Google's Schmidt: how to remake energy policy

Says company's $4.4 green tech plan will ultimately save $1 trillion

Google CEO Eric Schmidt issued a sweeping challenge to U.S. political leaders this week, calling on them to invest $4.4 trillion dollars in renewable energy over the next two decades.

But first he lambasted the short-sighted policies that have led to the country's dependence on fossil fuels.

Schmidt said the current state of the U.S. energy industry represents "a complete failure of leadership of the political parties... about a fundamental issue... to me is also shows a lack of understanding of technology and opportunity."

With a new administration coming in and an economic stimulus plan (beyond the credit market bailout) likely, Schmidt says the government has an opportunity to remake the energy industry by investing in green technology.

"Energy independence should be at the top of the list... Instead of giving the money to the usual suspects, let's give it to (green) energy," Schmidt told an audience of the Commonwealth Club in San Francisco.

Google's plan, Clean Energy 2030, looks to remake the energy industry by eliminating all power generation from coal and oil and half of that produced by natural gas, adding that the current power infrastructure was built with the help of "fifty years of federal, state and local subsidies."

While the investment would be huge, it would eventually eventually save $5.4 trillion, resulting in a net savings of $1 trillion, and create hundreds of thousands of new jobs. 

"I'm talking about rebuilding the energy infrastructure of the United States," Schmidt said. 

He lamented the push for cleaner-burning coal plants, saying "clean coal is an oxymoron.""

The Google plan calls for investment in three broad areas. 

The first is power generation and transmission from renewable sources such as wind, solar and geothermal. The plan would add capacity and transmission lines on both coasts and the Great Plains for wind power and do the same for solar power in the desert Southwest.

"The biggest barrier is the grid," Schmidt said. For example, "the wind is blowing somewhere in the U.S. all the time. With the right grid, we can take (renewable power) from being intermittent to being constant."

The second thrust is reducing power use by creating products that use less and giving consumers ways to monitor their power consumption. "It's cheaper to conserve power than it is to buy it," Schmidt says.

Lastly, the plan calls for investment in infrastructure and technologies needed to accelerate the switch from gas-powered vehicles to electric ones.

(Note: this is the first of three parts of Schmidt's presentation.)