CDP, RE100 call on policymakers for structural changes to electricity markets and procurement reform.
Regulatory barriers and a lack of public-private funding are preventing businesses from switching to renewable energy and meeting net zero greenhouse gas (GHG) emissions targets, according to a new report.
The study, by sustainability disclosure platform CDP and RE100, a group of corporates committed to transitioning to 100% renewable electricity, found limited availability in many markets globally and called for a number of policy reforms. Access to renewable sources of energy is seen as a key means of reducing emissions in many sectors of the economy in line with commitments made by corporates and their investors to interim targets set for 2030, in line with the objectives of the Paris Agreement.
The RE100 initiative has six overall policy targets to encourage a global transition to renewable electricity, including creating an electricity market structure allowing direct trade between corporate buyers and renewable electricity suppliers, and promoting direct investments in on-site and off-site renewable electricity projects. Members are also committed to working with utilities or electricity suppliers to provide more options for renewable electricity sourcing, supporting a transparent system for certifying competitively priced Energy Attribute Certificates (EACs), and creating a level playing field with fossil-fuel electricity.
RE100 members are pushing governments to improve renewable energy targets globally, with Japan-based firms having formed a working group to engage with the Japanese government on its renewable energy transition commitments.
In March 2021, more than 50 RE100 companies, including Google and AstraZeneca, wrote to Japan’s Prime Minister Yoshihide Suga, requesting the country increases its 2030 renewable energy target from 22-24% by 2030 to 50%. This would offer “greater corporate access to more abundant renewable energy will help businesses achieve their climate goals, which often align with Japan’s climate vision”, the letter noted.
In June, the government increased its 2030 target, noting that renewables should account for 36-38% of all power supplies by 2030.
“The findings from the report demonstrate a clear signal to governments that corporates are investing at scale in renewable electricity, not just in Europe and North America but in the Asia-Pacific region as well,” said Sam Kimmins, Head of RE100. Nonetheless, more needs to be done, and faster, Kimmins added. Progress will be further enabled by increased cooperation and alignment between government policies.
Rocky road to renewables
Limited availability of renewables is a particular issue in the Asia-Pacific region, the report found, with Japan and the Republic of Korea most frequently cited by members as presenting regulatory barriers to sourcing renewable electricity. With 62% of RE100 members now based in Asia-Pacific, “RE100’s voice for policy change is growing stronger in the markets where members currently expect to take longer to meet their RE100 targets”, the report noted.
Other obstacles cited by RE100 companies are the lack of procurement opportunities (37 members in 111 markets) and prohibitive cost (27 members in 41 markets). Reporting to CDP, 149 RE100 members disclosed how procuring renewable electricity was affecting their organisations’ energy costs, whereas 152 outlined how renewable electricity factored into engagement efforts with their supply chains.
Companies are also encouraging policymakers to better support sustainable sourcing methods, such as Power Purchase Agreements (PPAs) and Energy Attribute Certificates (EACs).
RE100 members annually consumed more electricity combined than the UK last year, at 339 Terawatts per hour (TWh), but 45% of their electricity needs were met through renewable electricity. Sixty-one members reported they sourced 100% of their electricity from renewable sources, which is the equivalent of 46TWh. Twenty-nine had these claims verified by the RE100 initiative.
In 2020, the overall target year for 100% renewable electricity for RE100 members was 2028. However, this has since been pushed back to 2030, due to the increase in Asia-Pacific based members, where renewable electricity is harder for companies to source, the report said. These new members have an average target year of 2037. European-based members have an average target year of 2025, and US members have an average target of 2027.
Countries are beginning to work together to accelerate the transition to renewable energy. At COP26, the Energy Transition Mechanism Southeast Asia Partnership with Indonesia and the Philippines was launched. It aims to utilise public-private finance to accelerate the retirement of coal-fired power stations and unlock investments in clean, renewable energy to replace them.
Further, a US$8.5 billion financing package was agreed by France, Germany, the UK, the US and the EU to accelerate the shift from fossil fuels to renewable energy in South Africa.
A 2021 report by Allianz and credit insurance subsidiary Euler Hermes warned that fossil fuel subsidies continue to outstrip renewables support. Fossil fuel subsidies, which account for 0.5% of global GDP, could instead be used to fund renewable energy developments, which would plug the funding gap for complying with the Paris Accord, the report noted.
“As the RE100 initiative has shown since its inception, companies have an urgent demand for renewable electricity, they can play a pivotal role in making it more available, and benefit from its use,” the CDP and RE100 report said.