Can the Internet save the planet?

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Last October, environmentally conscious Netheads everywhere got some excellent news. The pervasive use of broadband Internet connections and the tools and practices they enable could reduce greenhouse gas emissions by some 1 billion tons over the next decade, according to the American Consumer Institute. Widespread adoption of broadband in the United States alone would cut energy use by the equivalent of 11% of annual oil imports, the group says.

Clearly, though, when it comes to energy use, the Web is both a crusader and a culprit. Server farms and data centers burn mountains of CO2, much of it to keep machines cool. But now a new crop of companies and thinkers is trying to make the Internet 'carbon neutral' and find ways to use Web-based technologies to reduce worldwide energy consumption through 'demand-response' schemes that give energy consumers more direct control over their energy use.

Internet-enabled capabilities like telecommuting, e-commerce, teleconferencing, and distance learning that have been around for decades are expected to play an increasing role in cutting energy consumption--reducing air travel and the need for warehouses, trips to the mall, and even malls themselves. The American Consumer Institute projects that telecommuting alone will cut CO2 emissions by more than a half million tons over the next decade (see table, above). Overall, the Internet economy could help reduce growth in greenhouse gas output by 67% over the next several years, the study says, citing data from the Lawrence Berkeley National Lab.

Sixth in a series of articles assessing the future of the Internet. For more, check out internetevolution.com, with its ThinkerNet blog of more than 85 contributors, including Internet security expert Ira Winkler, wireless guru Alan Reiter, Citi senior VP Jeff Fleischman, and author Paul Levinson, as well as videos, Webinars, news, and 'The Wisdom Of Clouds,' the site's Web 3.0 interface. 'The future Internet represents an incredible business opportunity for researchers and corporations,' says Bill St. Arnaud, senior director of advanced networks at Canarie, a nonprofit group focused on advanced Internet development in Canada. 'It will allow them to deploy new economic models and create marketing opportunities where they will make profits by reducing CO2 emissions.'

St. Arnaud believes that Internet companies can slow global warming in two ways: by reducing the energy use of the routers and servers that make up the Internet's backbone, and by 'bits-and-bandwidth for carbon' trading schemes that would provide incentives for individuals and companies to reduce their carbon footprints in return for free or reduced-rate broadband connections or downloadable music and films.

St. Arnaud isn't the only Internet luminary turning attention to how the Net and Web technologies can help the environment. Legendary Silicon Valley investors like John Doerr of Kleiner Perkins and Vinod Khosla, who made their fortunes from Internet-based technology, are now focused on slowing global warming, channeling billions of dollars into technologies such as solar power and wind farms. And Google (NSDQ: GOOG) has said it will build a series of renewable-energy plants that will produce a total of 1 gigawatt more cheaply than coal. That's enough to power a city the size of San Francisco, and the project is likely to cost a few billion dollars.

Couple the potential of Internet-related technologies with these investment engines and the optimists among us might foresee a significant dent in the energy crisis. But such pronouncements mask the inconvenient truth that the Internet hogs a great deal of power, particularly for big server farms on Google- and Amazon-like scales. Power consumption by data centers doubled between 2000 and 2005, according to Jonathan Koomey, a staff scientist at Lawrence Berkeley National Lab, and while the total amount of electricity used by the Web infrastructure is small--about 1.5% of all U.S. electricity consumption in 2006, according to the Environmental Protection Agency--it's one of the fastest-growing sectors. (It doesn't help that Google co-founder Larry Page released about 1.5 million tons of CO2 flying 600 friends on private jets to his wedding on a Caribbean island.)

What's more, the Internet-related energy-reduction schemes that St. Arnaud and others envision, which involve disseminating information that will help people and companies reduce CO2 emission growth, overlook the more direct and powerful ways that companies are using the Internet to actively reduce energy use.

Many of these more commonsensical plans revolve around the emerging demand-response industry, which matches electricity consumption to supply in real time. They use the Internet to do what it does best: enable IT managers and 'chief carbon officers' to act on more accurate and timely data on energy consumption, prices, and supplies to control myriad devices over the network.

In other words, while Google snags headlines for equipping its Mountain View, Calif., campus with a huge solar array, the real work of using the Web to slow global climate change is going on in less celebrated locales, like the Boston offices of demand-response and energy-management provider EnerNOC.

MARKET-DRIVEN

EnerNOC, which stands for 'Energy Network Operations Center,' was founded in 2001 by a pair of energy-business veterans and graduates of Dartmouth's Tuck School of Business. It's based on a simple principle: Companies should respond to market signals in the energy business just as they do in their own core industries.

The company wants end users 'to be much more engaged and participatory in electricity markets,' says co-founder David Brewster. 'We're getting users for the first time to respond to high wholesale prices or reliability events on the grid.'

A handful of utilities across the country in recent years have provided incentives for customers to cut power usage during times of peak demand. But most businesses have largely been passive energy consumers with little incentive or capacity to respond to events in electricity markets. Now companies like EnerNOC are making this a viable option by tracking price fluctuations and grid events like power shortages, spikes in demand, and brownouts and helping customers respond to them in real time.

The technology is likewise simple: EnerNOC installs a gateway software device at the customer's premises (a data center, grocery store, warehouse, or manufacturing facility) that gives it 24-hour, real-time connectivity and control over the customer's energy assets. Based on preset rules, when peak demand hits, the price of electricity skyrockets, or a rolling brownout occurs, EnerNOC's automated program reduces power consumption, powering down lights and other nonessential power-consuming devices within minutes. In addition to saving money on the power they don't use during a peak-demand event, EnerNOC customers get a rebate from their utility for participating in the program, and they receive additional compensation based on how well they perform during a specific event.

EnerNOC gets paid a monthly stand-by fee, plus an energy-savings premium tied to the number of kilowatt-hours it saves the customer. The customer's happy because it makes money from an otherwise idle asset, excess energy demand; the utility's happy because it can more effectively handle peak demand periods and provide power to urgent-use customers willing to pay a premium during those times.

'Today's electricity supply is very inefficient,' points out Brewster. Utilities build power plants and the transmission lines to meet periods of peak demand, but those spikes happen infrequently--10% of the oversupply of infrastructure is there to cover peaks that occur less than 1% of the time. 'We have billions of dollars [in generation capacity] that sits idle 99% of the time,' Brewster says. By monitoring and reducing demand during those anomalies, the EnerNOC system can flatten the peaks and create a more regular demand curve.

As of September, EnerNOC had more than 2,000 customer sites across the country. One customer is telecom interconnection provider Telx, which maintains sizable co-location centers that hook up with service providers' networks. Telx benefits from a secondary EnerNOC service: selling excess power back to its grid when it tests its backup generators across the country.

'They can actually run those generators when we do our cycles and provide power back to the grid,' says Hunter Newby, Telx's chief strategy officer. Telx expects to generate several thousand dollars in the coming year thanks to EnerNOC's service, according to VP of operations Michael Terlizzi.

SAAS APPROACH
What's striking about EnerNOC's service is that it's so sensible: Energy savings can be achieved in friction-free ways, just by paying attention. That's the business model behind the emissions management platform at Canadian software-as-a-service provider Carbonetworks.

Carbonetworks was founded in 2005, but its CNX software platform was in development for about six years before that. The Web-based tool is aimed at C-level executives who want to treat their carbon emissions as a vital contributor to their companies' bottom lines.

'We provide an executive-level view of what a company's emissions footprint looks like in terms of both assets and liabilities,' says co-founder and CEO Michael Meehan, who spent a decade in software development and is also the founder of online climate-change information source the Climate Resource.

In practice, CNX is a series of real-time Web-based dashboards that give a company a site-by-site breakdown of carbon emissions plus options for an emissions strategy that reduces energy use and carbon production while minimizing costs and maximiz- ing returns. 'We'll present the CFO or CTO with all types of options, one of which might be to look at investing in carbon-offset projects,' explains Meehan. 'The software will do the calculations and run the algorithms, to tell you which offsets you qualify for and how much they'll cost over time.'

The final step is using the Internet to match 'emitters' with validated carbon-offset providers such as SGS, 3C, and Blue Source. They deal in tradable emission credits from sources engaged in activities that lower CO2 production, like reforestation projects and solar energy providers. Emitters can buy credits to offset their emissions.

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