Renewable Energy
Definition
Renewable energy is energy derived from natural sources that are replenished at a rate faster than they are consumed, such as solar, wind, hydroelectric, geothermal, and biomass. Unlike fossil fuels, renewable sources produce little to no direct greenhouse gas emissions during operation. The transition to renewables is central to global decarbonisation efforts.
Why It Matters
Renewable energy procurement is one of the most direct ways organisations can reduce their Scope 2 emissions. Corporate power purchase agreements and renewable energy certificates have become standard tools for ESG-conscious companies.
Related Terms
Scope 2 Emissions
Scope 2 emissions are indirect greenhouse gas emissions from the generation of purchased electricity, steam, heating, and cooling consumed by the reporting organisation. They occur at the facility where the energy is generated, not where it is consumed. Companies can reduce Scope 2 emissions by switching to renewable energy sources.
Net Zero
Net zero refers to achieving a balance between the greenhouse gases emitted into the atmosphere and those removed from it. This means reducing emissions as much as possible and offsetting any remaining emissions through carbon removal projects. The goal is to limit global warming to 1.5°C above pre-industrial levels.
Green Bond
A green bond is a fixed-income financial instrument specifically earmarked to raise capital for projects with environmental benefits, such as renewable energy, clean transport, or sustainable water management. Green bonds follow established standards like the ICMA Green Bond Principles and increasingly the EU Green Bond Standard. They provide investors with a way to finance the transition to a low-carbon economy.
Climate Risk
Climate risk refers to the potential negative impacts of climate change on organisations, economies, and ecosystems. It is typically divided into physical risks (extreme weather, sea-level rise) and transition risks (policy changes, technology shifts, market repricing). Understanding climate risk is essential for long-term strategic planning and investment decisions.