Are green IT premiums worth the cost?
- 20 June, 2008 10:00
Organisations are investing in green computers -- that is, machines that are energy efficient and built in an environmentally responsible manner -- at ever-increasing rates. Sometimes they pay a small premium to do this. Is it worth it? They seem to think so.
And their belief is not unfounded. Organisations that invest in green hardware find that the energy savings, extended product lifecycle, and other benefits more than make up for the additional price of that hardware.
What's more, demand for green computers appears to be on the rise. Twenty-two per cent of the computers shipped worldwide in 2007 (around 109 million) were registered on EPEAT (the Electronic Product Environmental Assessment Tool), up from around 10 per cent in 2006. Maintained by the Green Electronics Council (GEC), EPEAT is a searchable database of computer hardware that meets a strict set of environmental criteria. Among them, registered products comply with Energy Star 4.0; have reduced levels of cadmium, lead, and mercury; and are easier to upgrade and recycle. Depending on how many criteria they meet, products receive a rating of Bronze, Silver, or Gold.
The price of 'greenovation'
One of the key questions, though, is whether companies need to pay a premium for the green traits they seek. Patricia Atherton, engineer manager at hardware vendor MPC, acknowledges that, at times, the answer is yes, depending on the rating level (Bronze, Silver, or Gold) of the product. "Silver and Gold products will comply with more challenging requirements, and this might affect the cost of certain components," she notes.
For example, she says, "LCD on monitors, laptops, and integrated systems must have reduced amounts of mercury ... In order to elevate this product rating, the mercury content must be reduced to a minimum or eliminated. The technology is there -- LED backlit LCD -- but at a slightly higher price than a regular LCD with CFL lamps."
Another factor, Atherton says, can be the use of plastic parts containing high recycled-material content. "Since this may affect the properties of the plastics, requiring special techniques or materials, plastic components manufacturers may increase their prices as their own costs increase."
Brad Fry, environmental standards compliance engineer at Canadian computer manufacturer MDG, noted that there are, for now, higher costs associated with designing and certifying greener products. "There are some moderate product cost increases but no significant extra labor costs incurred in the production process for a greener computer. However there will be a one-time increase during the product design phase for engineering and certification costs to ensure quality and technical standards are met."
Ultimately, though, he expects prices for green wares to drop: "As demand for more environmentally friendly computers increases, the volumes sold are increasing, and therefore, the extra engineering costs become less significant and the product costs differences will continue to diminish."
Worth the price
Even if companies do pay a slightly higher sticker price for a green product, its energy efficiency, longer life, and other green-oriented benefits often more than make up for the cost. The Green Electronics Council says, "manufacturers and purchasers will actually save almost four billion dollars (US $3,660,553,851) over the life of the EPEAT products sold in 2007, primarily from reductions in energy use."
Attesting to this fact is Kaiser Permanente. The company purchased 55,271 desktop computers, 57,165 monitors, and more than 9,600 laptop computers registered with EPEAT between October 2006 and 2007. Laurie Spoon, executive consultant, procurement and supply, says the health-care organisation hasn't found that it pays a premium for purchasing green computer products, especially when taking into account the total cost of ownership, including energy consumption, repair and maintenance costs, operational costs, replacement of components, and the like.
"Of all the successfully implemented environmental initiatives in Procurement and Supply, almost all were cost-neutral or delivered cost savings when total cost was considered," she says. "For example, the EPA calculated that for the purchases Kaiser made [between] July of 2006 through approximately the middle of 2007, we achieved US$4.7 million in savings by purchasing EPEAT-registered desktop computers, monitors, and notebook computers, mainly through reduced energy usage."
The City of San Francisco has had similar experiences, according to Chris Geiger, manager of green purchasing and integrated pest management programs for the city's Department of the Environment. San Francisco has an ordinance requiring city departments to buy green products, and establishes a prioritisation and standard-setting procedure. "[M]any of our departments do pay extra for certain green products. The extra expense is usually justified by considering the long-term costs of health care, maintenance, etc., and also considering the life-cycle impacts of the products on the environment."
Customers aren't the only ones who can reap potential benefits by adopting green practices that tie in with EPEAT requirements. For example, MDG has saved money by implementing an EPEAT-based Customer Packaging Take-Back Program, according to Fry. Through the program, the company will take back product packaging from customer sites, then reuse it. "MDG has actually been able to reduce (through reuse) both packaging costs and the cost of excess packaging cardboard and foam disposal. Savings like these are accumulative and will increase over time as program adoption becomes more prevalent," he says.
But the company's customers are also enjoying benefits from the program: "High-volume clients especially appreciate the take-back options as it keeps their shipping docks clear for more important deliveries," Fry says.
It's also noteworthy to consider the less tangible, greater-good benefits of the adopting more sustainable IT products. The GEC says that the adoption of so many EPEAT-registered wares last year will:
- Reduce use of primary materials by 75.5 million metric tons, equivalent to the weight of more than 585 million refrigerators
- Reduce use of toxic materials, including mercury, by 3,220 metric tons, equivalent to the weight of 1.6 million bricks
- Eliminate use of enough mercury to fill 482,381 household fever thermometers
- Avoid the disposal of 124,000 metric tons of hazardous waste, equivalent to the weight of 62 million bricks.
- Save 42.2 billion kWh of electricity -- enough to power 3.7 million US homes for a year
- Eliminate 174 million metric tons of air emissions (including greenhouse gas emissions) and almost 365 thousand metric tons of water pollutant emissions
- Reduce 3.31 million metric tons of carbon equivalent greenhouse gas emissions -- equivalent to removing more than 2.6 million US cars from the road for a year
It's heartening, to me, to learn that organisations are finding that green can, in fact, pay for itself. With time, as demand for energy efficient, environmentally friendly products continue to rise, costs will undoubtedly drop. Sooner or later, in fact, I'd wager those sorts of traits won't even be viewed as extras so much as expected features.