Large Australian businesses see climate change as both a challenge and an opportunity. If you run a large resources or manufacturing company like BHP Billiton or OneSteel, climate change could have a direct and significant affect on the value of your organisation. If you're a bank, it's not only about dollars and cents in complying with new legislation, but also about reputational risk. And while Australia was very much late to the party with Kyoto, awareness about climate change and mechanisms like carbon trading is high.

So why are Australian organisations concerned about climate change? It's because with the Federal Government planning a mandatory emissions trading scheme for 2010, the more they emit, the more it costs them. Frost & Sullivan expects emissions trading to add as much as 5.5 cents per kWh to the cost of power by 2012.

Emissions trading allows parties to buy and sell permits for emissions and earn credits for reductions in emissions. The reason for this is that under the Kyoto Protocol each industrialized country is assigned a legally-binding greenhouse emissions quota, which it must meet or face penalties. Carbon trading is one of the most effective methods of enabling countries to meet their Kyoto obligations.

The first step towards emissions trading is the National Greenhouse and Energy Reporting System, which kicked off at the start of this month. This system essentially require large energy users to monitor and report on their greenhouse gas emissions, power consumption and energy production. The first reports are due in October 2009, with a maximum fine of $220,000 for non-compliance. While the system will initially affect only very large power users, the threshold lowers each financial year, catching more organisations as it does.

What all that means is there is - or at least will be, a significant financial incentive for organisations to adopt Green IT, in terms of reducing their power bills.

The other issue I should highlight is power availability. Some organisations - particularly in the ACT and southeast Queensland, are finding there just isn't the power available to site necessary infrastructure such as a data centre in a particular location. Or that it can be built, but that they have to fund a new substation. Reliability is also an issue, to the extent that, for example, St Leonards in Sydney is a popular site for data centres because it is supplied by the Gore Hill substation, the same one that supplies the Royal North Shore Hospital.

The Energy Supply Association of Australia forecasts that demand for power will increase by 35% between 2007 and 2020, underlining the pressure that's being placed on our ageing infrastructure, much of which dates back to the 1960s and 1970s. Energy Australia alone is planning $4.8 billion in capital expenditure over the period 2007 to 2012.

To understand the challenges faced by datacentre managers from any government department or private sector operation it is useful to take a look at some Australian statistics, and particularly some IT-related statistics.

These figures are from Frost & Sullivan research, based in turn around statistics from the Australian Bureau of Agricultural and Resource Economics.

Frost & Sullivan estimates that servers in Australia will consume 2.61 billion kWh of electricity in 2008-2009, generating approximately 2.6 billion kilograms of C02. Already electricity for these servers costs about $256 million, so there are significant incentives to save power. And with a carbon trading scheme, that power could cost as much as $400 million.

At the same time, there is growing pressure on the data centre. An explosion is bandwidth generated by a major change in the way we use the internet, and especially by the growth of Software-as-a-Service type applications and streaming media, has led to greater demands on infrastructure. At the same time, Australia's failure to invest in alternative energy - whether it be solar or nuclear - means we are emitting more carbon per kWh of power than many other developed countries.

Just to put it in perspective, the research shows emissions from power used in data centres exceeded emissions from the railway and shipping sectors. Australia can make a dent in its overall emissions by tackling overuse of power by ICT.

So given that for many organisations - especially knowledge-based industries like banking and financial services - IT is a major contributor to greenhouse emissions, it's not surprising that the CIO is the one looking to make changes. Luckily, there's a whole raft of changes they can make, ranging from very simple to more complex, from low-cost to costly.

It starts off with some relatively simple operational change. This is really about changing the way we think about energy, and the way we use it. And while these sorts of changes have a relatively minor affect on total usage, they tend to be simple to implement, and low-cost. We're talking here about implementing faster sleep times for PCs, reducing the number of PCs running simultaneously by using hot-desking and notebooks, shutting down machines overnight, and rolling out LCD monitors. Some organisations have chosen to implement thin clients.

Additionally, some organisations are making power savings by reducing the number of peripheral devices like printers and scanners.

Organisations can also make savings in emissions by encouraging employees to work from home - typically by providing notebooks VPNs and broadband connections, and by reducing corporate travel through increased use of conferencing and collaboration tools like video conferencing and instant messaging.

Having made those changes, organisations need to start looking at how they can make infrastructure changes that will reduce power consumption. And that's where the datacentre comes into the picture. As you can imagine, datacentres are major contributors to emissions. Well, there's a lot CIOs can do to reduce those emissions.

Energy-hungry and heat-intensive blade servers are major culprits in skyrocketing electricity use in data centres, with figures from industry group The Green Grid estimating hardware and cooling combined makes up 63 per cent of power use in a standard datacentre. According to processor vendor AMD, the power needs of Asia Pacific datacentres will double between 2005 and 2010 unless measures are taken to curb consumption.

Currently, most large commercial organisations outside of the manufacturing and resources space attribute about 40-50% of their power usage to their ICT infrastructure, and the bulk of that to datacentres.

And this, of course, is the reason that Virtualisation is such a hot topic at the moment, mainly because it drives greater efficiencies in power usage, allowing organisations with multiple servers to consolidate, and dynamically apportion resources as they are required.

Realistically organisations can expect a 10:1 ratio of old to new in virtualisation, so if you're running 300 servers, you could expect to reduce that to 30 using virtualisation, while still ensuring sufficient capacity for unexpected downtime.

But while virtualisation is stealing the headlines, the critical first step is to engage in measures around hardware-based power consumption reduction. While we're keen to adopt new software technologies, we sometime overlook managing the technology that we have through better design, for example by managing airflow in a datacentres, or by using water cooling on server racks to reduce power needs.

And in passing, I will mention that it goes even further. CIOs are also looking at datacentre design. How can they create a building environment that will use less power? And integral to this is designing a building that will expand as the organisation's needs grow. Too many datacentres are shoehorned into inadequate or ill-designed buildings. Several years ago, Qantas outsourced its datacentres to IBM. Looking to the future, Qantas realised it could not continue to operate a datacentre in a 1960s building in the Sydney central business district in a cost- and environmentally-effective manner.

Then there is the issue of power sourcing. Companies must not only reduce the amount of power they require, but must look seriously at using more alternative energy, despite the higher costs.

Ultimately, organisations that have done all they can to be more efficient in their use of power will face a choice. If they are under their emissions limit, as many will be having implemented these changes, they can stop. But some organisations will choose to go carbon neutral, and purchase carbon credits to offset unavoidable emissions.

Clearly, regulation for large organisations and pressure from supply chain partners for smaller organisations are the key drivers for Green in the IT space. CIOs are under pressure to reduce power consumption in particular, and they're looking to their data centres for the quick wins. Green IT is more than just a buzzword, and more than just a passing fad - it's a significant issue that will affect every large Australian organisation, whether they like it or not, and whether they are prepared or not.

Currently Senior Industry Analyst for ICT Practice within Frost & Sullivan, Simon Hayes previously spent 10 years as a journalist, primarily as news editor at The Australian's IT section. Simon is also a director of the Asian Media Centre's Asia Pacific News Agency, which provides news and features content to major Asian broadcasters.