March 31, 2022
Accelerate Auto Program will help drive decarbonization across the auto supply chain: “The barriers have always been capital and complexity”
Recent roundtable highlights the new powerhouse partnership
Edison Energy and RENEW Energy Partners recently announced the Accelerate℠ Auto Program, a $50 million fund specifically aimed at the decarbonization efforts of suppliers within the auto industry.
The announcement follows the launch of the Accelerate℠ Program, an innovative, $300 million flexible funding program funded by RENEW. The new endeavor will make progress towards decarbonizing the commercial, industrial, and institutional markets via flexible funding structures including Power Purchase Agreements and Energy-as-a-Service agreements for various behind-the-meter carbon reduction projects.
Edison has developed a robust supply chain program to help auto suppliers decarbonize and is pulling in partners to drive this effort, including Manufacture 2030 (M2030), which works with auto manufacturers and their suppliers to ease the collection and sharing of data. M2030’s platform is also able to identify energy efficiency measures at the site level using artificial intelligence and provide glide path reporting on progress towards environmental targets.
While suppliers have expressed a desire to comply with more robust sustainability targets set by their auto manufacturing clients, they often cite the upfront capital costs of projects as a roadblock to implementation. The funding partnership with Edison and RENEW is seen as a first step towards removing these barriers.
The innovative collaboration has caught the attention of auto industry association leader Suppliers Partnership for the Environment (SP), which has been advancing environmental sustainability of the auto supply chain.
SP recently hosted a roundtable discussion to lay out the new program, with panelists Bill Kenworthy, Vice President of Energy Optimization at Edison Energy; Charlie Lord, RENEW Co-founder and Principal; and Emily Prior, Chief Customer Officer at M2030. The conversation was moderated by Kellen Mahoney, Vice President of the Navista Public Affairs Group.
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Panelist:
Bill Kenworthy, Vice President, Energy Optimization, Edison Energy |
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Panelist:
Charlie Lord, Principal and Co-Founder, Renew Energy Partners |
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Panelist:
Emily Prior, Chief Customer Officer, Manufacture 2030 |
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Moderator:
Kellen Mahoney, Vice President, Navista Public Affairs Group |
The drive to decarbonize
The energy sector has ramped up its sustainability efforts over the last several years, looking specifically to their supply chains to decarbonize their businesses. This demand has been driven by a groundswell of public and private sector support, looming sustainability targets, and pressure from investors and customers.
Bill Kenworthy: “Industrials are starting to understand that they can’t meet their net-zero targets by doing financial and renewable transactions alone. You have to address not only your onsite activity but also your supplier network, your Scope 3.”
Charlie Lord: “It used to be that carbon targets were set at the 10-year range, and you had some time to figure it out. But we’re working with Fortune 200s that are setting annual targets. Those are publicly stated, and they are pushed down to the site level. In the auto industry, you’re seeing more of the OEM targets now flowing through to suppliers.”
Emily Prior: “The catalyst for us to start working in the automotive industry is that a lot of the OEMs are starting to set public targets to commit to reducing their carbon emissions in their operations. Supply chain decarbonization is such a fast-moving space that where companies were a year ago, they felt they were ahead. But things have moved so quickly that often they are finding that they’ve gone from being a leader to feeling that they are a little bit behind.”
Supplier challenges
Suppliers have historically faced several major challenges to implementing decarbonization projects, most notably upfront capital costs and the ability to identify and execute appropriate decarbonization strategies.
Bill Kenworthy: “These decarbonization mandates typically come from the board or the executive suite and they filter down to the operators. This could be the OEMs themselves trying to drive decarbonization, or any supplier. They have this mandate but how do they fit this into their capital budget or their operations? There are choices to be made.”
Charlie Lord: “The challenges are the same, no matter what size your business is. You have an annual capital budget and what we’re seeing is that clearly stated annual carbon emissions targets run smack into their capital budget, no matter how big or small the company is. So, interest in the third-party funding model is growing.”
Emily Prior: “Reducing carbon emissions in your supply chain is a real challenge for not only the automotive industry but other industries as well. You can control your own operations and carbon emissions but when we’re speaking to companies about their carbon footprint in their supply chain, this often feels like a really daunting task. There are thousands of suppliers, and you might not have a very close business relationship with all of them. How do you influence them to drive that change in order to hit those targets that you committed to?”
Supplier solutions
Edison’s capacity to validate and implement decarbonization projects, combined with RENEW’s funding capabilities and M2030’s ability to identify projects, will translate into an efficient and cost-effective process that will help drive real impact across the automotive supply chain.
Bill Kenworthy: “All of the firms here consider ourselves professional services firms. We are not advocating any given solution or technology. I want to highlight that when you find the right partner, it can unlock certain service levels that you might not think of. When suppliers identify a solution but they’re not sure how to run this process–if they find the right partner, those service levels exist in the market. Professional service firms tend to meet you where you are.”
Charlie Lord: “We like to start with the good news on carbon, which is that almost every commercial and industrial building in North America is sitting on energy efficiency and onsite clean energy opportunities that haven’t been harvested, primarily because of the capital hurdle. So just as it may feel like a challenge for businesses to begin to realize that these hurdles are being set every year, there are also new models and partnerships like this one, funding opportunities like ours, that help you get after it now. You have partners in this that help simplify the complexity and provide trusted advice on how to go forward and in what order. The barriers have always been capital and complexity. This is where that combined offering is so powerful in addressing the two historic barriers to decarbonization.”
Emily Prior: “We’re seeing companies that are really blazing trails and getting ahead, where they don’t just have a strategy to engage their suppliers, but they’ve actually come to grips with what role their procurement team needs to play to drive suppliers’ sustainability. It can’t be something that just sits with the sustainability team. If we really want to drive change, it has to be managed by the procurement managers in your company that have conversations with your suppliers every day and meet suppliers where they’re at.”
