The Energy Transition, Climate Adaptation and Climate Justice

• Pages: 189-207
• Author: Michael P. Vandenbergh,Sarah E. Light,James Salzman

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Chapter 9

THE ENERGY TRANSITION, CLIMATE

ADAPTATION AND CLIMATE JUSTICE

Chapter 7 described why companies care about addressing

climate chang e. Chapte r 8 explored the full toolkit of PEG

instruments in the climate space. Chapter 9 turns to PEG initiatives

in three specific settings. Because emissions from f ossil fuels play a

central role in driving climate change, the e nergy system is

undergoing a major transition to decarbonized energy sources. We

begin Chapter 9 by examining the many PEG initiatives that are

designed to accelerate the energy transition, blurring the boundary

between climate initiatives and energy initiatives. Eve n if climate

mitigation and energy transition efforts succeed in achieving the

goals of the Paris Agreement, though, a substantial amou nt of

adaptation to climate change will still be necessary , and our second

section examines PEG adaptation initiative s. Third, we wrap up the

chapter by exploring the significant environmental justice concerns

raised by PEG energy transition and climate adaptation initiatives.

I. The Energy Transition

Roughly 80% of GHGs are the product o f fossil fuel use, so PEG

initiatives often focus on transitioning the energy system to low-

carbon or zero-carbon fuels. We focus below on three aspects of the

role of private governance in the energy transition: renewable power

initiatives, the Equator Principles, and energy transactions.

A. Renewable Power Initiatives

Many private organizations help companies reduce the collective

action problems we discussed in Chapter 2 by serving as a forum for

companies to reduce the transaction costs of coordinating, to gain the

benefits of cr edible public commitments, and to gain expertise.

Roughly half of the world’s end -of-use of electricity occurs by

companies in the commercial and industrial sector, and two leading

initiatives led by non-governme ntal organization s (NGOs) have

emerged to push for and coordinate corporate renewable power

commitments: the RE100 initiative and the Renewable Energy

Buyers Alliance (REBA)/Clean Energy Buyers Alliance (CEBA).

1. RE100

RE100 is a global initiative that includes close to 400 companies

that have committed to powering their o perations with 100%

renewable electricity (hence the name “RE”). RE100 is managed by

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PEG IN ACTION: CLIMATE AND ENERGY

Pt. II

CDP and the Climate Group, an international non-profit specializing

in working with businesses on climate and energy initiatives.

RE100 focuses on companies with very large electricity demand,

typically over 100 GWh annually. The participating companies span

a wide range of sectors, from technology, pharmaceu ticals, and

manufacturing to fashion. They currently include well-known

companies such as IK EA, Google, Apple, and General Motors. The

large energy demand and size of RE100’s membership send signals

to markets and g overnments about private sector demand for

renewable power. RE100 provides a platform for companies to make

public commitments to using 100% renewable power, to follow

widely-adopted standards for assessing ho w much ren ewable power

they should purchase and what types of power qualify, to create

incentives for other companies to make similar commitments and to

push for governments to improve the regulatory environment for

renewable power. To participate in RE100, companies are required

to match 100% of the electricity they use across their g lobal

operations with e lectricity produced from a ran ge of renewable

sources (such as contracts with electricity suppliers or renewable

energy credits). By focusing on private commitments for renewable

power around the globe, RE100 not only reduces the transaction costs

of collective action, but also bypasses the geographic and political

boundaries that are barriers to gove rnment action on energy and

climate change.

As with any public or private regulatory system, lawyers and

managers advising clients on whether and how to participate in

RE100 focus on the r isks and benefits of joining, the co mmitments

required, and the process of joining and leaving the organization. For

RE100, companies must commit to 100% renewable power by 2050,

with interim steps of at least 60% by 2030 and 90% by 2040. The

permissible renewable sources include electricity from the market or

produced by the company and can include wind, solar, geothermal,

biomass (including biogas), or hydropower. Participating companies

can procure renewable electricity d irectly by purchasing from

generators and suppliers in the market through power purchase

agreements (commonly called “PPAs”) and can make retail renewable

power purchases and buy stand-alone “unbundled” renewable energy

instruments. RE100 also requires participating companies to join the

campaign at the group level (not to just have a subsidiary or unit join)

and commit to a set of core criteria. To give a concr ete sense of these

criteria, they are set out below:

• Commitment. A 100% renewable electricity public

commitment that includes al l of the co mpany’s

operations, including Scope 1 emissions from

electricity generation, Scope 2 emissions from company