Alibaba's Vietnam data center plan spurs local firms to find carbon reduction solutions


(Photo: Focal Foto/Flickr)

Chinese tech giant Alibaba plans to construct a data center in Vietnam to comply with local regulations. However, data centers, which are considered high-energy-consuming industries, are drawing attention to energy efficiency and carbon emission reduction.

In addition to saving electricity and using renewable energy, the local technology firms join U.S.’s Vietnam Low Emissions Energy Program II (V-LEEP II) to achieve carbon neutrality.

As reported by Nikkei Asia, Dang Minh Tam, solution architect lead at Alibaba Cloud, stated that Alibaba intends to construct a data center in Vietnam to meet the demand of Asia’s fastest-growing economy. However, he declined to disclose the project timeline and budget.

Vietnam tightened its Cybersecurity Law in 2022, requiring companies operating in the country to store user data locally, triggering pushback from many large multinational corporations. Currently, Alibaba has leased data servers from two local data center operators, the Military Industry and Telecommunications Group (Viettel) and the Vietnam Post and Telecommunications Group (VNPT).

Leif Schneider, counsel at the law firm Luther, stated that when multiple companies are involved in managing a data, the responsibilities of each may be contentious. Therefore, the contract must specify to ensure their respective risks and responsibilities.

Viettel has found that whether it's Alibaba or Microsoft, their customers have increasingly higher ESG (Environmental, Social, and Governance) requirements.

Nguyen Dinh Tuan, the manager of Viettel's technical department, mentioned that local companies would add technology usage (T) to become ESGT, such as utilizing technology to monitor and adjust water usage for server cooling, leading to significantly increasing operational expenses.

Viettel plans to increase the proportion of renewable energy to 30% by 2030 and has already launched its first data center powered by renewable energy in April as part of this pledge.

(Photo: Viettel)

FPT, a major Vietnamese information and communications company that also operates data centers, is accelerating its carbon neutrality goal by 2040 through a program supported by the US government. It was achieved 10 years ahead of schedule compared to Vietnam’s national goal.

FPT is the first Vietnamese technology company to collaborate with the United States Agency for International Developments (USAID), officially joining the Vietnam Low Emission Energy Program Phase II (V-LEEP II) in April. Technical assistance will be provided, including enhancing the knowledge of net-zero emissions strategies, direct power purchase agreement mechanisms, renewable energy certificates, battery energy storage systems, and rooftop solar development for self-consumption, and recommend renewable energy developers to facilitate cooperation.

FPT's ESG report was recently released and committed to ongoing energy efficiency and carbon reduction efforts, aiming to create a sustainable development environment. In addition to carbon offsetting through tree planting initiatives, providing subsidies for employees to purchase electric vehicles, and offering environmental protection courses. As digital transformation practices, FPT is actively pursuing paperless offices, and 100,000 e-contracts were signed in 2023, a 6.6% increase compared to the previous year.

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