RE100 Businesses Pave the Way for Transitioning to Renewable Energy

images Ambition, pace, scale—these are the themes in shifting to an economy recognizing climate change. Companies pioneering this economic shift incorporated climate change as an significant factor in conducting business.

One of the leading organizations spearheading this movement is RE100. RE100 is a collaborative movement uniting over 150 well recognized companies across the world to commit to using 100% renewable energy. What is even more impressive is that these companies have acted on their own in addressing climate change, ahead of government direction. Remarkably, these corporations were able to shift to 100% renewable electricity, which garnered a competitive advantage enabling them to financially outpace their competitors.

A study by RE100 and Capgemini compared RE100 companies to non-RE100 companies by sector. It concluded that RE100 companies earn an average profit of 7.7% more than their competitors. Admittedly, the report’s analysis in no way suggests that switching to 100% renewable electricity is the sole cause of the profit difference. However, it is compelling that all RE100 companies have consistently outperformed the competition in their respective industries. Thus, it would suggest a strong correlation between switching to renewable electricity and above-average financial performance.

The switch to renewable electricity is done using multiple mechanisms simultaneously. Companies utilize a combination of energy power purchase agreements (PPA) and self-generated renewable electricity technology. Moreover, RE100 companies have developed new management structures, such as silo model, centralized model, and global model, to coordinate renewable electricity sourcing and efficient use infrastructure. The benefits of transitioning are significant.

For example, General Motors harnessed renewable energy sources from landfill gas, solar arrays, and wind farms. This combination has lowered operation costs by $80 million. The cost savings result largely from improved, cost-effective renewable technologies and government incentives. Landfill gas allows companies to lock into long-term prices that are cheaper and more stable than fluctuating natural gas prices. GM strategically built their own solar arrays and benefited from government feed-in-tariff programs. Finally, GM built wind projects in Mexico and Texas that generate over 34 MW, enough to power five manufacturing facilities.

Anheuser-Busch, another RE100 company, has procured PPAs for onshore wind projects to offset its dependence on traditional energy sources. Anheuser-Busch is in line to become the largest purchaser of renewable electricity and one of the forerunners in advertising renewable energy. The beer manufacturer uses its brand influence in its renewable electricity symbol campaign, where every pack of Budweiser will carry the symbol to celebrate its commitment to brew with 100% renewable energy.

The trend toward renewable energy is now gaining traction, and signals a tipping point to mass renewable. Since RE100’s inception, companies partnered through renewable energy purchase agreements have created 100% renewable energy demand of more than 184.6 TWh—enough energy to power Poland. Moreover, RE100 company surveys yielded that renewable energy costs have reduced significantly where it has been cost competitive against fossil fuels. Therefore the RE100 momentum would suggest that this trend is welcomed with open arms and significantly contributing to how other companies shape their tactics to address climate change.

Breaking up is decreasingly hard to do

Decoupling_sparkline_graphic_v2A common concern of developed and developing countries has been that breaking up the 19th and 20th century association of economic development and fossil fuels will lead to GDP decline.  Referred to as “decoupling,” economists have warned that economic growth would decline as climate change policy made carbon more expensive.

But last year the International Energy Agency (IEA) reported that the global economy grew without increasing CO2 emissions — for two years in a row.

Now, new research from the World Resources Institute (WRI) delves more deeply into the country level dynamic.  According to WRI, 21 countries have decoupled their economic growth from carbon emissions since 2000.  More specifically, GDP has risen in these countries while carbon pollution has declined over the past 15 years, resulting in about a billion tons of lowered emissions.

Countries on the list are mostly EU members who, as parties to the Kyoto Protocol, legally bound themselves to reduce GHG emissions during the first (2008-12) and second (2013-2020) commitment periods.  The more well known examples of France, Germany, Sweden, and the UK are complemented by the less obvious contributions of Bulgaria, Czech Republic, Romania, and Slovakia.  Non-EU member but Kyoto Protocol signatory Switzerland also makes the list, as do Ukraine and Uzbekistan.  Notably, the U.S. figures among these 21 countries who have decoupled economic growth from CO2 emissions — the only major economy not to join the Kyoto Protocol.

The WRI notes that no “single formula, policy or demographic trend” has brought about this GDP-GHG decoupling.  Some of these countries have used policies to tax carbon or rapidly scale up renewable energy, while others have experienced shifts in their economies away from emissions-intensive industries.  More than 90% reduced the industrial sector share of their economies (which means that there’s potential for “leakage” of these emissions to other developing/industrializing countries not on this list).

For more detailed analysis at the country level, read here.

Decoupling GHGs from GDP: Year 2

IEA 2015The International Energy Agency (IEA) released new data today showing that global GHG missions related to energy held steady again for the second year in a row while the global economy grew. Renewable energy was key to stabilizing emissions levels, with more than 90% of new energy generation coming from renewables – the highest level in more than 40 years.

From IEA director Fatih Birol’s perspective, “Coming just a few months after the landmark COP21 agreement in Paris, this is yet another boost to the global fight against climate change.  This means the decoupling of global emissions and economic growth is now confirmed.”

For more specific analysis, including the roles that the U.S. and China played in this result, read the press release and accompanying data set here.