Google CEO on Energy Efficiency: Doing the Right Thing Is Also the Right Thing for Business"

Just before Thanksgiving, I had the chance to introduce Google CEO Eric Schmidt at a talk he gave in New York City. The event, organized by NRDC Trustee Wendy Schmidt, was illuminating and entertaining thanks to Eric's dry humor and engaging insights. (Watch a video of the event and read my colleague Phil Gutis' impressions here.)

The evening was also very gratifying for me personally. Five years ago, the only people I talked to about energy and climate were other environmentalists, but here was Eric Schmidt, the CEO of Google--the biggest corporate success story of the decade--who is also a member of President-elect Obama's Economic Advisory Board talking about how America can create a very different energy future from the one we have now.

What was especially exciting was the emphasis Eric placed on energy efficiency--the often neglected stepchild of clean energy solutions. Eric told a story that highlights the vast opportunities of efficiency, but also the critical role leadership plays in tapping them:

"I went to an NRDC event. Someone said 40 percent of energy and emissions comes from buildings. I thought, 'Wow, that's a big number. This is one thing we can do. We have a lot of buildings.'

So I called the Google folks in and said "What are we doing about the 40 percent?"

They said, "Oh, we have this idea and that idea and that idea."

I put on my sort of Republican, CEO, tough-guy tone and said, 'What is the payback?'

They said, 'Eighteen months.'

I said, 'What? I don't have to pay for this? Why don't you do this?'

They said, 'Nobody asked.'"

All of the sudden I realized all I had to do was ask. These people have been coming up with the ideas, doing the math. These were positive investments. So I said, "Go do it." They did it. And we have had millions of dollars in savings, which goes right to our shareholders. And by the way, it's the right thing. So I learned a lesson. You have to ask."

That's right. We have to ask. Now more than ever. As corporations and state and federal governments look for cost saving opportunities in the face of economic turmoil and volatile energy prices, we have to ask explicitly for a focus on energy efficiency.

What does this look like? Here are a few examples.

  • We have to ask President-elect Obama to include in his economic stimulus package incentives for businesses and homeowners to invest in energy efficiency measures.
  • We have to ask states to meet a percentage of their energy demand through efficiency---New York City already requires that15 percent of demand be met this way by 2015.
  • We have to ask the National Association of Regulatory Utility Commissioners--as NRDC recently did--to change the rules of the game so that utilities can earn a profit from expanding efficiency and not just from generating power.

And hopefully, with people like Eric Schmidt leading the way, other CEOs will ask their companies to mine the energy efficiencies residing in their offices and supply chains.

Throughout the evening, Eric's fellow panelists, NRDC's Ralph Cavanaugh and Google's Dan Reicher joked about how we can make "energy efficiency sexy," or "as cool as Google."

For some corporate leaders, the rapid payback and bigger shareholder dividends should do the trick. Eric explained that by investing in efficiency, he learned: "When you actually do the math, you discover that doing the right thing is also the right thing for business."

Cool indeed.