Friday, January 23, 2009

Google’s Green Agenda Could Pay Off

NY Times

October 28, 2008


SAN FRANCISCO — Google, the Internet search and advertising giant, is increasingly looking to the energy sector as a potential business opportunity.

From its beginning, the company has invested millions of dollars in making its own power-hungry data centers more efficient. Its philanthropic arm has made small investments in clean energy technologies.

But in recent weeks, Eric E. Schmidt, Google’s chief executive, has hinted at the company’s broad interest in the energy business. He also joined Jeffrey R. Immelt, General Electric’s chief executive, to announce that they would collaborate on policies and technologies aimed at improving the electricity grid. The effort could include offering tools for consumers.

Meanwhile, engineers at Google are hoping to unveil soon tools that could help consumers make better decisions about their energy use.

And while the company’s philanthropic unit,, has invested in clean energy start-ups like one that uses kites to harness wind power, Google is now considering large investments in projects that generate electricity from renewable sources.

“We want to make money, and we want to have impact,” said Dan W. Reicher, director for climate change and energy initiatives at

The timing could be off. With a recession looming and oil prices dropping, investors might pressure Google to curtail its clean energy ambitions.

Google’s shares have lost more than half their value in the last year, and some analysts complain that the company has a long history of dabbling in new initiatives with mixed results. It still relies on one business — small text ads that appear next to search results and on other sites — for the bulk of its earnings.

And Google’s online success does not guarantee success in the energy business.

But none of this has deterred Google from going deeper into the alternative energy business. To support its efforts, it has hired a growing number of engineers who are conducting research in renewable energy, former government energy officials, scientists and even a former NASA astronaut, whose hands-on experience with all sorts of electronic gadgets is being put to use to develop energy tools for consumers.

“They are a high-profile actor in the energy field,” said Daniel M. Kammen, a professor in the energy and resources group at the University of California, Berkeley, and an adviser on energy to the Obama campaign. “Google is in the lead in terms of human resources as well as money.”

Last year, Google unveiled an ambitious initiative called RE C, denoting its goal to develop renewable energy that is cheaper than coal. Since then, much of the public focus on the initiative has been in the approximately $45 million in investments that has made in wind, solar and geothermal energy start-ups.

That effort now also includes a small but growing group of engineers at Google who are conducting their own research and development in those technologies, which Google said it might commercialize in the future. also announced a project last year to develop plug-in hybrids. To make them widely available, the electrical grid would have to be upgraded so that cars could be plugged in at multiple locations, where they could be recharged and consumers billed.

Google now says it is interested in developing technologies to support some of those upgrades, as well as other tools at the intersection of energy and information technology, like “smart” electrical meters. The partnership with G.E. is aimed in part at exploring some of those opportunities.

Google has also increased its lobbying in Washington on energy issues. And the company is looking at larger investments in renewable energy projects that would be primarily motivated by their profit potential, not their environmental promise.

How far Google plans to go with its energy efforts, the company does not yet know, or at least is not willing to say.

“We have been debating, ‘What are the business opportunities for Google in this area,’ ” Mr. Schmidt, Google’s chief executive, said recently. “And I think right now, we would answer the question that our primary mission is one of information.”

Mr. Schmidt said that Google would be active in “information businesses or communications businesses” related to energy. Speaking more broadly about the energy sector, he added, “As to whether we will be in these other businesses, we will see.”

Google is known for stealth. The search engine company kept its advertising ambitions under wraps for years, a strategy that helped it become the dominant tech company in Silicon Valley. And with $14.5 billion in cash in the company’s coffers, it has plenty of resources to keep making further investments in new energy ventures.

Google’s efforts in the energy area remain relatively modest. The company has long said it assigns 70 percent of its resources to its core search and advertising business, another 20 percent to related business, like various Internet applications, and 10 percent to long-term, strategic projects. Its energy work falls in the last group.

But even that may be too much for some investors.

“With the stock cut in half and shareholders becoming increasingly frustrated, a lot of these initiatives are going to be called into question,” said Ross Sandler, an analyst with RBC Capital Markets. “Google is a search and advertising company. We are in a belt-tightening period. They should focus on the core business.”

And others still are raising questions about some of the company’s goals.

“The Silicon Valley guys have this idea that we are going to make solar cheaper than coal,” said John White, executive director of the Center for Energy Efficiency and Renewable Technologies. “To me that’s the wrong idea. I don’t think it needs to be cheaper than coal to be successful. The focus needs to be on the investment and deployment of the technology.”

Google’s commercial and philanthropic interest in energy emerged, in large part, from the intersection of its idealism and its business goals.

“The issue globally, and particularly in the U.S., is that renewable energy is hard to come by and is expensive,” said William E. Weihl, Google’s green energy director. “But as a competitive business, we can’t afford, anymore than anyone else, to say we are going to pay more.”

Google has gone to great lengths to conceal how much electricity it uses in its data centers. For instance, Google agreed to build a $600 million data center in Oklahoma only after the State Legislature passed a law exempting public utilities from disclosing the energy use of their largest customers. Google has also vowed to be carbon neutral, but unlike its rival Yahoo, for instance, it has refused to reveal its overall carbon emissions.

Google said that its power use was information that could be used by rivals to learn secrets of its operations, which it considered a competitive advantage.

Still, a picture of the scale of its data center operations has emerged through various reports. The company is believed to have about two dozen data centers around the world of various sizes. Some, like the one it built in The Dalles, Ore., which is largely powered by hydroelectricity, are among the largest in the industry. Two people familiar with that facility, who spoke on the condition of anonymity, said that it was operating at about 50 megawatts — enough to power 37,500 homes — but was built to handle even more capacity.

Google’s desire to better align its idealism and business interests helped motivate the REC project.

“For us to clean our energy supply, we need renewable energy available more broadly and more cheaply than it is today,” Mr. Weihl said.

Google does not maintain a strict divide between the energy work of the corporation and A recent status meeting included employees from both sides. was set up not as a traditional philanthropy, but rather as a Google unit that could profit from its investments and that, unlike traditional nonprofit organizations and foundations, was allowed to lobby.

Google’s business development executives, as well as some company engineers specializing in energy, work with to make investment decisions. Mr. Reicher, a former assistant secretary of energy for conservation and renewable energy in the Clinton administration, said that investments were primarily aimed at pushing an environmental agenda. But Google itself is eyeing more capital-intensive projects, including some to generate renewable energy on a commercial scale.

"If we make those investments,” Mr. Reicher said, “it would be largely from a profit motive rather than an impact motive."

Thursday, January 22, 2009

Permission to Regulate Gases Is Sought

NY Times

January 22, 2009


Mary D. Nichols, California’s chief air pollution regulator, formally requested that Lisa P. Jackson, President Obama’s choice to lead the Environmental Protection Agency, allow California and 13 other states to start regulating emissions of heat-trapping gases from passenger vehicles by granting the necessary federal waiver. If the Obama administration grants the waiver, these states — and eventually three more that have indicated they would adopt the same policy — can begin enforcing emission standards that would eventually require automakers to put more fuel-efficient cars on the market. Together, the 17 states represent about half of the American auto market. Last year, the Bush administration, breaking with precedent, denied California the right to establish its own standards in the absence of any federal mandates. Gov. Arnold Schwarzenegger, in his own separate letter to President Obama, urged him to direct the E.P.A. “to act promptly and favorably” on the request.

Wednesday, January 14, 2009

Gulf Oil States Seeking a Lead in Clean Energy

NY Times

January 13, 2009


ABU DHABI, United Arab Emirates — With one of the highest per capita carbon footprints in the world, these oil-rich emirates would seem an unlikely place for a green revolution.

Gasoline sells for 45 cents a gallon. There is little public transportation and no recycling. Residents drive between air-conditioned apartments and air-conditioned malls, which are lighted 24/7.

Still, the region’s leaders know energy and money, having built their wealth on oil. They understand that oil is a finite resource, vulnerable to competition from new energy sources.

So even as President-elect Barack Obama talks about promoting green jobs as America’s route out of recession, gulf states, including the emirates, Qatar and Saudi Arabia, are making a concerted push to become the Silicon Valley of alternative energy.

They are aggressively pouring billions of dollars made in the oil fields into new green technologies. They are establishing billion-dollar clean-technology investment funds. And they are putting millions of dollars behind research projects at universities from California to Boston to London, and setting up green research parks at home.

“Abu Dhabi is an oil-exporting country, and we want to become an energy-exporting country, and to do that we need to excel at the newer forms of energy,” said Khaled Awad, a director of Masdar, a futuristic zero-carbon city and a research park that has an affiliation with the Massachusetts Institute of Technology, that is rising from the desert on the outskirts of Abu Dhabi.

These are long-term investments in an alternative energy future that neither falling oil prices nor the global downturn seems likely to reverse. Even as the local real estate market is foundering, leaders in politics, business and research from across the globe will flock to this distant kingdom for three days starting Monday for the second World Future Energy Summit, which just one year after its inception here has become something of a Davos gathering on renewable energy.

This year’s guest list includes a former British prime minister, Tony Blair, and the European Union energy commissioner, Andris Piebalgs, as well as the oil and gas ministers of Oman, Bahrain and the United Arab Emirates. In attendance will also be executives representing hundreds of companies, large and small, from BP and Credit Suisse to dozens of start-up companies from Europe and the United States.

“Truth is that locally money is tight as everywhere, and the property market is certainly taking a correction downwards,” said Richard Hease, whose Dubai-based company, Turret Middle East, organized the conference. “But on the renewable energy front, it is business as usual.”

This new investment aims to maintain the gulf’s dominant position as a global energy supplier, gaining patents from the new technologies and promoting green manufacturing. But if the United States and the European Union have set energy independence from the gulf states as a goal of new renewable energy efforts, they may find they are arriving late at the party.

“The leadership in these breakthrough technologies is a title the U.S. can lose easily,” said Peter Barker-Homek, chief executive of Taqa, Abu Dhabi’s national energy company. “Here we have low taxes, a young population, accessibility to the world, abundant natural resources and willingness to invest in the seed capital.”

The vision of a renewable future in the gulf is rooted not so much in a fuzzy green sentiment — though that is starting to take hold — as in analysis of the region’s economic future and the high-end lifestyles of its citizens.

“You see what the gulf states have achieved in terms of modern infrastructure and beautiful architecture, but this has come at a very high environmental price,” said Mr. Awad of Masdar, standing in a field of 40 types of solar panels that the project’s engineers are testing, and using to power offices.

“We know we can’t continue with this carbon footprint,” he said. “We have to change. This is why Abu Dhabi must develop new models — for the planet, of course, but also so as not to jeopardize Abu Dhabi.”

The world is now consuming 80 million barrels of oil a day, and that could continue to rise steeply over the coming decades if population and consumption trends continue. That could mean having to add six Saudi Arabias worth of oil output just to keep up, according to Mr. Barker-Homek, at a time when scientists are warning that carbon levels need to be cut significantly to avoid potentially disastrous global warming.

To hedge their positions, then, an increasingly sophisticated generation of largely Western-educated leaders in the Middle East are seizing on green business opportunities, by seeding research in faraway nations.

The crown prince of Abu Dhabi, the wealthiest of the seven emirates that make up the United Arab Emirates, announced last January that he would invest $15 billion in renewable energy. That is the same amount that President-elect Obama has proposed investing — in the entire United States — “to catalyze private sector efforts to build a clean energy future.”

Masdar, the model city that will generate no carbon emissions, is tied to the crown prince’s ambitions. Designed by Norman Foster, the British architect, it will include a satellite campus of the Massachusetts Institute of Technology, as well as a research park with laboratories affiliated with Imperial College London and other institutions.

In Saudi Arabia, the new state-owned King Abdullah University of Science and Technology, or Kaust, gave a Stanford scientist $25 million last year to start a research center on how to make the cost of solar power competitive with that of coal. Kaust, now in its first grant cycle, also gave $8 million to a Berkeley researcher developing green concrete.

And it has other agreements as well, with Caltech, Cambridge, Cornell, Imperial, La Sapienza, Oxford and Utrecht, to name just a few.

In November, the Qatari government signed an agreement with Britain’s visiting prime minister, Gordon Brown, to invest £150 million, or more than $220 million, in a British low-carbon technology fund, dwarfing the fund’s investments from home.

For the rest of the world, the enormous cash infusion may provide the important boost experts say is needed to get dozens of emerging technologies — like carbon capture, microsolar and low-carbon aluminum — over the development hump to make them cost-effective.

“The impact has been enormous,” said Michael McGehee, the associate professor at Stanford who received the $25 million Saudi grant. “It has greatly accelerated the development process.”

Director of the largest solar cell research group in the world, Professor McGehee had tried and failed to get money from the United States government or American industries to commercialize cheaper solar cells. Research money is tight, he noted.

With the Saudi money he has hired 16 new researchers and expects the new energy cells to dominate the market by 2015. “People are astonished to see how big this grant is and where it came from,” he said, noting that his past grants from the United States government were one-fiftieth that amount.

Experts say the vast investments from the gulf states have already restarted stalled environmental technologies.

Nancy Tuor, vice chairwoman of CH2M Hill, the Canadian construction firm that is building Masdar city, said that the sheer size of the investment had had a “forcing effect,” pushing polluting industries to experiment with cleaner solutions.

For example, initial plans for Masdar excluded both aluminum and conventional concrete because the production of those materials generates high levels of carbon emissions, which warm the planet. Aluminum manufacturers protested and came back with a product that reduced emissions by 90 percent compared with regular aluminum; it is now included in the project.

Proponents say Masdar goes beyond creating new materials and is in fact exploring a new model for urban life. Masdar will use one quarter of the energy of a conventional city its size (about 50,000 people) — an amount that it will produce itself.

“When people think about sustainability, they think about devices,” said Gerard Evenden, a partner at Foster and Partners, the British architectural firm that is designing the site. “But here you’re taking it to a city scale, which has much more of an impact — connecting the devices to the structure to the transportation to the people.”

The city will have no cars; people will move around using driverless electric vehicles that move on a subterranean level. The air-conditioning will be solar powered.

With no industrial history, the gulf states say they have the advantage of starting from scratch in developing green manufacturing; countries like the United States are forced to retool ailing industries, like car manufacturing.

Also, although the gulf states have previously showed little interest in green energy like wind or solar, they have another advantage, Mr. Awad noted as he stood in the shimmering desert. “The sun shines 365 days a year,” he said.