Navigating the future of renewable electricity leadership: The rise of RE100
by Katie Barnett, Fiona Holyoake and Samantha Vincent
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As global businesses and economies increase efforts to reduce greenhouse gas emissions and transition to a low carbon future, initiatives to assist in goal-setting and reporting are emerging. Established in 2014 by the Climate Group and CDP, RE100, is a global initiative that brings together many of the world’s most influential businesses committed to using 100% renewable electricity across their operations, on or before 2050.
The urgency to transition to renewable electricity is now greater than ever. The latest IPCC report released in April 2022 was a stark warning - only immediate, robust and large-scale greenhouse gas emissions reductions can slow the accelerating pace of climate change impacts both now and in the future.
Electricity and heat production is the largest contributor to global greenhouse gas emissions (~25%)1 and presents huge opportunities for emission reduction initiatives. Decarbonisation is a key goal of many organisations. PwC has a worldwide science-based commitment to achieve net zero greenhouse gas emissions by 2030 and is a member of RE100. As a network, we are committed to transitioning to 100% renewable electricity for our largest firms (including PwC Australia) by 1 July 2022, and in FY21 83% of our electricity was sourced from renewable sources for our largest firms.
Within PwC Australia, our own recent renewable electricity procurement experience illustrates the difficulties that many organisations face in their transition to renewables and meeting commitments like RE100.
This article has been written for organisations who are on a similar journey to us, to better navigate the procurement of renewable electricity, who may be working on or considering meeting commitments like RE100 and simplify their transition to a low carbon future.
Why RE100? The importance of RE100
The RE100 initiative encourages businesses to move towards renewable electricity and remove fossil fuel energy being consumed by commercial and industrial users. Since its inception, more than 350 global members have signed up, driving a shift of over 370 TWh/yr of electricity from non-renewable to renewable sources - a volume greater than the UK's electricity consumption2. The RE100 initiative continues to grow in its number of members with over 65 joining in 2021 alone.
In 2018, PwC announced its own global membership of RE100 and stated that by July 2022, the network’s largest firms would achieve 100% renewable electricity. The global PwC network also announced a target to halve, by 2030, scope 1, scope 2 and scope 3 business travel emissions from a 2019 base year. Further, by 2025, globally, 50% of PwC’s purchased goods and services suppliers (by emissions) will have set their own science-based targets to reduce their own climate impact.
How RE100 is helping to simplify the greenhouse gas equation: scope 1 and 2 focus
As part of the Corporate Standard introduced by the Greenhouse Gas Protocol, three categories or ‘scopes’ of emissions have been defined3. For a company to achieve low carbon status, residual greenhouse gas emissions from these three scopes must be reduced or balanced by the removal of the same amount from the atmosphere.
RE100 requires companies to make a public commitment to sourcing 100% renewable electricity throughout their entire operations. RE100 defines entire operations as the electricity consumption which underlies, according to the Greenhouse Gas Protocol:
- all scope 2 emissions associated with purchased electricity
- all scope 1 emissions associated with the generation of electricity by the company, for the company's consumption.
Scope 3 emissions are more difficult to address given they are a majority of emissions dispersed throughout complex supply chains including staff travel and potentially home energy consumption of hybrid workers. Joining RE100 and developing a tangible action plan to move towards 100% renewable energy is a step to providing organisations more capacity to dedicate towards addressing scope 3 emissions and support their overall decarbonisation journey.
RE100 in Australia: What you need to know to meet local requirements in Australia
RE100 maintains a technical criteria which its members observe when sourcing their renewable electricity and reporting its use. The technical criteria are globally relevant principles which recognise credible sourcing methods for renewable electricity.
In Australia, regulation is still in development for scope 2 reporting. The Clean Energy Regulator (CER) is the relevant regulatory body with the Corporate Emissions Reduction Transparency (CERT) report. The reporting process has entered the pilot phase with the first pilot report due in Q2 of 20224.
The current CERT confirms that for Australian organisations, Large-scale Generation Certificates (LGCs) are the only way to prove renewable electricity for all electricity procured from the electricity network. This is a significant step forward and will help reduce ambiguity in procuring renewable electricity in Australia and mitigate the risk of greenwashing (unsubstantiated or misleading statements on environmental credentials).
Procuring renewable electricity can be represented across three broad categories in Australia, as outlined in the table below5.
| Procurement type | Example |
Behind-the-meter Onsite generation of renewable electricity |
|
| Via an electricity retailer Procurement of electricity from a retailer via an electricity contract or sleeved Power Purchase Agreement (PPA), (a direct procurement of electricity from a generator that is managed) |
|
| Direct with generator/supplier PPA agreement, similar to above. However, it is not sleeved through a retailer – it is direct between generator and electricity buyer. |
|
In order for an organisation to meet both CERT and RE100 requirements, LGCs must be retired on the organisation’s behalf for any electricity consumed from the grid. For instance, if an organisation wants to achieve 100% renewable electricity, there must be a voluntary surrender of LGCs equivalent to it’s electricity load (that is, it’s total electricity load less behind-the-meter renewable electricity generation less the renewable power percentage (RPP)7.
PwC Australia is on its own journey to procure renewable electricity, and below are some of the key lessons we can share from our recent experience.
Top tips: Renewable electricity procurement
1. Start with your electricity requirements, not the solution
In developing your requirements, consider your target goal and how your electricity needs may change with your business strategy. Set incremental milestones to be achieved along the way and the important factors for your organisation, like behind the meter generation, or how to integrate renewable electricity with your electricity contracting arrangements.
Addressing scope 2 emissions can be achieved in a variety of ways. PPAs may be thought of as the ideal solution, although they are rarely practical for organisations with smaller electricity demands.
When determining electricity requirements, also think about the claim and the marketing opportunities as a commitment that is also important to your customers, clients, staff, investors and shareholders to credentialise and avoid greenwashing accusations. For instance, if your organisation is looking to promote its renewable electricity credentials, decide whether a specific selection of generation technologies or assets would support your organisation’s vision.
This requirements list will continue to add value when engaging with the market, retailers or industry bodies. It enables them to understand what is important to you and provide fit-for-purpose options.
2. Be open to innovations and be prepared to pivot for potential changes in the landscape of work
Prior to 2019, it would have been challenging to predict the fundamental shift towards the hybrid work culture which has been exacerbated by COVID-19. Large organisations who have announced more permanent work-from-home policies will need to consider the impacts of this on their decarbonisation progress and energy consumption forecasts. Hybrid policies will need to be factored into future electricity procurement considerations, with a growing number of organisations now embedding household renewable electricity options for their staff into their procurement requirements.
3. Be aware; price is not the only indicator of ‘cost’
Fixing a long-term contract against possible future changes in load will need to be considered when identifying the renewable solution best for your organisation. This includes the ongoing management costs across your finance, accounting and legal teams to maintain complex electricity contracts like PPAs.
Buyers should be aware that PPAs can be an intensive process to source, negotiate and manage on an ongoing basis and still require the voluntary surrender of LGCs to count towards renewable energy. They are usually longer-term contracts that are subject to a number of accounting and tax considerations. From an accounting perspective, PPAs need to be carefully analysed and may be subject to ongoing valuations, which could introduce volatility into the balance sheet and profit and loss statement8. It is recommended professional advice is sought so buyers are aware of the risks before they commit and will be able to meet ongoing obligations. For more information, please see our publication focussed on PPAs.
While the confirmation of LGCs as part of the CERT report should simplify the procurement of renewable electricity in Australia for organisations with smaller energy needs, we note there is still a place for more complex arrangements like PPAs, particularly for larger electricity consumers and potentially partnering across value chains working together on scope 3 emission reduction efforts.
Looking to the future and taking the next step
PwC's membership supports RE100’s mission to help the global community unite behind a solution for the necessary transition to a low carbon future. In doing so, it’s also helping us transition our offices to renewable electricity.
Australian membership of the RE100 currently sits at 17 members9 with eight of these joining during the COVID-19 pandemic, evidencing Australian business’ prioritisation of climate change and the need for transition guidance, regardless of other commercial priorities.
We believe any organisation committed to limiting global warming to 1.5 degrees above pre-industrial levels in line with the Paris Agreement would also benefit from joining RE100 to demonstrate their commitment to renewable energy. Today is the day to take that step.
Definitions
The Greenhouse Gas Protocol defines the following scopes:
- scope 1 – direct emissions from company-owned and controlled assets. Examples include company vehicles, company machines and company buildings.
- scope 2 - indirect emissions from the generation of purchased electricity consumed by the company, including steam, heating and cooling.
- scope 3 – indirect emissions from assets not owned or controlled by the company. Examples include travel, waste from operations, and the use of sold products. Traditionally, scope 3 emissions are the hardest to abate given their dispersion across complex supply chains.
1 www.epa.gov/ghgemissions/global-greenhouse-gas-emissions-data
2 www.there100.org/sites/re100/files/2022-01/RE100%202021%20Annual%20Disclosure%20Report.pdf
3 ghgprotocol.org/sites/default/files/standards/ghg-protocol-revised.pdf
4 www.cleanenergyregulator.gov.au/Infohub/Markets/cert-report
5 This is not an exhaustive list but a simple way to understand the various options to procure renewable energy. These options are also not mutually exclusive - an organisation may procure all three types of electricity from the market.
6 www.legislation.gov.au/Details/C2021C00554
7 The 2022 RPP is 18.64% and refers to the renewable energy in the national energy market (NEM). Liable entities (generally electricity retailers) are required to surrender approximately 32.6 million LGCs to meet their LRET obligations for 2021.
www.cleanenergyregulator.gov.au/DocumentAssets/Documents/Corporate%20Emissions%20Reduction%20Transparency%20Report%20Guidelines.pdf
8 docs.wbcsd.org/2018/01/IFRS_accounting_outline_for_PPA.pdf
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Managing Director, Energy Transition - Deals, PwC Australia
Tel: +61 410 537 892
