As negotiators from almost 200 nations reached a historic agreement at the COP21 summit in Paris, the world showed that it stood united in its fight against climate change and rising greenhouse emissions.
Under the new agreement, the member nations need to prevent the rise of global temperatures by no more than 2 degree Celsius by the year 2100 and try their best in limiting the temperature rise below 1.5 degree Celsius. Although the emission targets of the individual nations, under the new agreement, are not legally binding, the Paris agreement will be a shot in the arm for the renewables.
Moreover, the historic developments in Paris have put green alliances such as RE100 on the center stage. RE100 is an alliance formed by 53 companies (to date) with a target of using 100 percent of renewable electricity in their day-to-day operations. Being led by the Climate Group and CDP, the RE100 alliance includes corporate giants such as Google, Nike, Microsoft and Coca Cola who have pledged to utilize only renewable power for running their operations.
How does this impact the renewable market?
According to the recent estimates made by the Climate Group and CDP, if all the 53 odd companies of RE100 start using 100 percent renewable electricity, that could lead to an increase of 90.1TWh of renewable electricity generation. This figure, which is almost equal to 1 percent of the total electricity usage by the industrial sector around the world, is indeed impressive. The estimate even shows that if the 1,000 most influential companies start using 100 percent renewable electricity, the renewable electricity market would have an additional demand of 1,700TWh. Related: LNG Glut Worse Than Oil
“The RE100 campaign is sending a clear message to Paris that the technological solutions to tackle climate change already exist, and that business supports the switch to renewable power. An ambitious and robust climate agreement will help accelerate the shift to the 100% renewable electricity future that everyone is calling for,” said the RE100 Campaign Director of The Climate Group before the Paris agreement.
As we now have an ambitious and robust climate agreement in hand, RE100 group could indeed have a deep impact on the renewable power market in days to come.
What is the most viable option for these companies?
“This (Paris) agreement will allow them (RE100 member companies) to go further and faster in their own ambitious plans and policies, and ensure that the transition to the new, smart economy is a swift one. This is only the beginning of the journey and opportunity. Imagine what can now be achieved by these leaders with a global deal that supports and encourages them to go even further,” said CEO of The Climate Group Mark Kenber.
It needs to be clarified that RE100 is currently focusing only on the ‘renewable electricity market’ with its member companies having an option of generating renewable electricity through either off site electricity generation or on-site electricity generation. Since RE100 members are at present only concentrating on generating 100 percent renewable electricity, the most viable option for them would be to first achieve this target and then aim for covering their other operations related to logistics, transportation and manufacturing through renewables. Related: $30 Oil Will Accelerate Much Needed Rebound
Once this happens and if RE100 keeps on adding more and more global companies, then one can expect a considerable impact on the non-renewable energy demand in next five years.
“The consequences of this (Paris) agreement go far beyond the actions of governments. They will be felt in banks, stock exchanges, board rooms and research centres as the world absorbs the fact that we are embarking on an unprecedented project to decarbonise the global economy,” said CEO of Unilever Paul Polman whose company is a RE100 member and has a target of generating 100 percent of its total energy from renewables by the year 2030. Although members of RE100 are currently targeting 100 percent renewable electricity, the group will eventually need to expand its goals and ultimately generate ‘100 percent energy’ through renewables, not just electricity. After all, any efforts towards decarbonising the global economy cannot exclude the transportation sector.
By Gaurav Agnihotri of Oilprice.com
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