Research and development funding
There are all sorts of areas where the world has yet to figure out how to reduce emissions effectively, affordably and quickly, including aviation, shipping, fertiliser, livestock, steel and cement.
Therefore, companies seeking to accelerate their path to zero emissions and maximize their impact on climate change should also fund the necessary early-stage research, development and scale-up efforts, either through their own R&D departments, external research grants or investments in startups. .
Some companies do it in different ways. In 2020, for example, Amazon created the $2 billion Climate Pledge Fund to develop technologies and services that can help it and other companies meet climate goals. It invests in companies such as Infinium, which is developing renewable electrofuels to clean aviation; Beta Technologies, a manufacturer of vertical takeoff and landing electric aircraft; and CMC Machinery, which produces custom boxes for specific products, reducing waste and the need for plastic airbags.
Each of these investments could help Amazon reduce its materials and emissions as it moves large quantities of products around the world.
Microsoft operates a similar effort through its $1 billion Climate Innovation Fund.
Beyond renewable energy credits
One of the most important sources of emissions for most businesses is electricity. But companies generally do not clean up their energy consumption by directly sourcing carbon-free electricity, as most have limited influence over the mix of sources in their local grid.
As an alternative solution, many simply purchase renewable energy credits that provide additional revenue to wind, solar, geothermal or other clean energy projects. The basic idea is that the added support helps build projects, so carbon-free electricity is generated that wouldn’t have been otherwise. Thus, credits can be counted against the share of a company’s global energy consumption that is not clean.
But while these credits can be beneficial in a number of ways, most notably in signaling to utilities that there is a growing demand for clean electricity, it is increasingly difficult to claim that they are effectively cleaning up a company’s energy consumption which does not actually draw electricity from the plants in question. These projects often do not even work on the same grids, or are able to produce electricity during all the hours that the companies consume it.