The next 12 months will be critical for the future of the EU as a leader on climate and clean energy policy. As EU energy ministers are meeting in Sofia to discuss how to deliver a sustainable energy union, Constant Alarcon, RE100 Campaign Manager, The Climate Group explains how they should look to leading corporates for inspiration. More and more European businesses are making bold commitments and taking innovative, concrete actions to drive the clean energy transition.
Thanks to pioneering and ambitious regulations like the EU Emissions Trading Scheme and the Renewable Energy Directive, the EU has been among the driving forces in the fight against climate change and the deployment of clean power. The EU has even set a long-term goal to reduce greenhouse gas emissions 80-95% by 2050, compared to 1990 levels.
This leadership position, however, is not guaranteed – and progress on key issues in 2018 will determine whether the EU will remain an ambitious leader on clean energy and climate action.
An uncertain leadership position?
Negotiations on the Clean Energy for All Europeans Package, which will frame how clean energy develops between now and 2030, should be completed by the end of 2018. This involves recasting the Renewable Energy Directive, and occurs at the same time as the European Council has asked the Commission to produce an updated 2050 greenhouse gas emissions reduction plan.
2018 will see global signatories to the Paris Agreement taking stock of their progress and reviewing their commitment. With the EU also adopting the next Multiannual Financial Framework – the post-2021 EU budget – billions of euros could be shifted towards the low-carbon economy and to climate-proof Europe’s infrastructure.
European businesses getting the job done
So where can we expect the EU to be at the end of 2018 – will it remain ambitious on climate and energy? The signals sent by policymakers are hard to read: whilst asking for an updated long-term strategy is an encouraging sign from the Council, supporting the very unambitious target of 27% renewable energy by 2030 is much less reassuring.
Looking to the actions taken by global businesses should help European policymakers overcome any hesitation – the ambition they are showing is inspirational.
RE100 now has 131 members globally, with 60 based in the EU. These companies have committed to bold targets to source 100% of their electricity from renewable sources. In Europe overall, our RE100 Progress and Insight report shows that RE100 members are sourcing 61% of their electricity from clean sources – double the total EU average of 29.6%.
RE100 will make an instrumental contribution to renewable energy targets: a recent BNEF report shows that current RE100 members represent an investment potential of $94 billion, and could add 87GW of wind and solar capacity globally by 2030 to meet their commitments.
These companies are re-writing the rulebook of electricity sourcing and developing innovative new models. With companies such as Google, AkzoNobel, DSM and Royal Philips signing a joint PPA, or H&M providing top-finance for new projects through their renewable energy certificates, they are transforming Europe’s electricity system and adding renewable capacity to the grid. In Bulgaria, Dentsu Aegis Network is already sourcing 100% of its electricity from renewables – a strong signal sent to the EU Council’s Bulgarian Presidency that businesses are going further and faster.
Corporate leadership goes beyond renewable electricity, too: RE100’s two other corporate leadership initiatives at The Climate Group, EV100 and EP100, are developing at pace, with businesses committing to massively accelerate the roll out of electric vehicles and to double their energy productivity. As well as this, the Science Based Target Initiative announced that 100 companies have now adopted emissions reductions targets in line with the scale required by global climate goals, showing the unstoppable momentum for climate action among global businesses.
Companies driving political ambition
What should European policy makers make of those achievements? Well, two things:
Firstly, it should give them the confidence to go for the highest ambition possible when it comes to climate and energy targets. For the Renewable Energy Directive, that would mean getting closer to the European Parliament’s more ambitious proposal of 35% renewable energy by 2030. Going beyond the current target of 27% is both cost effective and comes with explicit socio-economic benefits for all Member States, according to both the Commission and IRENA. In December 2017, 11 of our members publicly expressed their support for a more ambitious renewable energy target.
Pioneer companies are vocal in their support of political ambition: RE100 members AkzoNobel, Royal DSM, Unilever, Nestlé, Apple, Google, and Ikea have been praised for their leadership in actively supporting ambitious climate policies.
Secondly, as the business case for engaging in the energy transition gets clearer and clearer, rule makers must ensure that the correct policy environments are in place to unlock and enable the full potential of corporate action.
I wrote last month about disclosure and transparency mechanisms to support corporate action – this is particularly important in the EU where the fate of Guarantees of Origins (GOs, the EU renewable energy tracking system) is at stake in the Renewable Energy Directive. Ensuring mandatory allocation of GOs to all megawatts of clean power generated and avoid central auctioning is essential for companies to credibly claim that they are cleaning up their operations – and therefore catalysing more action from their peers.
Leadership, ambition and pace is critically needed
IRENA estimates that renewable energy needs to be scaled up at least six times faster for a climate-safe world. At their meeting in Sofia, let us hope that EU Member States feel inspired and emboldened by the pioneering companies embracing the low carbon transition. By adopting ambitious renewable energy targets, businesses can push the EU to continue leading the way in the energy transition and support the emergence of the energy systems of the future.