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Science Based Targets and Renewable Energy Leadership

On the road to and through COP21 in Paris, a growing number of industry leaders from multiple sectors are expressing their commitment to combatting climate change by aligning their sustainability targets with climate science. The Science Based Targets initiative encourages businesses to set carbon and renewable energy targets based on the scientific consensus on what is necessary in order for us to stay within the 2°C global warming guardrail. Linked to this is growing awareness that more investment is needed in new renewable energy infrastructure. This is confirmed by the Globescan/SustainAbility study, published this month, which concluded that investing in renewable energy is a key characteristic of corporate climate leadership.

The overarching context is the imperative to calibrate the rate of renewable energy investment within the 2°C guardrail. To achieve that target, a certain level of investment in new renewable energy projects is necessary. The chart below, in which the blue bars indicate what is needed, while the red bars show what has actually happened, illustrates clearly that the current rate of investment is falling woefully short of what is required.

Investment needed to keep within the 2°C global warming target ($ Billions/y)

RE gap

Source: Bloomberg New Energy Finance

Closing this renewable energy gap is consistent with the rationale behind the Science Based Targets initiative.


What role can progressive corporates committed to supporting this transition play?

Companies who are serious about Science Based Targets can demonstrate leadership in this area by focusing strongly and deliberately on approaches that put new renewable energy on the grid.

In most countries there remains a cost difference between fossil fuels and renewable energy. After all, if there were not, the problem would have been solved long ago. In essence corporate leadership involves providing financial incentives, through targeted procurement, that incentivise and expand renewable electricity generation.

In the context of the global 2°C target and the required rate of renewable energy investment, it is important to have clear criteria to identify renewable energy strategies which genuinely contribute to transforming the power sector. Without this, there is a very real risk of procurement of renewable energy at low cost but which does not cause any change. Key criteria for impactful corporate renewable energy procurement are:

  • The renewable energy should be additional to (i.e. not counted towards and not generated as a result of) any legally binding renewable energy target
  • The renewable energy purchase should provide material financial support to the project.
  • The project should be new or near new, and should depend upon that support for financial viability.
  • The buyer should have a clear and exclusive claim to the renewable energy attribute, established through the retirement of associated renewable energy certificates or equivalent contractual structures.


Why are the criteria important?

Corporate support for renewable energy will be critical in driving the transition we need, but only if the purchases drive real change. In contrast, buying rights to renewable energy from old projects, such as via Guarantees of Origin, does not cause change, does not demonstrate leadership and is not an effective use of corporate funds. After all why spend money if it doesn’t create change?


GoldPower Renewable Energy Certificates (RECs)

GoldPower

GoldPower is a REC aligned with these principles, which supports projects in range of countries which do not have established national renewable energy markets. It provides financial support to make the project viable and serves as the transparency mechanism enabling the corporate supporter to make credible claims. It is separate to a company’s electricity purchase, giving choice and flexibility in the project to be supported.


GoldPower’s growing impact

To date, corporate support of GoldPower has surpassed 600,000 MWh. This has supported much needed wind, solar and sustainable hydropower projects in a range of countries, and is enough to provide renewable electricity for some 150,000 homes for a year in those countries.

GoldPower has been purchased by a wide range of corporate renewable energy leaders including Tetra Pak, Novo Nordisk, SAP, PwC, Baker and McKenzie and many others. Click here to view the full list of organisations purchasing GoldPower.


Local GoldPower projects

Corporate buyers are increasingly focused on purchasing GoldPower from projects in the same country or within the same connected regional grid as their company operations. This approach creates a stronger feeling of engagement with the project and the local business and community ‘ecosystem’ within which the corporate operates. Purchasing local GoldPower also gives the best potential to be able to report 100% renewable energy and/or zero emissions under corporate reporting initiatives, subject to the criteria of specific programs.


Leadership examples that help close the Renewables gap

Tetra Pak and Novo Nordisk are just two examples of corporate renewable energy leaders closing the renewable energy gap by way of GoldPower. These examples show companies supporting local renewable energy projects close to their operations, expanding local renewable energy generation and creating local sustainable development benefits.

Local GoldPower

The advantage of GoldPower for corporates with global operations is that it provides a quality mechanism that enables corporates to source for multiple countries in a consistent manner.


Renewable Energy leaders supporting GoldPower

“Novo Nordisk has chosen GoldPower as our provider of renewable energy certificates for our manufacturing plant in Tianjin, China. We know GoldPower as a reliable and credible renewable energy product with true added-value for our stakeholders. The wind farm in Inner Mongolia fulfills all environmental criteria, improves air quality and provides employment opportunities to the local society”.

-Marcelo Zuculin Júnior, Corporate Vice President, Novo Nordisk (China) Pharmaceuticals Co., Ltd. (TEDA Plant)

“GoldPower is supported by WWF because, unlike most conventional green power options, GoldPower demonstrably stimulates new investments in new renewable energy capacity and is certified to reduce greenhouse gas emissions beyond business as usual. WWF recommends GoldPower to companies that want to drive quality renewable electricity solutions.”

-Dr Stephan Singer, Director Global Energy Policy, WWF International


GoldPower can underpin multiple procurement solutions

Corporates have various options for purchasing renewable energy, including unbundled Renewable Energy Certificates, direct investment in renewable energy generation facilities, and renewable Power Purchase Agreements (PPA). Each has their attractions depending on the buyer’s circumstances. However, for each of these options, a mechanism that provides financial support to the project and conveys ownership of the renewable energy benefits is needed.

In countries which do not have established national renewable energy markets, GoldPower can be the transparency mechanism for each of these procurement methods. As well as being available as a stand-alone certificate, when a corporate is funding their own renewable project or possibly a “green PPA”, GoldPower can act as the tracking and transparency mechanism so that the corporate can demonstrate exclusive ownership of the project’s renewable energy benefits.


Renewable Energy leadership

In anticipation of COP21, Christiana Figueres, Executive Secretary of the UNFCCC, encouraged companies to go carbon neutral, referring to some companies who have the financial means and the business model to build their own wind farms. Other companies for whom this is not a viable strategy can still contribute to closing the renewable energy gap and displaying renewable energy leadership. GoldPower was designed for both sets of circumstances, and we encourage all companies embracing science based climate solutions to consider GoldPower for their operations in emerging markets.


GoldPower projects

If you have multinational company operations , especially in China, Taiwan, Turkey, Thailand, Vietnam or other countries that don’t have established national renewable energy markets please contact our team to discuss how GoldPower can assist you in reaching your renewable energy goals.

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