GM has announced plans to use 100 percent renewable energy—from wind, sun, and landfill gas, among other potential sources—by 2050.
Yes, that’s more than 30 years away and a lot can change in that time (maybe we’ll have flying cars!), but the steps to get there aren’t just image-boosting gloss for shareholders, investors, and customers who are thinking about the company behind products such as the Chevrolet Volt and the new Chevy Bolt EV. It’s also not something that’s going to bankrupt the company; with an eye to the future and the purse strings, it’s increasingly good business.
According to GM’s 2015 Sustainability Report (the most recent such report), the company says that its manufacturing and non-manufacturing facilities use 2.09 megawatt-hours of energy and produce 0.78 metric tons of carbon dioxide per vehicle. (Ford, for instance, has that latter figure beaten for 2015, at 0.72 metric tons.) GM says that it required 9 terawatt-hours of energy for its global operations in 2015.
As an intermediate step, GM aims to get 125 megawatts of its energy from renewable sources by 2020—including a massive rooftop-and-carport solar array at its facility in Shanghai, China, totaling 20 megawatts—and it may even exceed its target this year when two wind projects come online.
Ian Kelly, the manager of the Business Renewables Center, an effort of the Rocky Mountain Institute (RMI) that helps companies procure renewable, off-site energy, assesses that while those kinds of on-site generation are steps toward a virtuous goal, they’re the glamorous side of the solution. They don’t come close to replacing other electricity-generation sources like natural gas or coal. At some point, GM will need to take a larger step and reach an agreement with or obtain a major interest in a very large solar farm somewhere to offset its full power demands and meet its goal.
Yet that bigger step might not cost the company as much as it might seem. A 2012 paper from the National Renewable Energy Laboratory assessed that renewable energy can provide 80 percent of U.S. electricity needs by 2050. Furthermore, GM already says that it saves $5 million annually from using renewable energy; as more sources come online it estimates that installation costs and the cost of the energy itself will continue to decrease.
“Natural gas prices are trending up, and electricity will continue to go up,” said Rob Threlkeld, GM’s global manager of renewable energy, anticipating that over the long term, GM will see a savings of about 50 percent on its energy costs. “We’re definitely signing onto an amortization that amounts to serious change.”
Enter the Big Business of Renewable Energy
In the shorter term, RMI’s Kelly points to the extended timeline for the federal government’s renewable energy production tax credit and business energy investment tax credit programs making it particularly attractive for companies to take the plunge now. Those tax credits benefit the owners of wind farms and solar arrays, but the indirect benefit is to big-footprint manufacturing companies like GM, in that they lower the cost threshold as the costs of the hardware continue to fall.
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“We’ve started to reach a tipping point where it no longer seems fanciful.” —Ian Kelly, Rocky Mountain Institute
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The critical mass of companies signing on, with help from organizations like the Renewable Energy Buyers Alliance, leads to a cascading effect, adding to the number of wind and solar sources that are on the grid and making a difference in the near term. “The second-order effect is that when more companies do this, it starts to become normal,” Kelly said. “We’ve started to reach a tipping point where it no longer seems fanciful.”
The definition of sustainability can change from one corporate report (or marketing campaign) to the next, experts agree, while renewable’s definition is more concrete. Jeremy Martin, a senior scientist with the Union of Concerned Scientists’ Clean Vehicles Program, notes that certain biofuels might be defined as renewable by industry and government—yet might be sustainable by some definitions and not others. “There’s often a social-values component to sustainable,” he said. “They’re renewable because they’re made from a crop that’s grown every year, but whether they’re sustainable, well, it depends on who you ask.”
That said, renewable energy is a closely watched product that’s most definitely not tallied on the honor system. While an electron from a renewable source is just the same as an electron produced by an old coal plant, the former is backed up by the green-energy equivalent of a bank note. Through a federally regulated system, renewable energy certificates (RECs) get generated along with the renewable electrons. These are tallied by different REC-tracking systems, and there are REC brokers for special markets and particular energy sources.
However, as a company, if you want to prove you’re sticking to your guns on renewables, you need to “retire” these certificates by putting them on a list to get canceled out, so they can’t be sold in secondary markets. And in these days when going green can sometimes be more about the badging and interactive dashboard graphics than what actually goes into producing the vehicle, it’s an important differentiating factor and something to extol on the annual sustainability report.
Forming Alliances Toward Real Results
A number of corporations realize these are economies of scale to be had in renewable energy, and they’re entering joint commitments. GM’s announcement coincided with the company joining RE100, an initiative that aims to help companies set efficiency and carbon-reduction targets. BMW is already a member, as is Tata, the parent company of Jaguar Land Rover.
Each automaker has a different procedure for how deep they’ll go in holding their suppliers to the same standards. GM wouldn’t reveal how far its commitment goes within its supply chain, although it’s reasonable to assume that Tier 1 (primary) suppliers will get some encouragement to do the same.
Over the long term, it could mean a massive cut in carbon emissions. The Union of Concerned Scientists estimates that if automakers were to switch to an electricity grid with 80 percent renewable energy, then they could trim out 25 percent of the carbon emissions due to manufacturing an electric vehicle—the vehicle type with the largest manufacturing footprint today, when you include their battery packs.
Fueled (Not Just Made) By Renewable Energy?
Looming over it all, though, is this reality check: According to Cleaner Cars from Cradle to Grave, a 2015 report from the UCS, less than 15 percent of the lifetime carbon emissions for a gasoline vehicle (or less than a third for a full-size, Tesla-like electric vehicle) are due to manufacturing.
“Obviously, we renamed our powertrains ‘advanced propulsion systems,’ ” said GM’s Threlkeld, who says that the company is acutely aware of this. To that, he says that GM is committed to “decarbonizing the transportation sector,” not just with renewable energy for manufacturing but with renewed attention to fuel cells and a focus on driving a decline in battery-technology costs.
If you’re really concerned about the carbon footprint of your vehicle, don’t get too hung up on the idea of manufacturing impact. Choose your vehicle first and foremost on its efficiency at the fuel filler (or charging port); in this era of sustainability reports and evergreen corporate one-upmanship, the manufacturing side should keep improving.
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