Top U.S. Businesses Love Clean Power

Partisan chatter about the evils of “woke capitalism” shows no sign of slowing down, but those who amplify the canard are running into a brick wall. Top U.S. corporations are ignoring the chatter. Instead of listening to these latter-day nattering nabobs of negativism, business leaders are making a fact-based, bottom-line case for clean power.

The power of the clean power purchase agreement

The latest news about corporate interest in clean power comes from Bloomberg NEF. Last week, BNEF issued a report that summarizes the global clean power market for the year 2022 under the title, "Corporate Energy Market Outlook." BNEF took note of industry-wide obstacles, including supply chain bottlenecks as well as high interest rates and an energy crisis sparked by Russia’s invasion of Ukraine.

Despite the harsh financial environment, BNEF totaled up 36.7 gigawatts’ worth of long-term clean power purchase agreements (PPAs) by private companies and public institutions, an 18 percent increase over 2021.

Power purchase agreements have become a common means of fast-tracking clean power. Instead of delivering clean kilowatts from a particular solar array or wind farm directly to an individual ratepayer, developers can sell their zero-emission electricity into wholesale markets. Ratepayers agree to buy the power, not the asset itself.

“Such contracts are comparatively easy for buyers to sign and allow them to hedge against power price spikes,” BNEF researchers explained.

Here in the U.S., tech firms have been the leading drivers of PPA activity over the years. That continued to be the case in 2022, led by Amazon, Meta, Google and Microsoft.

PPA activity is also becoming more diverse. BNEF notes that mining companies in Latin America were especially active in 2022, deploying PPAs to secure clean power for mines in parts of Chile and Brazil.

The PPA field is growing into new markets, too. BNEF notes that PPAs have only become widely available in Japan, China and South Korea in recent years, and the pace of uptake is already quickening. “Activity across APAC is expected to continue growing significantly as more companies set 100 percent renewable energy goals,” the report reads.

“Companies can access clean energy at scale in most major countries, the economics make sense, and amid turbulent energy markets, PPAs have become useful risk-mitigation tools for CFOs,” added Kyle Harrison, head of sustainability research at BNEF, in a statement. 

Who’s afraid of the big, bad woke?

The term “woke capitalism” was reportedly coined by the conservative pundit Ross Douthat in 2018. It has taken on a variety of meanings in recent years, but the basic intention is to smear ESG (environmental, social, governance) investing as a hollow corporate performance meant to curry favor with Democratic office holders at the expense of investors and government pension contributors.

Republican office holders in Texas and other states have been deploying the “woke capitalism” cudgel to punish financial institutions that support decarbonization. However, so far the only ones hurting are local taxpayers, who are at risk of missing out on competitive bids for municipal bonds.

JPMorgan Chase, for one, is not having it. The company is among the financial firms targeted by the anti-ESG movement, but instead of slinking away, it has clapped back with a vigorous defense of decarbonization. Two of the firm’s top sustainability officers, Ramaswamy Variankaval and former Barack Obama advisor Heather Zichal, penned an op-ed under the title, “Clean energy is a massive investment opportunity,” published in Fortune and elsewhere last week.

In a not-so-subtle dig at Republican policies under the Donald Trump administration, Variankaval and Zichal indicate that federal support for decarbonization lagged before 2021, forcing states to pick up the slack. Now, with strong federal policies under the Joe Biden administration, the stage is set for a more rapid uptake of clean power and other carbon-reducing technologies.

“Building on years of state policies that catalyzed the early days of low-carbon innovation, we now have the momentum to reinvigorate domestic manufacturing, build resilient supply chains, create good jobs, and cut energy costs–all while making progress on the climate challenge,” they wrote, crediting three laws prioritized by the Biden administration: the Bipartisan Infrastructure Law, the Inflation Reduction Act, and the CHIPS and Science Act.

“At JPMorgan Chase, we’ve financed more than $170 billion in green initiatives in the last two years and are targeting to finance an additional $800 billion for green by 2030,” they added.

The bottom-line case for decarbonization

Variankaval and Zichal also underscored a key problem with anti-ESG legislation passed in Texas, and under consideration in other states. The legislation seeks to punish financial firms that invest in clean power, but some of these same firms provide a broad spectrum of industries with financial support. JPMorgan Chase provides “critical financing” to help reduce emissions from the oil and gas industry, along with other important sectors that still rely on fossil energy including power generation, transportation and heavy industry, they argue. 

The falling cost of wind and solar power is another key bottom-line factor working in favor of decarbonization. During the Obama administration, consumers paid a premium for access to clean power. Now, the tables have turned.

An estimated 97 percent of coal power plants in the U.S. are more expensive to operate than nearby renewable energy projects, according to a January report from the think tank Energy Innovation, representing a “significant acceleration” compared to two previous analyses.

“For more than three-quarters of U.S. coal capacity, the all-in cost per [megawatt-hour] of the cheapest renewable option is at least a third cheaper than the going-forward costs for the coal it would replace,” the Energy Innovation report reads.

The woken have spoken

In their op-ed, Variankaval and Zichal emphasize that the point of all this is to prevent catastrophic global warming, a phenomenon that key Republican policymakers — including 139 members of the 117th Congress — continue to dismiss as a hoax.

Against this backdrop, the “woke capitalism” canard is nothing more than a hoax of its own. The lack of real-world evidence is perfectly consistent with Republican policymaking on a wide range of issues, which leans on vituperative sloganeering to fire up an increasingly extremist voter base.

The anti-ESG movement is yet another demonstration of Republican policy-by-projection. When they accuse ESG investors of of staging empty performances for the sake of currying favor with politicians, they are looking straight into a mirror.

Image credit: American Public Power Association/Unsplash