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.
This report was prepared by Green Strategies, Inc in conjunction with The NorthBridge Group and the Columbia University Center on Global Energy Policy. See below for the report’s abstract and a downloadable PDF of the full text.
By adopting and implementing aggressive renewable energy goals, leading companies have enabled the development of multiple gigawatts (GW) of new renewable generation capacity and demonstrated the ability of corporate buyers to reshape the energy landscape. From 2014 to 2018, large companies announced transactions with off-site renewable energy projects representing over 15 GW of capacity – equal to around one-quarter of all such new renewable generation capacity installed across the country in that same period. This is a great success story.
To achieve mid-century targets for limiting global warming, experts indicate that the U.S. electric grid must achieve full decarbonization by 2050 (if not sooner) – an immense challenge given the current reliance on fossil generators and given the likely future demands for generation arising from the electrification of other sectors. The fastest and most certain pathway to a decarbonized grid is one that utilizes a broad portfolio of zero-carbon resources that can provide firm and dispatchable power to complement intermittent generation. Large energy buyers can accelerate this urgently needed transition to a zero-carbon grid with a new generation of procurement targets and practices. A next generation of goals would prioritize all zero-carbon electricity options, including but not limited to wind and solar, and involve an expanded range of procurement objectives and activities that seek to maximize the carbon impact of procurement and reduce a buyer’s consumption of grid-supplied fossil generation at more times and at more locations.
In this paper, we explore how a “next generation” of corporate electricity procurement strategies and goals could accelerate grid decarbonization to meet science-driven targets. Our analysis covers: A) the imperative of a zero-carbon grid and how a pathway that prioritizes a broad portfolio of zero-carbon generation best aligns with reaching that goal; B) the achievements – and shortcomings – of current corporate renewable energy procurement efforts; C) the possible elements and objectives of next generation corporate procurement strategies; D) example transaction structures for next generation corporate procurements and the potential barriers those transactions might find in today’s marketplace; and E) other challenges corporate buyers might face in adopting and executing next generation goals.
To download, find the download icon on the bottom banner of the embedded PDF.
Green Strategies Report on Next Generation Corporate Procurement - Revised 5-2020The 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.
Working on environmental issues for a living is not for the faint of heart. It always feels like there are too many problems and too few solutions — and even the solutions can turn out to be problems.
One big problem getting a lot of attention is plastic waste. Everyone has heard the admonition to “reduce, reuse, and recycle.” The increasingly ubiquitous use of reusable water bottles, shopping bags, and straws are signs that we are getting better at reducing and reusing. When it comes to recycling, however, we may be heading in the wrong direction. Prior to severe new international restrictions on imports enacted in 2018, the U.S. was sending 4,000 shipping containers of materials per day to China for recycling — including about a third of our waste plastic. In 2018, China accepted only about 4.5% of our plastic. Since these restrictions took effect, hundreds of towns and cities across the country have either shut down or greatly reduced their recycling programs. Our waste is piling up.
And perhaps the mother of all environmental problems is climate change. The International Panel on Climate Change (IPCC), the world’s leading authority on the issue, has declared that in order to avoid the worst effects of climate change we need to transition to a net-zero carbon economy by mid-century. Such “economy-wide” decarbonization includes electricity, heavy industry, transportation, and agriculture. Of these sectors, electricity might be the most important. If we can decarbonize the grid, we not only eliminate the tremendous amount of greenhouse gases we emit in producing electricity, we also then can electrify other sectors (like transportation, the production of heat, and some industrial processes) knowing they in turn will be powered by climate-friendly energy. But today, about two-thirds of our electric grid is powered by greenhouse gas-emitting fossil energy. We have a long way to go.
What do these two problems have to do with each other? One of the ways we have dealt with municipal solid waste in the U.S. is to incinerate it. And through incineration, you can produce electricity that is then put on the grid (termed “waste-to-energy” or “WTE”). Some states deem WTE to be “renewable energy” and include it in policies that subsidize and support other forms of renewable energy, like wind and solar. Now, in the face of mounting waste including more and more plastic, the incineration industry believes that we can kill two birds with one stone: dispose of our mounting waste with more incineration and help fight climate change with more “renewable energy.” Sounds great, right?
Um, no.
Regarding “bird #1” — the plastic and waste crisis — incineration is not the answer. In addition to causing local air pollution and health impacts, more demand for waste streams that include otherwise recyclable materials will further undercut the economics of our already struggling recycling. And if incineration is seen by consumers as a “solution” to our plastics crisis, it could undermine our progress on improving reduction and reuse behaviors. The WTE stone might just kill the wrong bird.
“Bird #2” — climate change — is the big bird, and unfortunately, the WTE “stone” badly misses its target. Whether WTE is “renewable” is debatable. It’s also irrelevant. What the climate cares about — and what matters in our efforts to decarbonize the grid — are greenhouse gas emissions. Those of us who work on climate change support wind and solar because they are zero emission, not because they are “renewable.” To decarbonize the grid, we need all forms of zero-carbon generation — and we need a lot more of it. Stated differently, we need to stop adding carbon-intensive generation — such as waste incineration — to our energy mix and rapidly phase out the dirty generation we have.
Adding more waste-to-energy generation would set us back in our critical need to decarbonize the grid. Even before China’s import restrictions, half of the carbon dioxide emissions from waste incineration came from plastic. Plastic is made from fossil fuels and contains a lot of embedded carbon which is released to the atmosphere when combusted. With declining recycling rates, we will have only more plastic in our waste stream. The dirty secret (literally) is that the energy produced from this mixed waste incineration is nearly as greenhouse gas intensive as coal and worse than natural gas. To make matters worse, some states include WTE in “renewable” energy subsidy programs, which means this dirty source of energy competes directly with zero emission renewables like wind and solar.
The urgent task of decarbonizing our electric grid is immensely challenging. At a time that we must rapidly add clean energy to the grid, we cannot afford to take a step backward with waste-to-energy. Our only option is to move forward.
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 by Energy News.
