Zero Sum Game

The need for holistic carbon accounting for digital infrastructure


Greenhouse gasses (GHGs) are the gasses in the Earth’s atmosphere that capture heat. Over the past 30 years, our planet’s global temperatures have increased faster than at any time since record keeping began. Known as global warming, this increase is tied to dramatic shifts in weather known as climate change. While many emissions are natural, this century’s dramatic increase in GHGs is attributed to human activities, primarily the burning of fossil fuels that release CO2. Finding where these emissions come from and tracking the total is critical to addressing this problem. The old adage holds true here: if you can measure it, you can manage it.

Experts have been working on Carbon Accounting for more than two decades, starting in 2001 with the GHG Protocol led by the World Resource Institute and World Business Council for Sustainable Development. This led to ISO releasing ISO 14064 in 2006. This evolved into ISO 14065 release in 2007 with updates in 2013 and most recently 2020. These standards measure the amount of greenhouse gasses being released by category—Scopes 1, 2 and 3. The ISO standards for measuring GHGs were widely adopted in 2012 when the world aligned on the United Nations Sustainable Development Goals. That was supported further in 2015 by the G7 climate mandate to decarbonize the global economy as well as the launch of the Science Based Targets initiative (SBTi) which sought to unite the private sector’s efforts to accelerate the reduction of GHGs. All of this led to The Paris Agreement in 2016, a legally binding treaty adopted by 196 countries to address climate change.

Dean Nelson, CEO, Cato Digital, and Chairman & Founder, Infrastructure Masons

My introduction to sustainability and climate change was at Sun Microsystems in 2008 when they hired David Douglas as Sun’s first Chief Sustainability Officer. I was lucky enough to join David’s program that drove sustainable computing. He believed you could achieve economic AND ecological gains versus trading one for the other. Prior to this, I was blissfully ignorant of the impact of the building, deploying and retiring hardware and data centers. This was a new world that intrigued the engineer in me as I now needed to solve for four variables: performance, efficiency, cost and carbon. In 2016 I founded Infrastructure Masons, a professional association uniting the builders of the digital age, with sustainability as one of our four strategic pillars.

In late 2019, the iMasons Advisory Council members were concerned that while many companies were making individual sustainability commitments and substantial investments, we were not moving fast enough. This led us to unite on a common sustainability vision for the digital infrastructure industry. Every Click Improves the Future, was launched April 22, 2020, the 50th anniversary of Earth Day. That date coincided with the start of the pandemic. I vividly remember a news story that helped reinforce the message. The Himalayas became visible for the first time in 30 years due to the rapid reduction in pollution from the lockdown. This was a visual representation of what could be achieved when emissions were drastically reduced. Sadly, this respite didn’t change the trajectory. Climate events continued to become more frequent and more impactful. We knew we needed to do more as an industry.

Dean Nelson with Chris Crosby, CEO of Compass Datacenters, at the DCAC conference in Austin, TX

We launched the iMasons Climate Accord (ICA) in April of 2022 to unite our industry efforts on decarbonizing digital infrastructure. Our methodology is measurement and reduction of carbon in materials, equipment, and power by tracking through a carbon label, a concept similar to a nutrition label on packaged food. ICA members are aligned on baselining their carbon emissions of the physical data center buildings, the equipment inside of them and the power that enables the work. Through these insights, we will drive the necessary reductions. From my perspective, the only way to accelerate that reduction is to influence buying decisions. One of the primary goals of the ICA is to drive lower carbon products and services that members purchase. With over six trillion USD in combined market capitalization across 250+ member companies, there is significant influence to move the needle. Bottom line, ICA companies will lead with their wallets to drive this change.

Scope 4

While the ICA has made great strides to unite the industry on decarbonizing digital infrastructure, a number of carbon accounting challenges have emerged.

  • No holistic accounting. There is significant focus on Scope 1 and 2 emissions but most companies are challenged with Scope 3.
  • No accounting for time. There is no concept of amortization of carbon. We treat it as a one time write-off versus accounting for it as a debt we need to pay down.
  • No accounting for avoidance. There is no credit for the actions taken to lower carbon by avoiding emissions altogether.
  • Zero-Sum game. The good actions of some are covering the bad actions of others.
Second Life GPUs deployed by Cato Digital

Holistic Accounting

Our industry has primarily focused on reducing the carbon associated with power consumption in data centers. First, by lowering the carbon intensity of the source energy through energy investments, PPAs, offsets and locating load closer to clean energy. Second, by implementing efficient operations by increasing utilization and decreasing wasted power through optimization of PUE and PCE. While these are important actions to address Scope 1 and 2 emissions, we must also focus on Scope 3. Specifically, the embodied carbon of the buildings and the equipment inside of them. Scope 3 is significant when you consider buildings can be retrofitted 3—5 times and servers can be refreshed 5—10 times over the life of a data center. By applying carbon labels to the building and equipment we can account for all carbon for the data center over its lifetime.

One area that is not covered with today’s carbon accounting is a new concept first introduced to me by Chris Crosby, CEO of Compass Datacenters. It is called Scope 4 emissions. It addressed two challenges I’ve raised here, Time and Avoidance.

GPU Servers being assembled at Cato partner factory in Kansas


While it is logical from an environmental standpoint to offset all carbon the same year a product is created, it is not always practical from a business standpoint. General Accepted Accounting Principles (GAAP) were established to ensure that a company’s financial statements are complete, consistent, and comparable, with one of the core principles being amortization. This is the concept of accounting for a debt that needs to be paid down over time versus treating it as a one time write-off. The challenge of doing one time carbon write-offs is they are currently cost prohibitive and technically impractical.

My proposal is to treat carbon emissions from data center materials and equipment as debt so it can be accounted for and written down over time. This provides a complete, consistent and comparable way to account for that carbon debt. Companies can then consider different ways to pay it down faster. One example is the advances in sequestration at all steps of the supply chain that permanently capture more carbon than is being emitted. By holding companies accountable to a carbon amortization schedule for all carbon debt (historic and new) through normal operations and growth, they can monitor their carbon performance over time the same way they monitor their financial performance, allowing practical ways to drive meaningful reductions and providing a method for comparison with peers.

Cato Digital team turning up low carbon bare metal at in Manhattan


Current carbon accounting is based on an absolute number, e.g. lifetime carbon emissions. For example, the creation of products, construction of buildings, transportation of goods, the power used by the equipment and the data center M&E and emissions to recycle at end of life. Embodied carbon for products is captured through an Environmental Product Declaration (EPD). EPDs show the environmental performance of that product over its lifecycle. Materials used in the construction of buildings are now captured through tools and trackers, such as Building Transparency’s Embodied Carbon in Construction Calculator (EC3). These are critical mechanisms providing visibility into the embodied carbon footprint of equipment and buildings in line with the ICA carbon label for data centers. While these tools are very effective, they do not account for carbon avoidance from extending the life of equipment or reducing emissions from materials used during construction.


My company, Cato Digital, has fully adopted circular economy principles. Our mission is to achieve carbon-free compute. We source second life servers to power our bare metal platform. Reusing servers avoids additional carbon emissions as our hardware is serving a need that would have required a new product deployment. Our goal is to put one million second life servers into 1,000 data centers only using their stranded data center power capacity and clean source energy. I am confident that we are reducing carbon emissions as hardware can be refreshed up to 10 times during the life of a data center and at least 40 percent of built data center power capacity is never used. Each additional life we give the hardware, and every kW of stranded power we use, reduces that impact.

Compass Datacenters’ Phoenix data center campus


Concrete represents 8 percent of all global carbon emissions, so it is imperative that we embrace opportunities and new technologies to reduce its impact. Chris Crosby and the Compass Datacenters team apply two methods to the concrete used in the construction of their new hyperscale data centers. First, they apply CarbonCure to sequester carbon into the concrete being used to build the building, lowering the overall carbon footprint of the concrete for that project.  Second, they put concrete batch plants directly on the construction site to avoid cement trucks driving hundreds of miles back and forth with huge loads of concrete, reducing transportation emissions.

The actions of Cato Digital and Compass Datacenters do lower carbon as they are additive, but they are only tracked through the generation of carbon credits. This leads me to my final point.

On-site batch plant with CarbonCure at Compass’ data center site

Zero-Sum Game

Zero sum game is a situation where, if one party loses, the other party wins, and the net change is zero. Many companies have made net-zero carbon commitments. A common practice for corporations is to buy offsets from sustainable projects to achieve their carbon reduction goals. While investing in this way will accelerate these programs, the outcome is becoming a zero sum game. The majority of the time, these investments are outside of our own industry and not additive. They do not decrease the carbon debt. At best, they bring us back to the original balance. It’s like paying the minimum balance on a credit card. We will never pay down the debt, especially when spending continues.

Now apply that analogy to our carbon challenge. We have carbon debt from the past and we continue to add to that debt with the new capacity we build. While actions such as second life equipment at Cato Digital and sequestering carbon in concrete at Compass Datacenters are additive, we are just scratching the surface. They are the exception, not the rule.

We cannot accept a Growth-At-All-Costs mindset. Sustainability must be a requirement in all buying decisions. We must incentivize carbon avoidance projects. We must double down on technology to sequester carbon cost effectively. Finally, we must have holistic carbon accounting. To me this is simple budget tracking for carbon. What is your carbon debt, what increases are planned in that carbon debt and what actions are you taking to reduce that total debt to zero as quickly as possible? With all that in mind, consider the impact of Generative AI. The digital infrastructure industry is now forecasted to triple in the next 5 years. That means that by 2029, we are going to build three times the amount of capacity that we have in the last 20 years! We have conflicting priorities. How do we achieve net-zero carbon by 2030 to ensure the planet temperatures do not increase above 1.5C° when we have the largest growth projections in our industry’s history? We apply holistic carbon accounting and hold companies accountable to their reduction goals. We beat the zero sum game.

CarbonCure concrete being poured at Compass’ data center site