Google hopes to transform the energy grid in much the same way it did the Internet. Following up on its conquest of the search engine market by first simplifying the process and then generating sales from efficient advertising related to search results, Google is now funding green technologies and is using its incomparable brand power to lobby for changes to energy policy.
On October 1 the search giant introduced a strategy that would ease the United States off of coal-fired energy and oil by the year 2030 while reducing oil consumption within cars by 40 percent at the same time. The effort could cost trillions of dollars but Google is of the opinion that ultimately enormous savings would be realized both monetarily and for the environment.
Google Chief Executive Eric Schmidt points out that the annual cost of the Google energy strategy would be less than the $700 billion amount being considered for the bailout of the financial industry. He also says there are parallels between the credit crunch and the energy challenge.
“That is an unconscionable failure of system design,” said Schmidt. “I’m a computer scientist and computer scientists love scale problems,” he continued. “We like scale and replication and leverage in a technical way.”
Google is helping start-ups that focus on sustainable technology such as solar, wind, and geothermal power through Google.org, the company’s philanthropic arm. Google anticipates that renewable energy will one day be cheaper to use than coal. Last year, Google invested $45 million in these companies.
“But that is a drop when we need a flood,” says Google in its official blog.
Once only heard from environmentalists, the call for efficient energy along with the development of alternative energy sources has become much more mainstream after oil surged to record prices well above $100 a barrel.
Google is taking a close look at efficiency within its operations by making significant improvements within its servers and buildings. So far, the company has identified $5 million worth in building efficiency investments. Google believes that it will recoup that investment within two and a half years.
Google says that if its efficiency standards for computers were adapted that power consumption would be lessened by an amount equal to that of 10 to 20 coal-fired power plants by the year 2010.
Google’s energy plan includes a commitment to wind and solar power tax incentives that encourage homeowners to adapt the technology. Currently, those incentives have an expiration date. Google also wants to see stricter building codes that focus on environmental sustainability and energy efficiency and a price to be fixed upon carbon emissions either through a tax or a cap-and-trade scheme.
Google recently teamed up with General Electric to encourage development of cutting-edge power grid technology. Just as the presidential candidates from both major American political parties have stated, Google wants to see smart meter technology adapted throughout the country along with real-time pricing so consumers can see exactly how much energy they are using and how much that energy costs.
Schmidt serves as a business adviser to Obama’s presidential campaign. He says he was “discouraged” when Republicans mentioned “clean coal” as a viable alternative. Schmidt expects that energy policy will change no matter which candidate wins the White House.
Founders Larry Page and Sergey Brin pledged employee time and 1 percent of Google’s equity, plus an additional 1 percent of profits, to go towards philanthropy projects when the company became owned by the public in 2004. Currently, that equity pledge is equal to 3 million shares. Google converted 300,000 shares in 2006 into around $90 million in order to set up Google.org.
Schmidt said that ultimately the energy policy initiative is driven by the company founders and that there is a benefit to the Google brand from the effort. He doubts that investors should be concerned over the cost.
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