As per the Science Based Target Initiative (SBTi), effective management requires accurate measurement. The initial hurdle lies in quantifying the company's carbon emissions. Particularly in sectors where scope 3 emissions are significant, the Procurement function tends to prioritise this aspect. However, this focus limits the Procurement department's potential impact on scope 2 emissions.
For instance, negotiating contracts for the purchase of green energy, such as Power Purchase Agreements (PPAs), can be a valuable strategy, especially in the context of significant energy price inflation.
The "Energize program" initiated by the pharmaceutical industry to access decarbonisation solutions in terms of renewable electricity is a good example.
40%
of global energy consumption are accounted by buildings, and 33% of greenhouse gas emissions.
(World Economic Forum)
Power Purchase Agreements (PPAs): contracts between electricity producers and buyers, typically large consumers or utilities, where the producer agrees to sell electricity to the buyer for a predetermined price over a specified period of time.
PPAs are commonly used in the renewable energy sector, where they enable developers to secure financing for new renewable energy projects by providing a guaranteed revenue stream for the electricity generated. These agreements often involve the sale of electricity generated from renewable sources such as wind, solar, or hydroelectric power, helping to support the expansion of clean energy generation. PPAs can vary in duration, pricing structure, and other terms depending on the needs and preferences of the parties involved.