Enterprising Corporates Shift Focus to Tackle Scope Three Emissions
Sep 20, 2021, By Scott Shander
With corporate social responsibility goals set, actions are being taken
With the current emphasis on corporate social responsibility spreading across industries, most organizations have conducted impact studies to measure their environmental footprints. Many companies have already acted and made serious strides in reducing their scope 2 emissions. Since 2008, a cumulative of over 35 gigawatts (GW) in renewable energy PPAs have been inked according to the Renewable Energy Alliances’ (REBA) Deal Tracker. 74% of which occurred in just the previous three years. While 35 GW is a tremendous figure, to put it into perspective it equates to approximately 3% of the total installed US grid capacity as of 2020 (EIA).
Sorry I don’t work in sustainability, what are the different scopes of emissions again?
The consensus approach is to quantify environmental footprint in terms of greenhouse gas emissions, broken out into three “Scopes”:
- direct fossil fuel combustion (e.g., consuming gasoline or heat)
- indirect fossil fuel combustion (e.g., buying grid electricity)
- indirect from value chain (e.g., vendors, distributors, etc.)
Shifting focus for a broader impact
For a while, companies have focused on Scope 1 by targeting efficiencies and capital improvements, primarily for economic reasons. Over the last decade, Scope 2 has been a focus for many early adopters entering the renewable energy PPA arena. Certainly, this trend will continue as the more pragmatic crowd learn how to achieve goals more efficiently.
For the innovators and early adopter crowd, the focus has turned to the value chain. Sharing best practices through industry conferences can only be so effective. Effective ambassadors of change have enlisted renewable energy buyer consortiums.These companies bring strategic partners, vendors and clients (new renewable energy buyers) all under the same tent to achieve common goals in a renewable energy procurement consortium.
The merits of a RE buyer consortium
The consortium model compounds shared expertise, reduces transaction costs, all while increasing leverage and economies of scale. The typical challenges of the consortium model include the classic agency problem, corporate bureaucracy, misaligned objectives, and project groupthink. These challenges can be overcome through project planning that includes calibrating critical success factors and mapping them out up front.
What can a true partner bring to the table?
We took many of these important dynamics into consideration when designing and launching our consortium provider service at CRS. We ask ourselves: Where can we generate real value for our customers? How do we keep everyone involved without being bogged down in bureaucracy? How can we help our customers avoid the pitfalls of the conventional PPA? How can we make everyone happy?
There are several established advisors in the renewable energy space. The problem is most typically cater exclusively to the broad mission of greening the grid at the expense of transparency and their customers’ business objectives. CRS understands that for renewable energy to reach widespread adoption, companies need to understand the business case and potential risks before making strategic investments in renewable energy.
Reach out to discuss how to organize a buyer’s consortium
For advice on starting the conversation and identifying with key strategic partners for a buyer’s consortium, we are happy to assist. Or if you want to read a recent case study with a success story on the whole process reach out at info@crisksolution.com.