Carbon tax: bring it on

The Gillard Government’s carbon tax has provoked varied and, in some cases, extreme reactions but the message from the channel is simple - bring it on.

IT vendors and their channels believe a renewed focus on Green IT will open up a host of new business opportunities.

By contrast, public opposition to the proposed legislation has been so hostile it has even led to death threats being levelled at Independent MP Tony Windsor.

But as a business opportunity, the news is somewhat better. Despite technology being one of the biggest drains on power within an organisation, (an issue that has only worsened in the last year) the interest in Green IT has drifted in recent times.

In ARN’s State of the IT Channel survey (page 20), just six per cent of respondents claimed that Green initiatives would result in strong revenue growth in 2011.

This may partially be due to Government-driven green initiatives in the past that have been sidelined to the loss of those who banked on them – for instance, the Government’s Green Loans and Green Start programs which integrator UXC claims cost it more than $30 million. There’s also an e-waste scheme that has since been lost in limbo.

ICT research director at Longhaus, Sam Higgins, said, as a result, it might be too early for IT organisations to look for renewed Green IT opportunities from the carbon tax, but once the legislation passed there would be far more opportunities than the initial expectations for 2011 would suggest.

“I don’t think many people believed a minority Government would push through an emissions trading scheme [ETS].” Higgins said. “If I was advising a marketing manager I wouldn’t want to be rushing out with a green message just yet . “The interest in the Green agenda peaked in 2008 before the GFC, and has since taken a back-seat. That said, a lot of customer organisations will have shelved their plans to get carbon accounting sorted and will be scrambling to revise if this gets pushed through.”

According to Higgins, the ETS will both open up opportunities and make life difficult for different parts of the ICT industry.

Cloud providers could struggle if Australia proves to be an early adopter of carbon taxes, with overseas providers able to offer solutions without calculating the carbon tax in the price.

But APC Pacific vice-president, Gordon Makryllos, believes the rising cost of power, while a problem, won’t see the lion’s share of business head overseas just yet.

“There’s regulation in place around certain privacy information that means in needs to be kept within Australia,” Makryllos said.

“The hosting industry hasn’t been globalised to that extent, just yet, and I don’t see it happening for the next five years.”

Even without the carbon tax, datacentre organisations are already looking at energy efficiency as a critical concern at CEO and board level.

Datacentre owners are moving operations to the suburbs to develop more efficient energy designs and those that remain in the CBD are the ones looking at hosting solutions.

Other technologies that stand to benefit in a renewed interest in Green IT are those that improve optimisation. And while virtualisation is potentially one such technology, Longhaus’ Higgins said organisations will need to be far more circumspect in application, and consider other areas that can also be improved, rather than just expect virtualisation to fix everything.

“Virtualisation is in many cases just uncovering latent demand, so there are no long-term benefits,” he said.

“It’s made the consumption of IT easier and led to a lot of virtual sprawl. Now I would expect organisations to be asking questions like ‘do we really need to be running three lots of CRM in our enterprise?’”

A Smarter Future

Smart Grids and technology can also expect an injection of interest from the carbon tax. With some heavy vendor involvement from the likes of Cisco and IBM, Government support (especially in Victoria) and an EnergyAustralia Newcastle ‘Smart City’ project, being able to better monitor and manage energy usage will provide integrators with new access to the utilities sector.

Cisco is investing heavily in smart grids, classifying the field as an ‘emerging’ opportunity.

The vendor’s general manager for utilities, online media, connected real estate and cloud services, David Loy, outlined where the vendor saw opportunity for IT in the smart grid space, and how it could help customers deal with the carbon tax.

“Technology is a key enabler in helping companies measure, monitor, and modify energy usage. With smart grids, smart meters, building sensors, and building management systems [which control such things as HVAC and building lighting] all connected and managed, it creates an intelligent dynamic system. A system to assist in managing some of the challenges being faced today with energy usage and utilities at peak demand,” Loy said.

The good news for the channel is that smart grids are not solely the providence of vendors. While integrators require additional skilling to cross over and have successful conversations with the utilities, the success of companies such as Logica at a global scale proves this investment can be lucrative.

“The trend is already well-established, and there are opportunities to provide infrastructure between the utility and home,” Logica director of smart networks, Paul King, said.

“There’s clearly going to be an increased interest in electricity consumed.”

King said he hoped the money obtained from the carbon tax would be filtered back into improving the nation’s smart infrastructure further, where Australia is well positioned in some areas, but lagging in others.

“The Smart City project is world standard, but falling behind in terms of embedded home generation.”

The other major integrator in the smart grid space is Logicalis (formerly NetstarLogicalis).

Its marketing manager, Oliver Descouedres, said it is no great surprise that an ETS scheme is coming, and the carbon tax would just fuel further investment in the smart grid.

“Our customers are looking to bridge the gap between IP networking and traditional sub stationing,” Descouedres said.

“I don’t believe any of this is a bad thing for the IT industry. There are a lot of business benefits around making energy consumption more efficient.”