Corporate Demand to Boost Renewable Energy Credits Market

With major corporations setting ambitious environmental targets, a surge in demand for renewable energy certificates (RECs)* is anticipated, according to the market players gathered at the RECS Market Meeting in Amsterdam on 21-22 March.

“This is something of great force, something unstoppable,” Tom Lindberg, managing director of Ecohz, said. Ecohz is a market leader in the certification of renewable electricity supply in Europe.

“Since COP21 in Paris in 2015, the big corporate companies have moved centre stage in the climate and energy agenda,” Lindberg said. “Big businesses are now setting more ambitious targets than cities or governments. This is about making collective change.”

Stemming from the Paris Pledge for Action 2015, recent initiatives including RE100, WeMeanBusiness and Science Based Targets are working with leading corporations to set sustainability targets, such as a commitment to source 100 percent of electricity demand from renewable sources (RE100). With corporate energy consumers accounting for about 50 percent of global electricity demand, these initiatives aim at spearheading a major shift in the global renewable energy market.

“By grouping together, these huge corporates can punch above their weight and send a positive market signal to producers,” Sam Kimmins, head of corporate campaign at RE100, said during the 2017 RECS Market Meeting.

RECs play an important part in achieving these targets, currently accounting for 54-59 percent of voluntary demand for green power procurement. RECs markets are well-established in North America and in Europe. However, for major corporations with a global presence, finding localized sustainability solutions can be a challenge.

Intel Corp. purchased over 4 billion kWh of green power in 2016, compared with an estimated overall energy consumption of around 6.5 billion kWh/year. Marty Sedler, director global utilities and infrastructure at Intel explains the overall strategy: “Intel uses a portfolio approach to cleaner energy management, and Guarantees of Origin(GO), Renewable Energy Certificates (RECs) and International RECS (I-RECS) are an essential part of the portfolio approach. But first, we look for the best technology available in the region or the locality, and then we look at the grid. Our preference is for local technology solutions with multi-stakeholder buy-in. We’re not going to buy Norwegian hydro credits for our operations in Ireland.” 

“We’re here to meet and coordinate with all the players and help us create the markets outside of Europe and the U.S. — because we [Intel] are everywhere, and renewables are not yet everywhere,” Sedler added.

During the RECs Market Meeting, market analysts for Europe and North America were upbeat in their outlooks.

Highlighting increased demand in the compliance market, such as California’s target of 50 percent renewables by 2030, and Oregon aiming at 50 percent by 2040, Scott Eidson, vice president-environmental markets at 3Degrees also anticipates strong growth in the voluntary market.

“The voluntary market growth could be in contrast to the direction of federal policy” in the North American market, Eidson said.

William Dixon with Agder Energi, the third largest utility in Norway, said of the European market, “There’s potential for this to get a lot higher.”

Dixon cited factors influencing supply and demand, such as the expansion of the European Energy Certificate System (EECS); regulatory change, including the GO auctions proposed in the EU’s Clean Energy Package; and consumer/regional preferences. 

Nigel Topping, CEO of the WeMeanBusiness coalition congratulated the “heroic entrepreneurs in the room” and noted that climate pledges made by local and regional authorities through the Under 2⁰ MOU represented “a rich vein of market development.”

Jared Bralawsky, secretary general, RECS International, said: “What we are seeing is that the end users, the big corporations and citizens are driving the low carbon transition. Now our work is more about supporting the consumers’ choice: the consumer is looking for reliable renewable energy procurement options around the world.”

*Renewable energy certificates (RECs) are tradable and non-tangible commodities that enable energy consumers to verify that their electricity is generated by renewable energy sources. Each certificate corresponds to one megawatt-hour (MWh) of electricity produced by a power station. Different types of RECs include: International RECs (I-RECs), GoldPower, European Guarantees of Origin (GOs), Gos with EKOEnergy label, GOs with Naturemade star label, GOs with OK Power label, North American RECs and North American RECs with Green-e Energy label. 

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Clare Taylor is a communicator specialised in energy and environment. She is an experienced rapporteur and moderator with a decade's experience of working in European sustainability fora. Her work includes media advocacy for grassroots campaigns, supporting national authorities' implementation of EU energy directives; micro-enterprise, community entrepreneurship and sustainable development NGOs; writing and research for TV reality series, documentaries and journalism. A former magazine publisher, Clare enjoys skilfull communications, wicked problems and well-plotted thrillers.

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