Beware the Green Corporate Scam: the 100% Renewable Façade

counterpunch.org · by José Madero

A few months ago, Google announced that they will achieve their goal of being 100% powered by renewable energy in 2017 [1]. They are not the only corporation with such lofty goals. Google is joined by GM, Apple, Coca Cola, and more than one hundred companies who have also pledged to go “100% renewable” [2].

It would be easy to believe that this means a great victory for the planet, that the demise of fossil fuels is incoming, that environmentalism has won and that climate change will soon be a thing of the past. Yet the foul smell emerging from tax-dodging transnationals jumping all together into a bandwagon cannot be ignored.

Despite their claims, none of the companies in the RE100 list is actually going to receive all of its energy from renewable sources. The “100% renewable” label is a façade, a marketing gimmick used by corporations to pretend they are the good guys while their unfettered thirst for profits continues unopposed. This corporate lie is enabled by the abuse of Renewable Energy Certificates (RECs) which allow companies to buy their way into “green” without having to change any of their practices. Here is Google’s actual claim:

“Google will buy, on an annual basis, the same amount of MWh of renewable energy as the MWh of electricity that we consume for our operations around the world” [3].

Behold the magic of the RECs. When a renewable energy facility creates one MWh of energy, it not only creates electricity, it also gets a certificate, a REC, which states that one MWh of clean energy was created. The REC can then be sold, either together with the electricity or separate from it. The purchaser of the REC can then claim to have bought “green energy” without having ever done so. This means that you can buy 100 MWhs from your local utility provider, most likely produced in coal or natural gas power plants, and as long as you also buy 100MWhs worth of RECs, you can claim to be “powered by 100% renewables” even if that clearly is not the case. In that sense, RECs are the ultimate virtue signalers. They allow corporations to proudly wear the green badge without having to change in any way their energy consumption.

Now, RECs weren’t always all bad, and in some ways they still aren’t. They were created so that environmentally conscious consumers could support green energy generation, to encourage investment in increased generating capacity. But as a reverse-Midas that converts everything he touches into dung, once corporations realized that RECs allow them to appear green without actually being so, they began buying them in mass. The amount of RECs sold has grown more than twenty-fold since 2004 [4].

But if each REC represents 1 MWh of renewable energy created, and the sale of RECs has increased twenty-fold, that must mean that the amount of renewable energy generated has increased as much. Isn’t that a good thing? Yes and no. The share of renewable electricity generation in the US has been on an upward path, and it was almost 15% of all electricity generation in 2016 [5] (although it is worth noting that almost half of it comes from hydroelectric power, which is not a new technology.) As much as corporations would like to claim that they are fighting the good fight and are at the forefront of this trend, the truth is that government subsidies and mandated Renewable Portfolio Standards (RPS) are the ones to thank for the renewable boom [6].

There are two markets for RECs: the compliance market and the voluntary market. The compliance market is comprised of utility companies, which need to buy RECs to fulfill their RPS. There are some restrictions to what RECs utilities can buy to comply with RPS, the main ones being that they need to buy from the region where they are located, from particular sources, or “bundled” RECs, which means they need to buy both the REC and the electricity generated together. This has had two effects. One is that prices of compliance RECs have remained high. The other is that the share of renewable energy in the grid has increased. So far so good.

The voluntary market is largely comprised of big companies buying RECs for marketing purposes. Other purchasers are federal agencies and cities that have wised up to the scam. It would be great if the increase in demand for vanity RECs increased the amount or renewable energy in the grid and displaced fossil fuels, but unfortunately, studies have shown that not to be the case [7]. Federal production tax credits led to an oversupply of wind power and their respective RECs, which has caused the prices of voluntary RECs to plummet, making it very cheap to buy your way into “green” [8]. Cheap energy might sound good, but in this case it is not so. Under the current energy market system, the more renewables that enter the market, the lower the price of electricity becomes, which in turn discourages further investment, as the return is not high enough. A recently published article calls this phenomenon the Renewable Energy Paradox [9]. So the mass purchase of RECs not only doesn’t increase the share of renewable energy in the grid. Under the current system, it actually hurts further development, since the current energy market is not suitable for an increasingly renewable world.

To give credit where credit is due, Google, unlike most other corporations, claims that the majority of their renewable energy will come from bundled RECs (the better kind) and from Power Purchase Agreements (PPAs,) which are a direct commitment to buying energy from a specific power plant. While the PPA route is superior to unbundled RECs in that it does increase the total amount of renewable energy being generated, it still does not do what it says on the tin. Just as buying three pounds of kale to offset my consumption of three pounds of meat does not make me a vegetarian, a corporation buying renewable energy does not mean they are powered by 100% renewable energy if they are still also buying energy from fossil fuel power plants.

It is important that we do not miss the big picture. We need to reduce CO2emissions considerably to combat climate change. The use of fossil fuels for electricity generation is one of the major contributors to greenhouse gas emissions, so it is perhaps the most obvious target, with renewable energy being the main weapon against it. However, increasing renewable energy supply does nothing to combat climate change if it is not displacing fossil fuels along the way. By abusing the REC system, corporations are trying to fool us into thinking they are the good guys while continuing their abusive economic and environmental practices. As more companies, cities, universities, and federal agencies jump into the scam to avoid being left behind, the following will occur: The world will rejoice as renewable energy production explodes thanks to our corporate saviors, causing energy prices to fall. Soon, the Renewable Energy Paradox will strike and private investment will dry up as demand for RECs continue to rise. To ensure demand is met, government subsidies will need to expand. Meanwhile, emissions won’t decrease much, as corporations continue to rely on the dependability of fossil fuels to provide their ever-growing energy needs. Renewable production will keep rising, but the accompanying storage technologies required to make it reliable will lag behind. Eventually the bubble will burst as traditional utilities collapse and the renewable sector, a vanity project up to this point, is not robust enough to fulfill 24/7 demand. The ensuing energy crisis will, as usual, hurt the poor the most.

We cannot let this happen. We must demand that anyone who wants to call themselves “100% renewable” be just that. We already know that government policies and not corporate goodwill are responsible for the small inroads into curbing greenhouse emissions so far. We also know that the current market system is not suitable for a clean-powered world. Social, political, and technological changes are necessary if we want to avoid the worst that climate change has in store for us. This fight won’t be won by the champions of capitalism that got us into this mess in the first place. It will be won by the people, working together for the common good. Let us all join together, call corporations on their crap, and take the future into our own hands.

José Madero is a PhD student in Mechanical Engineering and member of the Graduate Workers Union at Washington University in St. Louis, where he studies the combustion of renewable fuels and the synthesis of battery materials.

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