Article examines corporate renewable energy pledges, how they interact with state laws
LAWRENCE — After Donald Trump was elected president and put a renewed focus on fossil fuels, several large corporations made headlines by setting goals to increase the renewable energy they buy. Many are making progress on those pledges, while varying state energy laws have made it easier in some parts of the country than others. A University of Kansas law professor has written an article analyzing corporate renewable pledges, outlining how policies have played a part and cautioning it is important to realize what 100% renewable goals mean in context.
Uma Outka, William R. Scott Research Professor at the KU School of Law, said corporations are driving new development of renewable energy. Her article, published in the Utah Law Review, examines that growth and takes an early look at how state policies are influencing the development.
“The trend of large corporations pledging to boost their renewable energy consumption seemed so counter to the direction the Trump administration wanted to turn in terms of energy policy. So, I wanted to understand the legal environment for corporate buyers specifically,” Outka said. “It’s a little too early to compare the success or efficacy of the newest state policies. But when traditionally regulated states took note of the fact that the vast majority of deals were made in the most ‘deregulated’ states, some have taken notice and tried to adapt. That’s the most recent development.”
State laws regarding energy development vary widely from state to state. And while deregulated states have seen large amounts of corporate deals, they are not the only states that have seen significant renewable energy growth. Kansas, for example, is what Outka calls a hybrid state, with traditional utility regulation while also being part of the Southwest Power Pool. Because of exceptional wind resources in Kansas, the state is first in the nation for electricity generated from wind and may well become the first state to generate most of its electricity from wind power.
States have also increasingly begun to change their policies in response to the growing corporate demand for renewable energy, and states that are more traditional in their regulatory approach have found new ways to be part of renewable energy development. While renewable energy is growing in some places in the current political climate, it’s not surprising given who is driving the demand. Large corporations are large customers that spend a lot of money on energy and utility companies have a clear economic incentive to provide them options they desire.
“Companies are influencing the energy industry with their demand for clean power, without a doubt,” Outka said. “It’s part of a larger trend of consumers playing a more significant role on the electric grid.”
While companies such as Google have touted their status as the “largest corporate renewable energy buyer on the planet,” others such as Facebook, Amazon, Microsoft, IKEA and Nike have made public statements about their intent to increase the amount of renewable energy they buy. It is important, however, to understand what it means when corporations or others claim they will derive 100% of their energy from renewable sources, Outka said. First of all, corporations have several reasons to buy renewable energy, not the least of which is promotion of their public image. A positive boost among shareholders and consumers can be viewed as almost as valuable as saving money or reducing a company’s carbon footprint. And while such goals are laudable, unless a company is generating all of its own renewable energy, it is not 100% green.
“It is important to understand what it means when a company says ‘100 percent renewable energy.’ If Google or another corporation says they’re powered by 100% renewable energy, it’s not completely accurate,” Outka said. “If they’re connected to the grid, they’re still using the energy mix, though they may be offsetting that usage (through purchases of certificates and other methods). The problem isn’t solved, though these are very important steps.”
Corporate demand for renewable energy is not just leading to purchase of more green energy but also to large amounts of new renewable energy development, Outka said. Companies such as Wal-Mart have made corporate policies that all new green energy it buys will come from new energy development. That demand is having both economic and policy results as states work to enact policies friendly to such development. While such development is largely positive, Outka cautions it should be viewed with a critical eye as well.
Public utility commissions have made progress in developing renewable energy, while state legislatures have not been as actively involved. With more active legislative leadership, the trend could foster a broader and more inclusive policy dialogue. So long as corporate deals occur largely outside state planning, there is potential for development exceeding transmission capacity and other problems. Outka said such development discussions should focus on what the goal of new energy projects is, whether it be economic development, environmental impact reduction or others. Expanding who gets to take part in the decision making is as vital issue as well.
“This is a useful trend that can accomplish only so much,” Outka said.
Large corporations have had an undeniable influence on the trend of increased development of renewable energy in recent years, but it is not clear how existing and new policies enacted in light of the demand will influence other energy buyers. In future research, Outka plans to study energy law and the low-income household. The research will be part of a larger look at how customers interact with the energy grid, in addition to the examination of corporate customers and previously published work on how cities interact with the low carbon grid.
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