At Sustainable Brands, we have recently announced the renewal of our renewable energy partnership with sustainability solutions provider South Pole Group, to help minimize the footprint of our global events. This week, we chatted with Melanie Wilneder, a Key Account Manager at South Pole Group, to learn more about the ever-growing renewable energy market worldwide, and which solutions make the most sense for business.
The global energy landscape is transforming before our eyes. The latest RE100 report shows this change is largely due to an increasing number of corporations demanding renewable energy. Can you tell us a bit more about the link between renewable energy certificates (RECs) and renewable energy procurement?
Melanie Wilneder: As you said, big companies, from Mars to Google, have become key players in the renewable energy market that has, until recently, been mainly dominated by utilities. In 2015, 154 gigawatts (GW) of renewable power capacity were added to the global electricity market – making it the largest annual increase ever. The price of renewable energy has also continued to fall despite ongoing fossil fuel subsidies and plunging fossil fuel prices. There is now a clear business case for renewable power, which is helping to grow corporate demand for renewables in all corners of the world!
The approach to sourcing renewable energy nonetheless varies at present from one country to another, depending on issues such as geographical location, financial means, and industrial and energy structure. Not an easy environment to navigate for companies who might have both national and international footprints! In these instances, purchasing renewable energy certificates (RECs) is a smart way to source renewable energy in challenging regions: In short, 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 and they are traded independently from the underlying power.
Corporate demand for renewable energy is starting to outstrip supply. How can RECs support the development of new sources of renewable energy?
MW: By procuring renewable energy from RECs, companies can support impactful RE projects and drive the transition to renewable energy on a global scale. The existing RECs markets in Europe and the US have been historically categorised by oversupply: Hence, claiming that RECs purchases have an impact on supporting RE in these regions is tricky. There are, however, high-quality RECs and so-called eco-labels that address this problem in three ways, either through:
- A fund model, whereby a portion of the REC price paid by the purchaser is reinvested in new renewable energy plants (as done, for instance, by the EKOEnergy label);
- By applying restrictions on the maximum age of the plants, as with North American Green-e and German OK Power; or
- By seeking certification by the Gold Standard Foundation on the additionality claim of each power plant that generates RECs. This ‘Gold Standard’ claim ensures that the plants would not have reached financial closure without the revenues from the sale of environmental attributes.
We’re also expecting some very new exciting developments in the RECs space that will be announced at the RECs Market Meeting in Amsterdam later this month – keep an eye out for updates!
How can RECs help brands meet their renewable energy and sustainability commitments?
MW: Clean energy has truly moved from being a ‘hip’ trend among environmentalists to becoming a real energy solution that provides a plethora of benefits to businesses and organisations. Companies are also becoming more engaged in the process of energy generation: Being able to rely on trusted renewable energy options is essential as an increasing number of corporate players pledge to source 100 percent renewable energy through industry initiatives such as RE100 or the Corporate Renewable Energy Buyers’ Principles.
The capacity of RECs to both mitigate business risks and allow users to engage in meaningful discussions with stakeholders is an indispensable asset when moving towards wider implementation of renewable energy.
In terms of meeting renewable energy and sustainability commitments, leading brands are already investing in labeled RECs to support the development of renewable energy, address Scope 2 reporting, and contribute to the UN Sustainable Development Goals (SDGs). A great example of this is Sustainable Brands itself – in addition to ensuring that your 2017 event series is powered by renewable energy, your RECs will also support specific SDGs with renewable energy projects that have an additional eco-label attached to them: the GoldPower-labeled project in Thailand that Sustainable Brands has invested in is furthering the creation of multiple skilled job opportunities within local communities, and regional infrastructure improvements in direct alignment with Thai national sustainable development goals. This is not a one-off, either – our renewable energy partnership is in its second year of operation. What started as an initial idea in 2016 has now become a successful model for others to follow.
Are RECs a comprehensive solution for helping companies meet their renewable energy goals, or is a combination of approaches recommended?
MW: For companies with a dispersed geographical presence, varying regulatory limits and complex deal structures in different markets can make it a challenge to reach company-wide price goals and energy targets. And even when renewable energy resources are available, not every place has sufficient electric grid access. But regardless of the industry and the size of the organisation, RECs offer reliable solutions to consume renewable energy on a global scale.
Especially consumer-facing retail brands with outlets around the world will in many cases have ‘unknown’ electricity provided to them; in other words, they might not know the origin of their electricity and might furthermore not be able to control their electricity provider (if their outlet is in a mall, for instance). RECs can offer a great solution here, but also help these brands go the extra mile by committing to specific projects that support additional renewable energy or the UN SDGs.
As mentioned before, the tide is definitely turning in terms of increased business demand for renewables (from those that recognize the business case), but we’re still a long way away from clean energy being the standard – what do you see as the biggest barriers to this shift in thinking/practice?
MW: Some of the barriers that still exist regarding renewable energy procurement can be broken down into cost barriers, internal barriers and structural barriers; concerns about uncertain payback are some of the frequently cited barriers to scaling up renewable energy. Internal discussions in corporations also need to shift from “why” to “how” to enable the discovery of creative renewable energy solutions that can overcome any issues of internal buy-in. Finally, there are structural barriers, which can include anything from lack of robust policy to poor availability of renewable energy infrastructure and technology in a given market. Getting involved with consumer organisations such as RECS International or supporting the I-RECs Standard help facilitate the development of Renewable Energy tracking systems in countries without national systems and thereby making solutions available to RE consumers.
Regardless of these barriers, the transition to renewable energy is, in my view, inevitable – we have already reached a tipping point. It is extremely encouraging to see that more companies than ever are committing to bold action on climate, speeding up our move towards a more sustainable tomorrow. But we need even more corporate leaders to push the use of renewable power right along their supply chains.
This piece was originally published on the Sustainable Brands website.