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| Fig. 1: Energy consumption by source in the U.S. in 2019. [8] (Source: A. Garg) |
Google recently pledged to go carbon-free by 2030. Such a decision sets a precedent and will likely be echoed by other large corporations in the coming years, as institutions face increasing pressure to be environmentally friendly. In this report, we will discuss the feasibility of carbon- free operations for large companies. In particular, we will explore whether going carbon-free is practical, and perhaps even beneficial, for large companies, and if energy decisions such as Google's can be implemented on a national, or even global, scale.
There exists a multitude of carbon-free options for companies operating in the US. Some examples of carbon-free options include wind, solar, biomass, geothermal, hydroelectric, and nuclear energy. [1]
We see in Fig. 1 that there are several forms of carbon-free energy that make up a sizeable amount of energy consumption in the US. The question to ask, therefore, is not whether carbon-free energy exists within the US, but rather how much carbon-free energy is available for corporations to procure and consume. U.S. Energy Information Administration splits carbon-free energy into two categories: renewable energy and nuclear energy. [2] We will therefore analyze these two categories separately.
Analysis of the report shows that renewable electricity production in 2019 was (se Fig. 2) [2]
According to the New York Times, in 2011 Google drew 260 MW on average. [3] If we assume this statement to be true, and then we can calculate how many Google-in-2011-equivalent companies can be powered by the amount of available renewable energy in 2019.
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| Fig. 2: Energy consumption by sector in the U.S. in 2019. [8] (Source: A. Garg) |
First, let's calculate how much energy Google uses in a year:
| 260 × 106 Watts × 3600 sec h-1 × 24 h d-1 × 365 days | |
| = | 8.20 × 1015 Joules |
The number of 2011 Google-equivalents we could power with all the 2019 renewable energy in the United States is
| 2.98 × 1018 J 8.20 × 1015 J |
= | 363 Googles |
A limitations is that this calculation assumes that Google wasn't fudging their energy use in their correspondence with the NY Times, and that no 2019 renewable energy goes to homes.
Another major issue to consider is that for a company like Google to go completely carbon-free, they cannot just channel carbon-free energy. They must procure reliable joules - that is, they must ensure that the carbon-free energy sources they use consistently deliver joules, on demand. This may seem like a guarantee for all energy, but it actually is not. Reliable joules consist of non-solar and non-wind generated joules, since there is no guarantee that the sun will shine and the wind will blow. According to the EIA, the amount of reliable renewable energy generated in 2019 was 1.25 × 1018 joules. [2] The number of Googles that could be powered by these reliable joules is
| 1.25 × 1018 J / (3.18 × 1016 J Google-1) | |
| = | 39.3 Googles |
Clearly, there is a significant difference between the original number of Google-like equivalents we could power, and the number of Google-like companies we can power reliably.
Now, let's calculate how much energy businesses currently consume in the US. We can do this by taking the total amount of electricity used in the US in 2019, and then subtracting the amount of electricity used in households.
According to the EIA, the US collectively used a total of 4.2 × 1015 Wh × 3600 sec h-1 = 1.51 × 1019 Joules in 2019, most of which was from fossil sources. [2] For simplicity's sake, we'll assume that approximately half of this total energy was used for non-residential - that is, industrial - activities. This industrial consumption amounts to
| 1 2 |
× 1.51 × 1019 J / (9.20 × 1015 J Google-1) | |
| = | 821 Googles | |
Looking back at our previous calculations, we saw that there was enough renewable energy in the US to support just 363 Googles, but the current industrial energy demands of the US total 821 Googles! And if we consider the fact that not all renewables are reliable, then we saw that the energy in the US supports only 39.4 Googles, an even drearier realization. Clearly, there is not enough renewable energy (at least, currently) to support at corporations in the country. In order for all companies to go carbon-free, there will need to be serious expansions and improvements to the renewable energy system as it currently stands.
A major limitation of this argument is that Google's disclosure of their energy use in 2011 does not specify whether this energy is used within the US alone, or used in the US and abroad. If the energy is the total of all countries that Google operates in, then we can assume that we have underestimated how many "Google-like" companies can use the available renewable energy; however, there is a lack of clarity that obstructs us from quantifying this measurement, due to Google's secretive guarding of its exact energy use patterns.
Let's now discuss the potential of nuclear energy to power U.S. corporations. The 2020 Year-to-Date US consumption of nuclear energy totaled 464,250 thousand megawatthours. [2]
Let's now calculate how many "Google"-type companies the current nuclear energy produced in the U.S. can power. The total amount of electric energy produced by nuclear reactors in the U.S. in 2019 was [4]
| 8.09 × 105 × 1000 × 106 Wh y-1 × 3600 sec | ||
| = | 2.91 × 1018 Joules |
The number of Google-equivalents this can power is
Next, we can employ the same assumption that we did for renewables: roughly half of the available energy is available for industrial use. So, we get see that the number of Googles we can power with this energy is:
Currently, we are producing as much as we are using, and there is no room for additional nuclear energy use by Google and other corporations who wish to enter the field. Expanding nuclear energy production in the US would increase potential for more carbon-free energy available through this source. However, there are valid concerns against expanding nuclear energy, such as radioactive waste and proliferation risks.
An important and unfortunate fact to note is that there is very little standing in the way of corporations fibbing about their energy use, especially as companies face increasing pressure to adopt clean energy - and particularly if such clean energy is difficult and expensive to acquire. Whereas in the UK the company National Grid paid £8M after misreporting the progress of a natural gas replacement program, the US has not had any notable crackdowns on large corporations for misreporting their energy use in recent years. [5]
The US federal government does possess energy regulation committees, such as the Federal Energy Regulatory Commission. However, the commission has mostly focused on market manipulation and anticompetitive behavior in the energy sector, not misreporting of energy use. Although the Commission claims that serious violations of electricity reliability standards are a main focus of their business, the Commission conducted 0 investigations on misreporting out of the 12 investigations conducted in 2019. [6] As it stands, it appears that there is a paramount need for policymakers to create committees and laws to regulate and enforce corporations reporting of energy use, as clean energy use becomes an important focus for society in the coming years.
A study published in Research in International Business and Finance in January 2017 notes that there was no significant difference in the performances of green and non-green energy companies in the European stock markets. [7] However, there are many qualifications to this finding; first, the study only looks at energy companies, which have a very different business model and corporate structure than most technology companies (and most companies in general). Additionally, the study focuses on European stock markets, which are markedly different from US stock markets; for example, the S&P 500 rose by 177.7% from 2010 to 2016, whereas Europes Euro Stoxx grew 49.3%. This is partially due to the US's higher GDP growth in this period; euro countries have seen average GDP growth of 0.9% year-on- year, whereas the US has experienced 2.1% GDP growth in the same period. Therefore, we cannot transfer the study's findings to corporations in the US with certainty, and especially not to corporations in all sectors. However, the study does show that there is the potential for green companies to perform well amongst others.
For a more specific example relevant to the US, we see that Tesla has performed extremely well recently (albeit financial experts often disagree about Teslas true worth and long-term financial success). Tesla markets itself as a clean energy company, and the all-electric nature of the company's automobiles is arguably the most important aspect to most consumers. Tesla is not carbon-free, but from Tesla's success we can deduce that green energy branding can have massive appeal to US consumers, and when marketed correctly, can rake in quite a bit of wealth. However, there is once again the possibility that a company can pass as partially or completely carbon-free without actually being so, due to a lack of strict scrutiny and regulation.
Even with the possibility of tax benefits for low-carbon companies, there is the question of whether the benefit of the tax credits outweighs the cost of reducing carbon emissions. This specification is one that cannot be answered universally, as each company has a different corporate structure and current energy use makeup. Therefore, it is difficult to deduce a firm answer - yes or no - to whether reducing carbon emissions or going completely carbon free is financial beneficial to companies.
In this report, we have examined the availability of carbon-free energy in the US. We found that there is not currently enough carbon-free energy available for all corporations in the US to go carbon-free.
We also scrutinized the lack of regulation regarding corporate misreporting of energy use, which could result in many companies misreporting how carbon-free they are in the future, given limited opportunities to shift energy consumption and increased pressure to do so. Finally, we examined the potential financial impacts of reducing carbon emissions. However, the financial performance of various individual companies that have gone or are going carbon-free cannot be generalized to all corporations; there are numerous compounding factors that complicate such generalizations.
In conclusion, going carbon-free is possible - but only for certain companies, at least for now. Clean energy's lack of availability means that reducing carbon emissions is currently not feasible for all corporations. Additionally, corporations may struggle to go carbon-free due to financial barriers.
© Anita Garg. The author warrants that the work is the author's own and that Stanford University provided no input other than typesetting and referencing guidelines. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.
[1] "U.S. Renewable Energy", Center for Sustainable Systems, University of Michigan, Factsheet CSS03-12, September 2020.
[2] "Electric Power Monthly, September 2020," U.S. Energy Information Administration, September 2020, Table 10.2c.
[3] J. Glanz, "Google Details, and Defends, Its Use of Electricity," New York Times, 8 Sep 11.
[4] "Electric Power Annual 2019," U.S. Energy Information Administration, October 2020.
[5] D. Blair, "National Grid Fined £8m for Misreporting," Financial Times, 6 Jan 11.
[6] "2019 Report on Enforcement," U.S. Federal Energy Regulatory Commission, Docket No. AD07-13-013, November 2019.
[7] L. Anderloni and A. Tanda, "Green Energy Companies: Stock Performance and IPO Returns," Res. Int. Bus. Finance 39, 546 (2017).
[8] "Monthly Energy Review, April 2020," U.S. Energy Information Administration, DOE/EIA-0035(2020/4), April 2020.