By C.J. Obikile, MBA ’24
This article was written in response to a seminar given by Nick Pearson, Global Head of Energy Policy at Google, in an EDGE Seminar at Duke University’s Fuqua School of Business in Fall 2022. This article voices one student’s perspective and does not necessarily represent the views of either Duke University or the seminar speaker.
When we think about energy transition stakeholders, we think of governments, political leaders, government agencies, and organizations like the International Energy Agency (IEA) and the International Renewable Energy Agency (IRENA). Rarely do Big Tech companies like Apple, Google (Alphabet), or Microsoft come to mind. This oversight is understandable; energy consumption by these leading tech companies pales compared to their economic, financial, and social footprint. Apple, Google (Alphabet), and Microsoft are three of the largest companies in the world by market cap, with combined earnings of $820 billion in 2021. This enormous financial footprint, coupled with the massive cultural and technological influence they wield, positions these companies as potential significant players in tackling climate challenge.
Depending on their business model, tech companies’ energy consumption and CO2 emissions vary significantly. Most large tech companies are entirely digitized and electrified, while others have significant carbon footprints. The IEA classifies CO2 emissions under three categories: Scope 1 (direct emissions), Scope 2 (electricity and market-based emissions), and Scope 3 (emissions related to business travel, employee commuting, manufacturing, construction, raw materials, and product use by customers). Scope 1 and 2 emissions from the big five tech companies collectively accounted for 0.04% of global energy-related greenhouse gas emissions in 2019[1]; including Scope 3 emissions, that number goes up to 0.3% of global emissions.[2] It is also essential to account for data center energy consumption. Since 2010, internet users have doubled globally, increasing energy consumption from data centers and transmission networks, contributing approximately 1% of energy-related GHG emissions.[3] Though this is significantly lower than other industries, most Big Tech companies have ramped up their commitments toward sustainable practices.
Google is one of these tech companies with lofty sustainability commitments. They report that, in 2017, they were the first company to match their energy usage with 100 percent renewable energy. Recently, they committed to running all their data centers and campuses worldwide 24/7 on carbon-free energy by 2030.[4] Amazon has promised to reach Net Zero by 2040 through clean energy acquisition, investment in electric vehicles, and purchasing carbon “offsets” or credits to offset outstanding emissions.[5] Microsoft has declared that it is committed to being carbon negative by 2030 and eliminating all its historical emissions since its founding by 2050.[6]
But there are other drivers behind Big Tech’s involvement in climate change, like regulatory pressures to decarbonize, growing market opportunities in climate tech, and strengthening their brand/reputation. Nonetheless, the impact of Big Tech on climate change extends beyond restructuring their internal energy systems. These firms have the potential to help accelerate the global energy transition by harnessing the power of digitization in these three areas:
- Accelerating innovation in energy technologies: Typically, new energy technologies have taken considerable time to reach maturity and widespread implementation. Solar panels were first used in space explorations in the 1960s, and the technology only recently started transforming the electricity sector. Unfortunately, achieving Net Zero by 2050 is following a similar trend. We need decades to develop and deploy new energy technologies—time that could harm the planet. A pivotal role Big Tech could play is to accelerate energy technology innovation. There is a lot of buzz around using artificial intelligence (AI) to develop new energy technologies, and AI is already being used to create new nanomaterials to increase batteries’ capacity. However, other advances in clean technology, like low-carbon aviation fuel and new approaches to nuclear energy, would benefit from the application of AI, which is where Big Tech companies come in. With their enormous financial footprint and extensive AI experience, Big Tech companies are uniquely positioned to advance the next stages of energy technological advancements either through internal research or by starting venture capital funds dedicated to promoting clean tech innovations.
- Improving the energy efficiency of buildings: Buildings contribute about one-fifth of global total carbon emissions.[7] Transitioning to renewable energy sources will undoubtedly reduce these emissions, but it is impossible to immediately replace 100% of energy requirements currently fulfilled by fossil energy with a low-carbon counterpart. Thankfully, buildings today are under-optimized for energy efficiency, and retrofit strategies can reduce the carbon footprint of existing buildings by as much as 90%.[8] Across the U.S., many projects are underway to retrofit existing buildings and make them more energy efficient. Though these projects are relevant, they take time and effort to scale. Big Tech companies have utilized efficiency improvements in computing and infrastructure to reduce their carbon footprint internally. Therefore, these companies have leverageable experiences and skills to apply to these projects. Machine learning technology can be applied to retrofitting projects using connected devices, sensors, real-time measurements, and fine-tuned controls to achieve significant energy savings in existing buildings. One example is DeepMind’s 2016 application of machine learning in HVAC systems to improve energy efficiency across Google’s data centers. By using deep learning to enhance the data centers’ cooling systems, DeepMind reduced the facilities’ overall energy consumption by 40%.[9]
- Influencing consumer behavior in favor of low-carbon options: According to the IEA’s 2020 World Energy Outlook, we can achieve a 2 billion ton emission reduction in 2030 through social and behavioral changes (like reducing air travel, carpooling, and setting air conditioners to higher temperatures). Who is more suited to drive these changes in consumer habits than Big Tech companies, whose products are now integral to everyday life? Big Tech companies could enable these changes in consumer behavior by making them easy to adopt and trendy. As sustainability conversations are gaining traction, consumers are increasingly factoring sustainability into their daily decisions. Big Tech companies can capitalize on this trend by developing products that encourage sustainable choices. Like smartphones can track our daily steps, mobile apps can include carbon trackers that tell consumers the carbon tradeoffs for various commuting options (foot, bike, public transport, or car). They can also develop apps that facilitate carpooling or smart home systems that regulate energy consumption without forfeiting comfort. Additionally, because of Big Tech companies’ influence, they can control information disseminated to the public, ensuring that search engines do not perpetuate false narratives and bad science around climate change—the result is a better-informed public capable of making knowledgeable decisions about their energy consumption.
While this article highlights potential Big Tech contributions to reducing GHG emissions, some tech companies have utilized their technology to promote increased hydrocarbon production and consumption. In 2020, Halliburton and Microsoft announced a five-year strategic agreement to advance Halliburton’s digital capabilities in Microsoft Azure[10], which will improve the efficiency of their oil and gas production operations. In the same year, Facebook suffered enormous backlash for accepting $24,000/day in advertising revenue from the American Petroleum Institute, America’s biggest oil and gas lobby group[11], with pro-fossil fuel ads viewed more than 431 million times on Facebook’s U.S. platforms.
Tech companies could be key drivers in advancing clean technology and sustainable practices. However, their actions can also be detrimental to the energy transition and Net Zero objectives, depending on how they invest the vast technology, skills, and resources at their disposal.
[1] “Drilling Lobby Pours Millions into Facebook and TV Ads Claiming Natural Gas Is ‘Climate Friendly’.” The Independent, Independent Digital News and Media, 19 Aug. 2020, https://www.independent.co.uk/climate-change/news/2020-us-election-oil-gas-drilling-lobby-facebook-ads-a9675936.html.
[2] IEA. “5 Ways Big Tech Could Have Big Impacts on Clean Energy Transitions – Analysis.” IEA, https://www.iea.org/commentaries/5-ways-big-tech-could-have-big-impacts-on-clean-energy-transitions.
[3] IEA. “Data Centers and Data Transmission Networks – Analysis.” IEA, https://www.iea.org/reports/data-centres-and-data-transmission-networks.
[4] Pichai, Sundar. “Our Third Decade of Climate Action: Realizing a Carbon-Free Future.” Google, Google, 14 Sept. 2020, https://blog.google/outreach-initiatives/sustainability/our-third-decade-climate-action-realizing-carbon-free-future/.
[5] Kantor, Alice. “Big Tech Races to Clean up Act as Cloud Energy Use Grows.” Financial Times, Financial Times, 18 May 2021, https://www.ft.com/content/c719f655-149c-4ce0-a7a5-18527c7776cf.
[6] “Environmental Sustainability: Microsoft CSR.” Environmental Sustainability | Microsoft CSR, https://www.microsoft.com/en-us/corporate-responsibility/sustainability.
[7] Rolnick, David, et al. “Tackling Climate Change with Machine Learning.” 5 Nov. 2019.
[8] Rolnick, David, et al. “Tackling Climate Change with Machine Learning.” 5 Nov. 2019.
[9] Toews, Rob. “These Are the Startups Applying AI to Tackle Climate Change.” Forbes, Forbes Magazine, 9 Nov. 2022, https://www.forbes.com/sites/robtoews/2021/06/20/these-are-the-startups-applying-ai-to-tackle-climate-change/.
[10] Toews, Rob. “These Are the Startups Applying AI to Tackle Climate Change.” Forbes, Forbes Magazine, 9 Nov. 2022, https://www.forbes.com/sites/robtoews/2021/06/20/these-are-the-startups-applying-ai-to-tackle-climate-change/.
[11] “Drilling Lobby Pours Millions into Facebook and TV Ads Claiming Natural Gas Is ‘Climate Friendly’.” The Independent, Independent Digital News and Media, 19 Aug. 2020, https://www.independent.co.uk/climate-change/news/2020-us-election-oil-gas-drilling-lobby-facebook-ads-a9675936.html.
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