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The Best Clean Energy Commitment Money Can Buy?

Among the largest buyers of energy in the world, global corporations hold immense potential to accelerate the transition to clean, renewable power sources. Also known as “Scope 2” emissions, energy purchases (e.g. from electric utilities) are one of the three emissions “scopes” that corporations must address to combat climate change. The others include the emissions produced directly by a company’s owned assets, such as the fuel burned by company vehicles or in company-owned manufacturing plants (Scope 1), and emissions that are attributable to suppliers or to customer product use, e.g. those created by parts suppliers or by products that require fuel or electricity to run (Scope 3).

Each scope is critical. But what’s unique about Scope 2 emissions is the theoretical opportunity for large corporations to support and grow carbon-free energy markets. This is particularly true of companies with a global footprint. Because these companies buy energy all over the world, their local energy purchasing decisions have the potential to create markets for renewable energy where there currently are none, and to create incentives for scale in markets where renewables are just becoming available.

Unfortunately, even companies that report 100% renewable energy typically use significant volumes of fossil fuel energy. That’s because they operate in locations, or during times of day, that make true carbon-free energy procurement extremely difficult. Instead, these companies pay for renewable energy, generated at another time or in another place, in proportion to the fossil fuel energy they actually use.

While such an arrangement is far better than not committing to 100% renewable energy, it is also far from ideal. Offsetting purchases tend to bolster the expansion of renewable energy in more developed markets, while leaving others behind. Even in markets where renewables have become established, the arrangement reinforces the use of fossil fuel sources as a second tier option, e.g. for when the sun is not shining or the wind is not blowing. This in turn can stunt the development of large-scale battery storage and more resilient, localized power grids.

In 2020, however, Alphabet Inc. (aka Google) made waves with a new kind of commitment for 2030: a “moonshot” plan “to procure clean energy, such as solar and wind, to meet our electricity needs, every hour of every day, within every grid where we operate.” A year later, the company became a founding member of the United Nations 24/7 Carbon-Free Energy Compact, a movement that has grown rapidly and now includes other tech companies like Microsoft, SAP and Iron Mountain, manufacturers such as Johnson Controls, Westinghouse and Rivian, electric utilities including AES and Xcel Energy, and even governments as widespread as those of Kenya, Panama and Scotland.

Google’s commitment was significant not just for its breadth and exemplary leadership, but also in light of the company’s reliance on purchased power. With over 100 energy-hungry offices and datacenters around the world, Google is a major energy customer in dozens of markets. In 2020, the company estimated that its commitment could “directly generate more than 20,000 new jobs in clean energy and associated industries . . . by 2025.” As of 2022, Google’s detailed progress report shows that it is nearly two-thirds of the way to its goal, one reason the company frequently appears at the top, or near it, on lists of the most climate-friendly companies and cloud computing providers.

But Google’s progress report also highlights the difficulties that remain. The company publishes data-driven “clocks” for locations around the world; many still lack the green sections that symbolize carbon-free hours of power generation. These include not just Ireland, Japan, Singapore, and Taiwan, but also Nevada, South Carolina, Texas and Utah. This is one reason the company has invested billions in new renewable energy projects from Chile to Japan, Europe and the US, which it says will ultimately generate more than 7 GW of carbon-free energy. Because in order to meet its goal, Google will need to put its money where its commitments are: not just relying on the company’s local demand to incentivize production, but by funding much of that production itself.

As a company, Google has significant areas for improvement. Antitrust concerns, privacy and ad targeting, and equal pay are foremost, while the company’s poor governance structure, which inordinately concentrates decision-making power between its co-founders, may be stymieing efforts to address the others. That said, the importance of Google’s leadership on carbon-free energy use can hardly be overstated. If the company can achieve its 2030 goal, or even track close to it, a new model will have been created for how companies can truly lead the carbon-free energy transition.