Empowering EU’s Net Zero Goal: Corporate Renewable Energy Procurement
In the face of such an imperative issue as climate change, energy transition is an inevitable choice to promote sustainable development for both businesses and our planet. Additionally, renewable energy is also one of the methods used by many European companies to achieve the EU’s climate goal of net-zero emissions by 2050. This is because the efforts of ordinary people are not enough to achieve this goal. According to a white paper by the IRENA Coalition for Action in 2021, companies in the commercial and industrial sectors account for about two-thirds of the world’s end-use of electricity consumption. Undoubtedly, enterprises play a key role in this endeavor. The actions corporates take on renewable energy procurement can have a profound impact on achieving the target.
The potential of renewable energy
The latest report of the International Energy Agency (IEA) has shown that renewable energy capacity additions reached about 507 GW in 2023, a nearly 50% increase from 2022, and solar photovoltaic (PV) alone accounts for three-quarters of global renewable energy additions. In addition to international data, renewable energy’s share of the EU electricity mix surges to 44%, breaking 40% mark for the first time, and wind power generation in Europe exceeded natural gas generation for the first time as well, according to the analysis of the EU electricity transition in 2023 by think tank Ember.
Portugal, a shining example of renewable energy success, made very outstanding achievements in 2023. Its renewable energy production exceeded national demand without having to resort to conventional thermal sources for 131 consecutive hours and it exceeded energy consumption for 95 consecutive hours. These achievements demonstrate the sheer potential of renewable energy in meeting our energy needs sustainably.
The influence European companies bring
So far, many companies in Europe have launched programs to support renewable energy transition towards the net-zero emission goal. As a Swedish furniture retail giant, IKEA is known for its active investment in renewable energy. IKEA launched a program in June 2021 to enable direct suppliers to purchase 100% renewable electricity. IKEA provides local solutions, such as bundled framework agreements and power purchase agreements (PPAs) to buy renewable electricity from the grid, enabling its direct suppliers to consume 100% renewable electricity in production.
Unilever, a multinational consumer goods company headquartered in the UK and the Netherlands, proposed five ways in 2022 to achieve 100% renewable energy by 2030, including purchasing from local renewable suppliers and increasing self-generation and storage on site. Now, 86% of all the electricity Unilever uses globally comes from renewable sources, including the electricity they buy from the grid in the markets in which they operate, as well as the electricity they generate themselves, data from Unilever showed.
Volkswagen, one of Europe’s largest car manufacturers, has been looking to reduce its carbon footprint. It plans to invest about 40 million euros by 2025 to promote the expansion of European wind farms and solar power plants. In 2021, Volkswagen announced that it had signed an agreement with wpd wind farm Onshore Aldermyberget in Skellefteå, northern Sweden, and it is the largest project in its portfolio to date.
Opportunities and challenges
Indeed, corporate renewable energy procurement has brought plenty of benefits, such as environmental protection, a circular economy, job opportunities, lower power generation costs, and so on. There are, however, many implementation challenges.
One of the major obstacles is how to cope with the complexity of regulations and policies regulating energy markets in different countries. Many countries are facing regulatory barriers and calling for improved accessibility for PPAs.
This kind of barrier can lead to a limited supply of renewable energy. Today, permitting is still a bottleneck to the expansion of wind energy in Europe. The situation in each country is different. In order to speed up the expansion, all national governments need to simplify and synchronize the implementation of the EU’s new rules on permitting.
In short, it is important to remove barriers for corporations to purchase renewable energy. At the same time, enterprises will support the EU in achieving the climate and energy goals.
