Google Spend More Than $5b on Green Energy Projects Since 2020
(Photo by Pawel Czerwinski for Unsplash.)
Alphabet, the parent company of Google, has spent more than $5 billion on green energy projects since 2020 according to its recently released “2022 Sustainability Bond Impact Report.”
The report provides specifics regarding Alphabet’s $5.75 billion sustainability bond, which was announced in August of 2020. A sustainability bond is nearly identical to a corporate bond. Investors purchase bonds from the issuing company, giving it the capital needed to fund projects or make investments. In return, they receive periodic interest payments and have their initial investment repaid in full once the bond reaches maturity. In the case of a sustainability bond, the issuing company uses the money to invest in projects that advance environmental and social causes.
The new report reveals the categories those environmental and social causes fall into for Alphabet: energy efficiency, clean energy, green buildings, clean transportation, circular economy and design, affordable housing, commitment to racial equity and support for small businesses and Covid-19 crisis response.
Of those eight categories, the lion’s share of the funding went to energy-related projects, with “green buildings,” “clean energy” and “energy efficiency” snapping up $5.24 billion in funding—about 91% of the total amount.
(A Google office. Photo via Google.)
Green Buildings
According to the report, projects in the green buildings category include the “design, construction and improvements of office spaces and surrounding communities.” Alphabet said in the report that funds from the bond went toward the construction of seven new buildings, which includes new offices in London and Munich. Another seven buildings received funding from the bond for energy efficiency improvements.
That the buildings are truly “green” is attested by the LEED Platinum certification, which Alphabet said all buildings funded by the bond are on track to receive. LEED stands for “Leadership in Energy and Environmental Design” and is the world’s most widely used green building rating system.
Platinum is the highest level of LEED certification available, and according to a database maintained by the U.S. Green Building Council, which developed the LEED certification, just 9,469 buildings worldwide have reached “platinum” status.
(A solar farm. Photo by the American Public Power Association for Unsplash.)
Clean Energy
Alphabet directed $1.75 billion from its sustainability bond to clean energy, specifically power purchase agreements (PPAs). A PPA encourages utility or green energy companies to build new renewable energy projects by securing demand for the power in advance.
Alphabet said it has signed a total of 45 PPAs on three different continents that together generate a combined 5.3 gigawatts of power. A November 2021 CNET explainer on gigawatts notes that just one is enough to power 750,000 homes.
Alphabet’s most well-known company, Google, has a goal to match the 24/7 electricity consumption of its offices and data centers worldwide with renewable energy purchases by 2030.
If Google can achieve its goal, it won’t necessarily mean that every kilowatt of electricity it consumes will come from a renewable energy project. That’s because the grid combines power from all the producers connected to it, making it impossible to know whether the energy powering a server or lightbulb was produced at a coal-fired power plant or a solar farm.
Unless a company directly builds power lines between its buildings and renewable energy installations, the best it can do is match every kilowatt of electricity consumed with a corresponding purchase from a local green power company. PPAs are a way of ensuring that supply exists.
In its sustainability report, Alphabet estimated that its 45 PPAs combined will help the company avoid nearly 25 million metric tons of carbon dioxide equivalent emissions.
(The inside of a Google data center. Photo via Google.)
Energy Efficiency
Alphabet allocated $1.02 billion from its sustainability bond to energy efficiency projects, but the report didn’t clarify what that money went toward. The company did say that four data centers in Chile, Taiwan, Belgium and Finland received funding to make them more energy efficient but not how exactly they achieved that.
A Google blog post from February 2020 sheds light on what the money from the bond might have gone toward. The post, authored by Urs Hölzle, Google’s senior vice president of technical infrastructure, notes that back in 2014, Google developed an artificial intelligence-powered recommendation system to cool its data centers. Hölzle also wrote that the company invested in smart temperature, lighting and cooling systems at the same time. Further, Google says it builds custom servers.
Operating data centers requires a massive capital investment on its own: These facilities consume electricity 24/7 and the servers within them need to be constantly monitored for any issues that might cause them and the services they power—from Google search to YouTube and Drive—to fail.
On top of that, data centers are cooled by purpose-built AI technology, store hundreds of custom servers and are equipped with smart energy equipment. All of this technology must be monitored, maintained and updated—part of that $1 billion might have gone toward that.
What It Means
Alphabet’s sustainability bond appears to be targeted at lowering Google’s Scope 2 emissions, those generated by the power a company purchases. In its 2022 environmental report, Google reported 6.5 million tons of Scope 2 emissions, an increase of 700,000 tons from the previous year.
Driving down Scope 2 emissions is difficult as companies often don’t have the capital to materially impact the sources that power their local grids. Alphabet does, though, as the PPAs it has negotiated show. It also has the money to construct more efficient buildings—and retrofit older ones with greener technology—and design and build custom software and hardware to make its data centers consume less power.
While Alphabet has the financial muscle to lower Google’s Scope 2 emissions, lowering the company’s Scope 3 emissions is a whole other challenge. Scope 3 emissions are indirect emissions that cannot be credited to the emissions a company creates firsthand or secondhand through the purchase of power: think employees commuting to and from work, emissions created by the use or disposal of a product and business travel.
In 2021, Google’s Scope 3 emissions measured 9.5 million tons. Alphabet appears to be targeting Scope 3 emissions with its sustainability bond, although just $22 million was directed toward clean transportation projects.