We are in the twilight of the golden age of tech.
The headlines are everywhere. Big tech is downsizing (or rightsizing, depending who you ask). The days of hockey-stick profits seem behind us, with the sector losing $7.4 trillion in one year. Twitter, Google, Amazon and Meta are laying off thousands of employees.
Say what you will about the tech deflation (it’s understandable to not feel too sorry for a sector with such high salaries and obscene perks). But if the era of excessive profit margins are behind us, I wonder: How committed will companies stay to their ambitious clean energy goals?
How important has tech been in clean energy proliferation?
Very. Corporate energy demand, and Big Tech in particular, has driven the evolution of energy markets, bringing down the cost of new technologies and developing new contract models for other corporations and communities following suit.
Four of the top five biggest procurers of solar in the U.S. are tech companies, all of which had recent layoffs: Meta, Google, Microsoft and Apple. Corporations are responsible for 14 percent of all solar capacity installed in the U.S., according to the Solar Energy Industries Association in its annual Solar Means Business report.
These companies are also at the forefront of cracking the code to 24/7 carbon-free energy (CFE), with Microsoft and Google signing power purchase agreements for CFE and Google investing in more nascent clean energy technologies, such as geothermal. In order to reduce emissions in the power sector, we need more organizations to help bring down the costs of firm clean energy resources — which means, in the short term, decisions that don’t appear economical in the short run.
Will companies still fund clean energy efforts?
Historically, economic downturns lead to the private sector contracting investments in sustainability and climate policies. This time may be different for two reasons.
First, the economics are on clean energy’s side. Solar and wind are the cheapest form of energy on a levelized cost basis, making virtual power purchase agreements an attractive financial hedge for corporations. While the cost to deploy solar and wind are on the rise because of supply chain disruptions and inflation, incumbent energy sources are even more volatile (thanks, global energy crisis), leading many companies to say they’re committed to the clean energy transition. A recent survey of 140 executives and investors finds that most energy industry leaders remain focused on their clean energy transition strategies, viewing clean energy as a counter to rising energy prices.
During this era of economic uncertainty, it will be more important than ever to question and examine corporate claims.
Second, public policies are creating new opportunities for smart people to make money with clean energy technologies. The Inflation Reduction Act is expanding tax credits to more forms of carbon free energy, and the Department of Energy has earmarked funds to support innovation in key clean energy tech, which is good news for geothermal, hydrogen and long-duration energy storage. New programs, such as the recently formed Secretariat for the Clean Energy Demand Initiative, support new public-private partnerships designed to accelerate clean energy deployment in more places.
Will Big Tech defund climate initiatives?
As of now, I am not aware of any company changing their climate goals or reallocating climate funding due to economic conditions. Google, Microsoft, Amazon and Apple all declined to comment or didn’t respond to my request for comment. I get it: It’s too early to tell what the future has in store, so why put anything to paper?
The companies I’ve talked to off the record indicate that this time is different. Companies with ambitious climate goals are "all in," regardless of economic uncertainty. Those leading on climate are making it core to their business operations and strategy, and they see long-term value creation in climate initiatives. In other words, climate tech isn’t an add on — it’s core to strategy.
Of course, talk is cheap and pressure to achieve short-term profits is real. During this era of economic uncertainty, it will be more important than ever to question and examine corporate claims — which already often outstrip outcomes.