New Research Points Out The Wrong Calculation Method Behind The Renewable Energy Statement Of Enterprises

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New research shows that although more companies than ever claim to use renewable energy, these claims are often exaggerated. The disconnect between the company's claims and reality could jeopardize global efforts to stop climate change. This problem stems from the company's reliance on renewable energy certificates (RECs) to support its green statement. A company receives RECs by paying to support renewable energy projects around the world.

When brands say they use 100% renewable energy to power their businesses, they usually still use electricity generated from fossil fuels; They just buy renewable energy certificates in an attempt to offset the environmental impact of their energy use.

"This disconnect between a company's claims and reality may jeopardize global efforts to stop climate change. Too many consumers, media, and even investors may really think that the company actually uses 100% renewable energy. This is not the case," said Anders Bjorn, a postdoctoral researcher at the University of Concordia and the lead author of a study published today in the journal nature climate change.

Although RECs have become the main content of enterprises' sustainable development commitments, there is more and more evidence that they are not as beneficial to the earth as enterprises may hope. BJ ø RN and his colleagues studied 115 companies, including Microsoft, Ford and best buy, which plan to control their greenhouse gas emissions. These companies report that from 2015 to 2019, the earth's thermal pollution generated by their electricity has been reduced by more than 30%. But that figure was exaggerated, bean and his colleagues found. In fact, their research shows that the company has only reduced its emissions by about 10%.

This is a big difference, and the culprit behind this mismatch is REC. The reason why rec works is that when customers connect to the grid, they can't really tell where their energy comes from. It may come from natural gas power stations or wind farms, but they are all mixed together on the grid. Therefore, REC represents a company's financial support for renewable energy projects.

RECs should provide environmental benefits from bringing more clean energy online. On the surface, it seems to squeeze out fossil fuels and avoid greenhouse gas emissions. However, as renewable energy projects become more common, REC prices have fallen. At present, such certificates cannot be a strong source of income and are not enough to encourage energy companies to launch new renewable energy projects.

This is a big problem, because it is the additional renewable energy production that can balance the emissions of enterprises. If they do not put more renewable energy online, companies will not really offset the negative impact of their power use on the environment. On paper, however, companies still use RECs to write off emissions from electricity use -- even if these RECs do not really reduce pollution.

BJ ø RN said: "In our research, we can see that in most cases, the certificates purchased by the company have little effect on the climate, if any, regardless of whether they know it or not. In order to reach this conclusion, he and his colleagues studied the company's disclosure of its emissions and power use. They saw that the company claimed that the two-thirds of the emission reductions linked to RECs could not bring more renewable energy to the power grid or reduce greenhouse gas emissions."

Given all these shortcomings, efforts are being made to change the way companies buy renewable energy. Many companies have begun to invest their money in so-called power purchase agreements (PPAs) rather than random purchases of RECs. This is an agreement they have reached with project developers to build more renewable energy capacity -- for example, a new wind or solar farm. The company may agree to purchase a certain amount of renewable energy from the project itself, or its purpose is to allow more energy to enter the grid. These power purchase agreements also generate RECs, which the authors of the new study believe are effective representatives of real-world emission reduction.

"In 2021, more than half of the clean energy power purchase agreements will be signed by technology companies."

Such agreements are very popular with large technology companies because they have enough funds to sign PPA. According to the analysis of bloombergnef, more than half of the clean energy power purchase agreements in 2021 were signed by technology giants, including Amazon, Microsoft, meta and Google.

There are other efforts to make the company's sustainable development plan actually help promote more renewable energy. For example, Microsoft and Google recently launched a similar plan to purchase renewable energy or match its power consumption with RECs around the clock, that is, to calculate the energy consumption per hour instead of the whole year, in order to promote the introduction of more clean energy into the power grid where these companies are located, and promote innovation to solve a major challenge of renewable energy: when there is no sunshine and wind, There can also be sufficient energy storage or alternative sources of clean energy.

Although the application of renewable energy has taken off, its growth rate is not enough to avoid the climate crisis. BJ ø RN hopes that his new research will help companies and policymakers make a difference when setting higher standards for proposed climate solutions (such as RECs). "The company can only do so much on a voluntary basis". BJ ø RN said. I think we need new policies to actually reduce emissions, rather than just assuming that companies will do it themselves.

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