Danish offshore wind developer Ørsted (ORSTED.CO) expects all its suppliers to move to 100% renewable electricity by 2025 at the latest, in a bid to set a “new gold standard” for the energy sector.
Ørsted said the move – believed to be the first by any energy company – forms part of its existing supply chain decarbonisation programme, and will support its science-based target to reach net zero by 2040.
“At this key juncture, the decarbonisation of the renewable energy supply chain is more important than ever – this is how the industry can ensure that renewable energy is done right from the outset,” the group said in a statement.
It said the sector “must act responsibly” both in building renewable energy capacity, and by raising expectations for suppliers to help speed up transformation within the supply chain.
The company has so far reduced its scope 1 and 2 emission intensity by 87% since 2006 and is “well on track” to become carbon-neutral in its own energy generation and operations by 2025.
Helping address suppliers’ emissions linked to component manufacturing, transportation, installation, and operation of renewable energy assets is “the next frontier” in its journey, it added.
Achieving this will see the extension of the 100% renewables target – currently only applicable to strategic suppliers representing over 60% of Ørsted’s total procurement spend – to all suppliers of wind turbines, foundations, cables, substations, as well as other components and services.
“This means that Ørsted now expects all its suppliers to exclusively use electricity from renewable energy sources when providing products or services to Ørsted by 2025 at the latest,” the company said.
This could be done by investing in on-site renewable generation, entering into power purchase agreements (PPAs) from renewable energy projects, or purchasing renewable electricity certificates.
Ørsted intends to support suppliers with renewable electricity guidelines to help them select the best solutions.
The group said “a majority” of its supply chain has already adopted the target, while a further 15% have committed to meeting the 2025 deadline.
It adds that “all current and future suppliers” will be expected to meet the target as well – particularly important as the developer continues to expand its UK offshore wind portfolio, and eyes incoming Scotwind projects.
Group president and CEO Mads Nipper said: “A sustainable future for our planet requires a rapid transition to renewable energy and limiting global warming to 1.5 °C. That’s why the renewables industry must lead the pack by decarbonising its own supply chain. We’ve transformed Ørsted into a global leader in renewable energy and strongly believe that companies must demand science-aligned climate action from each other as well.
“We recognise the efforts undertaken by all existing and new suppliers who share our ambitions and will commit to using 100 % renewable electricity. We look forward to working together to achieve this goal as soon as possible and to set a new gold standard for the renewable energy industry.”