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December 05, 2006
Eight Percent of Fortune 500 Taking EPA Challenge to Double Their Green Energy Use
    by Bill Baue

Fortune 500 companies are installing renewable energy generation on-site as well as purchasing green power directly or through renewable energy certificates.

Yesterday, the Environmental Protection Agency (EPA) launched its Fortune 500 Green Power Challenge that asks companies to double their use of renewable energy over the next year. Currently, 40 Fortune 500 companies--including top five Wells Fargo (ticker: WFC), Whole Foods Markets (WFMI), Johnson & Johnson (JNJ), Starbucks (SBUX), and DuPont (DD)--purchase 2.5 billion kilowatt hours (kWh) of solar, wind, geothermal, and other types of green power.

The goal is to exceed 5 billion kilowatt hours of corporate green power use, which could power more than 400,000 average American homes or avoid the equivalent carbon dioxide (CO2) emissions of over 680,000 cars each year. This represents 9 percent of the 55 million megawatt hours (MWh) of renewable energy generated in the US in 2005, according to the US Energy Information Administration (EIA). This total amount of renewable energy accounted for 1.5 percent of the country’s total electricity generation.

"Purchasing green power is a very easy and effective way for corporations to reduce their organizations' greenhouse gas emissions and the risks associated with global climate change," said Kathleen Hogan, director of EPA's climate protection partnership division. "These voluntary green power purchases are also helping to accelerate the development of new clean generation facilities across the United States."

The companies take three basic approaches to accessing green power, most often combining these solutions. The most direct approach is on-site renewable power generation, for example by using solar photovoltaic (PV) panels. Johnson & Johnson, a corporate pioneer in utilizing solar energy, generates power from PV panels at its facilities. Of the 306 million green kWhs the company uses (representing 30 percent of its electricity usage), JNJ also directly purchases green electricity from low-impact hydro and wind power as well as Renewable Energy Certificates (RECs) in wind power and biomass facilities.

RECs offset carbon emissions from non-renewable electricity sources by supporting green energy generation projects, such as wind power farms, and thus represent the least direct form of support for green power. There is some debate over whether RECs actually reduce greenhouse gas emitting power generation, since the actual energy the companies use continues to be derived predominantly from carbon emitting fossil fuels. The green power supported by RECs is not actually being consumed by the company paying for the RECs.

REC supporters argue that the certificates send a strong market signal in favor of green energy that will eventually shift the marketplace away from non-renewable energy sources.

"Wherever the power is being generated, there is a corresponding amount of power from fossil fuel-derived generation that's being offset somewhere, so we think that all of these products at some level have a very positive additionality component to them going forward," said Mark Buckley, vice president of environmental affairs at Staples (SPLS).

As with Johnson & Johnson, Staples is taking an integrated approach to carbon mitigation, using 121 million kWhs of green energy (or 24 percent of its total electricity usage) in direct purchases and RECs for landfill gas, biomass, solar, and wind power. The company is also in the process of installing on-site solar PV panels at two California distribution centers.

Mary Wenzel, vice president of environmental affairs at Wells Fargo, seconds this position, pointing out that direct access to electricity from renewable energy is not a given.

"We are in very few markets where we have the opportunity to purchase green energy directly and believe the environmental benefits of renewable energy certificates are just as strong," said Ms. Wenzel. Wells Fargo jumped to the top of the Green Power Partnership list in October 2006 after it purchased 550 million kWhs of wind power RECs (or 42 percent of its total electricity usage). "In addition to purchasing RECs, we have made several investments in wind energy developments directly and for our customers, so there's no question that this is a growing market."

The logic behind EPA's Fortune 500 Green Power Challenge is that growth in the market will spur growth in corporate demand for green power, and vice versa, to create a virtuous cycle.

"As we go forward with this challenge, we are hoping that our existing Fortune 500 companies will of course increase their commitment to green power and additional Fortune 500 companies will come on board as part of the Green Power Partnership as well," said Ms. Hogan. "We're continually in conversation with more potential partners quite actively."


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