How has business been affected by climate change over the last decade?
You could say that ACCIONA, in its present form, is our response to climate change. We have a long and proud history as an infrastructure group, but we made our first investment in renewable energy more than twenty years ago, which we followed with stronger investments in the last decade; we saw an opportunity in renewable energy that matched our concern with the long-term sustainability of our business, and of our planet. Nowadays ACCIONA is the world’s largest independent clean energy player, which means we operate solely in renewable energy and produce enough zero-emissions electricity to power 6 million homes in 14 countries.
How ACCIONA changed its business practices/model to cope with climate change?
ACCIONA is a pioneer in adapting its business model to the needs of a low-carbon economy. Last year, 76% of our EBITDA came from “Green Economy” activities, and all our businesses are engaged in a continuous effort to reduce their energy intensity, and their water and carbon footprints. We are in the fifth year of a Sustainability Master Plan that really sweats the small stuff: for example, we have measured the greenhouse gas emissions of our 28,000 suppliers, and identified the 500 responsible for 70% of the CO² tally of our supply chain. Together, we are working on actions to reduce their carbon footprint. We believe that sustainability and profitability go hand in hand. One example: Over the past 10 years, ACCIONA has reduced its CO2 emissions by more than 60%. This makes good business as well as environmental sense, as we are much more efficient in our energy use than before.
What do ACCIONA see as opportunities of climate change?
A great opportunity lies in the growth of renewable energy, which has a critical role to play in curbing greenhouse gas emissions. The way the world produces and consumes energy now is responsible for two-thirds of global CO² emissions. We have clean, competitive technologies to decarbonise the global energy system now, so I see deployment of renewables as the fastest, most sustainable and most economically efficient way to contain global warming.
What are the biggest obstacles to transitioning to a low carbon economy?
Regarding the need to get to an agreement in COP21, some countries are setting very low targets for emissions reductions and this lowers the overall possibility of getting a climate agreement that does not breach the 2ºC limit in global warming.
Beyond the climate negotiations, some governments have been inconsistent in their support for decarbonisation, and unfortunately, policy backtracking has made investors cautious about committing long-term funds for clean infrastructure.
If governments are serious about transitioning to a low-carbon economy, they must take steps to end fossil fuel subsidies, to the tune of $550 billion a year according to the International Energy Agency, and introduce robust carbon pricing mechanisms to drive down emissions and attract investment in low-carbon technologies.
What should be at the top of the lead negotiators priority list?
An agreement with binding global and national targets that curb greenhouse gas emissions to keep global warming to within 2ºC. These cuts should be in the range of between 40% to 70% by 2050, according to the latest science.
The tools and mechanisms to achieve this – top of which should be robust and stable carbon pricing mechanisms.
Governance and reporting mechanisms to ensure compliance
What do you hope to see achieved at Paris?
We would like to see an agreement with ambitious emission reduction targets – one that understands that the 2ºC global warming limit cannot be breached.
Carbon pricing must be part of the agreement. It must also be clear about the need to phase out coal and remaining fossil fuels. The targets individual countries commit to must be considered a basic minimum, and these targets should be reviewed every five years to measure progress.
How will a successful COP21 affect ACCIONA’s decision making post-Paris?
We see huge opportunities to accelerate ACCIONA’s investment in renewable energy and sustainable infrastructure if a successful COP21 becomes the catalyst for putting our economies on a sustainable, low-carbon growth path.
Our investment will be directed to countries that have the most ambitious emission reduction targets and regulatory frameworks that are stable and designed to facilitate low-carbon investments.
Who needs to play the biggest role in transitioning to a low carbon economy post-Paris - business, government or finance? Why?
The threat of global warming is too important to single out just one actor. We have to solve this together. Policy makers need to design the right regulatory frameworks in order to make low-carbon ventures attractive to financiers. The three will have to be in place for the transition to happen.
Juan Ramón Silva, Sustainability Senior Executive Director at ACCIONA