Corporate demand for renewable electricity outpacing improvements in policy and infrastructure
One-third of businesses with commitments to source 100% renewable electricity are facing challenges meeting their goals due to a lack of policy support, according to CDP and the Climate Group.
The two organisations have today (12 January) published this year’s annual report on the RE100 initiative, tracking the progress of 315 of the 349 businesses signed up globally.
While documenting continued growth in the initiative’s membership, with more than 50 new joiners in 2021 including AirBnB and DuPont, the report outlines how a string of procurement obstacles relating to a lack of supporting national policies are stopping dozens of members from making progress.
40 companies across 66 national markets reported having access to limited or no renewable electricity generation. A further 37 said that while renewable electricity was being generated locally, procurement options for businesses are limited. Additionally, 27 businesses said the cost of purchasing renewable electricity was prohibitively high, despite falling technology costs.
These barriers were most prevalent in Asia and were reported mainly by businesses with headquarters or operations in Japan, South Korea or China. According to Nippon.com, only 10.3% of Japan’s electricity generation mix in 2019 was accounted for by renewables. Nonetheless, almost two-thirds (62%) of the businesses to have joined the RE100 in 2021 are based in Asia.
Other nations where businesses reported barriers to procurement included Russia, Saudi Arabia and Australia. In these fossil-based economies, economies of scale have not yet been achieved for renewables, meaning the cost is higher than in places such as Europe and the US.
Representatives for RE100 have said that the initiative’s growth means it will be well-placed to begin and continue policy advocacy to help alleviate practical challenges faced by member businesses.
RE100 is a joint initiative between CDP and Climate Group bringing together hundreds of large businesses with the ambition of reaching 100% renewable electricity. CDP’s senior manager for renewable energy, Andrew Glumac, said: “The goal of RE100 is to accelerate the transition to renewable electricity and it is fantastic to see a continued increase in members who share this vision.
”Our growing membership, especially our increased presence in Asia, creates a stronger voice for RE100 to influence policy and ease the path for organizations transitioning to renewable electricity.”
Collectively, RE100 members are now responsible for the same annual electricity demand as the UK, according to today’s report. Collectively, 45% of the demand is met by renewables, up from 41% in 2020. Around one-fifth of RE100 members have already reached the 100% renewable electricity mark.
The initiative is also recording a gradual shift away from tariff-based renewable energy procurement, towards self-generation and Power Purchase Agreements (PPAs), which are regarded as more robust as they result in additions to the world's renewable generation capacity. Member businesses reported sourcing 42 TWh of renewable electricity through PPAs, or 28% of their total sourcing of renewable electricity, in 2021. This is an increase from 26% in 2020.
With more nations setting net-zero targets, pressure from customers and investors over emissions increasing, and the global gas price crisis pushing energy bills up, many corporates are likely to be rethinking their renewable energy approach in 2022. You can read edie’s roundup of 22 trends to watch in the corporate sustainability profession in 2022 here.
Also today, Nokia has joined the RE100 and committed to sourcing 100% renewable electricity for its operations by 2025.
The firm will also draw up new measures to help encourage suppliers and clients to shift to cleaner energy.
Nokia is notably working towards 1.5C-aligned science-based targets, headlined by a commitment to halve emissions across operations, product use, logistics and final assembly supplier factories by 2030. The firm's chief corporate affairs officer Melissa Schoeb said it will focus on energy efficiency as well as renewable energy to drive decarbonisation.