The 'cloud' typically conjures images of a remote place in the sky where people store documents, photos and music, yet the reality couldn't be more different.
Data is stored on thousands of remote computer servers located in large-scale industrial facilities called data centers that belong to well-known internet giants like Google and Amazon and niche players such as Rackspace.
While the industry has seen unprecedented growth in the recent years, there are challenges. Data centers consume tremendous amounts of power - often produced by "dirty" sources such as fossil fuels. Increasing demand for cloud infrastructure is set to boost power consumption over the coming years.
"This current path [of energy consumption] is unsustainable, as we are barely scratching the surface of data that's projected to come at us in the coming years," Martin Fink, chief technology officer of Hewlett Packard (HP) told CNBC.
Greenpeace estimates that if the global cloud computing industry were a country, it would rank sixth globally - right after Russia and before Germany - in terms of power consumption. The cloud's aggregate electricity demand - including data centers and networks - is expected to increase over 60 percent by 2020, according to the environmental lobby group.
U.S. Internet behemoth Amazon came under fire from Greenpeace last month for having among the "dirtiest" clouds in the sector. Its cloud business, Amazon Web Services (AWS), sources just 15 percent of its electricity demand with clean energy, while the rest is powered by coal, nuclear and gas, according to the organization.
Amazon, however, disputes the accuracy of Greenpeace's data. In an email to CNBC, a company spokesperson said, "AWS has been and continues to be committed to...offer cloud services in an environmentally friendly way. AWS operates efficient and highly utilized data centers across 10 different regions globally, two of which (Oregon and GovCloud Regions) use 100 percent carbon-free power."
The cloud's efficiency drive
Growing awareness in government and corporate circles around data center power consumption has demanded more proactive steps to reducing the industry's energy footprint.
Industry heavyweights such as HP and cleantech start-ups like U.K.-based Iceotope are developing technology to reduce the amount of power used by data centers, for example.
Data centers consume vast amounts of power because in order to process the daily data deluge generated by connected consumers and businesses. Huge amounts of energy are required to cool the densely-packed computers in these facilities.
"HP is investing heavily in technology solutions that will increase efficiency and decrease the amount of power needed to run the data centers that enable cloud computing," said Fink. Last year, the company launched a new breed of low-power servers that consume up to 89 percent less energy than traditional server models.
Meanwhile, Iceotope has developed a liquid cooling technology to boost the efficiency of existing equipment in data centers. This liquid eliminates the need for energy-intensive fans or air conditioning units.
Read MoreColleges test the limits of cloud
"Most data centers use spinning fans to cool IT but air is actually an incredibly inefficient means of removing heat and liquids are thousands of times more effective at doing so," said Peter Hopton, environmental entrepreneur and founder of Iceotope.
"To give cloud computing a better chance to deliver a net environmental advantage, Iceotope and other companies like us hope to dramatically reduce the resource impact of cloud computing by increasing efficiency and lowering costs," he said.
Reducing the cloud's energy footprint
Some data center operators have taken steps towards powering their facilities via clean energy sources like wind or solar.
"As industrial-sized consumers of energy, data centers are in a good position to support renewable energy sources by purchasing in bulk," explained Bob Landstrom, director of product development at European data center provider Interxion, which uses 90 percent renewable energy to power its facilities.
While progress has been made, the case of Amazon demonstrates that not all cloud data center operators are on board just yet.
"The environmental rationale for technology companies to act has been clear for many years, as a rapid shift to renewable energy is necessary to stem the worst impacts of climate change. Now, the business case is becoming more compelling as well," Greenpeace said, noting the costs for renewable energy dropping and prices for fossil fuel-based electricity rising.