The problems associated with traditional energy sources are well documented and extensive. Fossil fuels contribute directly to climate change, and they have a direct human cost as well. Increasing renewable energy capacity in every market around the globe is vital to addressing these problems and turning the tide on climate change. It is clear that renewables will be a crucial part of the energy mix in the future.
While there are ongoing efforts to tackle the energy divide between the developed and developing worlds, the reality is that, in most countries, the renewable energy infrastructure is still significantly under-developed. This creates a major barrier to economic growth, and it does nothing to confront the environmental and health issues caused by traditional sources of energy.
The private sector must be part of the solution, and businesses should work in partnership with government, non-profits, and local energy suppliers as they continue to build renewable capacity around the world. Committing to a renewable electricity future is the right move and makes strategic sense — for both global businesses and sustainable development. Many leading companies, including AB InBev, have already taken steps to do this.
Why the global focus? It is true that in many cases, developing markets are leading the charge when it comes to investing in renewable energy sources. According to REN21, the Renewable Energy Policy Network for the 21st Century, by the end of 2015, China led all countries in renewable power capacity or generation.
But there are more areas of the world where the incredible demand for renewable energy sources, which offer cleaner, and often cheaper power, is not yet met with enough supply. And building capacity comes with considerable risk: local regulations, currency or financing risks, a longer term timeframe, and other challenges can all be potential hurdles.
The private sector has a great opportunity here to help convert this demand into action by reducing risks for energy providers and local officials. By initiating long-term agreements with clean energy providers, businesses can provide stable demand and the capital for further investment in local renewable energy infrastructure projects. In Mexico, for example, AB InBev recently struck a Power Purchase Agreement (PPA) with Iberdrola to provide renewable electricity for our operations across the country. Iberdrola will build and install an on-shore wind farm in the state of Puebla. This should add more than 5% in additional renewable energy capacity to the country’s current installed wind capacity, based on the International Renewable Energy Agency’s estimate for the country’s existing 2015 installed wind and solar capacity. And we are just one company. While many others are already working on similar initiatives, imagine what Mexico’s renewable energy infrastructure could look like if every business working in the country made similar moves.
The private sector not only has an opportunity to do this — we have an obligation. Businesses are a key source of global carbon emissions, which is one of the most significant contributors to climate change. It is therefore our responsibility to proactively contribute to climate change solutions — and by doing so, we really can make a difference.
If each company commits to doing its part, we can have a real impact. RE100, a global coalition of businesses including AB InBev that have committed to 100% renewable power, estimated that in 2015, a relatively small group of 87 of their member companies had created demand for an incredible amount of renewable electricity: 107 terawatt hours, which is roughly the same amount of electricity used annually by entire country of the Netherlands.
And it makes good business sense — in some markets, renewable energy purchased via PPAs is cheaper than grid-sourced electricity. These agreements can also reduce the risk from volatility in energy prices by locking in a fixed price of electricity for the purchasing company.
Right now, the private sector has the chance to do something that would be meaningful and beneficial for both businesses and for citizens around the world, now and into the future. Committing to a renewable electricity future is the responsible path forward. The time to act is now.
Tony Milikin is AB InBev’s Chief Sustainability& Procurement Officer. Tony holds an undergraduate Finance Degree from the University of Florida and an MBA in Marketing from Texas Christian University in Fort Worth, Texas. Tony joined AB InBev in May 2009 from MeadWestvaco, where he was Vice President Supply Chain and Chief Purchasing Officer, based in Richmond, Virginia, since 2004. Prior to joining MeadWestvaco, he held various purchasing and supply chain positions with increasing responsibilities at Monsanto and Alcon Laboratories.