Regardless of where you are along your sustainability journey, taking climate action is a strategic imperative. Organizations across all sectors are faced with challenges and opportunities as we transition to a low-carbon economy. But where should you start? And how do you balance the need to address climate change against financial pressure, evolving energy markets, and resource constraints?
To help our customers answer these critical questions and plan for a sustainable future, World Kinect’s energy experts recently shared their insights at a Get Kinected Live event in Scottsdale, Arizona. Here are the event’s top takeaways.
Doing nothing is a core business risk
In his 2022 CEO letter, Larry Fink of Blackrock said, “Most stakeholders—from shareholders to employees, to customers, to communities, and regulators—now expect companies to play a role in decarbonizing the global economy. Every company and every industry will be transformed by the transition to a net zero world. The question is, will you lead, or will you be led?”
While there’s no single pathway to decarbonization, a “bold commitment” is no longer enough. In fact, when it comes to sustainability, doing nothing is itself a core business risk. Ideally, you’re building a realistic, actionable plan that reflects your organization’s values and energy stakeholder expectations and emissions scopes—but some companies start implementing changes immediately rather than waiting until they’ve formulated a long-term strategy.
The reality is that there isn’t one way to decarbonize your business. There are, however, two crucial components to success: a data management system that accurately tracks your progress and a company culture that embraces and supports the mission.
Moving from strategy to action
Like any aspect of your organization, you’ll need data to determine where you need to improve and to track progress along the way. A number of solutions exist, including one developed by World Kinect. Regardless of the technology you decide on, make sure that the option you choose is robust enough to grow with your business as you move along your sustainability journey. It will form the backbone of your decarbonization plan.
To see real success, you’ll need buy in from your entire team. Invest time in building consensus around sustainability efforts. Employees from the C-suite to the loading dock need to see that decarbonization efforts not only make business sense, but also support the long-term survival of the planet. You’ll also want to ensure management is committed to—and measured on—sustainability success.
Making progress towards decarbonization is a multi-step process, and there is no one change that can deliver a sustainable future. You’ll need to employ several of these six levers to reach your goals:
• Reduce consumption
• Transition to electrification
• Produce renewable energy on site
• Procure renewable energy
• Address supply chain emissions
• Fill gaps with offsets
You don’t need to tackle these levers in any particular order but understand that it will take more than one approach to achieve your goals. Reducing consumption through energy efficiency is a great place to start. Two other popular levers are producing renewable energy on site and purchasing RECs.
Whether or not you are a World Kinect customer, consider working with one of our energy experts to identify the low-hanging fruit, build off those early wins, and rally your organization around the mission.
Producing renewable energy
Onsite solar projects are a great way to generate renewable electricity, while also limiting exposure to fluctuating electricity prices that in many cases come from non-renewable sources. Using your existing structures and/or land you own, this renewable solution qualifies for several incentives under the Inflation Reduction Act (IRA) that make it more affordable than ever. Several states also offer additional incentives.
Some of the headwinds facing onsite solar are the detailed planning required for a project, regulatory challenges like zoning and permitting, and the cost of installation and upkeep. World Kinect’s onsite solar team has extensive experience scoping and managing projects across the U.S. and can help you decide if onsite solar is right for your business.
Jumping right in with RECs
Each REC, or Renewable Energy Certificate, is attached to 1 megawatt hour of energy and is traceable to ensure that each MWh is unique and cannot be double counted. Many organizations start their sustainability journey by buying RECs so that they can begin reporting that they’re using renewable energy. Given the time required for implementing renewables like solar, RECs are an excellent way to jump start your decarbonization journey.
Once you’ve pulled several levers, like reducing energy consumption and producing on-site solar, and sourcing renewable energy, RECs can help to fill in the gaps and move you along the path to net zero.
Factoring in natural gas
The push for decarbonization doesn’t mean the end of fossil fuels, which are currently responsible for 80% of the world's energy. Natural gas—considered a relatively clean fossil fuel—is a critical component of energy planning, since there’s not an endless supply of renewable energy. Both Germany and California have been leaders in decarbonization for years and both still rely heavily on natural gas.
Most of our customers are concerned about natural gas pricing because it makes up a large portion of total expenses. There are several ways to gain budget certainty in a volatile market, and the current outlook for natural gas may drive you to explore these options.
Pressures on pricing of U.S. gas are coming from several directions. High prices in Europe and Asia are increasing liquified natural gas (LNG) exports, as are exports to Mexico. At the same time, U.S. gas producers have slowed production because of the enormous capital investment required to extract gas from shale wells, which account for about 90% of the U.S. gas supply. The result is pressure that could lead to higher pricing for natural gas, which is expected to persist for several years.
And since the price of natural gas has a significant impact on the price of electricity, the volume of electric cars hitting the grid in the 2030s will likely drive prices even higher. We will need carbon capture, storage, hydrogen, and other options to meet the growing demand for electricity. In fact, a suite of solutions will be required for price stability and continuity of supply.
It’s time to take (climate) action
Whether you are actively working on decarbonization or just now realizing it’s time to start, World Kinect energy experts can help. Our team will partner with you to determine which approaches best suit your business—managing your energy needs today while planning for a sustainable future.