Cloud energy consumption: Is the cloud really more energy-efficient?

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  Quantumrun Foresight
• December 1, 2022

Insight summary

The rapid expansion of cloud computing is challenging the industry's ability to meet environmental goals, despite its initial promise of reducing carbon emissions. Strategies like building data centers near renewable energy sources and implementing strict energy regulations are being considered to address these environmental concerns. The cloud industry's growth can also influence changes in consumer preferences, government incentives, and technological designs, all aimed at promoting energy efficiency and environmental responsibility.

Cloud energy consumption context

Cloud computing has become an increasingly crucial part of the technology market, providing businesses with increased technological abilities at a lower physical and financial cost. However, while they are meant to help lower carbon emissions, the cloud industry's rapid growth has made it harder for the industry to reach its environmental targets.

Cloud computing can operate and support its customer base's technical and data needs by storing data in gigantic data centers or server farms. These centers are mostly located in typically cold areas of the planet, such as Antarctica and Scandinavia, to minimize the energy needed to cool down these facilities so that machines operate as efficiently as possible. Amazon Web Services (AWS) claimed that data centers are about three times more energy-efficient than the average company in the European Union (EU), based on their poll of 300 European companies. 

AWS has also claimed that businesses migrating to the cloud lowered these companies' overall energy consumption by 80 percent and carbon emissions by 96 percent. However, according to French think-thank The Shift Project, the surge in cloud migration and expanding data centers to support this growth pushed carbon emission levels higher than pre-COVID-19 air travel. The five largest technology companies in the world in 2022 (Amazon, Google, Microsoft, Facebook, and Apple) already consumed as much energy as New Zealand (over 45 terawatt-hours). Data centers comprise 15 percent of the IT industry's digital infrastructures, according to The Shift Project. Additionally, many cloud service infrastructures still operate on coal, while only 5 percent of the global power grid uses renewable energy, based on a 2020 report from oil company BP.

Disruptive impact

The commitment by the world's largest technology companies to achieve net zero or carbon negative status by 2040 is a significant step towards addressing climate concerns. However, experts suggest that more aggressive strategies are necessary to manage the growing energy demands of the cloud industry. The construction of data centers in proximity to renewable energy sources, such as solar and wind farms, could reduce transmission costs and secure a steady supply of clean energy. 

As technologies like machine learning, artificial intelligence, and blockchain continue to expand, they become more energy-intensive. In response, there may be increased regulatory oversight to limit the energy consumption of industries and businesses that heavily rely on these technologies. The implementation of energy use standards and carbon taxes is a plausible approach for governments to encourage the cloud industry and major technology firms to reduce and control their carbon emissions. 

Changes in the auditing profession are likely to emerge to better quantify the energy usage of the cloud industry and its operators. Accurate assessment and reporting of energy consumption are critical for enforcing regulatory standards and for companies to transparently demonstrate their progress towards environmental commitments. This evolution in auditing practices could lead to a more accountable and transparent industry, where companies are not only encouraged to innovate in energy efficiency but also held responsible for their environmental impact. 

Implications of the cloud industry’s energy consumption

Wider implications of more businesses using the cloud, and the cloud's energy consumption requirements to meet these needs, may include:

• Increased investments from cloud computing companies in privately-owned renewable energy such as solar and wind as they investigate ways to fulfill their carbon emission reduction commitments.


• Big Tech and telecommunications companies involving themselves more in local and regional utility infrastructure development programs to ensure future energy infrastructure supports carbon reduction efforts.


• Stricter regulations on data center energy efficiency, including for server farms, network devices, storage, and other hardware.


• Increased cloud computing and data center demand as technologies such as artificial intelligence, smart energy management and manufacturing, and autonomous vehicles continue to develop.


• Enhanced focus on energy-efficient hardware and software designs in cloud computing, resulting in more efficient processing and reduced energy consumption.


• Governments creating incentives for companies to develop and use low-energy-consuming technologies, fostering an environment where energy efficiency is a key competitive factor.


• Shift in consumer preferences towards cloud services from companies that demonstrate strong environmental responsibility, influencing market dynamics and company policies.

Questions to consider

• Do you think cloud services are more energy-efficient in general?


• How else do you think the technology industry at large should address the increasing electricity demand of their data centers?