What role can green electricity play in a company’s journey to net-zero?
Svend Brun Hansen, Lead Environmental Advisor
Svend Brun Hansen, Lead Environmental Advisor
Energy accounts for 73 % of global greenhouse gas emissions, and 20 % of that energy is used in the form of electricity. That’s why we at Ørsted put so much focus on decarbonizing electricity: transforming the world’s energy systems to produce green electricity is a key lever in the fight against climate change. That’s not to disregard other emissions, but to take aim at decarbonising one of the biggest single sources of greenhouse gases.
The good news is that renewable electricity is already a mature and cost-efficient technology. And as more and more companies set net-zero targets, green electricity can play a central role in corporate climate action – which can in turn support the build-out of renewable electricity capacity. Let’s explore what that looks like in practice.
Companies are huge consumers of electricity, using it across their direct operations and their supply chains. Their top priority should be to use that electricity efficiently, reducing overall demand, especially if it comes from fossil fuel sources.
But they should also consider electrifying other energy-intensive processes, making it possible to power them with renewable energy. There are already growing possibilities to electrify transportation, heating, and industrial processes. Even the most fossil fuel-intensive production processes, like steelmaking, may in the future be powered with electricity.
To power current or future electrified processes, companies should generate or procure electricity from renewable sources. There are different ways to do this. These include building your own on-site renewable capacity like solar panels or wind turbines, entering a corporate power purchase agreement (PPA) with a company like Ørsted that generates green energy, or sourcing renewable electricity certificates.
Procuring green electricity is a step that any company can take today. Unlike some other decarbonisation technologies, green electricity is a mature solution that is readily available and cost-competitive in most parts of the world. What’s more, by procuring green electricity companies can actively support the wider green transformation, for instance by actively funding the development of renewable energy infrastructure or ensuring stable prices for green electricity through PPAs.
At Ørsted, we’ve asked all our suppliers to switch to renewable electricity. Through our industry-leading supply chain decarbonisation programme, we’re collaborating with strategic suppliers to make progress towards our science-based target of net-zero emissions by 2040. By setting a clear expectation on electricity, we hope to catalyse change, dramatically increasing the number of companies procuring electricity from renewable sources, thereby supporting the build-out of renewable energy.
We’ve developed a set of guidelines to help companies assess the possibilities they have, indicating which renewable electricity products we consider to be the best options and why. We hope this can help them select the best solutions available to them.
We see the procurement of green electricity as one of the first steps in any company’s decarbonisation efforts. As I said, it’s a step that any company, whether big or small, can take immediately.
It’s also important to remember that this is only one step on the path to net-zero. We encourage all companies to start with a focus on energy savings and sourcing renewable electricity to cover their full consumption. But there are other things companies can do, as outlined in our Supply Chain Decarbonisation Programme.
Companies can work to disclose emissions across their value chains and set science-based emissions reductions targets. To work towards these targets, companies can develop road maps to switch all their energy use to renewable energy, engage their own suppliers to collaborate on reducing emissions, or develop products that are more durable or consume less energy over their lifetime.
We are excited to continue collaborating with our suppliers as they make progress towards lower emissions. We really believe that collaboration is key – it’s not enough just to set requirements or impose targets. Instead, we want to share our knowledge, build the capacity of suppliers where this is needed, and regularly engage with the people leading the charge.
Green electricity is a great place to start – but there’s so much more we plan to achieve together.