Carbon tax casts shadow over local data centres and clouds

Australian data centres and cloud infrastructure providers are likely to be the hardest hit in the ICT industry when the Federal Government's carbon tax comes into effect from July 1 next year.

For starters, locally owned data centre operators could find it harder to sell Australian companies the benefits of maintaining their information on-shore with the price of doing so expected to make them less competitive against overseas altrnatives.

Researchers from analyst firm Gartner said the impending tax and Australia's deep reliance on taxable energy sources had prevented major cloud vendors from establishing Australian operations.

In the short-term, businesses have questioned whether the carbon tax would make it cheaper to move data centre operations offshore, Gartner said.

The task will be even harder if the Australian dollar continues to hold strong.

On the bright side, however, technologies offering imporved energy efficiency are expected to get a boost. For instance, Australian providers of sustainable and / or green solutions should get a welcome reprieve affter floundering in the wilderness for the last few years. 

Companies specialising in virtualisation should also see the fortunes imporve, likewise providers of UPS (uninterruptible power supply) solutions.

So what exactly has the Government got us into?

In a bid to slash the nation’s carbon emissions by 159 million tonnes a year it has announced a price on the naughty gas of $23 per tonne.  

The tax will apply to Australia’s top 500 polluters from July 1, 2012 under a two-phase fixed and flexible scheme. 

Under the first phase, carbon emitters will be able buy as many permits as required at the fixed price, which will rise 2.5 per cent each year until 2015 to $25.40. 

From fiscal year 2015, companies will face a “cap and trade” mechanism which places a cap on the nation’s total emissions while the price of a limited number of permits is to be determined by bidding. 

The government will create a fixed number of permits representing one tonne of carbon, which it intends to auction off or allocate to businesses to support broader economic objectives. 

No emission limits will be placed on individual firms or sectors under the package. For the first three years under the flexible system, the government intends to place a ceiling price for credits at $20 above the international price and a floor price of $15 per permit.  

Adding impetus to Prime Minister Julia Gillard's determination to have a carbon price was the fact that New Zealand had already beaten Australia to the punch. The previous goverment across the ditch set a price of $NZ12.50 ($A9.70) which is expected to go to $NZ25 by 2013. Thye currect spot trading price of NZ's carbon credits is just over NZ$18.00.

Australia's carbon tax was officially announced on Sunday by Prime Minister Julia Gillard, Deputy Prime Minister Wayne Swan and Minister for Climate Change and Energy Efficiency Greg Combet. 

The scheme will split business into two camps: those that find it cheaper to bid for permits and those that can find cheaper alternatives to the prevailing price for carbon permits. 

“In both the fixed and flexible price period, large polluters will have to pay a price for every tonne of carbon pollution they release. These businesses will choose to reduce their emissions if they can do so at a cost that is less than the carbon price. In both periods, the market will determine the most cost-effective ways to reduce carbon pollution,” the government has pointed out.