The Great Global Reset: when 100% renewable and carbon neutral are not enough

Are you stealing my future, or are you building my future?

This is the question the younger generation are asking the leaders of big corporates and energy companies. The year 2020 will be known as the Great Reset, says internationally renowned climate diplomat Christiana Figueres. The world is moving away from Milton Friedman’s doctrine of shareholder primacy into a new era of stakeholder capitalism, a new set of metrics developed by CEO-group the International Business Council where company performance is assessed against environmental, social and governance (ESG) indicators.

A growing list of companies are pledging net zero or science-based targets through various initiatives. Publicly stating bold ambition creates ‘extraordinary power’, Figueres said at the World Economic Forum Sustainable Development Impact Summit. “Once you publicly announce your goals you unleash efficiency and resources so the transformation is quicker and deeper. We are seeing decarbonisation occur not just in itself but rather bringing a true resetting of corporations’ relationship to society.”

The COVID-19 pandemic has accelerated the shift in mindset from quarterly to quarter-century planning, from silo activities to radical cooperation, from exclusive to inclusive. Companies can expect to face a much higher public accountability now, and the most forward-looking are realising even going carbon neutral is not enough – they are going ‘climate positive’.

IKEA is aiming to remove more emissions than it generates by 2030, including not just in producing the furniture it sells but even accounting for customers’ travel to the stores. The next ten years will be the most important decade in the history of mankind, says Jesper Brodin, CEO of Ingka Group, which owns IKEA. The company is responding to a ‘hockey stick’ increase in customer expectations and concerns, he says.

Microsoft is another company that has committed to be carbon negative by 2030 and by 2050 remove all the carbon it has emitted since it was founded. The company has joined the Transform to New Zero coalition with other leading brands including A.P. Moeller – Maersk, Danone, Mercedes-Benz AG, Microsoft, Natura & Co., Nike, Starbucks, Unilever and Wipro. A UN initiative has embraced several such initiatives to form the Race To Zero campaign where organisations representing nearly 25% of global CO2 emissions and more than 50% GDP have committed to achieving net zero carbon emissions by 2050.

But despite huge leaps in technology and digital innovation, some emissions are simply still impossible to prevent with the best of intentions, and so offsets are used to cover the shortfall, often involving nature-based solutions such as reforestation. While offsets have had a bad rap in the past as at worst fraudulent, or at least ‘greenwashing’ or simply not additional, they are now greeted with approving nods as the only option to get to 100% or into climate positive territory.

And so after all this effort and mutual back slapping it may come as a surprise that companies may need to go back and revisit what they thought was one of the easiest sectors to carbon neutralise, their power supply. Many companies have pledged to use 100% renewable power, for example under the Climate Group’s RE100 initiative. But if they use power from the grid, their power supply is not carbon neutral on a 24/7 basis as long as the grid is using fossil fuel power sources. In fact, unless they generate their own power or exclusively use renewable power purchase agreements, consumers are only 100% renewable on an annual basis through the use of renewable energy certificates (RECs), which are awarded to renewable generators. Why does this matter?

Time is money

The greater the share of renewables on the grid, the more timing matters. Renewable output is greatest when it is sunny and windy, which often drives power prices negative. And yet a REC does not currently specify what time of day it is generated, awarding equal credit to a MWh produced at peak output versus when renewables are scarce. Until there is a way to assign greater value for off peak renewable capacity, RECs may not drive additional supply when it is most needed. A larger standing or spinning reserve of fossil fuel plants will be required, generating emissions, waiting for the sun and the wind to go down.

Consumers will soon demand better. A growing number of companies are testing 24/7 solutions to monitor exactly what sources they are using to be able to make verifiable 100% renewable energy claims without relying on cheap monthly or annual certificates. Google CEO Sundar Pichai says its goal to use 24/7 carbon-free energy for its data centres is “our biggest sustainability moonshot yet, with enormous practical and technical complexity”. Microsoft and Vattenfall have their own 24/7 project, and Daimler and Statkraft have a 24/7 corporate renewable energy deal. Two of the large US environmental registries are working on their own round-the-clock REC initiatives.

Truly 100% renewable energy 24/7 365 days a year is the ‘pot at the end of the rainbow’, said Simone Accornero, CEO of technology company FlexiDAO, in a webinar organised by Re-Source, a European platform for corporate renewable energy buying.

The task is hindered by a lack of easily accessible data and incentive for buyers whose ESG standards do not yet differentiate between annual and hourly REC accounting. But this could change once an international standard for more temporally granular certificate launches next month, he said.

The deep-pocketed tech companies are driving extreme ESG agendas that go beyond the conventional understanding of 100% renewable and net zero, setting the corporate and social responsibility bar ever higher. Whether a calculated ruse to drive more demand for their technology solutions or a genuine desire to build a better future, this should draw a line under greenwashing concerns and deliver real environmental benefit.

“Going not just climate neutral but climate positive and intentionally regenerating will return resilience to nature so we are not pulling at that rubber band to the point it will break,” Figueres said.