Corporate America’s Investments In Clean Energy Fell 30% So Far This Year
Corporate deals to buy clean electricity decreased by nearly 30% in the U.S. this year as the pandemic’s economic shockwave widened, highlighting the need for dramatic government intervention to cut planet-heating emissions from the power grid.
Between January and July, U.S. companies signed deals to buy just 4.3 gigawatts of clean electricity, down from 6 gigawatts during the same period in 2019, according to a new study released by the research firm BloombergNEF on Tuesday.
The numbers reflect both the effect of the coronavirus and the degree to which specific industries dominated corporate clean-energy purchases.
“A lot of these are not energy companies, and they have so many other things these companies need to focus on beyond sustainability,” Kyle Harrison, a senior associate at BloombergNEF and co-author of the report, said by phone. “The pandemic highlights the fact that, right now, when there are other components of the company that are compromised, that’s what’s prioritized over sustainability.”
Over the past few years, dozens of big American corporations, particularly electricity-hungry tech firms, funded the development of new wind and solar projects by agreeing to buy the electricity produced. But some companies, including Apple and Google, hit their 100% clean-electricity targets in 2018, reducing pressure for new purchasing agreements even as their electricity needs increased.
Corporations have long been fickle on sustainability, even as investors increasingly scrutinize companies’ environmental impacts. A 2017 study published in the peer-reviewed Academy of Management Journal found that several big companies that had announced ambitious climate goals retreated when profits decreased or top executives changed.
The cutbacks in the U.S. aren’t limited to corporate belt-tightening. While the Trump administration focused federal aid on oil and gas companies, the pandemic threw construction of new solar and wind projects into disarray, leaving 511,075 clean-energy workers unemployed as of July, according to data released Wednesday by a coalition of industry groups.
As a result, the gap between corporate pledges to use 100% clean electricity and inked deals to fulfill them has widened. Since the start of this year, 21 new companies joined the RE100, a voluntary club of 242 firms vowing to use 100% renewable power that includes such behemoths as Apple, the insurance giant Anthem and Bank of America. The group’s total demand for clean electricity is projected to reach 247 terawatt hours by 2030, but the lack of deployments and contracts has left a 224 terawatt-hour shortfall, BloombergNEF’s analysis found.
The report found some bright spots. Companies in Europe, Australia and Taiwan significantly increased power purchase agreement during the first half of this year. South Korea, meanwhile, rolled out a new pilot program allowing companies to buy or invest in clean electricity directly, and the national government is expected to propose new legislation to make such arrangements even easier.
Yet the speed and scale of the clean-energy build-out remains starkly out of sync with the planetary changes that emissions from fossil-fuel power plants are causing.
A Woods Hole Research Center study published last week in the Proceedings of the National Academy of Sciences found that the worst-case scenario for greenhouse gas concentrations in the atmosphere is tracking with the world’s current output of emissions.
There are already ample signs of that warming. A historic heat wave in the Arctic is producing record volumes of pollution. Federal forecasters last week updated their outlook for the Atlantic cyclone season, predicting an “extremely active” period with up to 25 named storms and six major hurricanes. The entire state of Colorado is in drought.
Democratic presidential candidate Joe Biden proposed a sweeping federal program to transition the country to 100% carbon-free electricity by 2035. The United States generated just 10% of its electricity from renewables and 19% from nuclear in 2018. But a recent study from the group Rewiring America found that the United States could generate virtually all of its electricity from wind, solar and nuclear by 2035 and cap average global temperature increases at the relatively safe 1.5 degrees Celsius, even without drastically altering other facets of American life.
But for big companies to even make a dent, Harrison said, power purchases need to grow by “several orders of magnitude.”
“It’s not going to be enough to keep warming to a 1.5-degree scenario,” Harrison said.
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