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Unlocking Sustainable Growth: The Case for Including Refurbished IT in the New Tax Credit

Unlocking Sustainable Growth: The Case for Including Refurbished IT in the New Tax Credit
21 July 2023
Unlocking Sustainable Growth: The Case for Including Refurbished IT in the New Tax Credit

Nick Stapleton, Managing Director at ETB Technologies

First published in Data Centre Review

The unprecedented impact on climate change is continuing to increase in urgency. Recent research predicts our overheating world is likely to break a key temperature limit for the first time over the next few years.

Historically, the IT sector has been a negative contributor to the environment through energy consumption during hardware production and throughout the lifespan of said equipment. In addition, we are now seeing landfills full of electronic devices – also referred to as ‘e-waste’ – that have been discarded but could have been refurbished to be made good as new.

E-waste is a global problem. It’s one of the fastest growing waste streams internationally, resulting in about 50 million tons being created every year by businesses and households. This could be minimised if a sustainable approach to the lifecycle of IT is adopted when designing the technical infrastructure of a business, as well as increased investment in refurbished equipment over new.

In 2019, Scotland became the first nation to declare a climate emergency, citing the circular economy as one way to drive down emissions and positively contribute to the global climate setting agenda. However, fast forward to this year’s UK government Spring Statement, where it was announced that businesses will benefit from a full capital expensing policy for new IT equipment.

With IT equipment making up 2.5% of carbon emissions globally, encouraging businesses to buy new hardware through a tax benefiting scheme goes entirely against plans for a more circular economy.

Of course, encouraging businesses to invest in their IT infrastructure will have a positive impact on digital transformation projects. However, to achieve their net zero targets, the government has also committed to reducing our carbon emissions by 75% by 2030.

If we are to achieve this goal, we need to promote the advantages and give guidance to businesses on how they can reduce carbon emissions through increasing their use of refurbished IT.

Benefits of using refurbished IT

When discussing the climate conscious advantages of refurbished IT in promoting a circular economy, a common query to address is: Does the use of older equipment cancel out its environmental benefits due to higher energy consumption? While this concern may have held merit in the past, it is no longer the case today.

Energy efficiency is largely equal from 13th generation severs onwards, with the same power supplies now used across multiple generations. 15th generation equivalents do use slightly less energy its 13th and 14th gen predecessors, but not so much that it offsets the carbon used to produce a new piece of equipment.

When it comes to performance, most businesses would never notice any difference between a 14th gen and 15th gen server. Therefore, if a business doesn’t use IT to run mission critical infrastructure, refurbished equipment would be the sensible option.

Scalability is another advantage of refurbished IT. Whether you choose refurbished or brand-new, the scalability remains consistent. Even modular systems from previous generations seamlessly integrate with the latest servers, ensuring compatibility and flexibility as your business grows.

Another key benefit is how much businesses could potentially save when buying refurbished over new.

Typically, if you are comparing a current model to a refurbished option on a like-for-like basis, you’ll usually save about 30-50%. Some of the largest savings can usually be found when buying either switches, hard drives, or a previous generation of server – in these cases, discounts of 70-75% are not unusual.

As we all know, the impact from the global supply chain and chip crisis is causing a lot of delays for manufacturers across the board, and there are no signs of this trend changing anytime soon. As a result, current lead times for new servers can be up to eight weeks, and for switches and storage arrays, this can be several months.

In contrast, refurbished IT doesn’t have the same delay, with shipping times usually measured in days rather than months. This makes refurbished the ideal solution for when you need to extend your IT capabilities and don’t have luxury of waiting.

Urging the UK government to include refurbished IT in the new tax credit

In a world where climate consciousness, cost efficiency, and time optimisation are paramount, the rise of refurbished IT poses a compelling question: Why opt for new equipment at all?

The government's incentive plans to invest in new hardware by allowing businesses to deduct these expenses from taxable profits, holds the potential to provide a boost to the economy. Making it easy to see the logic behind this move.

However, I’d urge the government to consider including refurbished IT equipment within this tax credit to promote sustainable practices and help achieve the UK’s net-zero target. This inclusion would add to the growing list of incentives for businesses to choose refurbished IT, reinforcing the country’s dedication to sustainability.

If granted, encouraging businesses to be more environmentally responsible while enjoying economic benefits seems like a win-win situation. If this blog has convinced you that refurbished IT could be the best solution for your business, contact us to see how ETB can help. Our friendly sales team are always ready to answer your questions.

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