The Climate Change Quagmire
The Climate Change Quagmire
Consider this: Wildfires in Greece, Sweden, and California that have appeared earlier in the year than expected. A 10-acre wildfire in California growing to1000 acres in just one night.
National Oceanic and Atmospheric Administration (NOAA) predictions that 2018 will be a record year for floods due to record-breaking amounts of rainfall. On June 22nd, Richmond, VA set an all-time record for hourly rainfall with 4.09” recorded between 3:54 and 4:54 AM, shattering the previous record of 2.82” in July 1969. August 2018 floods in Pennsylvania, New Jersey, and Rhode Island.
July high temperatures of over 105°F in Korea, 120°F in Algeria, and over 90°F seen in a Swedish village north of the Arctic Circle. Japan’s 2018 record heat has been blamed for 86 deaths in July alone with temperatures sustaining 105°F in early August.
Colorado experienced hail so large that it killed zoo birds, injured 14 patrons, and left 3,400 people stranded at the Cheyenne Mountain Zoo afterward due to their damaged vehicles.
These are just a few of the extreme weather events we have experienced so far in 2018. Climate change experts have been warning us for the past 30 years of such extreme weather conditions due to global warming, and this reality should be setting in for many of us as we watch weather patterns become more and more intense.
Taking Voluntary Action
As individuals, we try to do our part to reduce our environmental impact. We recycle, we buy electric cars, we support conservation efforts, we buy clean electricity … but have you ever stopped to wonder what corporations are doing to help prevent global warming?
Many companies have risen to the challenge of addressing this task by voluntarily reducing their environmental footprints. You have probably heard of greenhouse gas reductions and carbon offset projects as one way to reach environmental goals. These types of projects offer real, tangible emission decreases that make a huge difference and benefit our climate. Companies are striving to be good citizens and neighbors to mother earth. To that end, more and more are making voluntary changes and addressing their carbon footprint. Their goal includes the additional desire to try to limit high, long-range costs and harms. Nevertheless, emissions also result from activities caused offsite, for example, from power generation needed to supply requisite electricity, such activities result in what is referred to as “indirect” emissions. Ultimately, their focus is the realization that not only is the corporation affected, but also their employees and communities.
Clean Energy to the Rescue
Bloomberg New Energy Finance (Bloomberg) has recently announced that corporations have thus far purchased 7.2 GW of clean energy during 2018 (which is already 2 GW more than what was purchased all of last year!), with a total of 10 GW predicted to be purchased by the end of this year. In their August 2018 report, Bloomberg predicts that companies will need to purchase another 197 TWh of clean energy to meet their sustainability targets by 2030.
There is no doubt that corporations (in addition to individuals) have begun to play a part in striving to minimize the impact of climate change. We have witnessed this through actual carbon dioxide equivalent (CO2e) emission decreases that have been financed and encouraged using carbon credits. Where there was once a glut of voluntary carbon credits, companies have proceeded to gobble up this supply, and new projects are coming online to meet growing demand. Carbon offsetting for direct emissions of CO2e from manufacturing and on-site operations just makes good, tangible sense. So too does a focus on electricity consumption considered as indirect emissions of CO2e. As a result, corporations have added renewable energy credits (RECs) to their voluntary portfolio to help attain their environmental goals.
The Creation of RECs
RECs came about as the result of states and provinces implementing renewable portfolio standards (RPS), whereby a percentage of electricity sold must come from renewable resources that are described and defined by regulation, or from voluntary programs such as the very well-established Green E program (https://www.green-e.org/ ), which verifies clean energy production. One REC is equivalent to 1 MWh of electricity produced by a renewable power generation facility, such as (but certainly not limited to) a wind turbine, solar panel, hydropower facility, or biogas generation facility. While states and provinces have continued to cause fundamental changes in electricity production beyond fossil fuels using their RPS, corporations are increasingly using RECs to offset their electricity consumption from conventional fossil fuel generation.
The Use of RECs
In a simplified explanation, corporations calculate how much power they annually consume and then buy RECs commensurate with their annual power consumption. Of course, this process can be done quarterly, annually, or under any timeframe that a corporation deems is appropriate and accurate. Google was an early adopter of such an approach, which they explained on their web blog in mid-2010. By 2017, Google announced that they had become powered by 100% renewables with 2.6 Gigawatts of wind and solar power commitments. (Google 100% renewable)
The Cost of RECs
With renewable generation facilities becoming more prevalent, production and installation costs for renewable technologies have become more reasonable and more competitive with the cost of fossil-generated electricity. State and provincial RPS programs have fostered the installation of clean power production facilities, some of which produce excess clean power. Corporate executives and their colleagues’ corporate desire to do something in response to climate change has provided an ever-increasing interest in the voluntary use of RECs commensurate with annual electricity consumption.
A Simple Tool to Make a Difference
Ultimately, voluntary RECs and carbon credits are simple tools for corporations to use in meeting their corporate desire (and their shareholder’s desires too!) to do something about climate change. The image of clean power has become clearer, and the availability greater.
About the Author
Andy Kruger, Esq. serves as Senior Director, Environmental Markets at ClimeCo. Andy has more than 30 years of experience in environmental markets and policy. He earned his Bachelor of Engineering from George Washington University and his Juris Doctorate from Quinnipiac University School of Law.