Overview
IBM has been demonstrably committed to addressing climate change through the company's energy conservation and climate protection programs for decades. As a founding partner, IBM helped the U.S. Environmental Protection Agency launch ENERGY STAR in 1992. The company began disclosing its carbon dioxide (CO₂) emissions in 1994 and set its first CO₂ emissions reduction goal in 2000. IBM made its first purchase of renewable electricity in 2001. The company published its policy position on climate change in 2007, long before today’s acute focus, recognizing that climate change is a serious concern that warrants timely, meaningful action on a global basis. IBM supported the Paris Agreement in 2015, and in 2017, the company publicly reiterated its support for the U.S. to remain a party to it. IBM became a founding member of the Climate Leadership Council in 2019, supporting its bipartisan plan for a carbon tax with 100% of the net proceeds returned to citizens as a carbon dividend.
In 2021, IBM established its third consecutive goal for the use of renewable electricity; its fifth consecutive goal to reduce greenhouse gas (GHG) emissions; a new goal to achieve net-zero GHG emissions by 2030; and new goals for energy conservation, data center cooling efficiency, individual fleet carbon intensity reduction targets with key carrier and shipment suppliers, GHG emissions reductions for key suppliers in emissions-intensive business sectors, and more. For details on our climate position and energy and climate goals, please see:
Energy conservation
We recognize that the most effective way to reduce our GHG emissions is to make our operations more efficient and thereby reduce IBM's actual consumption of energy, which is the company's most significant source of GHG emissions. IBM established its global energy conservation program in 1973 and developed the methodology leading to its first energy conservation goal in 1975. The company continues to focus on ways to further reduce its energy consumption.
Energy consumption
IBM’s energy use decreased by 7.6% in 2021 from 2020. The company's global operations consumed approximately 3,804,000 megawatt-hours (MWh) of energy across all commodities, of which 85% was electricity. Lower average building occupancy due to the COVID-19 pandemic contributed to the reduction, as did the spinoff of IBM's managed infrastructure services business and its continued focus on operational efficiency and energy conservation.
Energy conservation projects
During 2021, 936 energy conservation projects were implemented at more than 190 IBM locations globally. These projects avoided 90,000 MWh of energy consumption and 26,500 metric tons of CO₂ emissions, and saved $9.9 million in expense. Only the first year's savings from projects are included. Accordingly, IBM's total energy savings and CO₂ emissions avoidance from these projects are greater than this simple summation of the annual results. The company also does not include reductions in energy consumption resulting from downsizings, the sale of operations or cost-avoidance actions, such as fuel switching and off-peak load shifting, in its energy conservation results.
From 1990 through 2021, IBM conserved 9.9 million megawatt-hours of energy — equivalent to more than double IBM's current annual energy consumption — saving $670 million and avoiding 4.6 million metric tons of CO₂ emissions. For more details on our energy conservation projects, please see the latest IBM ESG Report.
Data center energy efficiency
IBM takes a holistic approach to managing and improving the energy efficiency of the company's data centers—from improving existing space to derive more workload per area; to modernizing IT infrastructure and reducing energy consumption; to building or leasing new, higher-efficiency space.
IBM calculates the power usage effectiveness (PUE)¹ at many of the data centers the company manages and obtains PUE data from landlords of co-location data centers. For the limited number of data centers where PUE data is unattainable, industry average data is used. Using this approach, IBM had a calculated 2021 weighted average PUE of 1.53.² This puts the company on track to achieve its goal to improve the average cooling efficiency of its data centers by 20% by 2025 against a base year of 2019.
Following the spinoff of IBM's managed infrastructure services business in 2021, the majority of IBM's data centers reside in third-party managed locations. The company has developed and negotiated lease terms that enable IBM to engage and collaborate with landlords to improve the efficiency of support infrastructure toward meeting its goal.
¹ Power usage effectiveness (PUE) is the ratio of the total energy consumed by the data center divided by the energy consumed by the IT equipment. The closer the value is to 1, the more energy efficient the data center and its cooling delivery are.
² Includes only those data centers that remained with IBM after the Kyndryl spinoff.
Renewable electricity
Renewable electricity consumption
IBM made its first purchase of renewable electricity in 2001. In February 2021, the company established its third-generation renewable electricity procurement goal: to procure 75% of the electricity IBM consumes globally from renewable sources by 2025, and 90% by 2030. The amount includes renewable electricity in the grid mix IBM receives from utilities or energy retailers, and renewable electricity for which IBM specifically contracts over and above the renewables in the grid.
IBM increased its consumption of renewable electricity to approximately 2,068,000 MWh in 2021, representing 64.2% of its total electricity consumption, up from 59.3% in 2020. That includes 49.3% contracted directly from power suppliers and 14.9% already in the electricity mix we received from the grid. The increase was due to additional contracted purchases of renewable electricity in the United States, India, and multiple European countries — and keeps IBM on track to meet our current goal of 75% by 2025.
Even though we strive to do so one day, it is not possible today or in the foreseeable future for IBM to actually consume 100% of electricity from renewable sources given our physical presence in more than 100 countries along with the need for uninterrupted power, which is usually only made possible today by the use of fossil fuel and nuclear generation sources.
Data center renewable electricity consumption
Data centers continued to account for most of IBM’s global electricity consumption. In 2021, 67% of the electricity consumed in our data centers came from renewable sources, including both contracted and grid-supplied, up from 61% in 2020. IBM’s data centers include 72 that were supplied with 100% renewable electricity during 2021, although they still depend on backup power from fossil fuels when renewable sources become interrupted. These 2021 results include data centers that were part of IBM’s managed infrastructure services business for 10 months before that business was spun off, and many of those were in IBM-owned or managed locations. Going forward, most of IBM’s data centers are expected to be housed in co-location spaces managed by third parties.
To learn more about the company's progress toward its renewable electricity goal and sources of renewable electricity, please see:
Renewable electricity procurement strategy
IBM's strategy is to purchase renewable electricity that is generated in the grid regions where our consumption of electricity occurs. Our definition of "grid region" aligns with how the US Energy Information Administration¹ defines power balancing authorities' territories. We apply the same concept for other jurisdictions. By aligning with this definition of grid region, we ensure that the renewable electricity we purchase can physically flow from point of generation to point of consumption when the time of its generation and our consumption coincides. This also creates incentives for our electricity suppliers to increase their renewable electricity offerings in the places where we actually have demand for such power.
This means IBM does not rely upon the purchase of unbundled Renewable Energy Certificates (RECs) to comprise any "percent renewable" if we cannot credibly consume the electricity those certificates represent. For example, we do not use purchases of renewable electricity generated in Texas to claim consumption of that electricity in New York because the two states are in different grid regions.
We are source agnostic, meaning IBM procures renewable electricity generated from wind, hydropower, biomass, solar and geothermal installations around the globe. We report all of our contracted renewable electricity purchases whether from new or existing generation sources, "additional" or otherwise, and without discriminating against large hydropower plants. All purchases signal to suppliers our desire for them to maintain and broaden their renewable electricity offerings. This approach also recognizes that all sources of renewable electricity contribute to decarbonizing our economy.
Transparent reporting of renewable electricity consumption
IBM methodology to calculate its consumption of renewable electricity
IBM differentiates between two categories of renewable electricity consumption:
- Contracted renewables: purchases of renewable electricity for which IBM enters into a direct contractual relationship with a utility, power supplier or landlord to specifically procure and consume renewable electricity.
- Grid-supplied renewables: quantity of renewables that is part of the mix of electricity our facilities automatically receive from the grid.
To quantify contracted renewable purchases, the company relies upon its contracts with its providers. Typically, IBM obtains bundled Renewable Energy Certificates (RECs) or Guarantees of Origin (GoOs) in corresponding quantities that confirm this information. In geographies where RECs or GoOs are not available, the company obtains other equivalent documentation as alternative evidence to RECs or GoOs.
IBM estimates the grid-supplied renewables using publicly available power generation data by source from the International Energy Agency¹, the U.S. Environmental Protection Agency² (at grid sub-region level) and the Canada Energy Regulator³ agency (at provincial level). This data is typically one to three years behind the actual reporting year. The company endeavors to obtain the most recent reliable data for any given reporting cycle. The following example illustrates how IBM calculates its total renewable electricity consumption from both categories:
Let's assume a hypothetical IBM site in 'grid region A' consumes 10,000 megawatt-hours (MWh) of electricity each year. That site signs a contract with its power supplier to purchase and consume 5,000 MWh of renewable electricity per year. Therefore, 50% of the site's electricity is being supplied by contracted renewable purchases. The rest of the site's consumption (the other 5,000 MWh) is being supplied by a mix of energy sources in 'grid region A'. According to the relevant authorities, the electricity produced in grid region A comes from the following sources, in percent of total power generation: coal (23%); natural gas (45%); nuclear power (10%); hydropower (3%); wind power (18%); and solar power (1%). That means, that in total, grid region A is composed of 22% renewables. This means that 22% of the site's remaining 5,000 MWh of electricity consumption – equal to 1,110 MWh – is coming from grid-supplied renewable electricity. The site's total consumption of renewable electricity that year was 5,000 MWh (contracted purchases), plus 1,110 MWh (grid-supplied), totaling 6,100 MWh or 61% of its total electricity consumption.
IBM does not arbitrarily assign the consumption of renewable electricity to certain types of operations to be able to show desirable metrics (e.g., assigning all of the company's renewables consumption to its data center operations). The company's approach is factual and transparent since it assigns renewables consumption proportionally to the operations consuming the electricity at a facility level.
Allocation of renewable electricity to physical consumption and matched consumption
IBM categorizes its procurement of renewable electricity as either physical consumption or matched consumption with bundled RECs. Both categories represent scenarios in which an IBM facility and a renewable generation asset are connected to the same grid region:
- Physical consumption means the time of generation and consumption coincide. In this scenario, IBM consumes renewable power real-time, as it is generated.
- Matched consumption with bundled RECs means the time of generation and consumption do not coincide. This is the case, for example, when there is more renewable electricity being generated than what IBM needs to consume at a certain point in time. In this example, the excess renewable electricity is consumed by others within the company's same grid region, but IBM retains the associated RECs.
IBM allocates its renewable electricity consumption among these two categories using the following assumptions based upon the company's understanding of the sources and profiles of their output:
- Biomass - 100% physical consumption
- Geothermal - 100% physical consumption
- Hydropower - 70% physical consumption and 30% matched consumption
- Wind power - 40% physical consumption and 60% matched consumption
- Solar power - 20% physical consumption and 80% matched consumption
2021 Allocation of IBM's renewable electricity consumption: By delivery type
Total renewable electricity consumed: 2,068,267 MWh
Contracted purchases: 1,588,818 MWh
Grid-supplied: 479,449 MWh
On-site generation: 0 MWh
2021 Allocation of IBM's renewable electricity consumption: By category
Total renewable electricity consumed: 2,068,267 MWh
Physical consumption: 1,220,470 MWh
Matched consumption with bundled RECs: 847,797 MWh
Unbundled RECs: 0 MWh
Greenhouse gas emissions
IBM has been a leader in addressing climate change through the company's energy conservation and climate protection programs for decades. The company has set and attained a series of greenhouse gas (GHG) emissions reduction goals covering its operations.
IBM set its fifth-generation GHG emissions reduction goal in 2021: Reduce GHG emissions 65 percent by 2025 against base year 2010, adjusted for acquisitions and divestitures. The company's goal is based on science. The United Nations Intergovernmental Panel on Climate Change (IPCC), in its "Special Report: 1.5 C," indicates that anthropogenic carbon dioxide (CO₂) emissions must decrease 45 percent between 2010 and 2030 to limit Earth's warming to 1.5 degrees Celsius above pre-industrial levels. This translates to an annual rate of reduction of 2.25 percent. IBM's goal achieves a rate of reduction of 4.3 percent per year. In 2021, IBM reduced emissions 61.6% against base year 2010, placing the company on track to meet its goal.
In addition, the company set a new goal to reach net zero GHG emissions by 2030 using feasible technologies to remove emissions in an amount which equals or exceeds IBM's residual emissions. The company aims for residual emissions of 350,000 metric tons of CO₂-equivalent or less by 2030.
Both goals cover all of IBM Scope 1 and Scope 2 emissions, as well as Scope 3 emissions associated with the company's electricity consumption at co-location data centers. We challenge ourselves by not counting the purchase of unbundled renewable energy certificates to account for lower Scope 2 emissions, by not including the purchase of nature-based carbon offsets to comprise any emissions reduction, and by setting a numerical target for residual emissions.
IBM will continue to reduce its GHG emissions through conserving energy, driving continual improvement of its operational efficiency and increasing its use of renewable electricity. The company anticipates relying on new carbon removal solutions such as direct air capture to meet its net zero GHG emissions goal, and supports the development with research to accelerate the discovery of enabling materials. For more information, please see:
Logistics and packaging
IBM is optimizing logistics operations and increasing packaging density and strength to reduce the CO₂ emissions generated by the transport of IBM products and their components. The company has been an active participant of the U.S. Environmental Protection Agency's SmartWay® Transport Partnership since 2006. SmartWay is a voluntary initiative to improve fuel efficiency and reduce GHG emissions associated with logistics operations.
The company also develops product packaging that minimizes material use and package volume while optimizing package strength. This helps reduce transport-associated CO₂ emissions.