It seems that corporate America is losing a bit of interest in investing in clean energy. Investments into clean energy fell 30% in the US so far in 2020, and new data shows the risk of leaving an overdue energy transition to companies. Perhaps it could be due to the shock of a worldwide pandemic combined with the need for the government, which in my opinion is flailing helplessly with our current administration, to step in and encourage companies to cut emissions from the power grid.
During the first seven months of 2020, American companies signed contracts to buy just 4.3 gigawatts of clean electricity. This is down from 6 gigawatts during the same time in 2019 according to a new study by BloombergNEF.
In a phone interview with HuffPost, Kyle Harrison, a co-author of the report and a senior associate at BloombergNEF said, “A lot of these are not energy companies, and they have so many other things these companies need to focus on beyond sustainability. The pandemic highlights the fact that, right now, when there are other components of the company that are compromised, that’s what’s prioritized over sustainability.”
A 2017 study may provide a reason why corporations are starting to slow down on clean energy investments. The study, published in the Academy of Management Journal, found that many large corporations that announced ambitious climate goals typically walked back those goals in the face of decreased profits or when changing top executives.
Between the Trump administration financially supporting oil and gas companies and the pandemic making the construction of new clean energy projects pretty much impossible for a period of time, 511,075 clean energy workers were left without jobs as of July.
This has also reduced the number of corporate pledges to use 100% clean electricity. At the beginning of this year, a total of 21 new companies joined the RE100, which is a voluntary club of 242 firms making a promise to use 100% renewable power by some point in time. Apple is in this group, as are Virgin Media, Barclays, 3M, Target, and, well, more than 200 others.
The RE100’s total demand for clean electricity is supposed to reach 247 terawatt-hours by 2030. However, BloombergNEF’s analysis discovered that the lack of deployments and contracts will make these plans short 224 terawatt-hours. When will the lagging member companies sign renewable energy contracts?
Comparison with 2019
In 2019, BloombergNEF found that, globally, corporations signed a record amount of power purchase agreements (PPAs) for clean energy. This was up 40% higher than 2018’s total, which was the previous record. US corporate installations accounted for more than 10% of all the renewable energy capacity added globally. The estimated cost to build these projects is $20–30 billion.
Jonas Rooze, lead sustainability analyst at BloombergNEF, explained that, “Corporations have purchased over 50GW of clean energy since 2008. That is bigger than the power generation fleets of markets like Vietnam and Poland. These buyers are reshaping power markets and the business models of energy companies around the world.”
Is There Hope for 2021?
I always want to say yes to hope. Hope keeps us focused on the possibility of our goals coming into fruition. It’s that driving force that says, “keep holding, it’s going to get better,” and 2020 has been a prime example of hopelessness. Millions of Americans not only lost jobs, but many lost people to Covid-19, and those of us in America are dealing with a government that really doesn’t care about the people at all.
Many people are trying to get through 2020 before focusing on 2021, and this applies to corporations as well. Some are suddenly facing bankruptcies, while others are succeeding greatly — and those that are succeeding are still leading the way in regards to sustainability and their promises to use clean energy. So, yes, there is hope.
Also, 2020 isn’t over yet and there is still a chance that the 30% drop could end up being 25% or even better. It could go either way, but one thing for sure is that while some corporations may be unable to keep their promises in regards to clean energy investments, there are others that continue carrying the torch and leading the way.