Google, the Internet search engine, has started a new strategic initiative to develop electricity from renewable energy sources that will be cheaper than electricity produced from coal. The newly created initiative, known as RE<C, has led Google to invest heavily in wind and solar power programs. It has even included a move to power the company’s headquarters by one of the largest solar electric installations in the United States. Eventually, Google aims to bring the cost of solar power down by 25 to 50 per cent.

More recently, Google announced that it is investing $10.25 million in a pair of companies that are developing “enhanced geothermal systems”— basically generating electricity by running water through hot rocks deep underground. Google is clearly planning new ways to make money in a post-carbon future. A recent study from MIT estimates that within the United States, current geothermal energy technology could provide 2,000 times the energy that the country consumed in 2005.

Google has also teamed with Pacific Gas and Electric Company (PG&E) to demonstrate Vehicle-to-Grid technology. Such technology allows for the sharing of electricity between electric vehicles or plug-in electric hybrid vehicles and the electric power grid.

Essentially, each vehicle is used as a potential battery that can be drawn upon during periods of peak power usage. The green aspect of the project stems from the fact that the cars are recharged by Google’s solar array during offpeak hours. In essence, the Vehicle-to-Grid system increases power reliability and the amount of renewable energy available to the grid during peak periods.

Google anticipates investing hundreds of millions of dollars in breakthrough renewable energy projects. And Google likely isn’t launching this ambitious investment program solely out of the goodness of its heart. The company is probably betting that these large investments of capital will eventually generate significant positive returns.

Google’s investment model is not the only way large companies are turning green in order to increase the bottom line. Wal-Mart, the world’s largest retailer, announced that the company now aims to be supplied by 100 per cent renewable energy, to create zero waste and to sell sustainable products. Largely, Wal-Mart’s green initiatives focus on cost reduction throughout its own operations and within its supply chain. Beginning in 2009, the retailer will start building new high-efficiency stores in Canada that will consume at least 30 per cent less energy — resulting in an estimated savings of $25 million over a five-year period.

Similarly, Wal-Mart determined it could save $26 million a year in fuel costs by installing auxiliary power units on its fleet of 7,200 trucks, enabling the drivers to keep their cabs warm or cool during overnight breaks from driving without having to keep the engine continuously idling.

And most significantly, Wal-Mart announced that the company will require its 60,000 suppliers to reduce the amount of packaging they use. Through the use of smaller, lighter packages that are easier to transport and stock, Wal-Mart expects to save $3.4 billion in direct costs and almost $11 billion through the entire supply chain.

McCarthy Tétrault Notes:

Given that the environment remains one of the most important issues in North American society, companies that focus on “greening” their business will be seen as responsible actors within the communities they operate and develop valuable corporate goodwill. But these proactive environmental programs are also leading businesses to discover new, revenuegenerating opportunities, and to take advantage of substantial operational and supply chain cost reductions. In reality, going “green” isn’t just good ethics — it’s good business.