This article is sponsored by 3Degrees.
As corporate purchases of renewable energy have steadily increased, the criteria that buyers are looking for have also evolved. In the recent past, it was not a common practice to look at factors beyond environmental attributes, such as community co-benefits or other impactful procurement options, in order to differentiate one renewable energy certificate (REC) from another. Over the last year, there has been a noticeable uptick in buyers who have an expanded focus on these factors and are embedding social and/or climate justice initiatives into their corporate renewable energy goals and purchasing strategies.
The industry has been shining more light on the importance of prioritizing a deeper impact when taking steps towards decarbonization. Despite popular belief, all RECs are not equal in value — like standard RECs, impact RECs still deliver a megawatt hour (MWh) of renewable energy, but they also contain social or environmental benefits. Thus, impact RECs are sourced from renewable energy projects that have additional co-benefits associated with them, such as allowing low-to-moderate income (LMI) families to reap the benefits of renewable energy or funding renewable energy development in climate-vulnerable areas.
Co-benefits: The new normal
In addition to reducing the effects of their energy use and meeting sustainability goals, organizations are also seeking higher impact products for a variety of reasons. How an organization arrives at the decision to incorporate co-benefits into their REC purchase varies greatly based on what impact characteristics are most important internally. Some want to support projects that are local to their state or region, and others want to take steps toward attaining certain Sustainable Development Goals (SDGs) or meet specific climate target standards.
For many corporations, the motivation comes from customer demands to address global issues, such as racism, gender inequality or poverty. Additionally, many corporate buyers are increasingly concerned about the residual impacts that renewable energy development has on the local communities where these projects are built.
There is undeniable intersectionality between social and climate issues. Entities are beginning to understand that to develop clean energy sustainably, social boundaries must be weighted equally to planetary boundaries. Systematically marginalized communities, especially lower-income communities and communities of color, are disproportionately affected by climate change. In fact, according to the World Bank, 74 of the world’s poorest countries account for less than one-tenth of global greenhouse gas emissions. It is important to consider the climate impacts that affect historically excluded communities, understand the issues these communities face, and identify the systems that both perpetuate generational disadvantages and cause climate change.
For example, Okta, an innovative San-Francisco-based identity company that brings simple and secure access to people and organizations everywhere, went beyond solely addressing its emissions footprint by supporting projects with strong co-benefits, such as Solar Stewards, California Bright Schools and PosiGen’s Solar Power For All Program. This focus on impact-based work comes from Okta’s unique style of cross-team collaboration and a strategy to address broader challenges such as sustainability, and diversity, equity and inclusion (DEI).
Like Okta, companies that support impact projects can hit multiple goals simultaneously by cross-cutting amongst established objectives. Lifting marginalized communities out of poverty and inequality is an essential first step toward, and catalyst for, actualizing sustainable development on a global scale. The extension of clean energy technology to underserved LMI communities, who rarely have access to solar power, can spur other benefits such as new jobs and a reduced energy burden.
Creative, conscious procurement
Innovative, new renewable energy procurement solutions have emerged to aid in the intersectionality of social and climate issues. Take Peace Renewable Energy Credits (P-RECs), which have the potential to expand the renewable energy revolution to vulnerable regions, improve quality of life and create economic opportunities. A P-REC is an International Renewable Energy Credit (I-REC) with an additional certification by Energy Peace Partners (EPP) of the social and economic co-benefits associated with the project. The regions of the world most affected by crises tend to be those most vulnerable to climate change, and are largely excluded from climate-related investment, and P-RECs seek to change that. For instance, ZIZ Energie in Chad and Winch Energy in Uganda are extending the benefits of solar energy to fragile countries in Africa where communities have low levels of electrification.
Through years of discussions, 3Degrees and Energy Peace Partners conceptualized a method of supporting transformative projects through corporate purchasing of P-RECs. In 2020, Microsoft made the inaugural purchase of P-RECs, supporting a local Congolese solar developer to deploy a clean energy project in an underserved community. Microsoft backed that up with the first repeat P-REC transaction expanding its support for renewable energy development in the same community. The P-REC purchases will help finance the construction of a new commercial solar-plus-storage project and mini-grid-connected street lights in the Congolese town of Goma, which will raise the average electricity rate from 3 percent to around 20 percent. In addition to increasing neighborhood safety, the project supports the local economy and improves air quality.
This transaction unlocked a new renewable energy attribute option that organizations are just beginning to leverage. In the first P-REC transaction in South Sudan, 3Degrees purchased P-RECs from a solar plant managed by the International Organization for Migration and transferred them to Block, a fast growing global technology company. This purchase directly funds the solar electrification of Malakal Teaching Hospital in South Sudan, the main healthcare facility of that region.
How we can help
More companies are beginning to weave equity and impact into their business and climate strategies. To a greater extent, customers are coming to us interested in the opportunity to invest in projects that contribute to a just transition and have a deeper impact. If you are interested in advancing social benefits through procurement and taking direct action in an equitable and environmentally responsible energy transition, please contact us.