COP28: Schneider Electric accelerates global supply chain clean power push

Energy management consultancy giant Schneider Electric has today announced the expansion of its Catalyze program, with tech giants Google, ASM, and HP signing up to the work with the group to help suppliers in their semiconductor supply chains access clean power.

The announcement, made on the sidelines of the COP28 Climate Summit in Dubai as part of ‘Energy Day’, followed news the company had also expanded its Energize program that provides a similar service to pharmaceutical companies.

Google, ASM, and HP join Intel and Applied Materials in the Catalyze program, with all the companies now working to encourage suppliers in their value chain to set climate goals and join buying cohorts for renewable power that should allow them to sign more competitive Power Purchase Agreements (PPAs) with renewables developers.

“We are delighted to welcome Google, ASM, and HP to the Catalyze program,” said Jean-Pascal Tricoire, chairman of Schneider Electric. “Their decision to join supports the ambition to accelerate the decarbonisation of supply chains. Scope 3 emissions have proven a challenge to track and manage, but the Catalyze program enables companies and their suppliers to engage and collaborate in their energy transition and decarbonisation.”

Michael Terrell, senior director of energy and climate at Google, said there was value in companies working together to tackle their supply chain emissions. “Transitioning to carbon-free semiconductor manufacturing is critical to reducing global emissions, and no company can do it alone,” he said. “We are excited to become a founding sponsor of the Catalyze program and look forward to working with our fellow sponsors and suppliers to expand the use of clean energy across this critical area of Google’s supply chain.”

The news came just a day after Schneider Electric confirmed its Energize program for the pharmaceutical industry now boasts 20 participating companies and has formed five PPA buyers cohorts since its original launch at the COP26 Climate Summit in Glasgow.

The companies calling on suppliers to take steps to curb their emissions, including new sponsors Boehringer Ingelheim, Charles River Laboratories, Roche, Merck KGaA and Haleon, and collectively represent $732.8bn in global annual revenue.

The five cohorts of suppliers – one in North America, one in the UK, and three in the EU – together represent an aggregate electricity demand in excess of 2 terawatt-hours (TWh) and are now seeking PPA deals to secure access to renewable power.

“Climate change and nature loss are creating new health threats, changing the spread and burden of disease and reinforcing health inequalities,” said Lisa Martin, chief procurement officer at GSK, a founding member of the Energize program. “This puts increasing pressure on healthcare systems, which already account for nearly five per cent of global emissions. Supply chain emissions are a shared challenge across our sector and we are collaborating to find shared solutions. By working with our peers to expand access to renewable energy across the sector’s supply chain, we can have a greater impact on decarbonizing health care systems and building climate resilience.”

Speaking to BusinessGreen on the sidelines of COP28, John Powers, vice president for global cleantech and renewables at Schneider Electric, said the programs were helping to both catalyse investment in clean energy capacity and drive down supply chain emissions that can account for over 70 per cent of the carbon footprint of many corporates.

He said the programmes were originally targeting countries where there is a mature PPA market and it makes good financial sense to switch to renewables, such as the US and EU. But he added that the company was also looking at other markets where PPAs were beginning to emerge, such as India, Brazil, and Australia, followed by Singapore, Japan, Malaysia, and Vietnam. The Catalyze program is also expected to have a big focus on markets in Asia where the semiconductor industry is concentrated.

Powers said the use of PPAs had the potential to cut costs and carbon for both corporates and their suppliers. “The pharma supply chain is chemicals, packaging, logistics,” he said. “Power is a big part of both their cost and their carbon.”

He added that the intention was to evolve the programs over time to look beyond orchestrating PPAs and also help suppliers set emissions targets and electrify their operations to tackle their direct emissions. “Let’s harvest the low hanging fruit then move up the tree,” he said.

However, he warned that efforts to boost supply chains’ use of renewables can face significant barriers in the form of policy environments that hamper the use of PPAs.

“In US states where corporates can sign PPAs around 70 per cent of new renewables projects are being driven by corporate demand,” he said. “In other regulated markets that is not happening. Our premise is we can go a lot faster and many corporate actors want to go faster than even the fastest governments. We will do it, if you just let us participate.”

As such, Schneider Electric is looking to bring together corporates, suppliers, developers, and local government to urge regulators to allow PPA pilot projects to demonstrate how collective purchasing of renewable power to help drive investment in new projects. He added that such investments were in line with the commitment to treble global renewables capacity, which over 100 countries have endorsed in Dubai and which is widely expected to make it into the final text of any agreement reached by governments.

Schneider Electric this week also formally joined the Energy Transition Accelerator, which has seen a coalition of companies come together to push for policies and projects that can help developing and emerging economies accelerate decarbonisation efforts.

Powers also signalled his backing for a series of proposed reforms to help drive down the cost of capital for clean energy projects in developing and emerging economies, warning that the main barriers to boosting renewables capacity remained permitting and grid connections, subsidies for fossil fuels, and the perceived long term investment risk in some markets.

“The private sector demand for renewables has never been higher and is growing fast, and it is moving beyond just the big corporates,” he said. “The more markets open up, the more we can allow that acceleration to occur.”

He added that the use of renewables in corporate supply chains is a trend that is building rapid momentum, and as such suppliers can expect more of their customers to call on them to embrace clean energy. “These schemes are the ‘carrot’,” he said. “Our partners then make decisions on a case-by-case basis on individual purchasing requirements. But some of our clients already have carbon metrics in deals that are real and significant.”

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