Government worldwide have embraced the goal of switching to 100 percent carbon-neutral energy by 2050. In Canada, a number of cities have now unveiled their own plans to match, and 18.9 percent of Canadian energy is now renewably sourced. The tide is turning on green energy, leaving businesses to determine when it will be in their best interest to switch over themselves.
The high up-front costs of replacing old energy infrastructure with environmentally friendly alternatives, as well as the relatively low cost of oil, has kept most businesses from making the leap. Traditionally, switching to green energy cost shareholders, and cut into the business’ bottom line. Plummeting renewable energy prices, government incentives, and consumer demand for environmentally responsible businesses may have now changed this equation, however.
The Canadian government is making it a good time to go green
Going green isn’t exclusively about switching away from fossil fuels; it’s about generally reducing environmental impacts, and reducing the country’s carbon footprint. Currently, the government is offering significant support to businesses that will help the country to meet its future carbon emission goals. That includes financial assistance, workshops, and other support for industrial facilities seeking to reduce their carbon footprint.
Several provinces also offer financial incentives to fund free lighting and clean energy upgrades for businesses of any industry. There are also significant grants available for businesses looking to mitigate or reverse environmental damage, to improve water quality, and to support innovators in green energy and clean transportation technologies.
Renewable energy is now officially replacing fossil fuels
Over the past decade, renewable energy has become far more affordable. This is primarily because growing alternative energy companies have become able to take advantage of economies of scale, though renewable technologies have, of course, also improved. As investment into the renewable energy industry has increased and begun producing significant revenue on its own, it has begun to scale up rapidly.
The Renewable Power Generation Costs in 2018 report released by the International Renewable Energy Agency (IRENA) indicated that more than three quarters of wind projects, and four fifths of solar projects in 2019 will produce electricity at lower costs than new oil, natural gas, and even the cheapest coal projects.
This means that existing fossil fuel production can still compete with renewables, but continuing to invest into new fossil fuel production is no longer competitive because of the high costs involved in preparing to extract oil, natural gas, and coal from new sites. Building windmills and solar cells has simply become cheaper than massive drilling or mining projects. Ultimately, this means that global power grids, including Canada’s, will go green on their own in time. For businesses, however, it means that switching to green energy today isn’t just environmentally responsible, but also cost effective.
Local power generation saves money
While the grid will eventually go green, it can’t address the inherent problems of grid-based power. Transporting power is expensive, because some of the energy is lost to heat en route. The average consumer purchases between 8-15 per cent more power than they actually use, which is lost en route. This was unavoidable in a time when generating power on an industrial scale meant using massive facilities to combust enormous quantities of fuel.
While some renewable power—like hydroelectric—also needs to be transported, solar and wind power can be generated near or directly at the site where it’s being used without prohibitively expensive infrastructure. The fact that renewable power has become affordable for energy companies ultimately also means that businesses will be able to reduce their overall energy consumption (and energy costs) by taking over some of their own power production.
Environmental responsibility is becoming increasingly important to consumers
Besides the direct financial incentives, businesses need to consider their customers. A growing proportion of consumers in Canada and around the globe are taking sustainability and social responsibility into account when making purchasing decisions. An international study by Unilever found that over 30 percent of customers preferred sustainable businesses, even if it meant paying higher prices.
This reveals an opportunity for businesses that are looking to grow. By going green before competitors, businesses can not only reduce their energy costs, but also attract socially responsible consumers who previously are looking for eco friendly alternatives to the current status quo.