Impact Analysis of a National and Corporate Carbon Emission Reduction Target on Renewable Electricity Use: A Review

Abstract

The Paris Agreement requires countries to propose their National Determined Contributions (NDCs) and encourages companies to engage in climate action. This two-stage study explores the mutual influence of national and corporate carbon reduction targets and their effect on the adoption of renewable energy using Hierarchical Linear Modeling (HLM). The subjects are companies nested in the G20, engaging in the Science-Based Target initiative (SBTi) or the RE100 initiative. These empirical results show corporate targets are positively correlated to adoption of renewable energy, and development of renewable energy varies by country groups, however; national targets are insignificantly correlated. Our key findings: (1) companies which set SBTs are more willing to use renewable energy to achieve their targets but prefer power purchase agreements (PPAs) and renewable energy certificates (RECs) to investment in renewables. (2) The effect of a national-level target on corporate renewable energy use is non-significant, probably because most multinational corporations are used to compliance and their performances are likely to be better than the national deployment on climate change. We argue that an industrial energy transition to renewables is economically beneficial and needs substantial support in the form of policies or subsidies, instead of just setting targets or attracting publicity.

Renewable energy adoption in multinational energy companies: A review of strategies and impact

“…However, the diffusion of renewable energy technologies (RETs) has been slow, and there are innovation system problems that hinder their development and diffusion in different countries (Negro et al, 2012). National and corporate carbon emission reduction targets have a non-significant impact on corporate renewable energy use, indicating that multinational corporations may perform better than national deployment on climate change (Chang & Lo, 2022;Anamu et al, 2023).…”

“…While the adoption of renewable energy can improve environmental performance, the economic implications of this transition remain a fundamental question for electric utilities (Ruggiero & Lehkonen, 2017). Moreover, the impact of national and corporate carbon emission reduction targets on renewable electricity use has been a subject of review, highlighting the non-significant effect of national-level targets on corporate renewable energy use (Chang & Lo, 2022).…”

Power Sector Under Climate Scenario: A Study of Climate Policy Impact on Indonesia Electricity System

“…The enhanced NDC will also provide a short-term target of emission reduction by 2030 and achieve net zero by 2060 (Ministry of Environmental and Forestry, 2022), which could be challenging for Indonesia without international support (Suroso et al, 2022). In addition to assisting in the reduction of GHG emissions, the NDC has a positive impact on encouraging sectors to shift to renewable energy (Chang and Lo, 2021). Additionally, the NDC represents pathways to decarbonization and a shift toward energy transition (Siriwardana and Nong, 2021).…”

Multiobjective Optimization of Carbon Emission Reduction Responsibility Allocation in the Open-Pit Mine Production Process against the Background of Peak Carbon Dioxide Emissions

“…It can be found that mineral enterprises, as the main body of carbon emissions, shoulder an important responsibility for emission reduction. As national policies are driven, more and more companies are moving towards low-carbon and sustainable business models [7]. Sustainable mining practices are critical to the industry's long-term health [8].…”