IKEA, Nestle, Swiss Re show how they’re seizing the multiple benefits of renewable power
- 20 January 2015
ABU DHABI: A group of the world’s most influential companies say there is a growing business case for investing in low carbon energy which is propelling them to go 100% renewable, during a panel hosted at the World Future Energy Summit (WFES).
Corporate leaders including IKEA, Nestlé and Swiss Re highlighted that switching to renewable power is critical – not just for the long-term sustainability of their businesses but also to address the escalating risks of climate change. At an event hosted by The Climate Group at the WFES in Abu Dhabi, an audience of business and policy leaders heard that the renewable energy market is showing signs of a fresh surge, with new figures showing consistently strong returns on new investments.
Michael Liebriech, Founder of Bloomberg New Energy Finance, was among those to address the event to discuss the findings of a new report from the RE100 campaign – which is led by The Climate Group with CDP, IRENA and We Mean Business – that is demonstrating why leading businesses are switching to 100% renewable power. According to the report, the manufacturing sector is among those currently making the greatest renewables investments – and getting the greatest financial returns.
Steve Howard, Chief Sustainability Officer, IKEA Group, said that investing in clean energy was fundamental to reducing risk and building a resilient business. "We took a 9 million dollar hit to our business after Hurricane Sandy. Climate change is a real business risk. That, fundamentally, is why we decided to go for a full 100% cover of our energy production from renewables.
“We now have 300 wind turbines. By the end of this year we should achieve 70% of our energy production target. We are eliminating uncertainty over carbon pricing and our energy exposure."
RENEWABLES GROWTH TREND
Increasing interest from big energy users will add to the transformation that is taking place in the power sector and continue to drive the global trend for renewables.
"We have seen an increase in the investment in renewables by 16%. The market is bouncing back,” added Michael Liebriech, Bloomberg New Energy Finance. "Solar and wind are particularly financially effective when the energy is consumed on site.”
He went on to point out that when companies invest in renewables it increases their awareness of power consumption with a knock on effect of improving energy efficiency too. “What I like about RE100 is the focus on demand side generation. We need collegiate solutions like this which work out the demand and then start backwards on the solutions, starting with renewables first.”
IKEA and Nestlé both stated that they were also investing in biomass production. Claus Conzelmann, Vice-President, Head of Safety, Health & Environmental Sustainability of Nestlé said: “For us, renewable energy is part of a strategy to mitigate against the inevitable effect of climate change. In Mexico, all of our 15 factories source the majority of their energy from renewables. We are gradually switching over to biomass. Coffee grounds have a high thermal value and we are now using them as energy fuel in a number of factories.”
“Our motivation for investing in renewables is the long-term survival of our business, not a short-term payback," he added.
Swiss Re, one of the world’s largest reinsurance companies, was one of the founders of the RE100 campaign, which has already recruited 15 of the world’s leading companies to the goal of sourcing 100% of electricity from renewable sources. Juerg Trueb, Head of Environmental and Commodity Markets, explained: "We started lobbying for climate change action in the mid-1990s, and were one of the first companies to purchase renewable energy. Climate change is a relevant risk for us as an insurer insuring against natural disasters. Climate change is not just about storms and other natural catastrophes. The impact of droughts on the agriculture sector relates to food security."
One of the RE100 campaign’s institutional partners is the International Renewable Energy Agency (IRENA). Dolf Gielen, Director of Innovation and Technology Centre, highlighted why IRENA sees the campaign as a priority initiative. "Governments alone do not have the funds available so the private sector is a key partner. The knowledge that the private sector has in this debate is invaluable. The economic argument is there already. We see innovation as a critical component in success in increasing the demand for renewables."
The World Future Energy Summit was launched seven years ago by Masdar, the Abu Dhabi company with three business units including Masdar Clean Energy, Masdar City, and Masdar Capital with a mission to find ways to deliver practical solutions for sustainable living. Tony Mallows, the Director of Masdar City, said that Masdar’s initiative showed that renewable energy was a priority for leadership in the oil-producing country. "Our mission is to advance and become world leaders in renewable energy. Urban development is a prime target for action on carbon emissions. We are working with corporations to advance the benefits of sustainable strategies. It is possible to reduce urban development power and water consumption by 50% if you start by planning for it at the beginning."
He added there was a need for regulatory reforms to facilitate the adoption of clean energy by businesses. "Government regulatory environments need to adapt. Private corporations have a role to play in demonstrating the optimization of the regulatory environment. The subsidizing of energy consumption has to shift and this will strengthen the business case. RE100 will help to create a shift towards the business case for renewables."
SMART BUSINESS MOVE
Emily Farnworth, Campaign Director of RE100 at The Climate Group, said that the campaign was growing fast primarily because of the increasingly clear business case for adopting renewable power, and that she expected major companies in the Middle East will join.
"The appetite for renewable power among corporates is increasing. We are seeing a massive rise in PV solar, and major investments in wind energy. We are also seeing internal rates of return of up to 18% on companies’ investments. The myth that renewable energy doesn't help businesses to move forward is one that needs to be busted once and for all.
The comments during the panel discussion were a reflection of the wider conversation taking place at the Summit. It is clear from the government and businesses represented – estimated at 32,000 people from 170 countries – that the narrative is shifting. It is no longer a question of whether or not renewables can take the lion’s share of global power generation, but how long it will take to get there.
Panelists, from left to right: Claus Conzelmann, Vice President and Head of Safety, Health & Environmental Sustainability, Nestlé Group; Dolf Gielen, Director of IRENA’s Innovation and Technology Centre; Jurg Trueb, Head of Environmental and Commodity Markets, Swiss Re; Emily Farnworth, RE100 Campaign Director, The Climate Group; Michael Liebreich, Founder and Chairman of Bloomberg New Energy Finance; Steve Howard, Chief Sustainability Officer, IKEA Group; Anthony Mallows, Director of Masdar