What's happened is that the tech industry has stumbled onto this major cash-cow that has the unfortunate side effect of consuming staggering amounts of energy at a time when energy consumption and carbon footprints are getting more and more attention. And these companies don't just have to consider justifying how much energy they're using now: they're thinking about the amounts they're going to have to justify using in just a few years' time, while other companies and private consumers are getting leant on to use less. (That's also why he tries to claim it's self-regulating because "No large company wants to have a huge power bill.", when he knows full well that if a company is guaranteed to make $2 profit for every $1 spent on power, it'll be happy with the biggest power bill possible.) The game here is to try and avoid governmental restrictions or financial punishments on their energy consumption.
One way is to try and lump all the AI in together, good, bad and frivolous. Make it sound like all this energy is being used to do good stuff, but who knows how it divides up? ChatGPT alone reportedly consumes in a year enough energy to power an entire European country for a day or two. Is that sort of energy also being expended on protein folding models? Seems unlikely. And people aren't asking ChatGPT how to solve the climate crisis, they're asking it to help with their homework or recommend a TV show to watch or restaurant to go to. When Schmidt talks about "unshackling AI", I'm very sure he's not advocating leaving LLMs and deepfakes out of that.
So he makes out the huge catch-all of "AI" is part of the solution to climate change, not part of the problem, so leave us alone to keep doing whatever we want please. Of course the only answers people are going to be interested in are going to be ones that don't cost them more money or require them using less energy. I'm not sure AI can work out that miracle of arresting climate change pain free. But as long as the money's rolling in, its not Big Tech's immediate problem if nobody likes the answers.
I wonder what Schmidt's reaction would be if part of AI's solution to solving climate change was turn off all the non-scientific AI? Try and bury it, probably.