Google Search for Cleaner Energy Unveiled by CEO
Author: Braden Reddall
Having conquered the market for Web search by first simplifying how it is done and then making sales of related advertising more efficient, Google Inc is now funding green technology and using its brand power to lobby for policy change.
Google launched a plan on Wednesday to wean the United States off burning coal and oil for power by 2030, and cut oil use for cars by 40 percent. That will cost trillions of dollars, but Google believes it should ultimately save money.
Chief Executive Eric Schmidt said the annual cost of the energy plan would anyway be less than the US$700 billion being considered to bail out the financial industry, and he saw some parallels between the energy challenge and the credit crisis.
"That is an unconscionable failure of system design," he said. "It is inconceivable to me that the sum of the financial industry would have created that as a possible outcome."
He said Google had not yet felt the economic impact of it, but added it was hard to say what would happen next.
"There is an equivalent scale problem in energy," he told reporters after a speech to San Francisco's Commonwealth Club entitled "Where Would Google Drill?". "I'm a computer scientist and computer scientists love scale problems. We like scale and replication and leverage in a technical way."
Through its philanthropic arm Google.org, the company is backing start-ups designing wind, solar and geothermal technologies, which it hopes will eventually be cheaper than coal. Google invested US$45 million in such companies this year.
"But that is a drop when we need a flood," Google wrote on its official blog, http://googleblog.blogspot.com/2008/10/clean-energy-2030.html
Calls for energy efficiency, once heard largely from environmentalists, now resonate with voters and businesses unlike never before, especially with oil above US$100 a barrel.
Google itself is improving its servers and their buildings, identifying US$5 million in building efficiency investments that will pay for themselves in two and a half years. New efficiency standards for computers could cut power consumption by the equivalent of 10 to 20 coal-fired plants by 2010, Google said.
Google's energy plan calls for stricter building codes, a commitment to wind and solar tax credits that have lapsed in the past, and a price on carbon through cap-and-trade or tax.
Google recently partnered with General Electric Co to speed up development of grid technology. Echoing calls by both presidential candidates for an upgraded power grid, Google wants to see more smart meters and real-time pricing to let people see how much energy they use and what it costs them.
Schmidt, a business adviser to Barack Obama's campaign, was discouraged by talk of "clean coal" among Republicans, but said generally of energy policy: "Regardless of who becomes president, there will be action on this front."
Asked if he would ever enter politics, Schmidt told the Commonwealth Club meeting: "That is very flattering, but the answer is 'hell no.'"
At the time of Google's initial public offering in 2004, founders Larry Page and Sergey Brin pledged employee time and about 1 percent of Google's equity -- 3 million shares -- plus 1 percent of profits to philanthropy. In 2006, Google converted 300,000 shares into about US$90 million to set up Google.org.
The fact that it is a small percentage of Google's US$4 billion-plus 2007 profit has led some critics to wonder whether it is little more than a publicity stunt.
Schmidt said there was a branding benefit from the effort, but it was ultimately driven by what the two founders wanted, and he doubted investors worried too much about the cost. "Our shareholders are used to this sort of stuff from Google."
(Editing by Bernard Orr and Louise Heavens)