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100% Renewable Energy in the Age of Climate Change

Posted by Greg Scandrett on Jun 14, 2016 10:00:00 AM

Today’s top companies have a common idea, the dream of being “powered by 100% renewable energy.” In the age of climate change, it can make a company more attractive and trustworthy, an ally in the struggle for a better world. In the space of Corporate Social Responsibility (CSR), sustainability and impact, millennials would rather invest in, buy from and work at a company with an exemplary environmental image; a company that addresses climate change responsibly.

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The RE100 is a clear indication of the trend. The RE100 is a global coalition of companies committed to reverse climate change through 100% renewable electricity, including Coca Cola, Google, Goldman Sachs, Ikea, Infosys, Microsoft, Nike, Johnson & Johnson, the Federation Internationale de l’Automobile and Starbucks. This is about more than just being a cleaner and more attractive image to buyers and stakeholders. According to Corporate Renewable Buyer’s Principles, a coalition committed to streamlining renewable energy strategies to address climate change, most Fortune 500 companies and half of the US’ largest companies see renewable energy as a necessary part of their business strategy – capturing significant business value while hitting sustainability targets.

Many of these companies employ power purchasing in their energy strategy, with Google as the largest corporate buyer of renewable energy in the world. Gary Demasi, Google’s Director of Data Center Energy and Location Strategy, reasserted the tech giant’s dream of 100% clean energy with Google’s energy buying strategy and what it means to be 100% powered by renewable sources. He said, “Google purchases, on an annual basis, the same volume of MWh of energy that we consume for our operations.”  

This means that with the amount of power that Google consumes from the power grid (a mix of fossil fuel and renewable), an equivalent amount of Renewable Energy Certificates (RECs) are purchased. What is an REC? RECs are essentially the linchpins in a company’s renewable energy strategy.

A company that aims to transition to 100% renewable to address climate change can’t disconnect from the grid and depend solely on on-site renewable power such as rooftop solar panels. It simply isn’t possible, especially for large companies with data centers. Rather, a company will likely have to tap into the grid, where energy is a mix of clean and unclean.

This is where RECs come in. When a corporation purchases one REC, they are essentially buying an equivalent to one MWh of electriciy from a clean source to be fed into the grid. This energy is not consumed by the buyer; it becomes part of the overall energy mix in the grid.

Though controversial, RECs have become the answer to green electricity. When a company claims 20% clean power, they can mean 20% power from solar panels or 20% fossil fuel power with an equivalent REC purchase. Essentially, a company could source 100% of their MWh from a nuclear plant, buy equivalent RECs and, therefore, claim to be 100% powered by renewable energy and climate change responsible. This may sound suspect since RECs don’t directly eliminate carbon emissions and fossil fuel energy. The true virtue of an REC lies in its “financial additionality.” In other words, purchasing an REC makes building more clean energy projects to reverse climate change possible. One way of looking at an REC purchase is a way for corporations to contribute towards creating a national and global sustainable energy system.

Currently, carbon emissions and fossil fuel power generation are still a big percentage of the power grid. The hope is the REC system will eventually be one corporate tool of many in the collective effort toward transforming our power systems for a renewable future.

 

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