As global companies and experts meet in Amsterdam to discuss the tracking of renewable electricity, Constant Alarcon, RE100 Campaign Manager, The Climate Group, makes the case for transparency and supportive policy frameworks to unlock the full potential of corporate renewable electricity sourcing in Europe and around the world.
The amount of new solar and wind capacity installed globally increased from 129 gigawatts (GW) in 2016 to 154 GW in 2017. Investments in renewable energy and energy smart technologies were up 3% to reach $333.5bn in 2017. At the same time, renewables costs continued to fall, and the lowest prices ever for solar PVs were achieved in Mexico.
Clean power is up, costs are down. It’s a real opportunity for investors to get more for less, said the UN Environment chief. And with renewables reaching or exceeding cost parity with brown-power in many markets, we are approaching a tipping point for a cleaner, more prosperous economy.
But we are not there yet. We need to go faster.
COMPANIES LEADING THE WAY
Through RE100, a global initiative led by The Climate Group in partnership with CDP, corporate electricity users are accelerating the shift to renewable energy. Our membership now includes 128 leading companies committed to 100% renewable electricity, creating more than enough demand to power Poland or New York State.
They are progressing towards their objective: in Europe, 61% of the electricity they use is already generated from renewable sources (twice higher than the EU average of 29.6%) – more than in any other region where RE100 members operate.
At the RECS Market Meeting in Amsterdam this week, our members have been explaining what it means for them to be market leaders.
IKEA Group has been a long-term champion of renewable electricity, co-founding RE100 in 2014, to facilitate collaboration between companies to stimulate and accelerate broader corporate action. Now the retailer is looking to bring its suppliers on board.
Philips Lighting has been pushing the boundaries of what is feasible by developing the first renewable energy certificates of the Gulf Region. The company is also vocal about its sustainability commitments in policy conversations, in support of more ambitious climate and energy regulations.
ING favors renewable energy in its investment decisions and is shifting away from coal-fueled power plants, the most polluting way of generating electricity.
And Colruyt Group's approach goes hand in hand with its strategy to offer best cost to consumers shopping in its stores. Put simply, its investments in renewables are reducing its prices.
TRANSPARENCY AND DISCLOSURE
Progressing towards their 100% objective gives forward-thinking businesses the confidence to be bolder on renewable electricity. But they also need and want to be able to claim it.
The existence of an EU-wide credible tracking mechanism for renewable energy has been critical to motivate companies to take aggressive action and to secure rapid progress. The system of ‘Guarantees of Origin’ (GOs) enables businesses to make credible claims about their renewable electricity consumption.
In our recent RE100 Progress and Insights report however, traceability issues and the lack of widely available renewable energy certificates were quoted by our members as significant barriers to achieving their target in other markets.
Fortunately, credible certificate systems like the International RECs Standard or TIGRs (Tradable Instruments for Global Renewables) are becoming more widely available. In February 2017, China’s National Development and Reform Commission announced the launch of a national and governmental pilot market.
SUPPORTIVE POLICIES TO CATALYZE ACTION
While those developments are going in the right direction, Europe might be about to head exactly the opposite way. As the EU Commission, Council and Parliament progress their ‘Trilogue’ negotiations on the next Renewable Energy Directive, the fate of GOs – so critical in enabling corporate renewable energy sourcing in Europe – is uncertain, due to the diverging views of the Parliament and the Council.
First, this means that the use of GOs for renewable electricity disclosure must be mandatory – to avoid unsubstantiated and non-credible claims. Second, and critically, all produced renewable electricity should receive GOs – whether or not government support was given to the producer.
In addition, countries should avoid the mandatory auctioning of GOs for supported production. It is essential to maintain the link between the production of renewable electricity and the corresponding certificate.
Our recent RE100 survey shows that policy barriers – not cost, or calls for subsidy – are the most common challenge for committed companies.
Leading companies are playing their part, but they need governments to ensure that enabling policies are in place to unlock corporate investment at scale. Ensuring the traceability of renewable electricity purchasing is an example of structural regulation that can accelerate corporate action on renewables.
Policy visibility, certainty and stability are also vital for companies to make long-term decisions about their electricity supply. This is why 11 of our members have called on the EU Council to back the 35% 2030 renewable energy target adopted by the Parliament. Recent analysis from the Commission and IRENA show that going beyond the 27% target voted by the Council is cost effective and bears large socio-economic benefits for all Member States.
Companies must also be allowed to directly participate in electricity markets. Our recent RE100 report shows that in the US, 20% of the renewable electricity consumed by RE100 members is sourced through power purchase agreements (PPAs), in which producers and buyers directly negotiate a contract. This results in direct addition of renewable capacity to the grid.
By contrast, in Europe the lucrative corporate PPA market is largely untapped – representing only 4% of our members’ renewable power consumption. The Renewable Energy Directive can unlock this potential by requiring Member States to get rid of all administrative and regulatory barriers to PPAs and clearly take them out of legal ‘grey’ areas that create uncertainties and risk for companies.
RE100 members are putting themselves at the forefront of change, and they will catalyze US$94 billion in renewable electricity investment by 2030, adding up to 87 gigawatts of wind and solar energy to the grid.
Ambitious, leading multinationals are already driving the transition to clean energy. Governments can empower thousands more to and ensure that the clean economy not just grows, but booms.
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