We have just over a decade to contain climate warming to below 1.5°C. Any feasible economic path to achieving that goal requires us to obtain nearly all of our energy—85 per cent by 2050—from renewable sources.
It is technically possible to exit fossil fuels, if we are able to muster the political will to do so. We currently do not use all the technologies available to their full potential and only satisfy about 18 per cent of global energy demand from renewable sources. If we removed existing (and non-sensical) market and regulatory barriers, we could bump that figure to 44 per cent or more by 2030 with technologies that are ready to deploy now, putting us on target to achieve the 2050 goal.
We also need to scale private sector investments rapidly, to US$400 billion per year until 2030 for new capacity and energy system costs,and to US$ 600 billion per year after that. To put this in perspective, global gross domestic product is US$80 trillion, with annual cross-sector investments at US$20 trillion, so even a more ambitious estimate of US$1 trillion per year for a clean global energy system is a modest macroeconomic target— especially if we redeploy the US$544 billion per year the International Monetary Fund says we currently lavish on subsidies for fossil fuels; it is clearly high time that we did.
Despite renewable energy being cheaper than electricity from coal or gas, renewable energy developers are confronted with distorted power markets and regulatory disadvantages that prevent them from accessing the capital they need.
With this perverse situation only getting worse, initiatives like the RE100—through which corporates commit to sourcing 100 per cent of their power needs from renewables—have grown in importance as enablers of a faster transition to 80 per cent renewables by 2050. Given that the Commercial and Industrial sector accounts for two-thirds of the world’s end-use of electricity, corporate heavyweights wield great influence in driving the energy transition.
The RE100, a global corporate leadership initiative, is composed of 170 multinationals including 30 of the global Fortune 500, with combined revenues of US$2.75 trillion and electricity demand of 188 terawatt hours per year, equivalent to the annual electricity consumption of Thailand, the 23rd largest electricity consumer globally.
In many countries around the world, however, renewable energy is not readily available to buy off the grid. And while some companies start investing in on-site generation, this route is not always possible. Thus, a large number of companies still rely on a tool called unbundled Environment Attribute Certificates (EACs) to satisfy their renewable energy targets.
An unbundled EAC verifies that one megawatt hour of electricity was generated and fed into the grid from an eligible renewable source and, thus—provided it is strictly accounted for to avoid double-counting—can be used to offset fossil energy consumed by the purchasing company.
The major challenge for the EAC market to date has been to stimulate a liquid, transparent and accessible market that is both affordable for projects to participate in, and deemed credible by buyers.
The blockchain—a digitised ‘Distributed Ledger Technology’—provides a solution for these challenges, particularly in developing economies where a lack of transparency and verifiable ownership rights have historically thwarted clean energy investments by major corporations.
Not-for profit initiatives like the Reneum Institute, a Singapore blockchain-based EAC certification and registry platform that we represent, and SP Group’s blockchain-trading tool offer a digital solution to an analogue problem.
By unlocking a trusted global market for environmental attributes, the blockchain helps renewable energy generators secure the full economic value and social benefit of their attributes, and provides corporates who wish to contribute in a meaningful way to the energy transition with the means to do so.
In Asia, renewable energy is, regrettably, still considered niche. However, some corporate trailblazers are rising to the challenge: Singapore’s CapitaLand, for example, has said its global portfolio will be green-certified by 2030. It wants at least 20 per cent of its energy consumption to be from renewables by 2025. This is where credible digital EACs come into play: CapitaLand does not have to wait until 2025. It can deliver on its 20 per cent right now and then increase their ambition further.
Thailand’s Thai Beverage has also prioritised investments into renewable energy, exploring alternative mechanisms to offset its existing fossil fuel consumption. It has even partnered with the government of the Netherlands to commit to new measures of sustainability. DBS Bank was the first Asian bank and first Singaporean company to join RE100, pledging 100 per cent renewable energy consumption by 2030. DBS will be sourcing EACs from all eight of their regional Asian markets to support their renewable energy targets.
Corporate sourcing of renewables is critical to a faster transition to 80 per cent renewables by 2050, and blockchain-powered EACs can play a major role in ensuring corporations achieve their renewables goals faster and sooner.
Anna Lehmann and Brianna Welsh are senior vice-presidents, partnerships at the Reneum Institute, a blockchain-based certification and registry platform for environmental attribute certificates.
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