Asian investors on China's data power

Singaporean money has long been backing the rise of Chinese Internet giants. Temasek is investing in some of China's biggest tech companies, including Alibaba, Tencent, Meituan Dianping. And its fully owned subsidiary ST Telemedia holds more than 10% of GDS, China's largest carrier-neutral datacenter operator.

While Singaporean money has played a significant role in propelling GDS into fame and profits, it now has a chance to help GDS become more climate friendly and shift toward 100% renewable energy. Why renewable energy matters Developments such as cloud computing, e-commerce and the Internet of Things have ushered in an age of big data, with a big carbon footprint. A recent Greenpeace East Asia report found that data centers in China were powered 73% by coal and emitted an estimated 99 million metric tons of carbon dioxide in 2018. The numbers are set to skyrocket, as electricity consumption from China's data-center industry is estimated to increase by 66% by 2023.

Assuming China's energy mix remains the same, the sector will produce 163 million tons of carbon emissions - equivalent to those of a medium-sized country.

Yet while we're clicking through our carbon budget, opportunities are emerging for China's internet giants to procure clean energy. China is home to more renewable energy capacity than any other country in the world. By the end of 2019, solar installation capacity exceeded 205 gigawatts and wind had surpassed 210GW, more than Europe's entire solar and wind capacity.

The cost of renewable energy is hitting a record low. Wind and solar energy have already reached grid parity in parts of China. In 2019, China announced more than 20GW of grid-parity renewableenergy pilot projects.

The renewable-energy market is making promising progress. New policies in Hebei province allow Internet companies to buy clean energy directly from the market. With the renewable-energy market maturing, small changes can make a big difference. The same report estimates if the Internet and data center sector's renewable-energy intake in China increases by just 7%, 16 million metric tons of carbon emissions can be avoided by 2023, equal to the emissions from roughly 10 million round-trip transAtlantic flights.

GDS leadership opportunity

GDS is one of the largest carrier-neutral data-center operators, currently operating more than 50 data centers. It's also one of the fastest growing: Its data-center floor area has quadrupled in the last three years, currently covering about 340,000 square meters.

In fact, GDS has great potential to lead the sector toward renewable energy in China. GDS scored second among independent data-center operators in Greenpeace's Clean Cloud 2020 scorecard. It already has one data center powered by renewable energy and procured more than 45,000 megawatt-hours of renewable energy in the first three quarters of 2019.

While global Internet peers are doubling down on renewable energy and moving away from fossil fuel, the climate leadership stage of China's Internet sector remains to be taken. Except for Chindata Group, no Chinese data-center company has set any renewable-energy targets. GDS can fill the gap by taking the ambitious step to set a 100% renewable-energy long-term target.

Just as Temasek states on its website, "climate change is the most urgent and critical global issue of our time."

Investors, banks, and stock exchanges worldwide are acting. Early this year, the world's largest asset management company Black Rock joined the US$41 trillion investor climate campaign and pressured companies it invested in to disclose carbon emissions and formulate adaptation strategies.

The "climate risk is investment risk" consensus is strong. The Hong Kong Stock Exchange recently upgraded its ESG Guide to include disclosure on climate impacts on a comply or explain basis.

Temasek's website states its investing principles including "sustaining our planet," "investing with tomorrow in mind," "mainstreaming sustainability," and "ecosperity."

Now is the chance to walk the talk and help GDS realize its potential to lead China's Internet and data centers sector's shift toward renewable energy.

Asia Times Financial is now live. Linking accurate news, insightful analysis and local knowledge with the ATF China Bond 50 Index, the world's first benchmark cross sector Chinese Bond Indices. Read ATF now.