The 26th gathering of governments called the Council of Parties – more familiarly known as COP 26 – was held in early November in Glasgow, Scotland, and its delegates were under significant pressure to come to common ground on actions to help put the brakes on climate change. Their aim was to encourage policy commitments from virtually every nation on Earth to ensure global temperature rise would stay below 1.5°C above preindustrial levels. Although progress was made, agreements fell short of this goal, and the parties will be meeting again in one year.
On the positive side, though, the private sector isn’t waiting for governmental guidance on how they should be greening their businesses. In many ways, corporations are ahead of their governments in driving advances in emissions reductions and overall sustainability commitments and actions. While climate change is certainly top of mind with these investments, businesses also see bottom-line benefits in stabilizing their energy costs now and in the future.
COP 26 successes
While ambitious goals for emissions reductions weren’t fully reached, COP 26 delegates did make progress on a number of fronts. It can be argued that the agreement that was approved moves us closer to the 1.5°C goal than we were after the landmark 2015 COP 21 meeting in Paris, at least on paper. And this was the first COP gathering to directly target fossil fuels – although this effort was tempered by a last-minute change to “phase down” rather than “phase out” coal use. And, perhaps most importantly, rules were put in place under Article 6 of the Paris Agreement to avoid double counting of emissions reductions, which could boost confidence in a future global emissions market. That, in turn, could unlock billions of dollars for investments in renewable energy and other emissions-reducing technologies.
In parallel with the work governments have been doing over the last decade or so, businesses also have been striving toward emissions reductions in their operations. In the United States, companies are using power purchase agreements (PPAs) to engage directly with renewable energy developers – including Empower Energies – to support their own energy use with solar and wind.
According to Rocky Mountain Institute’s Business Renewables Center, U.S. annual corporate renewable procurement grew from less than 500 MW in 2013 to more than 6 GW by the end of 2018. Globally, corporations purchased 23.7 GW of clean energy in 2020, up from 20.1 GW in 2019, despite the global pandemic, according to Bloomberg New Energy Finance. And Wood McKenzie has seen growth continuing in 2021, with overall commercial and industrial market growth of 354 MW of solar, alone, installed in just the second quarter of 2021.
This shift to renewable energy purchases isn’t just an effort to polish corporate sustainability credentials. Bottom-line concerns also are addressed in these projects because PPAs enable companies to add predictability to their energy budgets. Not only can rates be lower than for what utilities are supplying, companies also know what those rates will be for the entire duration of the PPA, which can be a decade or more.
Many corporations also are developing sustainability goals with annual reporting and moving to include environmental, social and governance (ESG) targets in executive compensation plans. Incorporating more renewables through corporate and community solar and wind development can help both companies and their executives meet their goals.
The last year, with extreme weather events occurring all around the globe, has made clear the urgency with which climate change needs to be addressed. COP 26 fell short in ways, although there were historic achievements. The bottom line is that we don’t have time for half measures and government-level work must accelerate. But as we’ve seen over the last decade, governments aren’t the only important players in this effort. Commercial and industrial companies are picking up at least some of the slack in their renewable project investments. By continuing – and growing – that effort, these organizations can help drive the economic forces pushing renewables’ costs lower for even greater market penetration.