As indications of climate change intensify and the world ponders the future of the Paris Agreement under the Trump presidency, every commitment by governments and businesses to combat this problem assumes additional significance. The announcement this month by Google, the world’s leading internet services company, that it would by 2017 meet 100 percent of its corporate energy demand from carbon-free sources is therefore a critical signal of the corporate world’s commitment to responsible environmental stewardship. Google’s efforts are driven not just by a notion of corporate responsibility but also by business imperatives: Going green is smart, efficient and potentially profitable. That is the way to ensure that such policies are adopted more widely.
Google (or more accurately its parent company, Alphabet) is the world’s second-largest corporation by market capitalization: It is worth more than $530 billion. Headquartered in the United States, it has a digital and physical footprint that stretches around the world; in addition to office complexes that house staff and scientists, the company has huge data farms dotted across the globe. Those farms house massive computing facilities that consume extraordinary amounts of energy. It is reckoned that Google consumed 5.2 terawatts of energy in 2015 — the equivalent of the energy needs of the city of San Francisco or half a million homes in the U.S.
In a bold move, Google announced in 2012 that it was committed to 100 percent renewable energy purchasing in its operations. This month it confirmed that it will by 2017 purchase enough green energy to meet all its energy needs. Currently, the company has commitments to purchase 2.6 gigawatts of electricity under long-term contracts, an increase from 2 gigawatts just the year before. This amount will match the energy Google consumes during a year of operations and make Google the largest corporate purchaser of renewable energy in the world — larger even than many utilities.
In fact, Google will not be running all its operations with renewable power — and the company concedes as much. In some places where Google operates, there are no renewable energy sources; other places do not have a regulatory structure or policies that permit the purchase of renewable energy. Instead, the company will be purchasing energy equivalent to its projected use, a move that is in many cases akin to investing in clean energy. This is a powerful way to spur the development of clean energy projects, allowing other companies to benefit from Google’s commitment — they can use the energy that Google does not consume — and encouraging still other companies to do the same.
Google’s commitment makes business sense when electricity costs are one of the largest components of its operating expenses. Investment on this scale helps drive down the cost of such energy sources as well. Reliance on renewable energy also insulates the company from the inevitable swings in volatile fossil fuel prices.
The renewables program is part of a suite of initiatives designed to reduce and make more efficient Google’s energy consumption. Google has also relentlessly honed its energy use, using its data and computing capabilities to ensure that its facilities run in the most energy-efficient way. According to Google statistics, its data centers now get 3.5 times more computing power from a single unit of energy compared with five years ago. Google hopes to share these tools with other companies to allow them to reach the same efficiencies.
Google is not alone in its commitment to renewable energy. The information technology sector has been leading this push, but even traditional sectors like automakers and the government are pushing renewables. General Motors, for example, has promised to get all of its electricity from renewable sources by 2050, expanding a previous commitment to use 125 megawatts of renewable energy by 2020. Eighty-two other companies have made the RE100 pledge to get 100 percent of their energy from renewable sources, which is meant to spur demand for large-scale renewable energy generation.
Sadly, none of the RE100 companies is Japanese. That is especially troubling given the opportunity that Japan has had to promote renewable energy in the aftermath of the 2011 Fukushima nuclear crisis. Bloomberg New Energy Finance reports that in the three years after the accident, Japanese investment in renewable energy quadrupled, growing from $2.3 billion to $9.1 billion in the first quarter of 2014, but that figure had fallen to $3.5 billion in the third quarter of this year.
The explanation for this reversal reflects low fossil fuel prices, a reduction in government subsidies to renewable energy users, and a government commitment to other energy sources, including coal — more than 40 new coal-fired power plants are in the pipeline — and nuclear power. As a result, renewable energy sources make up just 14 percent of Japan’s energy production in the last fiscal year, up from 10 percent before the March 2011 accident, but it means that a lot of work will be required to meet the official goal of having renewables provide 22 to 24 percent of the country’s energy needs by 2030.
Government commitments are important, but even more durable and compelling are steps by companies like Google. They not only set the pace for competitors and green-minded companies, but those investments bend the cost curve, creating new opportunities and new markets.