Who’s Buying Clean Energy?

A June 2011 report, the joint effort of Bloomberg New Energy Finance and Danish firm Vestas Wind Systems (VWDRY.PK) is aimed at identifying which corporations have voluntarily purchased significant amounts of renewable energy technologies, and which may be “greenwashing” their image.

Called the Corporate Renewable Energy Index, or CREX 2011, this is the largest and most global report ever conducted to measure corporate renewable energy activity. It is aimed at providing the kind of information that conscientious consumers can use to guide purchases, and that NGOs and policy makers may use to decide where to allocate funding and/or special attention so as to increase the uptake of renewable technologies.

Tracking the almost exponential rise in clean energy investment, from $52 billion in 2004 to $243 billion in 2010, the report identifies companies by the percentage of renewable energy purchased (page 14), by “absolute” renewables utilized (page 15), and by sector. Some of the companies are headquartered in the U.S., while others are European or Asian firms.

Some clear winners in the category of "renewable energy purchased" are Intel Corporation (NASDAQ.INTC), Kohl’s Corporation (NYSE.KSS), CLP Holdings (Hong Kong-based energy company), Whole Foods Market, Inc. (NASDAQ.WFM) and Koninklijke KPN (Netherlands; communications).

Winners in their market sector include Plum Creek Timber Co., Inc. (materials; NYSE.PCL), News Corp (communications; NASDAQ.NWSA), Kohl’s Corporation (consumer goods and apparel), CLP Holdings (energy/utilities), Toronto-Dominion Bank (financial services; NYSE.TD), Vestas (industrial) and Adobe Systems (communications technology, NASDAQ.ADBE).

As the report notes, more than 80 percent of all renewable-generated corporate electricity purchased in 2009 was done via renewable energy credits (or certificates) known as RECs.

Unfortunately, even when corporations “green” their image by reporting renewable energy purchases, fully 30 percent of them don’t know which technology (solar, wind, biomass, etc.) is represented. And even though nearly three-fourths of companies surveyed increased their 2010 renewables procurement, more than 40 percent of them still held a basket of renewables that represented less than 5 percent of their overall power consumption needs.

Broken down by geographic location, 25 European companies met 40 percent of electricity needs through RECs; 48 U.S. companies consumed 22 percent renewables; and 12 companies from Japan averaged no more than a 3-percent of renewables.

Direct financing of renewable energy projects, and purchases of energy from these corporations, accounted for less than 0.6 percent in 2010 – a factor driven by the time and expense needed to install a solar panel rooftop array, for example.

Wind was reportedly the most popular energy source for those companies that knew where their renewables were coming from, accounting for 51 percent of REC purchases. Solar accounted for only 1 percent, while biomass reached a total of 11 percent and hydropower won fully 14 percent. The popularity of wind is ascribed to its technological advancement and economic competitiveness.

Data for the report was gathered in two time periods (November 2010 to January 2011, and April 2011 to June 2011), from 176 firms which responded to the survey and whose results could be calibrated. The report is admittedly less than comprehensive since it relies solely on respondents and not on global renewable energy purchases as a whole.

Another aspect of the report that may skew real renewable energy purchasing is the fact that it incorporates, small, but measurable, investments in things like energy efficiency and smart grid installations. And, of course, the models by which companies are vested in renewable energy technologies vary from direct and indirect REC purchases through utility “green pricing” programs, carbon offsets or carbon trading, or a combination of the above (see page 10).  

Clear winners, by sector, were technology (i.e., Adobe, Dell, Intel, 22.8 percent) and financial services (19.8 percent) – a not-surprising development, considering that these are also the sectors which have survived an extended recession relatively unscathed. Technology companies were also the most knowledgeable about the source of their renewable energy purchases, and here again wind was a winner at 45 percent of the total renewable purchases.

One of the downsides of the report shows that energy-intensive companies (manufacturing, for example) are less vested in purchasing renewable resources, largely because of their greater need for energy, its greater impact on bottom lines, and the higher costs associated with green pricing programs.

Does green power pay? A better way to frame the answer would be to point out the graph of CREX-based corporations (page 24) based on their performance against the MSCI performance benchmark for global stocks. The question then becomes if green power is cause or effect. Like childhood development, performance may be integral to corporate social and environmental responsibility as a whole.