Amazon Is Aggressively Pursuing Big Oil As It Stalls Out On Clean Energy

Amazon Is Aggressively Pursuing Big Oil As It Stalls Out On Clean Energy

In 2014, Amazon announced that it would power its rapidly expanding fleet of data centres with 100 per cent renewable energy. Apple, Facebook, and Google made similar pledges two years before that, and pressure from consumers and environmental groups drove Amazon to follow suit. For the next two years, the tech giant made admirable strides toward achieving its goal, bankrolling large solar plants and wind farms. Then, it stopped.

Amazon hasn’t announced any new deals to supply clean energy to its data centres since 2016, and it quietly abandoned plans for one of its last scheduled wind farms last year. Meanwhile, in 2017, according to internal company documents viewed by Gizmodo, Amazon undertook a concerted push to win over a new industry, perhaps best summed up by the name of a presentation at Amazon Web Services’ annual company Sales Kick-Off event that February: “Positioning for Success in Oil & Gas.”

Over the last two years, as Amazon’s clean energy promises have stalled out, Earth’s most customer-centric company has aggressively courted the fossil fuels industry, landing deals and partnerships with companies like BP, Shell, and Halliburton, offering data-based services such as machine learning for enhanced exploration, internet of things-enabled oilfield automation, and remote site data transportation.

All this has occurred during a period in which the threat of climate change has been widely and clearly articulated by the top scientists in the field, and the urgency they say is necessary to reduce carbon emissions has never been better understood.

Amazon Web Service still displays a Sustainability page that claims “AWS is committed to running our business in the most environmentally friendly way possible” and that it is “committed to achieving 100% renewable energy usage for our global infrastructure.” Jeff Bezos, the company’s CEO, broke a champagne bottle atop a massive turbine to christen an Amazon wind farm in Texas in 2017 in a high-flying PR stunt designed to broadcast the company’s clean energy bona fides.

Bezos also joined Bill Gates’ multibillion-dollar investment fund “focused on fighting climate change by investing in clean energy innovation” in 2016, to considerable fanfare. And Amazon won headlines the next year for joining Apple and Google in signing the ‘We’re Still In’ pledge to uphold the Paris climate agreement to draw down global carbon emissions.

Yet Amazon’s actual renewable energy deployment has plateaued at the halfway mark—the last milestone the company lists on its Sustainability Timeline is “AWS achieved 50% renewable energy usage,” in January of 2018 — and now even risks decreasing as a total share of the company’s energy supply, as research from Greenpeace energy analysts indicates that Amazon is continuing to rapidly build new data centres without adding clean sources of power to run them with.

With the publication of its February 2019 report, Greenpeace pulled no punches: “Amazon Breaking Commitment to Power Cloud with 100% Renewable Energy,” its release announced. “Despite Amazon’s public commitment to renewable energy, the world’s largest cloud computing company is hoping no one will notice that it’s still powering its corner of the internet with dirty energy,” the activist group’s senior corporate campaigner, Elizabeth Jardim, wrote at the time.

And an internal database of “Oil and Gas Key Accounts” for 2018 viewed by Gizmodo contains dozens of current and targeted clients that include some of the largest private contributors to climate change, like ExxonMobil and Chevron, and entities like Aramco, Saudi Arabia’s state-owned oil company.

Notably, many accounts (such as BP, ConocoPhillips, ExxonMobil, Halliburton, HESS, Shell, Schlumberger, and Woodside) are listed in the documents as “2018 lighthouse accounts,” indicating Amazon is still in the early phases of developing this business, and these companies were treated as early adopters of its oil and gas services. An events calendar viewed by Gizmodo lists a detailed log of oil and gas-related events AWS representatives would be attending, like Oil & Gas Industry Day in Calgary, Canada’s oil industry capital, where AWS’s Jon Guidroz delivered the keynote speech in 2017.

These documents, combined with industry pitches and case studies on AWS’s own website, show that beginning in at least 2017, Amazon has begun a targeted campaign to win oil, gas, and coal business at a time that scientists say it is imperative most fossil fuels be left in the ground if we are to avoid severe climate disruption. All while the company was reneging on, or at best indefinitely idling, its own pledges to build more clean energy.

“There is deep irony that the very companies that are supposed to represent the leading edge of technological innovation and advancement are actually taking us backward,” the climatologist Michael Mann told me, “when it comes to their business practices, when it comes to the single greatest technological challenge we face: the challenge to decarbonise our economy rapidly enough to avert catastrophic climate change impacts.”

The irony is, in this case, twofold: Despite promising to make their operations more sustainable, Amazon’s massive cloud operation appears to once again be getting dirtier, powered by a growing share of fossil fuels. AWS is then selling its fossil-fuelled cloud to oil, gas, and coal companies, to help them better find and extract more fossil fuels. As of now, Amazon is burning the climate from both ends.

In mid-March of 2019, just two months after Amazon had toppled Microsoft to become the world’s most valuable public company, the web giant sent one of its top executives to speak at IHS Markit CERAweek, the indecipherably named oil and gas conference in Houston. CERAweek bills itself as “the premier annual gathering of senior energy executives, innovators and honored officials offering dialogue and insight into the energy future.” There, Andrew Jassy, the CEO of Amazon Web Services, pitched the oil and gas executives in the crowd on moving their operations to the cloud and stressed how closely the company had been working with them.

“A lot of the things that we have built and released recently have been very much informed by conversations with our oil and gas customers and partners,” Jassy said from the stage during his ‘Agora innovation session,’ “and these are companies like Shell, BP, ConocoPhillips, and Halliburton.” Jassy, one of the most senior executives at Amazon — his direct report is Jeff Bezos — went on to detail the ways that Amazon was helping oil companies effectively and efficiently extract more oil and gas and save money by automating their operations. (Video of the talk is available online.) Apparently, it was a hit.

“Their Agora session attracted a huge crowd around the hall!! I thought they were serving alcohol or something!” one attendee tweeted.

Historically, few would associate Amazon and big oil as close bedfellows, but that is likely to change, and fast. Many of the largest tech companies (Apple being a notable outlier) are teaming up with oil majors to help them accelerate the location and extraction of fossil fuels. Google opened an oil and gas division just last year, for instance, and Microsoft has inked deals with giants like ExxonMobil and Chevron.

Collectively, the deals between the oil belt and Silicon Valley are worth billions of dollars.

Onstage at CERAweek, Jassy listed three cutting edge technologies he believes will, with Amazon’s help, transform the oil and gas industry: machine learning, internet of things tech, and automation. “You can see it changing the way things are done in this industry,” Jassy said. “If you look at what Shell’s doing,” he continued, “they’re taking all these images and well logs, and cleansing the data and tagging the data and then trying to use machine learning and building algorithms that assess what are the characteristics and the patterns that leads to success wells versus ones that are less successful with the goal ultimately to be able to use machine learning and AI 100% to target which wells to go pursue. That is heady stuff. That is a very different model than has existed in the past. That is a game changer.”

Jassy also says he sees more oil companies turning to AWS for automation solutions. “There are a whole number of activities today that we have human beings doing that you’re going to have robots and drones doing in the future — and no it doesn’t mean there’s going to be no jobs for human beings — we’re not going to run out of those anytime soon. … We’re starting to see a lot of oil and gas companies who are starting to build drones,” he says, pointing to AWS’s robotics service, Robomaker. “All kinds of things that are dangerous and arduous for human beings to do, we’re going to have robots do,” Jassy says, “and we’ll use the humans do more value-added activities.”

One of the slides in that early 2017 presentation viewed by Gizmodo promises to offer AWS employees instructions on “how to position AWS and effectively sequence your approach to long term entrenchment” in the gas industry. Two years later, with a top executive courting the industry in Houston, dozens of clients on the roster and a detailed public website full of AWS Oil and Gas case studies, the effort is well underway.

Jassy’s pitch broadly mirrors the one Amazon lays out in greater detail online, on its page touting AWS for Oil & Gas (tagline: “Cloud computing to enable digital transformation and fuel innovation in Oil and Gas”).

The stated “benefits” range from “Accelerate and optimise exploration, drilling, and production by using AWS machine learning and big data tools” to “allow oil and gas companies to reduce the time required for seismic data processing from several months to a few days.”

A sidebar in one of the promotional tipsheets puts Amazon’s promises more succinctly:

-Find Oil Faster

-Recover More Oil

-Reduce the Cost Per Barrel

-Reduce Risk and Ensure Compliance

That can probably be read in the order in which the promises appeal to the oil companies. AWS also lists its less extractive pitches, like that it will help improve safety compliance and monitor equipment for maintenance.

The site is also littered with numerous blog posts and articles extolling the appeal of AWS to the oil industry. In one, Eddie Murray, Global Oil & Gas Leader, Amazon Web Services, pitches oil and gas companies on migrating their data to the cloud where they might “apply machine learning models to extract more value from that data while stored in low-cost storage services,” like the apparently unironically named “Amazon Glacier.”

Amazon has gathered a long list of partners to help prospective oil industry clients “innovate and transform faster with AWS.” That list includes companies like Ambyint, a startup that says it’s “building the ‘self-driving car’ for oil wells to enable autonomous well operations” and “creates value for customers by increasing production and reducing labour costs,” and Landmark, a Halliburton subsidiary that “is the leading technology solutions provider of data and analytics, science, software, and services for the exploration and production industry.”

And AWS is providing services to every stripe of fossil fuel company: Mitsui Coal Holdings, a Japanese coal investment company, is a customer. So is Gulfmark Offshore, which manages a fleet of 70 oil rig support vessels, and SEAOil, the Philippines’ largest independent oil company.

Pacific Inter-Link Group, a palm oil company responsible for some of the world’s most severe deforestation in Southeast Asia, says it expects to “save at least $916,412 over the next three years” thanks to AWS.

Amazon Web Services undergirds a vast swath of the internet as we know it. Because of its lack of transparency, it’s impossible to say just how much of the web runs on AWS, but researchers estimate that Amazon controls around 35-40 per cent of the entire cloud computing market. In 2018, AWS was bigger than its three biggest rivals—Google, Microsoft, and IBM—combined.

Netflix—itself responsible for generating around 15 per cent of the world’s entire web traffic—is hosted by AWS. So is Airbnb. And Slack, and Yelp. NASA uses AWS. Literally millions of websites are hosted by AWS, which is why, when it goes down, it can feel like it takes the whole internet with it. And it’s continuing to grow at a rapid rate.

Amazon’s Jassy said in his talk that AWS has become a “$30 [$AU42] billion revenue run-rate business” for the company. “It’s growing about 45 per cent year over year.” Last year, AWS brought in more money than McDonald’s. And it’s the chief source of all of Amazon’s operating income—Amazon makes more money from AWS than it does on “Really we’re in the midst of a titanic shift to the cloud,” as Jassy put it.

That’s why data centres are rapidly becoming a significant energy issue. Right now, the IT sector is responsible for about 2 per cent of global carbon emissions. Some outer estimates project that it will drain one-fifth of the world’s energy by the next decade, as more and more data-intensive services migrate to the cloud. And that’s why it remains a serious issue that Amazon is idling on its clean energy promises.

Google it will get there by 2020.

Microsoft’s progress has been slower, but in 2018, it signed what was heralded as the largest corporate solar agreement in the U.S. Amazon appears to be the only major tech company so dramatically stalling out in its pursuit of renewables.

While Google and Microsoft are also aggressively seeking oil and gas contracts, the companies have prioritised procuring clean energy for their own operations. Amazon’s drive to win fossil fuel business comes at a time when the company has for the last two years neglected its own stated commitment. According to a December 2018 report in the Information, “a senior AWS executive, Peter DeSantis, has told colleagues inside the company that renewable energy projects are too costly and don’t help it win business.”

The results of that ethos are visible in the Greenpeace report that examines AWS’s presence in Virginia, which found that “Amazon Web Services is only meeting 12% of its renewable energy commitment as its East Coast presence and energy demand grows.” AWS, the report notes, has “built the core of its global infrastructure” in the state, “with 1.7 gigawatts of power demand across 55 Virginia data centres.”

That’s an increase of 60 per cent over the past two years, and the data centres running at full capacity draw an amount of power “equivalent to the electricity required to power 1.4 million U.S. homes annually.” The vast majority of that power comes from gas and coal — Dominion Energy, the local utility responsible for supplying most of the electricity to so-called data center alley, only generates 4 per cent of its energy with renewable sources.

This shouldn’t necessarily be surprising — Amazon lagged for years behind Google, Apple, and Facebook in pledging to adopt clean energy in the first place. It took, among other factors, another deeply critical Greenpeace report detailing the company’s reliance on fossil fuels vis a vis its cleaner competitors, to prod Amazon to set a goal of 100 per cent renewable power usage.

“They were quite dismissive of renewables, but after hearing from customers and having crap answers for a really long time, they finally made a commitment,” says Gary Cook, Senior IT Sector Analyst and Energy Campaigner at Greenpeace. “So in 2016, they started signing some pretty big contracts for solar and wind. Then they kind of stopped. 2017 was the last time they brought a major project online. Their growth was outstripping their supply of renewables then, in 2017, and since then they’ve just stopped and growth has continued apace.”

Neither Amazon nor AWS responded to my request for comment.

Another mounting problem is AWS’s notorious secrecy. Amazon is the largest U.S. company that refuses to disclose its carbon emissions—until 2018, even ExxonMobil disclosed its carbon emissions. “They’re completely nontransparent,” Cook says, which makes determining how much clean energy they’re using or not using difficult. (Greenpeace does it by examining external factors like how much backup power they’re obtaining permits for.)

It’s so difficult, and Amazon’s policies so opaque, that the company often won’t even share data about what kind of energy is used to power its data centres with AWS clients—which forces some AWS-reliant companies in countries that require sustainability reporting into elaborate guesswork.

Now, according to Cook’s sources, the team formerly driving Amazon’s clean energy procurement is in disarray. “All those people have left the company or been moved elsewhere, as best we understand,” Cook says. “The long and short of it was that they had a change in leadership. The new direction was that buying renewables directly is not something we want to be doing, not something we want to pay for, it’s not enough of a priority for customers.” This tracks with the Information’s reporting, which found that at least one senior AWS exec had become openly dismissive of renewable energy.

Cook thinks the explanation for the timing here — why Amazon appears to have abandoned its commitment to building out renewables when it did — is relatively simple. “What happens in 2016? Donald Trump, right?” he says. “They’re likely to get less attention on their own performance with Trump as president.” Since Amazon’s moves toward clean energy were always largely reactionary, its support for sustainability tenuous at best, it makes sense that it would drop the act when pressure let up. For the most part, the strategy has appeared successful — it has apparently gone years without progressing on its renewable targets, and few have noticed.

Even when it was buying clean energy, it did so in a manner rife with half-measures and cold calculation. Take, for example, Amazon’s maneuverings in the renewable energy credit (REC) market.

“Renewable energy projects in the US have two things to sell, the REC and the power itself,” Cook says. These RECs can be used by utilities to count toward state renewable energy requirements (many states have standards that require utilities to generate a certain percentage of their energy from renewable sources), but they can also be bought and sold on the open market by corporations, in order to meet voluntary clean energy commitments.

What a company interested in boosting the amount of clean power brought online would do — as, for example, Microsoft did with its RECs after purchasing clean energy in the region — is buy the clean energy then retire the credits, so the credits from the project aren’t used by a utility to meet a state renewable energy requirement. (Google’s policy is to retire the RECs, too) This ensures that the project brings additional renewable energy onto the same grid as its data centres from what would have happened without Microsoft or Google’s purchase.

“While Amazon has also signed large renewable energy contracts,” Cook says, “rather than retire the RECs, it has appeared to have arbitraged them, selling the RECs from a local project and bought replacement RECs for 1/15th the price from the middle of the county.” (In states where there is higher demand for renewables, RECs are worth more; Amazon earned RECs in competitive markets, sold them, then bought back cheaper ones from markets already flooded by clean power projects.)

In short, solar and wind projects producing an equivalent amount of clean energy would almost certainly have been eventually built anyway, but they would have been used to power things other than data centres. While Microsoft and Google retired its RECs so that its clean energy projects would add to the total clean energy count, Amazon found a way to profit off of slightly speeding up an emergent status quo. “They still brought the project online which is good,” Cook says. “They just did it in a way that displaced the demand.”

Amazon has not been completely inactive on sustainability initiatives. Last year, it invested in a corporate effort to help municipal waste systems improve its recycling programs, and its retail division announced it would be installing solar panels on regional fulfillment centres in the UK. In February 2018, Amazon announced the Shipping Zero initiative, through which Amazon says it aims to make 50 per cent of its shipments carbon neutral by 2030. No details about the project besides the introductory announcement have been made public, so it remains to be seen how seriously the company will take the initiative.

But it would be a promising step, to be sure: Delivery emissions are another one of Amazon’s largest sources of pollution. According to estimates calculated by the Seattle division of the nonprofit, “Amazon’s shipping operations in 2017 alone spewed at least 19.1 million metric tons of CO2 into the atmosphere—the emissions equivalent of 4.7 coal-fired power plants operating for one year.” Halving that would be a considerable achievement.

Further, Amazon says it will, for the first time, disclose its carbon footprint sometime this year. However, it will not be submitting its disclosure to the nonprofit Carbon Disclosure Project, as most corporations do, for independent verification; Amazon says it is “developing its own approach to tracking and reporting carbon emissions,” according to CNBC.

These announcements came after a number of Amazon employees used their status as shareholders to formally petition the company to outline a comprehensive plan for addressing climate change, showing that in some quarters of the company, discontentment with the company’s current policies is growing. The shareholder proposal will be voted on this spring, and the story about their efforts drew the attention of the New York Times.

Public pressure has thus far been one of the only reliable levers that have guided Amazon towards cleaner energy sources and more sustainable practices. Absent that pressure, Amazon has drifted from pursuing renewable energy to embracing big oil.

“It’s plain hypocrisy,” John Broome, the Oxford philosopher, economist, and author of Climate Matters: Ethics in a Warming World, wrote me in an email. “I think all companies should make a serious effort to reduce their emissions. They certainly shouldn’t cooperate in extracting fossil fuels.”

Amazon does so despite a renewed urgency in climate politics — in a much-discussed 2018 UN report, top climatologists said we have mere years to seriously undertake the process of decarbonising our economies, or we risk facing runaway warming. As it stands, Amazon is hastening that prospect, both by relying on untold—and potentially growing—amounts of fossil fuel-generated energy, and by selling its technology services to the companies that extract those fossil fuels.

“This is more pernicious,” Cook says, “using AI to find oil that wouldn’t have otherwise been discovered, when what we really need to be doing is leaving that oil in the ground.”

And it remains to be seen whether Amazon will resume building out its promised clean energy commitments after two years of silence.

“Renewable energy is an essential part of the solution,” the climate scientist Michael Mann says, “and we need to not only keep up with but exceed current renewable energy targets if we are to avert dangerous planetary warming.”

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