Pathways to 100% renewable: how are companies reaching this goal?
Over 90 well-known companies worldwide have committed to the RE100 campaign, the corporate campaign that brings together major businesses who share the goal of obtaining 100% of their electricity from renewable sources.
On the day that Donald Trump signed away President Obama’s clean power plan, the world’s biggest brewer signed up to sourcing 100% of its electricity from renewable sources. In doing so, ABInBev – owner of brands such as Budweiser, Corona and Stella Artois – joined a growing number of companies who are part of RE100, the corporate campaign that brings together major businesses who share that goal. So far, over 90 have joined up.
So what’s driving them? Reputation, for sure: committing to 100% clean electricity is a decisive way to nail green colours to the corporate mast. But there’s hard economic self-interest in there as well. As Sam Kimmins, head of RE100, points out, in a world of volatile wholesale energy markets, a long-term deal with a renewables supplier gives some welcome price certainty. And as the costs of both solar and wind power continue to fall way beyond expectations, such deals are becoming increasingly attractive.
Switching to renewables can save on other costs too. ING Bank, another RE100 member, has a longstanding commitment to carbon neutrality. “By increasing efficiency and sourcing most of our power from renewables”, explains Kaitlin Crouch, global environmental programme manager, “we have reduced emissions by 27% since 2014 and thereby have saved money on carbon offsetting.”
Pathways to 100%
So how are companies making the switch? At present, says Kimmins, the vast majority are doing so indirectly, either by buying renewable energy certificates (RECs – which represent a proven amount of power generated from a renewable source) or shifting their electricity supply to an established “green tariff”, which carries a similar assurance. Some have questioned the veracity of such assurances, but Kimmins is confident that RE100’s “credible claims” (pdf) assessment system puts those in operation today beyond doubt. “At the very least, they prove there’s a market for renewables, and so help drive their rapid expansion – which is part of the point of the campaign.”
Even so, such methods can sound disappointingly intangible, compared to buying directly from a generator such as a wind farm, say, or generating your own solar power onsite. Why don’t more companies go for those solutions? Two reasons, says Kimmins: first, such things take time.
Companies committing to RE100 are keen to demonstrate immediate action – and that’s most easily achieved through the simplicity of a REC. Second, national regulatory systems don’t always provide for direct purchases. “But it’s a rapidly moving feast”, he adds. “Things are changing incredibly quickly, as renewable costs come down, governments look more kindly on new purchasing arrangements, and companies start to get more creative.”
That creativity takes several forms. In one pioneering collaboration, four major businesses – Google, DSM, Royal Philips and AkzoNobel – came together to sign a long-term power purchase agreement (PPA) with a Dutch wind farm. This both helped ensure its viability, and helped the companies hit their RE100 targets. Other companies backed by the Climate Group (which spearheads RE100) and NGOs, are lobbying governments to reform power purchase regulations so as to allow direct purchases. Kimmins cites Starbucks, which has persuaded North Carolina to allow it to buy electricity direct from a solar farm: enough to power 600 of its outlets.
Meanwhile, a number of companies such as Apple and H&M are encouraging their suppliers to commit to 100% renewable targets as well. With many suppliers being based in Asia, there’s growing pressure for governments there to allow direct power purchases from renewables providers. Google has raised the bar by explicitly ruling out locating any of its data centres in a country which fails to do so. Partly in response, perhaps, says Kimmins, China is “moving very quickly” to enable such changes.
Financial creativity is at play, too. Armand Ferreira, director of sustainable finance at ING, says the bank is exploring ways of helping companies make major RE100 commitments with sometimes challenging financing structures. He points to a major fast-moving consumer goods company which wants to install rooftop solar on all its buildings worldwide but keep it off the balance sheet. ING is looking at creating a special purpose vehicle that would purchase and own the panels, and then receive a monthly fee from the company in return for the resulting power supplied.
When it comes to renewables independence, the doyen of them all is Ikea. It’s investing directly in its own wind and solar plants, to the extent that it’s already producing more renewable power than it consumes in the Nordic region, and it will soon be doing so in the US as well. At the same time, now that domestic rooftop solar costs have fallen from the price of a car to the price of a kitchen – within the Ikea price bracket, in other words – it’s offering a solar service to its customers, too. Essentially, says Kimmins, “it’s taken a sustainability commitment, and turned it into a customer offer.” Which might just be a model for others to follow, too.
Photo: Starbucks has persuaded the state of North Carolina to allow it to buy electricity direct from a solar farm. Photograph: Getty Images/Universal Images Gr
For more information on this article or subject please mail to: Kaitlin.Crouch@ing.nl, or Armand.Ferreira@ing.nl