For a growing number of companies, electricity is a prime resource in the value chain. However, several global corporations have come under fire from the general public, shareholders and major NGOs with regards to energy procurement. The failure to adequately manage corporate energy can leave a company vulnerable to risks, such as changing regulations and legal requirements. What is more, being seen as a big polluter carries detrimental effects for any brand.
More and more companies have set themselves a target of growing the share of renewable energy in their consumption. These commitments have been reflected in the global investments in sustainable energy: the past year witnessed an investment in renewables capacity that was roughly double that in fossil fuel generation. According to the latest report by the United Nations Environment Programme and Bloomberg New Energy Finance, the corresponding new capacity from renewables was equivalent to 55% of all new power, the highest to date.
Leading businesses and renewable energy experts have also joined forces to form RE100, a global initiative aimed at motivating and recruiting major companies to use 100% renewable power across their operations. Launched at the New York Climate Week back in 2014, the campaign has continued to gather momentum, drawing commitments from over 100 leading companies in just the span of three years. The initiative is also a reflection of the wider interest to disclose and communicate corporate performance in energy: calculating and, more importantly, reducing emissions from purchased or acquired electricity (“Scope 2 emissions”) is a prerequisite for inclusion in the CDP’s prestigious Carbon Disclosure Leadership Index.
Nonetheless, joining initiatives and disclosing data alone will not be enough to boost corporate brand image and ranking, nor to ensure the “greenness” of energy. A key challenge for today’s multinational companies is the difficulty, in certain jurisdictions, of tracing whether the electricity they consume was produced using renewables or fossil fuels and nuclear. For tracing the origin of power, renewable energy certificates (RECs) are key. RECs contain and disclose the renewable sources from which the electricity is consumed and are issued for every megawatt-hour (MWh) of electricity produced by a power station. Currently REC systems exist in the U.S., Canada, Europe (going by the name of ‘Guarantees of Origin’), Australia, and Japan, as well as in several developing countries under the International REC Standard.
However, not all RECs are the same in terms of impact. Only certain RECs with eco-labels ensure that the sources of energy are additional – or, in other words, that the purchased renewable energy certificates have had or will have an impact on the development of new renewable energy installations and yield added ecological value.
An example of an eco-label is EKOenergy: the supplier of EKOenergy labelled RECs contributes 0.10 Eur/MWh of to the Climate Fund, which in turn makes investments in new off-grid small scale renewable energy projects in developing countries. The fund contributed over 300’000 Euro so far in new solar installations in some of the world’s poorest countries.
Another eco-label is GoldPower: GoldPower labelled RECs stem only from recently built power plants that contribute to Sustainable Development Goals (SDGs) and have quantifiable, positive impacts on communities. Developed together with the WWF in 2009, GoldPower has recently been updated to include the Gold Standard Renewable Energy Label.
Major market influencers and RE100 signatories have purchased GoldPower in the past, including the likes of SAP, Microsoft, Novo Nordisk and Tetra Pak. In the words of Mario Abreu, VP Environment at Tetra Pak: “We want to support the transition to a low-carbon, sustainable economy so it is incredibly important to us that the renewable energy we buy comes from new or recently built installations that also provide broad sustainability benefits for local communities.”
So why should other brands care? There are a plethora of benefits gained from a pivot towards renewable energy, and especially if sourced from projects that additionally contribute in a substantiated manner to the SDGs. Companies not only reduce their carbon footprint, but also demonstrate their commitment to their employees, customers and investors. Equally importantly, smart corporates can hedge against risks: the move to a low-carbon future is inevitable, and as societies and economies unlock from fossil fuels, the transition to renewables makes long-term economic sense for businesses.
As in the case of Tetra Pak, companies are becoming more demanding about how exactly their green power is produced. And rightfully so: leading organisations are already leveraging renewable energy certificates to hedge against transitional risks, reach their sustainability targets, and reflect an essential character of their brand. The unique capacity of eco-labelled RECs to secure new renewable energy production, mitigate business risks, and engage local stakeholders in projects is an indispensable asset in the global pursuit for renewable energy and a greener economy.
Please join me in the Innovation Lab: Good Energy session at SB’17 Copenhagen and lean more about the multi-modes of energy production and how to remove barriers to renewable energy.
Sales Director Carbon & Renewables
South Pole Group
October 17, 2017