23 Nov 2011 Google Abandons Green Energy Project

Google has announced plans to eliminate one of its major green energy efforts.  According to Fox News, Google is cancelling its “Renewable Energy Cheaper than Coal” project.  Its green energy czar has also left the company.

Fox News reported that the announcement comes “as some investors have groused about rising spending at the world’s No 1. Internet search engine.”

The National Center is one of those investors.  While the National Center has not specifically targeted Google’s “Renewable Energy Cheaper than Coal” project, I presented a shareholder proposal questioning Google’s overall foray into alternative energy projects earlier this year.

In our proposal, we said:

Given government spending on clean energy, Google’s investments in this area could be deemed redundant if not wasteful.  A financial analyst quoted by Reuters said of Google’s clean energy spending: “… it’s symbolic of potential for them to spend somewhat recklessly and that’s a real concern of investors.”

At the shareholder meeting, I told Google’s leadership that:

Your company … competes in the market place.  Green energy companies do not.  Without strong government subsidies and renewable energy standards, green energy companies would go under.  Google should focus on its core technology and Internet business and not risk shareholder value in the volatile energy markets.

The National Center shareholder proposal specifically highlighted a possible conflict of interest between the company and one of its board members, John Doerr.  Doerr is a partner at Kleiner Perkins Caufield & Byers, a venture capital firm that invests heavily in alternative energy.  One of Google’s alternative energy investments appears to overlap with Doerr’s, so we asked the company to be transparent and report any such conflicts to the shareholders.

Google’s leadership recommended voting against the proposal, and the National Center proposal did not receive the required votes for passage.  However, the questions I raised about Google’s green energy focus were well-received by many shareholders in attendance.

Since the shareholder meeting in early June, the National Center has kept the pressure on Google regarding its alternative energy plans.  In an article for Pajamas Media, I wrote that:

Since its inception and initial public offering, Google has created immense shareholder value by focusing on its core Internet, technology, and advertising businesses.  However, in recent years Google has spent millions in alternative energy markets.  Google’s foray into alternative energy is suspicious for multiple reasons and begs for an explanation…

… Google shareholders are the company’s true owners, and Google’s corporate leaders should be good stewards of investor money.  Alternative energy investments are speculative, and it would be worrisome to shareholders if Google were to use shareholders’ money to support Doerr’s risky moves, or to blindly follow his wide-eyed supposition.

Then, when Google announced a $280 million investment in SolarCity a California solar energy company, I again questioned Google’s speculative investing.  An Associated Press article about Google’s SolarCity investment appeared to echo the sentiments I discussed in my Pajamas Media piece. The AP reported:

Investors have raised questions about investments that have little to do with Google’s main Internet businesses and that may be potentially risky.

And just last week, I highlighted Google Executive Chairman Eric Schmidt’s dubious honor from the Natural Resources Defense Council for his work at Google in advancing green energy.  I wrote that:

Mr. Schmidt’s award is not surprising.  While at Google’s helm, Schmidt has directed hundreds of millions in shareholder dollars to the green energy markets.

In concluding, I commented that:

By allying itself with the Natural Resources Defense Council, Google’s leadership is showing that its green energy investments are no accident.  However, that does not mean they aren’t a mistake.

It appears that some of the folks at Google are starting to get the message.  Alternative energy investing is risky, and shareholder money should not be used to back this ideological pipe dream.  To be sure, Google still has millions of shareholder dollars invested in green energy projects, but the cancellation of its “Renewable Energy Cheaper than Coal” project is a step in the right direction.

It is a good day of thanksgiving for Google’s true owners – the shareholders.