How do Google and Microsoft compare on climate?

Why IT > Industry analysis

How do Google and Microsoft compare on climate?

While no two ICT companies are identically structured or provide the same exact products and services, it's good to take a closer look at the actions of close competitors. In the first in a developing series of comparisons, we look at the action of Google and Microsoft on our different climate criteria -- how they stack up on climate advocacy, as well providing IT solutions to climate change and how they take care of their own environmental footprint.

The ICT industry is built upon the memes of competitiveness and ingenuity, and as companies compete for the best and brightest minds, we expect these rivalries and challenges to propel the level and depth of engagement from ICT leaders in shaping critical climate policies and tech solutions.

Summary

Google

Google is one of the largest "cloud" based ICT companies, whose business model is to put all of the world's information on-line depending on large and energy voracious data centers. Particularly for the company whose self chosen motto is "Don't Be Evil", Google knows it has a huge carbon problem if the current electricity grid remains heavily dependent on fossil fuels.

Among the ICT companies, Google has been the strongest in advocating government policy changes that would drive low carbon sources of electricity, including support for a national cap on carbon, as well as support for national renewable electricity and energy efficiency standards.

Despite significant activity in the first six months of 2009, Google has been less visible on the issue as the Senate prepares to take up climate legislation, and as the world prepares to go to Copenhagen to adopts a new global deal, on how to address climate change. We hope to see more leadership from Google soon. In comparison to other companies in the ICT sector, Google has a much less to offer in the way of solutions to help its customers reduce their energy consumption, as approximately 95 percent of Google's revenue comes from on-line add sales, requiring both Google and the end user to use electricity. Google has focused on driving policy and technology changes that will allow their business model to grow.

Microsoft

Microsoft as the largest software company in the world, has unparalleled reach into homes, businesses, and governments alike. Microsoft's market leading position appears to translate into a corporate culture that is much more conservative in how it approaches many issues, and climate change is certainly no exception.

Microsoft is hardly a wall-flower when it comes to the Washington, DC policy making scene, as it has become one of the largest contributors to political campaigns over the last 10 years, and has averaged nearly US$9 million in lobbying expenses since 2003. Despite its significant political influence and access, Microsoft has not been publicly supporting the policies that are needed to drive deployment of lower carbon electricity solutions and energy efficiency technologies. Particularly in comparison to Google's climate & energy advocacy efforts, as well as in comparison to other policy issues such as IT solutions to health care where they have been active, Microsoft has been practically silent in the climate and clean energy policy debate thus far.

CEO Speech

Google

CEO Eric Schmidt has publicly articulated a compelling business and environmental case for the transition away from fossil fuels and to a clean energy economy on multiple occasions, drawing from Google's Clean Energy 2030 Proposal. Though he needs to make this case more frequently and to key decision makers, linking it more directly to climate policy, it is at least a transformational vision.

Microsoft

CEO Steve Ballmer has not spoken in any significant detail on climate policy or the need for a clean energy economy. The strongest example offered was a internal email to Microsoft's employees detailing how Microsoft was working to help reduce its environmental footprint and those of its customers. Craig Mundie, Microsoft's Chief Research & Strategy Officer did make a speech before electric utility executives focused on the need to transition to a zero carbon economy, but lacked real urgency.

Solutions

Google

Google's direct solutions offerings are limited to PowerMeter at present.

Microsoft

Microsoft has a much broader mix of solutions in its climate solutions development pipeline than Google. However, as many of them are not mature enough for Microsoft to provide data on their impact, we will limit our comparison to a common solutions offering: energy use software.(We will provide more in-depth review of Microsoft's solutions in comparison with other ICT companies in a future rating).

PowerMeter vs Hohm

Google

Google, PowerMeter is a free electricity usage monitor, which can provide live data from either a smart meter or a monitor attached to your meter. By leveraging live data, PowerMeter provides consumers detailed insight on the actual electricity footprint of appliances and other products in the home.

Because it requires additional hardware to work, PowerMeter is directed to a more limited audience currently, but could help establish important precedent on the impact of empowering the consumer by making the data directly available, not necessarily a priority among electric utilities. To Google's credit, they have included consumer access to information into their policy advocacy. PowerMeter operates outside of Google's business model, though could be linked to ad-sales for energy efficient vendors in the future.

Microsoft

Microsoft, Hohm serves more as an online energy advisor and manager, allowing consumer to input (or eventually import) their utility data and build a profile on information on your home energy use. Hohm will take this information to make recommendations to save energy drawing upon best practice from energy experts.

Because Hohm does not require additional hardware, it has a significantly larger potential audience than PowerMeter currently. However, without or until the inclusion of live energy use data, its potential for empowering customers to change their behavior would appear to be less than PowerMeter. Microsoft appears to be offering this as part of a potentially more integrated solutions software offering that would create a bi-directional data bridge between consumer' and electric utilities.

ICT Solutions Metrics

Google

Though Google does not have any solutions of their own toward using Plug-In vehicles(though see PowerMeter, above), the analytical work done in house by Google as part of the ReChargeIT initiative to quantify the greenhouse savings from using plug-in hybrids is a solid contribution to the debate, providing real world data and metrics for measuring the potential impact of plug-in hybrid development.

Microsoft

The carbon footprint analysis on digital music delivery that was funded by Microsoft and Intel was also a very good example of analysis needed to get more specific in the level reductions that can be achieved through "demateralization" solutions such as digital music delivery, and helpful to unpack the assumptions that are to be used in such an analysis. We strongly encourage Microsoft to conduct similar analysis to other solutions, particularly those with higher GHG reduction potential.

ICT Carbon Footprint

Google

Google has stead fastly refused to release any meaningful data on its energy use or carbon emissions, citing concerns over disclosing information that could be used by their competitors. However, Google is one of the few ICT companies that does not disclose its GHG emissions. Google does not have a greenhouse reduction target, opting instead to become "carbon neutral," which it has apparently reached at least in part through the purchasing of carbon credits from offsets.

While Google's carbon neutral commitment is commendable for its commitment to addressing climate change, Google itself recognizes the limited effectiveness of offsets, and emissions are best avoided rather than "offset". For 2007, the first year of this goal, the purchase of the offsets occurred as late as 16 months after the year in which the emissions occurred.

The difficulty in being "carbon neutral" is clearly demonstrated by Google. Its US$600 million datacenter in Lenoir, NC operates in Duke Energy service territory, which is 50 percent coal powered. Even if Google is buying the lowest carbon electrons on the grid, the energy demand of this datacenter has fundamentally changed the demand in this load center, and in turn increasing demand for coal fired power.

The bottom line is that Google's explosive growth through Gmail, YouTube, and soon to be on-line library are ultimately driving emissions higher, not lower, and creating a greater demand for coal and other fossil fuels, not less. The fact that they will not even disclose their footprint publicly is a clear sign that the answer is not a pretty one.

Microsoft

Microsoft has adopted an intensity goal, rather than an absolute goal, to reduce its carbon emissions (30 percent below 2007 levels by 2012, by unit of revenue). While Microsoft has traditionally had a lower greenhouse footprint than others in the sector due to its focus on software development, the rapid shift Microsoft is making to "cloud" based software solutions to compete with Google and others will fundamentally change its emissions profile, and is likely a significant reason why it has refused to adopt an absolute emissions reduction target.

Renewable Energy

Google

Google has demonstrated an entrepreneurial, even venture capitalist approach to supporting development of renewable electricity technologies under its RE-C initiative, whose stated goal is to develop utility scale renewable energy cheaper than coal. Google has thus far reported investments US$35 million in innovative renewable energy technology projects, which is commendable, not to mention understandable given Google's voracious demand for electricity. However, without any data points on Google's energy use, its greenhouse gas emissions, or the potential renewable electricity generated from these investments, our basis of evaluation limited to other points of comparison: US$35 Million investment = 15 percent of its reported annual revenue of US$22.68B and 27 percent of its reported gross profits of US$13.17B.

Microsoft

Microsoft has reported purchasing 24 percent of its energy from renewable resources, substantially meeting its goal of 25 percent by 2012.