As global demand for digital infrastructure accelerates, data centers are expanding at a pace few industries can match. Sustainability discussions around these facilities have largely centered on energy efficiency and renewable electricity. However, a growing share of emissions is locked in long before servers are powered up.

In a recent conversation hosted by Net Zero Compare, we spoke with Karl Rabe, Founder and Managing Director of WoodenDataCenter and Co-Lead of the Modular Data Center Group at the Open Compute Project Foundation. The discussion focused on embedded emissions, material choices, modularity, and why early design decisions matter as much as operational efficiency.

🎥Watch the Full Conversation: The full interview with Karl Rabe is available on YouTube. In the discussion, he walks through the practical realities of building lower-carbon data centers, including materials, costs, timelines, and grid integration.

Watching the full recording provides additional technical nuance and context that complements the summary below, particularly around modular construction, open standards, and regional considerations for data center development.

Why Embedded Emissions Have Become the Real Challenge

For many large data center operators, renewable electricity is no longer the primary bottleneck. Once facilities reach high levels of renewable power sourcing, most remaining emissions shift into the supply chain.

Rabe explains that for “hyperscalers”, up to 99 percent of reported emissions can come from upstream sources once operational electricity is decarbonized. These emissions include construction materials, structural components, cooling systems, batteries, and other hardware that are installed before operations begin.

The challenge is not awareness but complexity. Embedded emissions are harder to measure, harder to compare, and harder to address than electricity procurement. As a result, organizations often default to metrics that are easier to manage, even if they no longer represent the largest share of impact.

How Much Construction Materials Actually Matter

The share of total emissions attributable to construction materials depends heavily on location. In regions with carbon-intensive grids, operational emissions may dominate over time. In regions with low-carbon electricity, the opposite is often true.

Based on detailed analyses from recent hyperscale projects, Rabe notes that construction materials alone can account for roughly 40 to 60 percent of total emissions associated with a new data center. In less technically dense buildings, that share can be even higher.

Unlike operational emissions, these impacts occur immediately. Once concrete, steel, and other materials are poured or installed, the emissions are irreversible. That makes early design choices particularly important for organizations that operate in low-carbon energy markets.

Why Cross-Laminated Timber Is Viable for Data Centers

WoodenDataCenter builds modular facilities using cross-laminated timber, or CLT. While timber construction is often viewed as unconventional for critical infrastructure, CLT behaves very differently from traditional wood construction.

CLT panels are formed by cross-laminating multiple layers of wood, creating large structural elements with predictable strength and fire behavior. In fire scenarios, thick CLT panels char on the surface while retaining structural integrity. This characteristic allows them to meet stringent fire safety requirements without relying on chemical treatments.

Durability concerns are addressed primarily through moisture control. As Rabe emphasizes, humidity management and leak prevention are the critical design constraints for long-term performance. When those conditions are met, the longevity of timber structures is well established, with historical examples spanning centuries.

Beyond emissions, CLT enables faster and more precise construction. Panels are prefabricated off-site, reducing build times, material waste, and reliance on carbon-intensive concrete and steel.

Cost, Speed, and Bankability

Sustainability alone does not drive adoption in data center development. According to Rabe, projects must compete on traditional metrics such as capital cost, delivery timelines, and operational performance.

Wooden modular data centers are typically delivered around 30 percent faster and 30 percent cheaper than conventional builds on a cost-per-megawatt basis. In some cases, time-to-availability improves even more, which is particularly relevant for AI-driven capacity expansion.

From a financial perspective, these facilities are fully insurable and bankable. The structural and fire performance characteristics of CLT, combined with standardized engineering, allow projects to meet insurer and lender requirements without additional hurdles.

Where Modularity Delivers the Most Value

Modularity is often used as a blanket term, but its benefits vary depending on where it is applied. Rabe distinguishes between modular buildings and modular infrastructure.

The greatest gains come from pre-engineered and pre-tested components such as UPS systems, switchgear, pump stations, and heat exchangers. These skidded systems can be manufactured in controlled environments, shipped to the site, and commissioned rapidly. This approach has enabled some AI-focused deployments to move from planning to operation in as little as 120 days.

By contrast, IT rooms themselves may benefit more from precision construction using nontraditional materials rather than fully containerized modules. The key advantage lies in defining interfaces clearly and limiting on-site complexity.

Open Standards as an Enabler of Lower Emissions

Rabe’s involvement with the Open Compute Project reflects a broader belief that open collaboration is necessary to reduce carbon intensity at scale. Open hardware specifications, shared performance metrics, and accessible design models allow organizations to benchmark, iterate, and reuse components more efficiently.

Open standards also support second-life use of equipment, extending asset lifetimes and reducing the need for new manufacturing. Without this shared foundation, many of the sustainability metrics now used by large operators would not exist in a consistent form.

Collaboration among major technology companies has also accelerated innovation in adjacent areas, including lower-carbon concrete and alternative cooling approaches.

Location Still Matters

Even with improved materials and modular designs, geography plays a decisive role. Regions with abundant hydropower, geothermal energy, or low-carbon grids remain the most favorable for minimizing lifetime emissions.

Rabe highlights the Nordics, Iceland, parts of Canada, and emerging regions such as the Philippines as increasingly attractive due to energy availability and cost. As renewable generation expands, off-grid and hybrid models are also opening new possibilities for data center placement.

Within Europe, regulatory structures and electricity market design can still distort incentives, making some regions less attractive despite favorable energy resources.

Data Centers as Grid Assets, Not Just Energy Consumers

One of the less discussed opportunities is the role data centers can play in supporting renewable energy systems. With large batteries, backup generation, and flexible loads, data centers are uniquely positioned to stabilize grids with high shares of variable generation.

Rabe describes this as the energy-integrated data center. These facilities can absorb excess renewable power, provide peak shaving, and in some cases supply waste heat to nearby buildings and industrial sites. Liquid-cooled systems make heat recovery particularly viable.

As AI-driven capacity growth continues, this integration may become a critical element of grid resilience rather than a secondary benefit.

Conclusion

The conversation with Karl Rabe highlights a shift in how sustainability should be evaluated in digital infrastructure. As operational emissions decline, embedded emissions, material choices, and early design decisions increasingly determine a data center’s total impact.

For organizations planning new capacity, the message is practical rather than ideological. Lower-carbon materials, modular engineering, and open standards can reduce emissions while improving cost, speed, and flexibility. Treating these factors as secondary is no longer aligned with either environmental or commercial reality.