Dell Aims to Go Carbon Neutral

It's portraying itself as at the head of the pack among computer makers with a big initiative to help the environment. How good is the plan?

by Arik Hesseldahl

Dell (DELL) is embarking on a broad environmental initiative under which it plans to consume less energy and use more power from renewable sources in a bid to make its operations carbon neutral by the end of 2008.

The announcement came in a speech Sept. 26 by CEO Michael Dell at the Center for Strategic & International Studies in Washington. "Never before in the history of business have we seen such a critical need to build a worldwide community dedicated to improving the environment," Dell said.

Carbon Scorecard

With a statement like that, one might think Dell is aiming to turn his sprawling $55 billion company on a dime into an oasis of eco-friendly industrial practices. But given the details disclosed so far, the move looks more like a baby step for a business of this size.

Dell executives say the effort will focus mostly on power consumption at Dell-owned and leased buildings around the world. For starters, employees' computers will be turned off at night and during long periods of inactivity, says Dane Parker, Dell's director of global environmental health and safety programs. The company estimates these efforts will save $1.8 million per year in power costs and cut annual carbon dioxide emissions by 8,500 tons—about the same amount of CO2 spewed by 1,400 American cars in a year.

However, while certainly a step in the right direction, 8,500 tons amounts to just 2.2% of Dell's annual CO2 emissions, according to the latest data released by the Carbon Disclosure Project. The CDP is a nonprofit coalition of financial institutions, including ABN Amro (ABN), HSBC, AIG (AIG), and pension fund CalPERS, that manage a combined $41 trillion assets. The group uses that investing clout to press companies to disclose data on their carbon emissions and then produces an annual report rating companies on their disclosures.

Dell has told the CDP its annual global emissions amounted to 344,000 tons of CO2. That was well below the 2 million tons reported by archrival Hewlett-Packard (HPQ) and the 2.8 million tons reported by IBM (IBM), but higher than the 255,000 tons reported by Sun Microsystems (JAVA).

Using Alternative Energy Sources

"It's going to be a big job," says Allison Hannon, corporate engagement manager for the Climate Project, an advocacy group that has worked with Dell on its carbon policy. "First, it's going to have to get its house in order and then work on reductions."

Dell says it's also replaced the lighting fixtures at its buildings in Central Texas, cutting power demands in those facilities by 9%. The computer maker also plans to buy more power from alternative sources such as wind farms. Already, 10% of the power needed to run Dell's facilities in Austin, Tex., come from renewable sources. However, "our biggest constraint with renewable energy is with availability," says Mark Newton, Dell's environmental policy leader. "Availability is a bigger problem than cost." While that increases demand for alternative energy, the immediate impact on carbon emissions is not very significant, says Michael Gillenwater, a climate policy researcher at Princeton University. "A lot of power from renewable sources would have been generated anyway," so there may not be a corresponding drop in electricity generated from fossil fuels, he says.