Cloud leaders vie for environmental kudos as market spend soars

Microsoft, Google, azure, AWS, Google Cloud,  through techniques such as liquid cooling

The world’s leading cloud providers are vying for environmental kudos as governments, enterprises, consumers and investors raise sustainability targets and expectations, according to market analyst firm Canalys.  

Cloud infrastructure services spending increased 36 per cent year-on-year to US$47 billion in the second quarter of 2021, as workload migration and cloud native application development accelerated, the analyst firm’s latest figures show.  

Indeed, expenditure was over US$5 billion higher than the previous quarter and over US$12 billion more than Q2, 2020.  

This increase in expenditure comes amid the backdrop of a global market that continues to be shaken by the ongoing pandemic and a series of extreme weather events and natural disasters that emerged over the first six months of the year, raising concerns over long-term disruption from environmental risks. 

The double whammy of disruption from COVID-19 and extreme weather or natural disasters has resulted in an industry on edge. 

This can be seen in an intent focus on business resiliency planning, which has expedited digital transformation projects and increased cloud consumption, driving up spend.  

It can also be seen in an emerging call-to-action to make sustainability central to post-pandemic investments and improve environmental resiliency, a trend that is expected to further elevate the importance of cloud services. 

Indeed, the environmental impact of the technology sector is under the spotlight as sustainability targets and expectations come to the fore across industry, according to Canalys research analyst Blake Murray. 

“Awareness of the energy use and carbon emissions from digital services delivered from data centres operated by cloud service providers is growing,” Murray said. “But the leading providers are also at the forefront of environmental resiliency efforts. 

“The best practices and technology utilised by these companies will filter to the rest of the industry, while customers will increasingly use cloud services to relieve some of their environmental responsibilities and meet sustainability goals,” he added. 

The industry analyst noted that Amazon Web Services (AWS), Microsoft Azure and Google Cloud, the top three cloud service providers globally, which collectively accounted for 61 per cent of total market spend in Q2, have made progress towards reducing their own carbon footprints and have set aggressive targets to further minimise their future impact.  

This is critical given the scale of their operations, Canalys suggested.  

Unsurprisingly, the cloud leaders are in the process of increasingly trying to outdo each other in the sustainability stakes.  

For example, AWS’ parent company Amazon recently announced 14 new wind and solar energy projects globally and claimed to be the world’s largest corporate buyer of renewable energy, topping 10 GW to date, according to Canalys.  

AWS maintained its undisputed industry-leading position in the second quarter, accounting for 31 per cent of total spend after growing 37 per cent on an annual basis. 

Some of Amazon’s renewable energy infrastructure is used to support AWS data centres, several of which are claimed to be already carbon neutral.  

Currently, 40 per cent of Amazon’s operations run on renewables and it plans to power its operations with 100 per cent renewables by 2025.  

Microsoft’s Azure was second largest cloud service provider in Q2, with a 22 per cent market share, growing by 51 per cent year-on-year.  

Microsoft claims to have been carbon neutral since 2012 and wants to be carbon negative and water positive by 2030, according to Canalys. The vendor also plans to produce zero waste by 2030, with its Circular Centres repurposing or reusing servers and other hardware from its data centres.  

Moreover, Microsoft is looking at ways to mininise data centre power consumption through techniques such as liquid cooling, submersible racks and hydrogen fuel cells, and plans for its data centres to be 100 per cent powered by renewables by 2025.  

Meanwhile, Google Cloud grew 66 per cent in the second quarter, accounting for 8 per cent market share.  

According to Canalys, Google Cloud achieved carbon neutrality in 2007 and purchased more renewable energy than the total amount of electricity it used for the first time in 2017.  

Clearly, environmental sustainability has become a point of competition at the top end of the cloud market, a trend that is likely to become further pronounced as the years drag on and governments implement ever-more stringent guidelines.  

But competing on this front is likely to become easier as well. 

As Canalys points out, the price of renewable energy sources is now competitive with fossil fuels, and the share of renewable energy sources powering a cloud service provider’s data centres will only increase.  

“Regulation from governments, especially those tied to the Paris Agreement, will continue to intensify, while an increasing share of cloud services contracts will have sustainability requirements built in,” said Canalys chief analyst Matthew Ball.  

“Customers will continuously evaluate their cloud service providers and use multi-cloud strategies to achieve the lowest carbon footprint. However, transparency in measurement of sustainable practices will have to improve,” he added. 

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