed footprint across a ton of facilities.”

While RECs are essentially an accounting mechanism, they do have high impact because they help create new renewable-energy generation projects, Hughes points out, adding that, in some cases, companies can prioritize adjacency by buying RECs in specific markets near their data center facilities and “backfill” with national RECs. But he emphasizes that none of these renewable energy projects directly power data centers.

“Electrons are going on the same grid … that the load is taking electrons from, but nobody is building these projects colocated to the data centers,” he says. “Contractually they are directly powering them, but physically they’re not.” Instead, companies can continue to optimize REC purchases depending on what projects are available and what regulations exist in a particular jurisdiction, he explains.

Distributed Infrastructure Complicates Transition to Zero Carbon

Mike Mattera, director of corporate sustainability at Cloudflare’s competitor Akamai Technologies, agrees that zero-carbon goals create greater, more complex challenges for edge players than for hyperscalers. “We're in about 138 countries today. It’s hard to figure out how you green up those loads in a meaningful way,” he says. “I think Cloudflare is doing a great job doing a hard thing right now.”

Akamai says it is looking for additional opportunities through virtual power purchase agreements (VPPAs), a financial contract structure in which the energy and RECs acquired are directly attributable to net new, clean renewable energy added to the grid. “But those are only going to be in certain geographic areas,” Mattera says. “We have a clear vision about what we are trying to achieve, but it’s about how we create opportunities for us to achieve that vision.”

Cloudflare says its efforts to remove its historic carbon emissions is also a big step, as is an accompanying announcement that its customers can choose to route traffic through data centers powered by renewable energy. “If you look at how much the world depended on the internet to be the reliable sidekick to help get through the pandemic, it’s not easy to imagine using the internet less,” says Graham-Cumming. “So, our options are to become more efficient, which is already very important for us, and ultimately getting to zero-emissions.”

Investors, Corporate Clients More Carbon-Conscious

Zero-emissions goals have also become a big issue for investors, adds Cook, with a growing class of ESG criteria to measure how companies are performing. “Companies risk getting screened out and not viewed as eligible for certain classes of investment,” he says.

In addition, customers are speaking out about what they expect from technology companies they do business with. “We are seeing customers making more aggressive and explicit asks in RFPs and contracts around renewable electricity,” says Mark Porter, VP of programs at the Renewable Energy Buyers Alliance, an association of large clean energy buyers, energy providers, and service providers.

Overall, your mileage on zero-carbon claims may vary from company to company. For Cloudflare and other non-hyperscaler organizations, the impact of their efforts will vary based on their size, type, and carbon footprint, says Porter. “It’s important for each company to evaluate how best to achieve their internal goals, to thereby move us toward a zero-carbon energy system.”

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