At the Edison Electric Institute’s (EEI) National Fall Key Accounts Virtual Experience this October, Roger spoke to attendees about the urgent need to achieve net zero emissions in the electric sector and the role of corporate clean energy procurement in reaching this ambitious goal.
To watch Roger’s presentation and live question and answer session, please click play on the video below and follow the link to view on youtube:
Faced with threats to business continuity from Covid-19, we have seen companies think critically about how to respond to risks from the natural world and prevent exposure to them in the future. During this challenging moment, there is opportunity. With businesses primed to think critically about their interaction with the environment, forward-thinking companies are well positioned to double down on sustainable practices such as supply chain transparency, transitioning to clean energy, and implementing circular economy principles.
Integration of these sustainability fundamentals can help reduce risk and ensure resilience in a future defined by yet another major global crisis: climate change, which is poised to create shock waves that catapult the world into yet another “new normal.” Sustainably informed business models, demanded by investors and required for long-term success will define this “new normal.” The pace and scale at which most companies are currently committing to action will not be enough.
Like Covid-19, climate change will have dramatic impacts on global markets, supply chains, and human welfare. Its impacts can already be felt across the globe. Companies that use this moment of reflection to pursue sustainable change can help ensure business continuity and growth in the face of climate-caused global shifts and market disruptions.
Corporate sustainability commitments to address climate change are increasingly common and ambitious. In 2019, approximately 25% of Fortune Global 500 companies had a public commitment that by 2030 or sooner they will be carbon neutral, purchasing 100 percent renewable power, or meeting a science-based emissions reduction target. This represents a fourfold increase in commitments since the Paris Agreement was signed in 2015.
Corporate buyers have dramatically driven demand for renewable energy, catalyzing 9.33 GW of new generation in the United States in 2019. In 2020, 63% of Fortune 100 companies had some level of commitment to renewable energy. An emerging group of companies are even committing to invest in, deploy, and otherwise support carbon-negative technologies that actively remove carbon from the atmosphere (e.g. Microsoft, Amazon, Stripe, Delta).
Despite this growth in corporate climate action, sustainability practices need to go both further and faster to limit warming to 1.5 or 2°C in the coming decades. The level of commitment most companies exhibit is not enough to ensure resilience, capitalize on future market opportunities, or curb the climate crisis.
Adopting sustainable best practices and business models is becoming a non-negotiable prerequisite for companies to maintain a social license to operate among the common consumer. The World Economic Forum’s most recent Global Shapers Survey found that “climate change” and “destruction of nature” remained the top concerns for people under 30 years old (who represent approximately 50% of the world’s population) for the third year in a row.
Investors concerned about climate risk are also increasingly considering the sustainability of their investments. Earlier this year, the CEO of the world’s largest asset manager, BlackRock, warned “climate risk is compelling investors to reassess core assumptions about modern finance.” In the European Union, asset managers will soon be required to disclose the sustainability of their holdings, including metrics such as carbon emissions and deforestation.
A recent study from HSBC bank found that as the pandemic wreaked havoc on global markets, “shares of companies focused on climate change or ESG issues…outperformed as the virus spread.” Even without a global crisis, there is increasing evidence that sustainability funds outperform the market. According to Morningstar, the number of assets flowing into sustainable funds in 2019 set a record four times higher than 2018 levels.
Companies that move quickly to capitalize on these global shifts will be better positioned to succeed. Those that cannot adapt may find themselves poorly equipped to deal with the world’s “new normal.”
As companies explore the potential for risk mitigation and growth through sustainability and climate action, three core areas of focus can act as helpful guideposts: 1) gaining transparency into the supply chain, 2) transitioning to clean energy, and 3) implementing circular economy principles.
Transparency in the supply chain: Emissions associated with the supply chain are often significantly larger than emissions from owned and operated assets. Gaining greater transparency into the supply chain can help identify sustainability “hot spots” (areas that need improvement), and low-hanging fruit (areas ripe for action). Collaboration with supply chain partners is also often essential to reducing Scope 3 emissions, a requirement for many companies committing to reduction targets through the Science Based Targets Initiative (SBTi). Industry-specific coalitions and tools, such as the Sustainable Apparel Coalition in the fashion sector, can be incredibly valuable for engaging supply chain partners.
Transitioning to clean energy: Reducing fossil fuel consumption is a great way to communicate values to stakeholders, reduce emissions, and, in many cases, save money. Many companies procuring low-carbon energy are working towards a public commitment goal (e.g. RE100, SBTi), however, there are multiple pathways for procuring clean energy and the best fit will be unique for every company. Despite the recent economic down-turn, the renewable energy industry expects continued activity through 2020 due to long-term commercial and industrial demand. Companies like Google are even embracing next-generation procurement commitments, striving to achieve 24/7 consumption of zero-carbon electricity.
Implementing circular economy principles: A circular economy decouples economic growth from the consumption of finite natural resources. In practice, this means reducing waste, increasing efficiency, ensuring long-lived products, and imagining business models around closed-looped systems (e.g. refurbishment, re-commence, recycling, etc.). In addition to being good for the planet and brand image, implementing circular economy principles can help reduce emissions, costs, and climate risks. As part of its recently announced goal to be carbon negative by 2030, Spin, a scooter rental company, predicted extending the life of its scooters to 24 months could reduce the company’s carbon footprint by 40%.
The Covid-19 crisis should be a wakeup call for any company not actively prioritizing resilience and sustainability. The pandemic has been a humbling reminder that markets are fundamentally tied to and limited by natural boundaries. It has shattered the comfortable business-as-usual paradigm. As we pick up the pieces, lets capitalize on this moment to ensure a brighter, healthier, and more sustainable future.
Written by Kacey Katzenmeyer, Senior Manager at Green Strategies and DC 2020 Fellow at the Clean Energy Leadership Institute.
For the sixth consecutive year, Green Strategies’ President Roger Ballentine co-chaired the Aspen Institute’s annual multi-day forum on energy innovation and decarbonization. The 2020 Winter Energy Forum was held in February in Aspen Colorado.
Please utilize the hyperlink to view the full report published from the forum, “Unlocking Mid-Century Deep Decarbonization.”
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Clean power is the train that everyone wants to get onto these days. Transitioning away from fossil fuels is necessary to meet climate goals, it benefits public health, and it’s the right move for organizations looking to bolster their bottom line today and even more so in the future. But clean energy is not a new trend and it’s not something that sprang up out of nowhere, rather the push to make clean energy a mainstream goal has been many years in the making, and we have numerous early leaders in the sector to thank
for the progress that’s already taken place. Today, I’m excited to share an interview with Roger Ballentine who is one of these long-standing leaders for clean energy and overall action towards sustainability and preventing climate change.
Roger is newly a part of Energy Central’s Network of Experts, specifically as a part of the Clean Power Group. Today, Roger is President of Green Strategies Inc., but he brings with him decades of experience across a spectrum of clean power groups, initiatives, and more. His presence as a Clean Power expert on Energy Central only serves to make the community that much more connected and informed, but don’t take my words for it. Roger agreed to sit down with me for an introduction interview so the community could get to know him more as a part of our Energy Central Power Perspective ‘Welcome New Expert Interview Series’:
Matt Chester: Thanks for joining our network expert and bringing your unique perspective and expertise to the Energy Central Community, Roger. To start, can you introduce yourself quickly so your fellow members know where you come from, your history in the utility sector, and what expertise and experience you bring to the table today?
Roger Ballentine: I’ve been in this space, which I would define as energy, energy transition, climate change, energy and environmental policy, energy and environmental business strategies and sustainable for 25 years. Early in my career, I was a partner at a big law firm in Washington DC with a very vibrant legislative policy practice, so I have been involved in policy longer than 25 years. I then went to work at the White House during the Clinton administration, where I was the President’s liaison to Congress on energy and environmental issues. Then, I transitioned over to run the White House Climate Change Task Force, which was a pretty large group of folks around the government who were detailed over to the White House and reported to me. We handled every aspect of energy- and climate-related policy development and outreach.
It’s actually that experience that led me, at the end of the Clinton administration, to decide to go into consulting. In the time that I spent working on these issues in the White House, I found and realized that the potential for the private sector to have a major impact on these issues that I cared about like climate change was profound and had tremendous, untapped potential because I firmly believed then and firmly believe now that there was significant business upside in a positive relationship between the private sector and environmental issues at large, clean energy and climate change in particular. In the early days, that was a pretty quiet street. Now, of course, it’s a vibrant part of the private sector.
Since that time, I’ve been a strategic advisor to a wide range of companies and financial institutions and investors. In the energy sector, that includes energy providers, utilities, technology providers, service providers; and then importantly, I also work with the large energy consumers and corporate buyers.
While my work has been very broad across energy and sustainability I’d say I spend more time on the electricity sector than any other. I have also been 10 years with a small private equity firm. We make investments and clean energy companies and other sustainable businesses. For the past six to seven years, I’ve co-chaired the clean energy, energy innovation, and decarbonization program at the Aspen Institute, so I’ve been involved outside of my regular business on these issues, as well as through the many Boards and advisory boards I have sat on.
MC: So you’ve spent a large amount of time not only looking to get clean energy technologies off the ground, but also in progressing energy and climate law. Between tech and law/policy, do you have a sense of which of those will have a greater impact in the next few years? And which are faces more challenges and obstacles, in your opinion?
RB: You know, actually, Matt, I’m going to go back and revise your question a little bit. I think that there’s a third piece there which is the business case. There’s the old construct about how energy innovation sits on a three-legged stool of technology, policy, and finance. I’ve got perspective and experience in all three of those things. Again, I’ve been doing policy for 30 years. And I know enough to keep up with technology and technology development. What distinguishes us from others is that additionally we bring a very sober and sophisticated business perspective to these things. I would say the question– what’s really going to drive change in the energy sector is all three: technology, policy, and finance. Sorry, it’s a bit of a cop out, but let me give you an example.
Solar is our fastest-growing sector in energy, but what caused that success? In this case, it’s all three of these things. It’s policy. Early on, federal government adopted tax credits, so the tax incentives are very important. Various states adapted renewable portfolio standards with the top-down supply-side policy mandate. Well, all of that ultimately worked in the marketplace because we combine that with the advancements in technology which you can translate into reduction in cost. The technology advancements, coupled with the policy, grew the solar sector tremendously. And what is now taking it further? What is taking it further is the demand side, such as companies to seek out and innovate in how to procure renewable energy. Now, you’re seeing a demand-side pull which takes the renewable industry beyond even where the technology advancements and the policy incentives would have taken it. It’s all three of those things in combination that are really creating the success story we’re seeing in renewable energy.
You need all three. My bias is that probably the least important of those three is technology. What I mean by that is not that there’s not tremendous innovation going on out there, but if I ask what’s the challenge today, the challenge today is we’re not even fully utilizing the technologies we have to the degree that we could and the degree that we need to. That is a function of either and probably both policy and business model innovations.
MC: I’d also love to hear more about your time as Chairman of the White House Climate Change Task Force under President Clinton. During this time, climate change awareness and urgency did not reach as far as it did today— how did that impact the work that your prioritized in that role? And what would someone in that role today need to do differently than how you did it back in the 90s?
We were dealing with this at a time when there was no broad consensus that climate change was even real. We were pushing back against that, and we actually faced bipartisan opposition. I had some of my most fierce debates and conflicts over climate change with Democrats. It was a very, very different time. But we were committed and President Clinton was highly committed to this issue. He was way, way ahead of his time and firmly believed that while climate change was an existential challenge, it was also an extraordinary economic opportunity. But we had a really tough time convincing people of any of that, and we were facing a Republican-controlled Congress that severely limited our ability to do things, so it was a much more controversial issue in the policy and political world then than it is now.
It is also fair to say, and I think this is really what you meant with your question, that in terms of public consciousness it was not nearly as high as it is today, which was also why I gravitated towards the private sector. The few companies that were taking action were doing so in spite of the fact that there was no broad, public calling for action. That really made a light bulb go off for me as to how enlightened private sector leadership could break through the politics. And looking ahead, I saw that the political world was going to remain very much divided and complicated around this issue, and I, in a sense, lost patience for that. I said that I’m going to go where those types of debates are less important than the ones of what can we do, what are the benefits, and how do we finance it? That was in the private sector, and it still is.
MC: Another key area over the course of your career has been in assisting major corporations to increase their strategy by implementing sustainability. When making this case to companies, how much of it comes down simply to financial costs vs. benefits, and how much do you think is governed by longer-reaching or less immediately tangible goals? And how has that changed over the years?
RB: It’s a good, complex question with a complex answer. First, to say, not every company is the same. I will talk about where the leading edge, and the leading edge is getting larger, not smaller. It’s becoming the mainstream deal. There are lots of different reasons that companies adopt sustainability or climate or clean energy goals and objectives. Certainly, it helps and is important that there’s a financial case for action. The financial benefit, or more broadly, the business benefit, takes several different forms. The simplest case would be that if you make this efficiency investment, your return on that investment will be this much by this time. It’s the best use of your capital regardless of whether it’s good for the world or not, so we’ll do that. That’s fine, and that happens. Similarly, well, I can execute a fixed-price power purchase agreement for renewable energy power that insulates me from price volatility based on natural gas prices or whatever it is. Maybe there’s just a stone-cold business case there as well.
Typically, there’s more that goes into a company making sustainability and climate commitments. Some of it may be reputational, just purely branding, but again, I found very, very, very few companies that make this decision just on that basis. Increasingly, you have companies that see more than just a corporate citizenship role, but they see a strong business case to do so. As only one example, employees love it, so it helps employee retention and commitment. That’s increasingly the case as the Millennial generation becomes the largest source of workers. People want to work for companies that have these types of commitments and sense of responsibility and ability to make an impact. Is that a financial return? It’s certainly a business return and a business value return.
MC: As you’ve started to get involved with Energy Central, what do you find to be the value that the platform brings to you and to the industry? Why do you participate and stay so engaged, and how do you hope to bring value based on your experience and knowledge to fellow Energy Central users?
RB: These issues are becoming more important, not less important, but they are not becoming simpler. If anything, they are becoming more complicated. The benefit of having a platform like this where thought leaders can come and learn and share and ask questions, it’s really important, and I think there hasn’t been a real good way to do that. Is this the only way? No, but I think it’s an important contribution, so I certainly look forward to the opportunity to not only share my experience and views with people but to learn from others as well. One thing I like about my job is I learn something new every day, and we’re all going to need to keep learning if we’re going to have any success in tackling these issues because they are becoming more important and not less complex every day, so I think platforms like Energy Central is really, really important right now.
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The burning of municipal waste seems to be included as a qualifying source of “clean energy” in a recent House proposal to transition the United States to a sustainable, low carbon future.
A key plank of the CLEAN Future Act proposal, introduced in January by House Democrats, is achieving “net-zero emissions from the electricity sector” through the use of a Clean Energy Standard (CES), which Democrats will likely pass this year ahead of the election.
The CES would require retail electricity suppliers to obtain 100% of their electricity from “clean energy sources” by 2050. That is the right way to go.
However, according to the Environmental Protection Agency, burning municipal solid waste (MSW) emits nearly as much CO2 per unit of energy as coal—and almost twice as much as burning natural gas. This is not the way to get to net-zero.
The European Commission announced in December 2019 a new classification system to guide the growing number of private and public capital investors who want to put capital to work in ways that will not only generate strong returns, but will also have a positive environmental impact.
Democrats in the House understand that the Europeans are on to something: reducing waste and investing in low carbon development is both an ecological imperative and a roadmap for economic growth. But these lawmakers may be overlooking one important plank in the European sustainable growth plan: don’t burn garbage to make electricity.
The EU classification system tells investors what types of projects and activities should be considered “green.” To put it mildly, burning municipal solid waste (MSW) to make electricity did not make the list.
Waste incineration is included in the commission’s list of activities that could cause “significant harm to environmental objectives.” (Article 12). Two of those environmental objectives are climate change mitigation and the promotion of a “circular” economy.
The commission was likely well aware of European analyses finding that waste incineration for energy production is almost twice as carbon intensive as the EU grid average and thus works against the goal of a zero carbon grid. In Article 9, the commission lists “minimising incineration” of waste as among the activities that can make a “[s]ubstantial contribution to the circular economy.”
Incentivizing the burning of our garbage also undercuts incentives for waste reduction and hurts the recycling sector—and at a very bad time. The U.S. recycling industry is in crisis. At the end of 2017, China severely restricted the import of U.S. recyclables.
Prior to that, we were exporting about a third of waste plastic for recycling to China; in 2018 that number was less than 5%. Hundreds of towns and cities across the United States have either shut down or greatly reduced their recycling programs.
The language in the House Clean Energy Standard appears to suggest that the eligible waste incineration facilities should be limited to those that use “postrecycled” waste. Given the collapsing of our recycling industry, waste truly void of recyclable materials may only exist in theory.
Even before China’s import restrictions, half of the carbon dioxide emissions from waste incineration came from plastic; today even less is being diverted. While not yet in the legislative text of the CLEAN Future Act, the authors note that other issues to be addressed include “recycling and waste management.” But any additional—and badly needed—policies to promote recycling will be hindered by the voracious appetite for fuel posed by waste-to-energy facilities.
A more sustainable and lower carbon economy means a more resilient, efficient, and equitable economy that can grow and create more wealth by mitigating the headwinds of climate change and resource constraints that are otherwise a drag on economic growth.
We need lower carbon energy; we need to reduce waste; and we need to create clean economy jobs. We do not need to burn our trash for energy.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Roger Ballentine is the president of Green Strategies Inc. He served as chairman of the White House Climate Change Task Force under President Bill Clinton.
Originally published in Bloomberg Environment.
