The ongoing boom in renewable energy around the globe is fast transitioning our energy system towards low-carbon.
And there’s no doubt that the buying-power of businesses is central to this transition.
Costs for renewables continued to fall in 2017, with IRENA reporting an 80% drop in solar module prices and a 40% drop in wind turbine prices since 2009.
And as prices fall, capacity grows. In 2017, global renewable capacity grew 8.3%, continuing a steady trend of 8-9% growth in recent years. In total the world now has 2,179 GW of installed renewable energy capacity. That’s enough to power 473 million homes.
Corporates are not blind to these trends. CDP’s 2017 climate analysis shows that the number of companies with renewable energy consumption targets grew 23% that year, while the number with targets to generate their own clean power jumped 36%.
We also see momentum in the number of major companies with the ultimate clean energy ambition: to go 100% powered by renewables.
To date, 140 companies, including huge names like Apple, Kellogg Company, H&M, Starbucks, Nestle and Fujitsu, have made the commitment through the RE100 initiative – a collaboration between The Climate Group and CDP. This is up from 87 in early 2017.
These 140 companies use around 184TWh of electricity cumulatively. And they will need to source an extra 197TWh of renewable electricity by 2030 to be on track for their 100% targets - spurring market demand.
But while all this progress is cause for celebration – is it enough?
We need to go even faster
To have a reasonable chance of meeting the central goal of the Paris Agreement – to keep global warming well below 2 degrees Celsius – global emissions have to peak by 2020 and sharply decline thereafter.
By 2050 we need to be well on the way to a fully zero-carbon economy. And that means companies around the world being 100% powered by renewables.
The fact is, we are not yet on track.
The recent IEA report - World Energy Investment 2018 - warned that renewable energy investments dropped 7% between 2016 and 2017.
Much of this can be attributed to the sharp price drops of these technologies. However, we should be utilizing these cost curves to install even more capacity, not installing the same amount for a cheaper price.
Urgent action is required to shift our course. The transition is already well under way, but it needs to accelerate.
How companies can lead
Through strategic collaborations like the RE100 initiative, companies can help speed up the journey to a renewable future.
In our most recent report, Business Leadership in the Transition to Renewable Electricity, RE100 looked at what this corporate leadership looked like. We found five key areas:
Ambition: How far and how fast is a company progressing towards sourcing all its energy from renewables? The gold standard for ambition recommended by RE100 is a 100% renewable electricity by 2030 target.
Impact: To what extent is a business’ buying power adding extra renewable energy capacity to the grid? Leading companies use a range of strategies to make their procurement as impactful as possible – for example investing directly in new projects and signing long-term Power Purchase Agreements (PPAs).
Sustainability: Is a company taking a holistic view of renewable energy developments to ensure the numerous benefits are maximized and negative impacts on communities and ecosystems are minimized? This includes using community engagement and impact assessments.
Influence: Are companies using their power to scale and accelerate the clean energy transition beyond their own operations? Are they engaging with policymakers on local and national energy policy and supporting their suppliers to set strong targets and actively source renewable energy?
Transparency:Is a company openly sharing information about their usage of renewable energy? Are they not only disclosing energy and emissions data through CDP, but also going further to communicate about strategies, challenges, actions and impacts? This underpins the four other leadership dimensions.
The influence point highlights a particularly powerful way for companies to move the needle on renewable energy. CDP’s supply chain program brings together over 100 blue-chip companies that are shining the light of transparency into their supply chains – which can cascade action through the economy.
Take Walmart for example. The retail giant announced this year that their suppliers have cut emissions by 20 million metric tons through their flagship Project Gigaton. And sourcing renewable energy was one of suppliers’ top two actions.
Getting the policy framework right
One of the biggest obstacles to corporate sourcing of renewables is a hostile policy environment. Yet engagement on policy is also one of the key levers for change - as illustrated in the ‘influence’ part of the RE100 leadership framework.
The IRENA report Corporate Sourcing of Renewables: Market and Industry Trends 2018, which includes CDP data analysis, lays out several policy recommendations. They map onto each of the main renewable energy sourcing strategies – energy attribute certificates, green tariffs, power purchase agreements and on-site generation.
For example, providing a transparent and credible tracking system for renewable energy attribute certificates is crucial for making credible usage claims, while offering transparent grid-access rules is key to Power Purchase Agreements (PPAs). To encourage on-site generation, governments should provide a clear and stable mechanism for feeding excess electricity to the grid (e.g. net-metering), with priority dispatch for renewable energy.
These are some of the policies to advocate for if your company is looking to lead the pack and influence national energy policy in favor of renewables.
From mainstream to take-over
Renewables are now a mainstream and growing part of the global energy mix.
Now, we need cross-sector collaboration and concerted action by corporates and policymakers to accelerate the transition. It’s time to shoot for 100%.