Apple Commits Energy Accounting Fraud

Imagine this scenario: Apple CEO Tim Cook wants to take an ocean liner across the Atlantic. He has a problem. Ocean liners run on oil but Cook wants to be “green.”

What can he do?

Well, he could try his luck with a sailboat. But the wind is volatile and unreliable — not to mention that a wind-swept voyage across the ocean would be dangerous.

But then, when all hope seems lost, Apple Board member Al Gore offers an idea. Use an ocean liner, but install sails on top, so that at least part of the time the boat is at least partially powered by wind.

But what will that really accomplish? Cook asks. The boat will still be mostly powered by oil. And the sails would probably cost more money than they saved—otherwise, ocean liners would all use sails to save money. Bottom line: I’ll still be using a lot of fossil fuel.

No you won’t, says Gore. I can make the trip 100% wind-powered through the magic of green credits. Let’s say that if you install the sails, 5% of the voyage will be wind-powered. Every passenger is using 95% oil, 5% wind. But if you pay the other passengers enough money, they’ll give you credit—green credit—for their 5%, and say they used 100% oil. Find 19 passengers to pay off, and presto: you get credit for a 100% renewable, wind-powered trip across the ocean in seven days.

Cook summarizes: So let me get this straight, you want me to pay a lot of money for an inefficient wind contraption and then more money to get others to pretend I’m getting 100% of energy from that wind contraption, even though, in the final analysis, I’m really only getting 5%?

I can make the trip 100% wind-powered through the magic of green credits.

Come on, Tim, says Gore, you can afford it.

I wish that Apple’s CEO would not agree to such a thing. But alas, he has. Swap “ocean liner” with “data center” and “sail” with “renewable energy” and you get this public statement by Apple:

All our data centers are powered by 100 percent renewable energy sources, which result in zero greenhouse gas emissions, and we’re committed to keeping it that way. These energy sources include solar, wind, and geothermal power. This renewable energy comes from both onsite sources and energy obtained from local resources. The data centers run services like Siri, the iTunes Store, the App Store, Maps, and iMessage. So every time a song is downloaded from iTunes, an app is installed from the Mac App Store, or a book is downloaded from iBooks, the energy Apple uses is provided by nature.

As it turns out, that energy is provided by an electric grid. And every electric grid in the world, including the one powering Apple’s flagship data center in Maiden, NC, requires abundant energy on-demand from a controllable power source, such as the 35% coal power and 52% nuclear power on the grid Apple uses.

Like the oil fuel in the ocean liner, Apple needs that abundant, controllable energy—but since it wants to be perceived as green, it spends a huge amount of money on solar panels that, like sails, feed in unreliable energy, and then pays off the NC grid operator for “green credits.”

This is contemptible for two reasons. First, it is a public lie; if an executive communicated its financial accounting the way Apple communicates its energy accounting, he would be thrown in jail.

Second, Apple and other technology leaders have a public responsibility to give us sound technological guidance—and by perpetrating the myth that solar and wind can replace fossil fuels, they are harming the energy future of billions.

There is not one modern economy in the world that is powered by solar and wind, because they are inferior, unreliable sources of energy. You may have heard that Germany has proven that solar and wind are viable sources of energy. In fact, it’s proven that they aren’t. In a given week in Germany, the world leader in solar and number three in wind, their solar panels and windmills may generate less than 5% of needed electricity. Thus, Germany can’t and doesn’t rely on solar and wind.

If an executive communicated its financial accounting the way Apple communicates its energy accounting, he would be thrown in jail.

Here is a graph of the production of solar and wind electricity production in Germany for the entire year 2013. It uses the most precise data available from the European Energy Exchange, and illustrates what common-sense tells us; no country is relying on the sun and wind to produce energy on-demand.

German solar and wind production vs. need, 2013 — taken from The Moral Case for Fossil Fuels by Alex Epstein

Source: European Energy Exchange AG Transparency Platform Data (2013)

As Germany has paid tens of billions of dollars to subsidize solar panels and windmills, fossil fuel capacity, especially coal, has not been shut down — it has increased. If they and the rest of the world were starved of fossil fuels and forced to try to live on solar and wind, the result would be catastrophe.

There’s a broader argument to be made about public responsibility as well. Apple doesn’t live in vacuum. What it does and how it operates affect not only the technology industry, but any company trying to achieve Apple-level success. And while Apple and similar-sized companies like Facebook can afford to overpay for energy for symbolic reasons, most companies cannot. Beyond that, most consumers cannot. And certainly not the three billion people in the world with little-to-no electricity.

When Apple uses its power and influence to promote, as broad-scale solutions, energy sources that are expensive and unscalable, it cheapens the debate about the future of energy. Whether or not it publicly acknowledges it, Apple has a moral and public responsibility to speak the truth about its energy use.

Alex Epstein is President of the Center for Industrial Progress and author of The Moral Case for Fossil Fuels, which comes out today from Portfolio/Penguin.

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