President Donald Trump announced that the U.S. would renege on its commitment to the Paris Agreement on Climate Change last June, and back then the conventional wisdom was that the world would simply move along without him. Since then there have been many indications that the conventional wisdom was actually right. In the latest development, a new survey of 94 major corporations and institutions demonstrates a strong commitment to renewables — including a “leapfrog” effect that bodes well for future progress.
The survey was conducted by the information and research platform Smart Energy Decisions. The firm specializes in commercial and industrial power users and the respondents were primarily based in the US and Canada.
Nope, it’s not the green branding
Green branding is often cited as an important factor in renewable energy investment by businesses, but that factor was more motivating several years ago, when the cost of renewables was generally higher than the cost of fossil fuels.
That development is clearly reflected in the findings of Smart Energy Decisions.
The firm garnered survey responses from 94 corporations and institutions shortly after Trump’s announcement of the Paris withdrawal, which occurred on June 1. A good 40 of the respondents are included in the Fortune 500 list.
Here’s the rundown from Smart Energy Decisions:
Energy cost reduction was the single most important factor for 29.1 percent of organizations that already purchased or are interested in purchasing renewable energy, followed by meeting GHG reduction targets (25.6 percent) and meeting renewable energy targets (16.3 percent).
Green branding does not disappear entirely off the map. A decent proportion of survey respondents — 8.1 percent — selected brand image as “the most important factor” influencing their renewable energy buys.
Consumer demand also continues to play a role, though a relatively small one. Almost 6 percent of survey respondents cited consumer demand as the most important factor driving their interest in renewables.
Leapfrogging to renewables
Another finding with good implications for future progress is that companies dipping their toes into renewables for the first time are not taking a leap into the dark. They are taking to heart lessons learned from the early adopters:
Buyers new to renewable energy are “leapfrogging” straight into methods that used to only be prevalent among more mature buyers. For respondents considering a first purchase, the two most-favored methods were onsite power purchase agreements (61.1 percent) and offsite power purchase agreements (44.4 percent). This is in contrast to lower figures for methods that used to be more common among first-time buyers, including onsite, self-owned assets (38.9 percent) and renewable energy certificates (16.7 percent).
The leapfrog effect also seems to be nudging the industrial sector toward renewables. According to Smart Energy Decisions, commercial companies dominated the field of early adopters, but the survey responses indicate that the industrial sector is “gearing up to enter the market.”
Smart Energy Decisions has been hearing “chatter” about industry moving toward renewables, and the survey backs that up. Of the industrial companies surveyed, 22.2 percent were considering their first renewable energy buy.
That’s especially significant in light of the high electricity load borne by industrial operations compared to the typical commercial firm:
…we have seen a number of large, energy-intensive corporations such as Corning, General Motors, and Toyota announce ambitious renewable energy and/or carbon reduction goals. The potential impact of a broader number of industrial companies turning to renewable energy for their electric supply is significant, as their electric loads far outweighs those of the commercial sector.
Leading companies consider the leap to renewables
Yet another interesting feature of the new survey is that it included respondents that have not yet made renewable energy purchases.
Though by far the lion’s share of respondents already have renewables in their pocket, a fairly large proportion — 19.4 percent — reported that they have not yet made a renewable energy purchase.
And now for the good news: All of those respondents reported that they are “currently considering” renewables.
As for companies that are already invested in renewables, it looks like the Trump effect caused barely a ripple. Recall that the survey was literally taken within days after Trump announced that the U.S. would withdraw from the Paris Agreement:
Among organizations that already purchased or are interested in purchasing renewable energy, over 95 percent reported interest in renewable energy, stayed the same (36 percent) or increased (59.3 percent) in the past year.
What about climate change?
The new survey also demonstrates the power of goal-setting.
Thousands of companies have already committed to reducing greenhouse gas emissions, and the survey indicates that bottom line considerations are closely entwined with climate change awareness on a corporate level.
Among the group of companies currently invested in renewables, a significant proportion of almost 71 percent had already established a target for reducing greenhouse gases, or they already had a target for transitioning to renewables.
Underscoring the point, a healthy minority of respondents — 32.6 percent — had already established targets for both.
In addition, the survey indicates that leading companies are committed to progress, with more than 47 percent of respondents committed to an ultimate goal of 100 percent renewables.
The survey is embargoed as of this writing, but here’s a taste indicating that the pace of renewable energy investment is bound to accelerate:
…while leading edge corporate buyers have received much of the attention related to their renewable energy sourcing, the market is broadening and a critical mass of corporate buyers are beginning to enter the market. The survey results show that a signicant number of responding companies were considering their first deal…
In another positive finding, the survey indicates that smaller companies, which previously were relatively hesitant to enter the renewable energy market, are ready to jump on the bandwagon:
…while leading edge corporate buyers have received much of the attention related to their renewable energy sourcing, the market is broadening and a critical mass of corporate buyers are beginning to enter the market…a significant number of responding companies were considering their first deal, including those with smaller relative energy spending (early movers were typically large companies with large energy budgets)…
That development could be attributed to any number of factors. Aside from falling costs, renewable energy technology has matured, energy storage has smoothed out sourcing spikes and dips, and financial arrangements have also become standardized.
The takeaway: When an unstoppable force meets an immovable object, sometimes the unstoppable force just wins.
Image (screenshot): via Smart Energy Decisions.