Policy Solutions

Corporate Focus Areas

Procurement
Corporate

Corporate procurement can be a powerful tool for reducing greenhouse gas (GHG) emissions and driving private-sector demand for new clean technologies. Emissions in companies’ supply chains are on average more than five times greater than their direct operational emissions. Already, the decisions private and corporate entities make about how they obtain, transport, and use goods and services for their business define much of the current global carbon emissions profile. By making low- and zero-carbon procurement choices, they can likewise catalyze the development of cleaner products and processes. In sum, Breakthrough Energy advises companies to:

  • Use procurement commitments to encourage demand for clean technologies that are commercially viable but need early markets to become more affordable and effective.
  • Partner with early-stage companies to encourage the commercialization and wider use of low-carbon products in hard-to-decarbonize sectors such as energy storage, fuels, steel, and concrete.
  • Use proven best practices and new tools to understand carbon emissions/cost tradeoffs and then specify appropriate low-carbon products via Requests for Proposals (RFPs).

By mapping their emissions footprint, prioritizing focus areas, partnering to learn or develop best practices, and aligning metrics across the company to accelerate action, corporations and private sector entities can have a significant positive impact on reducing global GHG emissions.

Electricity

Recommended Corporate Actions on Electricity Procurement:

  • Establish clean electricity procurement contracts that maximize additionality, including power purchase agreements (PPAs) and green tariffs.
  • Prioritize clean electricity procurement in regions where projects will lead to the largest long-term emissions reductions.
  • Assess the impact of projects on their potential to reduce emissions.
  • Procure emerging electricity technologies and sources of clean dispatchable generation—like geothermal, advanced nuclear, and fossil with Carbon Capture and Storage (CCS)—that will be critical to supporting deep decarbonization of the electricity sector at the lowest cost.
  • Aggregate buyer demand to pursue collective power purchase agreements and other high-impact electricity procurement contracts.
  • Shift electricity consumption to the lowest-emissions periods on the grid.
  • Procure energy storage in ways that reduce emissions and create demand for longer-duration storage solutions.

Responsible for 25 percent of global greenhouse gas (GHG) emissions, electricity generation is currently the single biggest contributor to climate change—and emissions from this sector are continuing to increase. The world needs clean electricity, both to reach net-zero emissions across the economy and to power clean transformations in other sectors such as transportation, manufacturing, and buildings.

Organizations looking to minimize their own emissions should turn to tools like power purchase agreements (PPAs), which can add clean electricity to the grid and displace fossil fuel-based generation. Corporations and private-sector institutions are leaders in this space, and corporate renewable-project procurement is booming: RMI’s Business Renewables Center anticipates more than 60 gigawatts of new projects by 2030.

Not all approaches to clean electricity procurement have equal impact in terms of increasing demand for clean generation and reducing GHG emissions. While renewable energy certificates (RECs) are a basic tool for tracking renewable generation, for example, they cannot achieve meaningful GHG reductions alone.

Emissions impact depends on when and where megawatts are generated or consumed. For instance, California now curtails gigawatt hours of solar electricity production every spring during midday, because adding more clean generation during these times has little benefit—it results in an oversupply of clean energy that cannot yet be stored for later use. To avoid exacerbating this problem, organizations can look at a grid’s marginal generation mix to understand which emissions a new clean electricity project would displace. They can also reduce emissions by shifting demand to times when cleaner energy is on the margin. Keeping these timing and location aspects of emissions in mind—in project siting, onsite clean energy generation, heating/cooling system optimization, and device deployment, for example—will reduce emissions without sacrificing function or financial performance.

Overall, measuring the impact of projects based on a marginal-emissions metric will help organizations prioritize the strategies that most reduce emissions. This puts generation, efficiency, and load-shifting strategies on an equal footing. It also focuses efforts on shifting clean generation to regions who most need it and supports clean energy integration. Using this mindful approach, organizations can achieve greater GHG reductions with the same investments, accelerating the transition to clean energy.

Companies can also encourage the transition to a fully net-zero emissions grid beyond 100 percent renewable purchasing. They should look toward emerging sources of clean, firm, and dispatchable generation—like geothermal, advanced nuclear, and fossil with carbon capture and storage (CCS)—that will be critical to supporting the decarbonization of the electricity sector at lowest cost. They should also consider the role of energy storage, particularly long-duration storage, in helping address the intermittency of variable renewable energy sources (VREs) like wind and solar power and identify opportunities to encourage demand for these storage products.

Emissions-Optimized Procurement

Prioritize clean electricity procurement in places where projects will lead to the largest long-term emissions reductions.

Energy Storage Procurement

Acquire energy storage in ways that reduce emissions and create demand for longer-duration solutions. Ensure these solutions are co-optimized for cost savings and emissions reduction.

PPA Buyer Aggregation

Aggregate buyer demand to pursue power purchase agreements (PPAs) and other high-impact electricity procurement contracts collectively.

Transportation

Recommended Corporate Actions on Transportation Procurement:

  • Decarbonize fleets by purchasing electric vehicles (EVs), using low-carbon fuels, and procuring highly fuel-efficient modes of transportation.
  • Leverage purchasing power to scale the production of emerging low-carbon fuels like sustainable aviation fuel (SAF).
  • Support novel applications for transportation-related technologies, including hydrogen-powered forklifts in warehouses and fast-charging EV infrastructure.
  • Reduce emissions from employee travel by decreasing work-related travel when applicable, and committing to lower-carbon alternatives.

Globally, the transportation sector makes up roughly 16 percent of GHG emissions. However, in many countries—including the United States—emissions from cars, planes, trucks, trains, and ships are growing to become the largest national contributor to climate change.

In recent years, the sector has seen significant progress on the path toward net-zero emissions. Paired with a decarbonized grid, electrification is one of the most promising pathways for vehicles that travel shorter distances. Since 2010, the cost of lithium-ion batteries has declined by 85 percent, which has made electric vehicles (EVs) increasingly competitive for a wide range of applications. But despite these encouraging developments, the sector still relies primarily on fossil fuels.

Companies and private-sector organizations can accelerate the transition away from these emissions-intensive fuels by buying EVs. This, in turn, will create demand for charging infrastructure and help develop a robust network of charging stations across the world.

While electrification will be critical to the decarbonization of transportation, it likely will not solve all the sector’s challenges. Unless we achieve major breakthroughs in battery technology, electricity may not feasibly support long-distance modes of travel such as aviation, maritime shipping, and long-distance trucking. Developing cost-competitive low-carbon fuels will be critical to reducing emissions from those industries in an affordable way.

As such, companies should leverage their purchasing power to scale the production of emerging low-carbon fuels like sustainable aviation fuel (SAF), renewable diesel, advanced biofuels, and green hydrogen. Fuel consumers, such as airlines and freight transporters, can commit to buying lower-carbon alternatives to traditional fossil fuels. Companies who benefit from these services can also pay a green premium to create early markets for these fuels.

Beyond EVs and low-carbon fuels, corporations and private-sector entities should look for opportunities to support innovative applications for transportation-related technologies, including hydrogen-powered forklifts in warehouses and super-fast charging EV infrastructure in parking lots. All companies, even those without fleets of their own, can play a role in reducing transportation sector emissions by decreasing work-related employee travel and committing to lower-carbon alternatives like SAF.

Low-Carbon Fleets

Decarbonize fleets through purchasing electric vehicles, utilizing low-carbon fuels, and leveraging highly fuel-efficient modes of transportation.

Sustainable Aviation Fuel

Leverage purchasing power to scale the production of emerging low-carbon fuels like sustainable aviation fuel (SAF).

Buildings

Recommended Corporate Actions on Buildings Procurement:

  • Implement net-zero buildings practices for new construction and retrofits for office space and facilities, including:
    • Onsite electricity generation,
    • Highly efficient, all-electric equipment,
    • Advanced envelope solutions, and
    • Next-generation building management.
  • Use load flexibility in end-user devices such as EV chargers, smart thermostats, hot water heaters, or batteries to reduce emissions, improve energy efficiency, and minimize consumption.
  • Utilize lower-carbon materials—such as cement produced with carbon capture technology, steel refined with green hydrogen, or bio-based materials like cross laminated timber—in the construction of new buildings. Companies can use tools like the Embodied Carbon in Construction Calculator to procure these lower-carbon materials.

Along with the manufacturing of building and construction materials such as cement, steel, and glass, the non-residential building and construction sector accounted for nearly one-quarter of total global GHG emissions in 2018. This calculation also includes the emissions from end-use electricity consumption, coolants like hydrofluorocarbons (HFCs), and the embodied carbon of materials used in construction.

Operational carbon emissions, or those associated with a building’s operations, include the energy used for lighting, heating, cooling, and powering equipment and appliances. Over the last 30 years, the buildings industry has made significant progress in reducing these emissions. Best practices for implementing improvements in electrification and energy efficiency range from simple no- and low-cost improvements to more expensive upgrades that may be funded via long-term savings.

Still, according to ENERGY STAR, the average commercial building today wastes 30 percent of the energy it consumes. Companies can help accelerate the transition toward net-zero energy buildings by further reducing operational emissions. They should also implement net-zero practices for new construction and retrofits of office space and facilities, including onsite generation, highly-efficient all-electric equipment, advanced envelope solutions, and next-generation building management.

Corporations who already use all-electric infrastructure can go even further. Up to 70 percent of electricity end-use is flexible, and the marginal emissions of the grid changes as often as every five minutes based on underlying sources of electricity. To maximize climate impact, companies should use load flexibility in end-user devices such as EV chargers, smart thermostats, hot water heaters, or batteries to reduce emissions, improve energy efficiency, and minimize consumption. Buildings can also act like batteries, shifting electricity demand to cleaner periods through real-time controls and automation.

In addition to operational carbon emissions, buildings contribute to climate change through the manufactured cement, steel, and iron used to make them. These are known as embodied carbon emissions. Operational carbon emissions can be reduced over time, as things like HVAC systems become cleaner and more energy efficient. Embodied carbon emissions, by contrast, are locked in place as soon as a building is built.

Embodied carbon encompasses the emissions associated with extraction, manufacturing, transportation, and installation of all the materials that are needed to make a building. These “upfront” emissions include everything up to the point that a building actually turns on the lights and begins to operate. Experts estimate the emissions from manufacturing building materials comprise more than 11 percent of global emissions. To reduce these emissions, companies should use lower-carbon materials—like cement produced with carbon capture technology, steel refined with green hydrogen, or bio-based materials like cross laminated timber—in the construction of new buildings.

Although these emissions are getting more attention today, it has been difficult until recently for decision makers to map and compare materials. A new, free open-access tool, the Embodied Carbon in Construction Calculator, can help companies procure lower-carbon materials.

Net-Zero Energy Buildings

Implement net-zero buildings practices for new construction and retrofits for office space and facilities.

Automated Emissions Reductions

Use load flexibility in end-user devices and buildings to shift electricity demand out of high-emissions periods and into low-emissions periods.

Low-Carbon Building Materials

Use lower-carbon materials in the construction of new buildings.

Tool: Embodied Carbon in Construction Calculator

Created by a consortium facilitated by the Carbon Leadership Forum, the free, first-of-a-kind Embodied Carbon in Construction Calculator (EC3) Tool enables users to analyze and compare the carbon content of building materials.

Manufacturing

Recommended Corporate Actions on Manufacturing Procurement:

  • Address Scope 3 emissions throughout the supply chain by integrating climate evaluation criteria into contracts and Requests for Proposals (RFPs).
  • Procure low-carbon materials commonly used in products such as aluminum and plastic.
  • Create early markets for key technologies to address emissions from industry and manufacturing—including carbon capture, direct air capture, and green hydrogen—through commercial-scale demonstration projects.

The manufacturing sector—which includes the cement in our bridges, the steel in our cars, the clothes we wear, the books we read, and the plastic toys and containers we buy—accounted for 31 percent of global greenhouse gas (GHG) emissions in 2017, making it the largest contributor to climate change that year.

To make these products, large manufacturing facilities rely on fossil fuels for heat and power. Further emissions come from the chemical processes used to develop key materials and from high levels of electricity consumption.

While some emission reductions can be attained in the same ways as other sectors (net-zero electricity procurement and efficiency, for example), eliminating emissions from many manufacturing processes is still a challenge. Fortunately, solutions are emerging—including electrifying those processes that currently use fossil fuels, developing low-GHG alternatives to fuels where electrification isn’t cost-effective, deploying carbon-capture technologies, and reducing emissions from the production of oil and gas.

All companies, even those that do not manufacture their own products, can support these decarbonization efforts. The private sector can leverage its large buying power—including plastics used in containers, aluminum used in cans, and metals used in electronics—to put pressure on supply chains to reduce the carbon intensity of production. To address Scope 3 emissions (indirect emissions from sources other than electricity), companies should integrate climate-evaluation criteria into contracts and Requests for Proposals (RFPs). They can also work directly with suppliers to procure low-carbon materials. Committing to long-term contracts for low-carbon products, even if they come with a green premium, will force producers to reduce emissions, and the costs of low-carbon alternatives will come down over time.

Manufacturers also have a critical role to play in decarbonizing this sector. Commercial-scale demonstration projects can and should create early markets for key technologies that address emissions from industry and manufacturing, including carbon capture, direct air capture, and green hydrogen.

Low-Carbon Products

Source low-carbon materials for end-use products.

Agriculture

Recommended Corporate Actions on Agriculture Procurement:

  • Increase demand and consumption of alternative proteins in restaurants, grocery stores, and corporate cafeterias.
  • Source sustainably-produced foods that avoid the use of harmful products like palm oil and proteins that rely on unsafe farming and fishing practices.
  • Reduce food waste throughout the supply chain, at the production of meals, and during consumption by employees.

The agricultural sector made up approximately 18 percent of global greenhouse gas (GHG) emissions in 2017. These emissions come primarily from soils used in cultivating crops, methane produced by livestock raised for meat and dairy production, and deforestation.

As the world population continues to grow, the demands for food will increase by almost 50 percent, with even higher growth rates estimated for animal-based products. Slowing and reversing the rise of agricultural emissions while still meeting growing global demand for food will require significant innovations in agricultural practices. On the supply side, new technologies, practices, and policies will need to increase efficiency while reducing the use of fertilizers, increasing carbon sequestration through soil management, and reducing methane emissions from livestock. At the same time, demand-side measures can reduce the consumption and waste of GHG-intensive foods.

As major consumers of food, companies and private-sector institutions have a critical role to play in decarbonizing the agricultural sector. Meat and dairy are likely to remain the most GHG-intensive foods, so they should be a key starting point for corporate buyers. The plant-based meat and dairy market is taking off, driven by a flurry of innovation in new food products that increasingly resemble conventional meat and dairy in taste, texture, and price. Companies should increase demand for alternative proteins like plant-based meat and low-GHG dairy products in restaurants, grocery stores, and corporate cafeterias. They can also source sustainably-produced foods that avoid the use of harmful products like palm oil and proteins that rely on unsafe farming and fishing practices.

Food waste is another critical problem in the agricultural sector that leads to significant emissions from unnecessary food production, transport, cooling, and cooking and methane production at disposal. Some studies estimate that as much as 8 percent of global GHG emissions come from wasted food. Companies should thus work to reduce food waste throughout the supply chain, at the production of meals, and during consumption by employees.

Alternative Proteins

Increase demand and consumption of alternative proteins in restaurants, grocery stores, and corporate cafeterias.

Food Waste

Introduce new technologies, processes, and practices to reduce food waste in corporate-run kitchens.

Procurement Deep Dives

Accelerating Corporate Procurement

More Corporate Focus Areas