The transition towards a low carbon economy has never seemed more certain, with world leaders confirming in Paris in 2015 that climate action is well and truly on the global stage. However, with such a massive undertaking requiring time to develop and embed policy in nations around the world, many look to the activities of the private sector as a sign of true progress.
Through initiatives like the RE100, the largest corporations in existence are already well on their way to going fully renewable. With the like of IKEA, Google, Unilever and more than 80 other firms all now committed to 100% renewable electricity to power their operations, the business case for going green has been cemented.
However, challenges remain and so there is still very much a place for policy makers and the private sector to discuss how to move the green agenda forward. The Climate Group, leaders of the RE100 movement, and Google created such a forum recently when business leaders and politicians convened at the tech company’s offices in Brussels.
The event welcomed the European Commission’s Maroš Šefčovič, vice president of energy union, who was interviewed onstage to open the event and claimed that the efforts of RE100 companies was key in proving the business case behind renewables.
“You clearly demonstrate that it is possible. There are a lot of people who will tell you it is too costly, too technically complicated or that it’s not possible so when I see your story of 100% renewables with all the energy you must use, it’s a remarkable result,” he said.
His talk was followed by a panel discussion on the business case, welcoming representatives from RE100 members and beyond to make the case for widespread adoption of renewable electricity.
The first agreement that can be made by any private firm to have taken on renewable electricity supplies is that the financials come first, as Francois Sterin, director of global infrastructure at Google, explained: “It has to make business sense, there’s no question of this.”
Monica Mireles Serrano, senior advisor EU environmental policy at IKEA Group, revealed that the furniture company first looked at investing in renewables purely as a business decision, carrying out the same financial due diligence as needed by any other investment decision.
The fact that the company now has over around 730,000 solar panels installed on its stores, which themselves are outnumbered by IKEA’s 480 wind turbines, shows the results of this due diligence.
As Serrano stated: “Energy is our second largest cost after labour so it makes sense to put money into something that can yield a return.”
However as much as these companies can surely look at the lowering costs of renewables as a key driver – Sterin claimed current renewable globalised costs of energy make Google’s first PPA look expensive – there is of course a political dimension to the choice.
Pascal Gréverath, assistant vice-president environmental sustainability at Nestle, said: “One of the reasons we joined this RE100 initiative is to give a strong signal to the political world that private sector is ready to buy renewable electricity [but] the market conditions and the regulations in particular have to be right to allow us to buy.”
While many would normally look to national governments and within the context of the Brussels event, the European Union, to lead on renewables, there is – and seemingly always has been – the inevitable friction between the public and private sector.
With the Winter Package the commission looked to open up the energy union to change, but there are still calls throughout the sector for private businesses to pressure member states into action.
“Speak to your governments,” was the instruction from Šefčovič , who added: “We need to explain that going renewable makes strong business sense, not only for big consumers of energy but for all the companies.”
This was a view shared by almost all of the non-business speakers at the event. Jill Duggan, director of Prince of Wales Corporate Leaders Group, claimed firms could influence member states to make up for the shortfalls of the Winter Package, namely the lack of national targets in addition to the EU’s overarching goal of 27% renewable energy use by 2030.
“The first message I would say in the absence of those member state targets set at a European level, talk to your member state governments about setting targets nationally which they can still do. It’s within their power to set targets and help drive that investment,” she said.
“We now need to look to member states to provide the direction they have failed to agree at a European level.”
Kathleen van Brampt MEP, vice-chair of the European Parliament’s Group of the Progressive Alliance of Socialists and Democrats, added that companies also needed to do more to counteract the efforts of energy incumbents campaigning against the change to renewables.
“One of my frustrations at a European level is that I see a lot of very important companies set an example to move forward which is excellent but I don’t see or hear them to defend that at European level,” she explained.
“We have a lot of people working across Parliament across parties and we have a very good compromise [but] then all of a sudden there’s a massive lobby coming up from parts of the industry and it’s always against and I don’t see any lobby from the ones who are in favour.”
So there is obviously political appetite for companies to get more heavily involved in pressuring EU member states and Parliament for more rapid transition to renewables. Putting the ethics of private sector influencing national governments to one side (as difficult as that seems), the question remains: who should be leading, business or government?
Businesses are free to set their targets as high as they like, with the RE100 showing the scale of change some are willing to tackle, but if governments do not do the same off their own back the achievements of the likes of Google and IKEA will only get us so far.
