Dell has promised that it will be the first major computer maker to reach some form of carbon neutrality.

The pledge was made by Dell CEO Michael Dell during a speech at the Center for Strategic and International Studies in Washington, DC this week, where not by coincidence the White House has also just hosted a climate change conference.

I’m proud to announce that by the end of 2008, we [Dell] will be the first major computer company to become carbon neutral. We hope we are not the last. I say this with all seriousness. We have a critical need to build a worldwide community dedicated to improving the environment, Dell said.

Dell said that it will achieve carbon neutrality by reducing greenhouse gas emissions, about 95% of which are related to the company’s electricity use. It plans to be more energy efficient, and to buy as much power from renewable sources as possible. It will deal with remaining emissions through the sometimes controversial process of offsetting, or making investments in other organization’s green efforts, such as forestation, or the development of green technologies.

The pledge earned an endorsement from US environmental group Ceres, an long-standing organization that combines non-profit groups and over fifty companies, including large corporations such as General Motors, Ford Motor, ITT, Sun Microsystems — and Dell.

What’s particularly impressive is Dell’s focus on energy efficiency and renewable energy as primary mechanisms for addressing climate change, and we look forward to working with Dell as additional environmental initiatives are developed, said Ceres president Mindy Lubber.

A spokesman for another US environmental body, Environmental Defense, said: This is indicative of something much bigger than Dell, which is that businesses are beginning to take their carbon footprints seriously.

Although Dell will cut its electricity bills by making its operations more energy-efficient, the company will not reach carbon neutrality without spending on offset investments. Currently the company says that it is difficult to know whether the whole project will subtract or add to its bottom line.

Our energy-efficiency efforts save us money. For example we estimate a power management trial for computers on the company network will save $1.8m annually. The price of renewable power is variable but in some cases has become competitive with more traditional power. Offsetting will carry a cost, which we are currently quantifying, said Dell spokesman Bryant Hilton.

10% of the power used at Dell’s Austin, Texas facility comes from renewable sources. But as Dell expands, that percentage might fall. Our challenge is that as a growing business our power needs will increase in the future, hence we need to expand the supply of and access to renewable power, Hilton said.

Dell has already pinned its colors to the green mast, and in June this year said it planned to be the greenest technology company on the planet. Alongside its plan to automatically shut down computers at night or when inactive, the company has started fitting office lighting that uses 9% less electricity than existing lights. It also refers to a Dell building in Germany that saves energy through enhanced insulation and use of LCD monitors. But all of this is not going to make a huge dent in Dell’s electricity consumption.

Offset investments – sometimes also known as carbon credits — have sometimes been criticized as fig-leaves that allow businesses to pretend to be carbon neutral at very low, tax-deductible cost, based on inaccurate calculations of environmental damage and the green investment needed to put it right.

Stressing that he was not familiar with Dell’s plans, the Environmental Defense spokesman told Computer Business Review: We support offsets 110% — as long as they are verifiable and enforceable, and don’t just represent business as usual with regards to emissions.

Dell’s corporate announcement of its carbon-neutral pledge included this statement: Dell is working with stakeholders to shape its offset strategy, which will help ensure that offsets are invested in projects that can be monitored and verified. Projects will be evaluated for their long-term viability and assurance that the carbon savings are real.

Hilton added: We are refining the offset strategy with stakeholders now – it will not all be through reforestation efforts.

As for the criteria that Dell will use to decide when it has achieved carbon neutrality, Hilton said that Dell has reported to the Carbon Disclosure Project for the past four years and that emissions data is part of a Dell annual sustainability report. The company is also part of the US Environmental Protection Agency’s Climate Leaders program, and said that the EPA is advising it on emissions accounting

The neutrality promise covers Dell’s owned and leased facilities, and its employees’ business air travel.

Dell also said that it has extended the tree-planting scheme that it launched earlier this year, under which its customers can help pay for trees to be planted to offset the carbon emissions associated with the hardware they are buying. The company would not say how much it has it self spent on the two schemes, but said that within three months of the launch of the first US program initial donations covered the planting of 20,000 trees. ABN AMRO,, AMD, and WellPoint were joint founders of the new Plant a Forest for Me scheme.

Our View

Regardless of how much cash Dell can save by making itself more energy efficient, it is going to have to spend money on offsets in order to become carbon neutral. And money spent on offsets will be money out the door.

The key decision that Dell will have to make is how much of its profit it is prepared to spend on its environmental beliefs.

That decision will obviously have to take account of Dell’s competitive position. If business is tough and the company’s recent recovery falters next year, it is going to be harder for it to hold to its promise. That is even allowing for wiggle room in impact and offset calculations.

If carbon footprints really do need to be cut quickly to avoid climatic disaster, the only way to guarantee that this will happen is through government action that enforces a level playing field, and equal environmental penalties to all businesses.